UPHTED STATES DISTRICT COURT
DISTRICT OF DELA`WAR.E
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AEHNEON LQYALTY GROUP, INC. )
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Haixttiff, )
) Civil Action Ne. $4-36B-JSF
v. )
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MARITZ, iNC’., )
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Defendant. Q;
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EXPERT REPORT DF RANDY PETERSEN *
I. INTRODUC'HGl*E AND ENGAGEMENT
I have been asked by Affinion Loyalty Group, lm:. and Aftinion Net Patents, Inc.
{colteetively "At"£i¤i0n") to provide my expert opinions concerning: {1) the validity of certain
claims uf 1.}.3. Patent Nu. 5,?'?9,S'?€} {the ‘“3'?(} patent`}, U.S. Patent Ns:. 6,{}£}9,4l2 {the "`4l2
patent"} end U.S. ?atent No. 6,573,012 ("’012 patent"); and (2} the rule of Entemet-based
incentive programs ie the logyalty/frequency industry, l have been speeitlealiy asked to review
the Expert Report and Supplemental Expert Report of Bmee Badger, dated March IG and Apt-E}
ttl, 2006, respectively, and the Expert Report and Supplemental Expert Report of Dr. Arthur M.
Keller of the same dates and to respond to certain of the opinions contained therein.
This report is based upon the infomation available at this time. if new information
bwomw available or if the Coutfs eieim construction mling alters what I understand to be the
mezttitag ofthe patent claims, I may supplement uz amend this aeputt in light ofthet additicartal
information. I will be prepared to testify at trial as to tive opinions set forth in my reports
EXHIBIT 1*~t0.............
-/@-ec
The imvoducmry poraiem of my iniaiei expert reporz is inccrpemied herein by reference.
` Pmached at Exhibii A harem is 2 list of materials E have reviewed ce relied upon in prepméng my
opinions herein, m addition to those identified in connection with my initia§ report}
ll, THE STATE OF THE ART OF F REQUENCYILOYALTY FROGRAMS IN 3995
The introduction 0f1he American Airlines Alidvantage program in 1931, foiiewcd
closely by many of its competitors, launched the modem im:¤n1iv:!}eye`2ty imdumy. I have
i`e§l¤wed the devekapmem of this industry closely ever the years and kep: abreasz of the latest in
innovations and wveiegmmcms in than industry. In 1995, of these icyalzy programs were
nffm-ing redempzicm of poims for awards through the Internet. Indeed, in $995, amine
commerce was just beginning to gain very limited acceptance as a vehkzle fer making purchases
{er reservations). §_g_g "Give Cyber-Ready Consumers the Once Over, Irzzerecxive fvlcrkemzg
News June 23, 1995 a1·aiele{0nly 5 percem of remote sakes were conducted ihreugh the internet).
Thus, although the use of internet webpages in conduct various aspects of commerce may be
commonplace mw, is was net so in i995.
The $"act1hat is was net natural ze ihink of using Inicmet websiies te aciuily operate
in·:emix·e or loyalty programs 0n~}ine is demonstrated by me actions of the parties in this case.
Both Maritz and Tréiegiam were involved in the provision oi" the technaiogy for operating
icyakylincemive programs for major corporate clients in the 1990s. My review of the deposition
testimony and documents in zhés case demonstrates thai, éespite the fact {het zhese two
I ie e:i¤z's expens eéae xo eenuin references in me inzwductimm of their repuns withoui refenérsg te them again
in me gzrimasfy analysis ef the patent ciaims. My review ef shes: references dues nm affect my validity analysis.
2
companies were among the industry lcadcrs in providing sysacms far operating loyalty programs,
the computer system fur allowing redemption of awards ihrough ih:. Iziicmei was mm ¤f€·::r:d_by
cinhci szumpmiy imnil aLlcas1j_Q_§§_. 5g, gga TRL·3v1TZ3S879-96 {pmpusai for development of
Imcmci system in August $98); Lister Bap- at 16-I? (tim web application aiiawing redemption
was hunched in 3998}; Altemucllcr Dep. at 37 {`VAULT program developed and launched in
1999). Likewise, Clickiicsvards, the cm-iime incentive pmgram instituted by Netcentives, which
includ cd bush rewards for un—}inc activiiy and un—!im: rcdcmpticn was not launched until 1997.
Even in the airline imziusuy, which has lcd the development af lcyzsizy program tcchnuiegy, cm-
line rcdcmptism of points for awards was noi widely adopted until ihc ima §990s. Thus, aha: usc
of Internet capabiiitics for the operation of incentive programs did mi: bcxmmc widaiy accepted
umii wcti aim: the inventions at issue in this case were already made.
I1!. CLAIM CGNSTRUCTION ISSUES
In my initial report, 3 set forth my opinions conccming the construction ofccraain ciaim
terms as they related to my infringement analysis. The reports ¤i“1'·J£aa·itz’s experts have put
{onward upirniozzs ccnccmisig thc zzunsmiczicm of some additional ciaim terms, as wc}! as opinions
about ciaim tcmis E also discussed in my initiai report.
A., “lmmedi2<:y"
Mr. Boigcr asserts that {he: claims cf thc ‘4i2 patent rcquirc what hc refers to as
Gmmeéiacy c£`i`c:;t." Mr. Bziigm purpcrzs 10 {ind mis limitation in the element of Ciaim 1 of the
*413. paacnt mat provides: “iss¤ing said asvasé points to an zccoum cfsaid user if said asm
qualiiics for said award points, whexain said award poims are redeemable by said user for an
award? None of this claim ianguagc on its faces contains any reference ici the timing cf for
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taking those steps. 'Ezcrefcrc, one cannot find any immediacy effect in ih: ordinary meaning of
this claim language.:
E disagree: wm: Mr. Bcigcfs view mm th: person ¤i`·:>rdéua:ry sm? im the an wozzld
zmncthciess understand this claim language to require that me issued paints be imrncéimcly
available for rcdezmpzicn. The patent specification lists multiple: putenziai advantages of the
invention, but docs not include each of those: advantages as elements ¤E` each and csvcry unc of
thc: claims. @5, gg, Col, 2, lines §8~2Q (an advantage ofthe: invention is an electronic sigmup I
form for 0n—linc signing up by users). in my opinion, the person of mdinary skill in the an
would no: ccmciudc tha: thc immcéiatc award ofpuiuis after purchases is part of the meaning of
{hc claim language. The person of cnrdiuary ski?} in thc art would understand thai the claim is
fccxzsézag on she technology ofthe award of points by using an on—·lim=; incentive pmgmm and
awarding points based 0:1 the purchase: of products through an Entcmct webpage- R would also
be recognized by zhc person of osdinzry skili in thc an that thc use ofsuch technology xvould
permit certain aspects uf Hwa: Lsazssaciicns to bc pcrfonncd mam rapidly than for such sysacms
ihat did not uziiizc Imcmct tccimuiczgy, but nm that any particular timing for performing the
steps was a required element of practicing the invention.
The lack of slipper: in the claim language for the supposed Wmmadiacy afl`cct’* as a claim
czlemczza imcmmes clearer when unc lcmics at the argument that the "immcdiacy <·:ff`c.c:" for the
issuance vfpoirzts as an ckmcnt ¤fC§aims il}, 27 and 36 of the *412 patcm. $3; Beige: Rep. at
27. Thos: ciaims do nu; ccniairs the same language cm which Maritz relics én Claim 1
2 Besause l do not Gnd any elemem ¤i'“immeclia¤:y†in me claims, l do nm ackirem: how such an imieflinise
concept could be undcrsauoé in the wmext of applying this claim to ih: prior an. M:. Holger docs not specify in
either ofhis repams haw mis “immcdiacy clT¤·:t" is zu be mcasurcci.
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ccncccming the issuance of puéms. Mr. Bcigcr points cniy ac thc cia§m iauguagc “cml§nc
énccntivc program" as somehow containing the manning that award paints mus: be issued 10 a
user immcciimcly after an on-Ein: purchase and that those: award paints must be immcdiaacly
rcécemabéc by the um for an award. Nothing in the specification provides a basis for reading
that limitation imo aha ciaim term "¤nlinc incentive program" or imo any other language of
I Chaim EE}. in addition, M:ar§tz’s accused program pfainly empkays ané benefits from scvcrai ¤i`
the advantages of ihc invention discussed in th spcciiication.
B. “£}n-line incentive Pr0gramâ€
idisagrcc with at has: two additionai interpretations of the language azscd in the patent
claims zhai are put fcxwaré by Mr. B0§g¤r in his rnpcm. I have already discussed my
understanding of what the claim term “0niin¤ incentive pr0gzam" wcnuid have meant to the
person of ordinary skill in the art at the time of thc invention. 3;; ikzierscn Infringement Rep. ai
5. In acidition to the ‘*imrrzcdiac3· cf`i`ccz" discussed above, Mr. Baigcfs construction adds two
additional clcmcms Lu xhat Eamguagcz thc on-lin; inccmivc program must rcward users for on-
line aciivity and the 011-3im-: activity being rewarded must be the amine purchase: ufpznéuczs.
The claim Eanguage: cafclaims IG, 2'? and 36 (and the ciaims that écpcrzd from mem} docs not
contain any ra ference in purchase of products, either on-lim: 0;* Off-Jinc, aud, ahcrcfom the
ordinary meaning of thc claim language docs not supporé Mr. Bulgcfs intczprctazicn.
Mcrcuvcr, Mr. B0}gcr’s interpretation is mai consistent with the specification of thc *412
paaent or E18 prosecmian history of that patent. in the specification of the *412 patent, the
inventor ideniiiics scvcrai problems with ah: than-currcm izacemivc programs thas he: was
scckiug tc address. $5; C0}. 1, limzs 1'7·59. Wiih rcspcct to the process of rczdcczming avvanré
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points camcd in incentive programs, he speciiiazaiiy idcnaifics the pmblzm of aha customc;
needing to physicaiiy obtain an award ccraiiicatc 0: credit instrument ami the requirement that
thc customer plan ahead su1`i}c1entiy to ailazzw time fc: that pmcscss to occur. gg at limes 3840,
52·55. These idcmiiicd prcbicms arc specific to the pmccss of redeeming pcims, rcgardiess cf
how the pcims are named. Therefore, the person of ordinary skili in the am wouid imvs
understood that thc inventor was cunccmcd with rcscivizag that prcbicm in the rcdcmpticm
process in his invention, In Claims IG, 27* and 36, the inventor addresses that very problem
through thc use of an internet webpage that permits the user in interact dircctiy wiih Que
incentive program and initiate the rcdvxnption process dircctiy wizhouz the nccd to obzain a
certificate, credit instrument or wher similar mechanism to obtain thc award.
This interpretation is further suppcmcd by statements made on the invcnzofs behalf
duzing the prosecution of the ‘4E2 patent. Although I am not a patent lawyer, I read the Petition
to Make Spcciai filed during the prosecution of the *412 patent to be distinguishing between {hc
ciaims whic}1 zrcquiac am-line: psxrchasc ofpmducts from thc ciaims mat do moth §_g=__<,:_, Eiga Pctizicza
*.0 Make Spcciai (Plaimifi`s’ Exhibit 217) at 2-3 (describing two distinct set cfciaims, one caf
which involves product purchase and one cf which dues not). That dissincticm, which is made
repeatedly in thc Petition to Make Special, would nm make any sense if the ciaims aik required
on-line purchase ofpruducts. Tiacrcfcre, the prosecution history is directly contrary in the
position advanced by Mr. Bcigcr that each af me claims of Lim *422 pazcm rcquircé omlizac
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product purchase.}
C. “On-1inc"
As discussed in my cpcnixag r<:p¤n and acldacsscd in more demi} in Mr. “YmGi.¥¥3§¥S report,
thc Affinion patents dc&:n•: `°011Iinc" to mean use uf the Intcmet. @ Young Validity Rep. at _.
§’cr the reasons sat forth in M:. `*:’¤ung’s report, med concurrently herewith, I disagwac with thc
deziiniticn of "0r2iin2“ set fcsztia in the opinions c>§`Marit2’s experts.
D. "Award" or “Redecmable Au-ardâ€
As discussed in my opening rcpcm, the term. ‘°awa:d"" is defined in the spccificaeicm ofthe
Afiizzion patents as ‘*a product or scrvizc that can be obtained as a prize or award in exchange for
award points? Mr. Bulgcfs rcpuzt docs not cxpnzzssiy dcfkte the term "awards,“ but hc
concludes in his vaiidivy analysis that "pric:c discounts cm latter ;;•¤rc¥1ascs"c¤nstitute an awardt
§g Bcigcr Rep. at 1849, In my opinion, the use of such discounts as an incentive to purchase:
wouid not have been undcrstooé by the pczsun ofcrdinary ski!} in the art to constitute an
‘*awa;·d" as that term is used in the specification of the Ai`€E.ni0rn patents, My interpretation cm
this point is supgmrtcd by the fact that Maritz’s own counsel advised Marin: that discount
programs wcmid ;2_
In ardcr to render my opinions herein, E have `bccza asked to zeppty certain legal standards
to my analysis. I understand that at patcnt claim is "am§ctpa2cd" only ifa sing}: piece cf pri or an
éiscloscs cach and cvcry eicmcm of the claimed invention. E understand that there may be an
3 Ma-xriu’s mliance an statements mad: by the examiner concerning the aékzwancs ¤f claims of the 'SYE)
patent tc support this interpretation is misplaced. §g;g;, 1%:: c:¥z¤$m,·s uf thc ‘3?D patent, in contrast tn the asscrzcé
cimms of the ‘4 I 2 patent do contain claim language relating to onlin: purchase. _§_=__5_:_;__¤_¤gQ, the examine: made plain
that it was the cnmbinaténn nf “cl2c:rcmic cumrrmrcc systems and incentive: award prc>g7ams" that was now:] and nm
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issue as to whcahcr ccnain of the pubiéczaaions and patcnas cited in Lbs: scpams of Mr. Boigcr and
DL Keilcr ccmstimzc prior ar:. For purposes of my report, E have assumed that the references
cited am ;)1`i€H` am.
E furzhcr understand thai a paicnt claim w0u}d aksc bc invalid ‘*if the differences bcawcczz
the subject matter sought io be patcrsxed and the prior art are such that thc subject maucr as a
whole wmuid have been obvious at iha time ofthe invention to mma of ordinary skili to whiah said
subject matter pertains? 35 U.S.C. § 203- In chakicnging the vaiidixy of a patent as obvious
under section 103, E understand that Maria; may rciy on muitipic ycferencas, bu; that mcmiy
identifying each element in thc prior an is insufikicnz, and Maria; must establish that the person
of mciinary skiil wcuid have had a motivation, suggestion or {caching thai would have Emi him to
salccn mcse rcfcrcnccs and combine, mei: teachings zo mak: me maimed invcmicn.
V. CLAIM 1 OF THE ‘8'?0 PATENT iS VALID
A. Claim 1 ofthe ‘8’?0 Patent is m:•tA1:ticipated by the U.S. Patent
N0. 5,483,444 or the hook to Book Program.
Claim 1 of me `8"H3 pawn; provides: A syszcm for zm incentive awaré pmgram, including
a mmpmcr system acccssibic for
A first mcmory area fb: storing a product catalog, said
product cataicg including proéucz descriptions and pmduc:1 prices
fe: each product avaiiabie: for purchase;
A second memory awa for staring an awards calalug, said
awards catalog including an av·.·a1·d description and award puims
value.: fox nach award; and,
A frequency database stozing account ir:fc>nrs&zi© for each
suggcsxcé by zhe pmr an. 3; 'S?9 patent Notice caf Aiiuwasncc.
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enroiled user ofssid incentive award program.
l have compared the éisciosure of U.S. Patent No. 5,483,444 (tee **144 patent"} and the
disciosure of the documents cited by Mr. Holger concemisig the operation of the Look to Book
programa to the elements ¤t`C3aim 3 of the *87*3 patent. My conclusion ie that, whether viewed
separately or combined as Mr. Boiger does, those references do not disclose esch of the elements _
of Claim 1 of the ‘B“?0 patent}
Neither the *444 patent or the Look to Book documents describes a computer system
accessibie for "ori—iine interactive communication with users" as that ierm is oetineci by the ‘B?0
patent, because neither of those references discloses any use of the Irtterriet. instead, both of
these references describe s system using e CRS system to operate so incentive program for travel
agents. For that reason alone, these references do not disclose earch of the elements of Claim l of
the ‘S`?(} patent,
The *445 patent does not disclose soy awards cataiog stored on a computer system, much
less ihe specific attdbctes of the award catalog required by Cisim i of the *870 patent. Mr.
Bulger does not cite to any such disclosure in his expert report. For that additional reason, the
‘444 pzitem does iiotdisciose all the elements of Ciaim 1 ofthe *370 patent.
The Radisson documents concerning the Look to Bock Program cited by Mr. Boigcr also
do not oisclose ali the elements of Claim i of the *879 patent. in addition to the absence ofeny
" Mr. Boiger cites tothe foilowirtg documents coriccming the Look so Book program: £C0036i>9»70B,
Ct’Ztm=t id-:-49, CCU045S8-63, €TCC·04568·89, CC€i{>467é-77, CCG{}4900—G2, suc! TR1..·MH 44088-93.
S My imdersiaridiitg is that in order to anticipate the cittim of e patent the chailenging party must rely cm s
single piece ofprior art as diseiosing the entire invention. Here, Mr. Boiger seems to be reiyirtg on awe tiifferent
zefermreiwr relating to ii-ini: an Buck; the *444 patent and ciocumenx relating to the operation of tire Lock to Book
program by Radisson, For purposes of my analysis, I wiil discuss these references separately,
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onwiine computer system as defined in abc *879 pazcnt, those documents do not provide any
ciisciosurc as to thc usc cfa separate memory area for abc pmdzsct catalog and a separate: icmaticn
for sawing an awards camicg, which Mr. Boigcr assests are required ciemenis of the claim}; 3
understand from Mr. Ym.mg’s report, consistent with my own review of the dacumcms, that 2
person caf sicéii in thc an wcuid not find that zhcsc documents disclosed such separate memory
areas. ggg Young Validity Rep. at 9.
Because neither the *444 patent and/cr the Lock to Book program dncumczzis disclose
cash and every clcmcni cffliaim E ofthe ‘8"FD patcm, aha; claim is mz; anticipated by either of
those references.
B. Claim I of the *870 Patent Is Not Obvious in Light of Any of the
Combinations of References Cited
Mr. Bcalgzfs obviousncss analysis wiih respect ic Ciaim 2 ofthe: ‘8?0 patent appears to
be based cn locking aa me im·emi0n and mm searching for each of those mcmcnzs in mc prior
ari. Indeed, Mr. B¤}ge2r’s analysis does not specify whi ::11 oftixnz many references he lists hc
contends the person of méizaary skill wouki have combined in crcatc thc invcmicn of Ciaim 1.
lm thc absence af that specifkity, I cannot know what exact comibiuation caf references Mr.
Badger is contending w¤u§c§ have been combined by the person cf ordinary ski}? in aha: ara and
wha; spcciiic mativaiéon t0 combine w0asEé appiy 10 ihcsc specific references.
*· lz ig arm uncirzr mm the dom.-mum dma by Mr. Bnsgpx mam, german awumcum wm mma ma,
aherefnxe, whmhcr may are even prior ar;. For purposes of my anaiysis I wiil assume dna: thas: cicxnsmcms 50
CGTfSI€l¤'lt prior EH.
EG
As an initial matter, cvcn ihough Mr. Bulger cakes many references in an cffcn ic coms
up with nach ckmcm mf the invention of Claim 1 ofthe ‘87€} patcm, no combination of thosc
references would siisciosc each and every clamav! of mm ciaim. Nana of the references
discloses an amine computer system containing the scccmd memory area for an awards czmicg.
Both of the references cited by Mr. Bclgcr (Lack to Hook program dccumcxzis and Judy Quinn.,
"%c interactive Rzvo}uticm,“ Incenzive, February 1994 {Wha Quinn smi¢`ie")) discicsc only aha
display of awaaré cataiugs on the CRS system 0: private computer nctwmics, nc: the use of the w
Imemei for such catalogs. Because the ‘870 paumt defines on-lime as ahmugh the Irzscmcz, ai! cf
the pcssibic ccmbinaiions of references cited by Mr. B0}gcr would sti?} bc Eacking the use of an
awards catalog accessible through the Intcmcl.
Nothing in the references cited by M:. Buigcr would have given the person ofozdinazy
skill in thc art a motivation to combine thc elements ufa computer system ac<:cssib¥c for on-lim:
imcramivc mmmunicatioxz with users, a memory area with a product cazaiug, as second memory
uma with an award cataicg, and a frcqucncy database., iuciccd scvaraf of thc rcfcrcnccs citcd by
Mr. Beige: acmaily wuuid discourage a person of ordinary skili in the an from combining the
elements imo thc invention nfthc ‘S7O patent. For example, U.S. Patcm Nc. 5,025,372 {Wha
*372 pasenn"} discloses ihc usc of 2 credit instmmcm in the provision of inccmiw: award
programs in as cffart to avoid the burden 0{`having la usc 21 catalog of asvzszcis. §;_g Cci.4, fines
7~·::0§. 6, line 55 {describing advantages cfoperaiing an incentive program ihat dues g rciy cm
an awards cataiag}. A person ofcrdinary skill in the an would there fore undcmtand the ‘3“’?2
paicm :0 be discouraging thc use c>1â€cm—.linc award catalogs in the administration of incentive
award programs and ccrtainly would not 'havc bccn motivated to combine thc disclasurc of that
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reference wiih an awards cataicg. Another amide cited by Mr. Bulger, " Shopping Spree in
Cyberspac:¢" by Laude Pcrcxscn in Catalog Age, Scpacmbcr 1, 1995 {thc "Ccz:zzI<2g Age article`}
mentions a frequent buyer ciub fur an Imcmca mall {which docs nm include an awards camcg uz
on-hue redemption), but dascnibes in great detait the difiicuitics that were experienced in using
the Intcmcz as a method ofcannducting a relatively simple consumer transaction. The person of
ordinary skill on reviewing such an article would, ifzznything, have been dissuadcd by that
amhofs account from viewing thc use cf thc: Ememct as a viable rout: for operating an incentive
program.
Likewise, the article by Anzac Stuart in C10, August I995 (aim "C`!O artic]¢“) describing
Radissaufs usc of infomation tcchmiogy refers to the use of thc internet as a way for consumers
m book rooms, bu; aEs¤ retbm separately an me success of thc nm-{meme: sysmms used by
Radisson, such as Picm: and Harmuny, and thc-: Lock to Book system. The person of ordinary
siziil in thc-, an readings such an zmicia wouid HOI have sccn anything suggesting {hai abc Lock in
Buck program shouid bc moved to the Entemet or suggesting the implementation afcansumer
incentive programs zhrough the intcmct. Taken as a whoic, the micics and patents that Mr.
Beige: assms would have provided a mctivaiion :0 combine the elements found in the various
references cited simp§y would :101 have done sc.
C. Cir-aim I af the *8711 Patent is Nut invalid Unéer§ 1G2(f}.
My uxsdcrsaanéing of the posiaicm sc:. forth in Mr. Bolgcfs report is thas he asserts that
Mr. Smxcy was joined by ozhcxs in isw¢mi¤g thc invention of Claim I ofthe “S?O patent. Mr.
Bcigcr docs nm cize any evidence 10 suggest aha: anyone other than Mr. Szcrey invented the
ciaimcd invemicn or had any ixwclveement at ali in making the invcntircmn indeed, as I understand
32 ‘
aha testimony, the invention was made wc}! after M1: Storey had left his employment at
Radisson. $9,; Szorcy Dap.a1 12-13, 195-98 (left Radisson for Doublcxrcc in 2994; invention
made: in spsiuglsummcs &995}, The sai: basis {br this argument appcars to bc the assanica that
{ha Lock tc; Bunk program is the same as the iawcmism of the ‘87G patent, For the reascms stated
above, there are significant distinctions between the disclosures ¤feiLI1cr of the Mack to Bock
references and the claimed invczaticn. Therefore, the logic cf thc argument is fiawcd.7
VI. CLASMS 1, I0··}7, 18, 2764, 35 AND 36 OF THE *412 PATENT ARE VALID.
Mr. Boigcfs initiai cxpzn report aédrcssas only Lhc validity of Claims 1, 10, 13, 27, 35
and 36 of the ‘·¤¥ I 2 patent. Hs has rcccndy submiticd a Suppicmcntai Expert Report {ha;
addresses the validity ofthe dependent Claims 11-17 and 2S»34. E address herein the opinions
expressed in bmh of ihcasc reports ccmccming ma validity ofthosa patent claims.
A. The *887 Patent Docs Nat Auticipate Claims 1, 18 or 35 of aha ‘=!12 Pascnt.
Claim E of thc *412 pazznt provides: A mcxhod for implementing an on-Eine incentive
prevgram, said method comprising thc steps ot?
Providing an Entcmct webpage accessible to at least cna user, via a computer
system, for on-line interactive communications behwseu saici user and said
Emcmct webpage;
Offcriag on said Internat webpage, at least cnc product for sai: no said user,
Ekterrnining whether said user qualifies for um: or more awaxd paints based on
said uscfs rcspcmsa to purchase said at lcasi one product;
Calcuiating said award points according in a pzcprogrammcd f¤rmu}a if said user
quaiiiics for said award pczims, and
issuing said award paints an an accoum of said user if said user quaiiics {0; said
7 Dr. Kmiler makes an simiiar argument wixh respect to the Ersvanmrship nf Chim lf} af the- *4 i 2 patem, Since
neither 0fMarit1’s experts asscr! that Claim §0 of the ‘4 ! 2 patent is anticipated by ih: @44 patcm, there is cvcn lass
support for such an argumam wixh rcspm:1 in tha: patent claim.
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award points, whcnzin said award points are redeemable by said user for em
award.
Ciaim K8 claims "zz ccmpmcr rcadabkc medium comprising a plurality of insmscziuns,
which when executed by a compuzcr causes a computer tu pcrf01m“ the same steps as in Claim
1. Claim 35 claims "a computer system for implcmcming an 0n—Iin incentive program, said
smmpuier system c¤=mprising†software ta perform the samc.
Mr. Bulger asserts that, under the claim ccnstzmciicm proposed by Aftlnion, Ciaim I of
the *412 pazcm is anticipated by U.S. ?a1cm Nc. 5,730,8375 {Wha *887 paz~:nt"), The focus cfihc
*3821 patent is on the tcchnokugy of bringing shopping functions $0 ihc inzcmct. it describes in
great detail thc ways in xvhich a system should be designed tc facilitate abc operation of
cicctronic storcfmnts. The issue of inccmivc programs is ciéscusscd only very briefly in the
pamm spsciihzation and is not mentioned in either the abstract, the summary of the invention or
the claims. Although the *887 patent dues mention thc usa of incentives, the *887 patenz uses the
mma "i¤ccntivc" 10 encompass satcs or disccums on merchandise ané docs not ccmemplatcz what
would traditionally be vicwszd as a customer icyaltyffrcquczacy program. §; *887 pamm, co?. 7,
limes 19-24. Therefore, it is my opinion Hm the pcrscm of ordinary skill in the an wcuéd not
view the ‘8E7 pa&¢.=:m as being a reference in the iiaéd of ioyalryifrequcncy programs.
I have been asked to compare thc limitations 0£`Ciairz2 1 ofthe ‘4i2 patent to the
disclosures of the ‘S8? patent. Based cm that comparison, {conclude Qhai aha ‘8B? paimt docs
rmi anticipate Claims E or 18 ofthe W12 patent because it docs not disclose each amd every
element of that claim.
14
1. The ‘88’? Patent docs not disciosa an “(>n-line incentive Pa-ag;-m¤â€
Mr. Boigcfs analysis of Claim 1 ofthe *532 patent ignores the opening section ofthe
cmim. in sh: case ¤fCEaim 1 of the **412 patent, in is nccssssary tc: imk at tha: language 20
asndcrszamd the claim in Su; entirety. Indeed, M¤n·itz’s lawyers apparcmly understood thc
importance of {hat language in its non-infringement opinions. ,$g.__g SPC·€}4i{>~435 at SPO{}419
{"wc imcrprcx thc implementing an cm—Ei¤c incentive program prcamblc language to be a
iimitasicm of Ciaim E") Thcrcforc, in my view, thc analysis must stm wixh the issue of whcihcr
ma *887 patent discicscs tha: implementation of an cn-line inccmévc program.
As discussed in my opening report and above, an an-lim: incemive pmgram in the ‘A¥ 2
patent, acquires a program webpage which permits users to in£¢1’aClWii}1 the incentive program
0n—linc. Thcx ‘887 patcnz disckzscs a webpage through which a user can shop, which may bc
analogous tc $;`lB "prc>duc: h0m¤p&gc" described in me *4iZ patent specification, _$_g_g *412
paicni, ::01. 3, iincs i3-22. The ‘S8? patent docs not disclose any program homepage to
tmplcmcm an cndinc inccmivc program and no webpage which pczmizs me users of an incentive
program to irxiemct with that program. Therefore, {he ‘8B? patent docs nc: disclose the
implementation of an 0n·£inc incentive program.
2. The ‘38'? Patent cicxss not expressiy or inherently disclose the eiements
of determining whether a customer quafifics for award paints or
calculating award points according to 2 prcprogrammcd fcrmuiz.
As Mr. Beige? recognizes, ihc *887 patent docs not dcscribz the claim elements of either
écmmuining whcthar a customer quakifics for award points based cm said uscfs response: to
purchase said as has: one product ar caiculating award points according 20 a prcprogmmmcd
1`uxmula. Man Bcigcr asscris {without significant cxpiicatiunj thai such €i€m€uIs are "inh<:r€nt"
25
in {hc frequent buyer program disclosure of the ‘387 patent. I disagree. The skcichy disclosure
in the *887 pazcm docs not provide any guidance to zhc person nf nzdinary skiil in the m as ac
haw the progmm decides tc} award points to za usefs accmmz or provid: any infurmatian as to
how zhosc points are: caxiculaacd. The program as described in the *887 patent wcmid noi have
disclosed xhcsc elements ¤t`C1aEms 2 and 18 ta the person af ordinary skill in the an.
Th; person of ordinary skill in an would xmdcrsmzad ihai nothing the ‘8S’? patent
discknsura requires that the points be awarded based cm said usc:r‘s response to purshasc a
parxicular pméuci, 0: any product for thai matter. The ‘88'? patent describes zh: frequent buyer
program as being a type of *‘in-store inc
cm simpic presence in ih: electronic "sL0rc" or coupons which may bc ubtaincd from muitipia:
sources, including shopping at other sites. §E *837 patent at co!. 20, iincs 43-46; co]. 23,liz1cs_
4~l2. Therefore, a pczscm of caréinary skiii in the an would understand thm, alnhcmgh an award
of points based 0:2 the decision :0 purchase: a product bought mrcugh the website offering
pmducts for sale is one pussibic way caf implementing thc program described in the *887 patent,
it is not necessary {hat the award of points br: based on such purchases.
Mr. Badger also asserts that it is inherent in the sketchy disclosure of chez *887 patent ihai
th; paints are calzuiaicd "acc0rding 10 a prcprcgrammed formula if said user qualiiécs for said
award p<>ims." Yhe *337 patent does not disclose anything about how the paints are calculated
and ceriainiy does not pmvidc that may am calcuéaccd by the computer sysacm according EO a
prcprcgammcd forrmzia. The person of ordinary skill in thc art would understand that the
CEJIHQQHCK 5)’$f.€H“s CO1J]d CB].Ci.1i&C¤ [BC §)U§i}T$ &CCOId5.flg to E! ]D!“€i}K0g$`&111ll}Gd f-€|l'¥l1¤l3, hui I.;"§§S¥€ is
I6
ee necessiay that il be ealeuiated than way based on the limited disclosure ef the *887* parent.
3. The ‘837 Patent does not disciose award points that are reéeemable
by said user fer an award.
â€Â§â€˜lie ‘88'5 paieni does noi disclose any redemption of points ie obtain an award as
required by Claims 1 and 18. The sole benefit for purchasers in the incentive system described
by she *387 Parent is a discount that is calculated automstiealiy aiier a cusiemer has placed
certain items in his cart. 5;; ‘837 patent, Fig. 13 and cel. 24, line 65 — col. 35, line 5. The
disclosure relating tu "Frec;u.e¤t Buyer h1eentives" describes discounts as the eriiy ineentive
being provided. §_eg igi, aicoi. 27, line 59 — col. 28, Eine I?. As discussed above, such a price
discount at the time of a future purchase from the retailer is not an "award"’ as that term is used
in the *41 2 patent. Therefore, the *887 patent does net diseiose this element of Claim I of the
`412 patent.
B. Claims 1 and 13 of the *412 Patent were Net Rendered Obvious By Assy of
the Combinations uf References Cited
Msritzs experts adsense multiple piissible eumbiriatieiis of references iiiat they assert
wceid render Ciaims 1 and 18 obvious ie the person of ordinary skill in the art, each oi`wbieh l
analyze below.
1. The *887 patent
As discussed above, "immediaey" is net an element 0fClaim l of the ‘4§2 parent.
Therefore, wlieiher or l'EOi1hE! person of erdizaary sicill in the art weuici or would not iind the
immediate award of points fur on-line purchases obvious in iight of she ‘88'7 patent is net
reievaei zo the analysis ofwhetiaer the *887 parent invaiidszes Cleiml of she *4 l2 paienr. For
ilie reasons set forth above, with respect to the anticipation argument, ihe ‘S8'? patent would
S7
eieo not have tendered the invention ot`Claim 1 ofthe ‘el2 patent obvious.
2. The *881 Patent and U.S. Patent No. 5,°?94,21€t (“the *21G patent"}
As with the argument above concerning obviousness in light of the *887 patent alone, the
issue of whether the *210 patent would have renoered the immediate award of points for on-line
purchase obvious is not relevent to the analysis ofthe validity of Claim l of the ‘4l2 patent.
These two references are Rom such cliffercnt fields and take such different approaches to
the provision of incentives that the person of ordinary skill iii the aft would not have been
motivated to combine them. Nothing in Mr. Bolgefs report points to any indication in either of
those pieces or prior ar: that the disclosures shoulo be combined with others such cs the other
reference.
Moreover, even if one weie zo make this combination, the claimed invention would not
have been obvious to the person of ordinazy skill in the ati. Neither of these pieces of prior an
teaches the person ofordinery skill in the art at method or system for providing awards tothe
purchasers uf products tluough an Ititemet webpage. Nor does the ‘2lG potent provide any
disclosure ecnceming orovicling points based on product purchases according to a pre-
programmecl fomtule. Therefore, this combination ofrefercnces would not have tendered the `
invention offflaim l ofthe *412 patent obvious.
3. The Look to Book Program! *444 Patent
The Look to Book program would not have rendered Ciaim i ofthe ‘·4 12 patent obvious.
fig; os Mr, Bulger concedes, the Look to Book program does not disclose the use ofen
internet webpage for any ofthe functions of the progzem. indeed, the specification ofthe *444 A
potent teaches away from the use of new tcelmologiw to implement the program:
18
A key in making {he present invention ccmmcrciaily viabic involves
dcacmsiniag how to implcm¢nt1hc§nvcnii¤n. Since most travel agents work
through rcscrvmiun systcms {described below} that arc aircadjg cstablishcd,
implementing such a system invcnivcs determining how to interact with thc
cxiszing reservation §yS1€m. Col. 3, lines I-5. (emphases addcé).
The ‘444 pazcm also wouid not have suggested the use ofthe Ina:-zmct to czpcsatc zhc Lock
to Book pmgram because the entire focus of that pazcnt was on aha awards to navel agents, a}E
of whom were already electronically rcachabte zhrough the CRS system. Thczrcfczrc. aime
wouid be no reason to look for a different mechanism to bring an incentive program io shan
group. Endeied, even afzcr Radisson ’aegan moving some reservations cpcraiiams to thc imcmczt,
Lock to Bock itself remained a timcticn on thc: CRS systems. _S_;_;:_ CIO a¤ic§¢. Because the
‘¢§44 patzm pzaiscs aha success of sha: Look tm Buck program, gg *444 paicm, Cai. 3, iincs 6·29,
aha: pczmuu czfcrdinary skill in thc ar: at thc timc of thc: invention wcuid not haw believed that ax
need m as new (and largely untested) technology was warranted. Indeed, because the travc!
agents were ak? rcachabic zhscugh thc CRS syszcm and rcgukarly used that system tc engage in
the premise activity by travel agents that Lack ta Book sought 10 encourage, Lock to Book
acmaliy {caches may from using the Ememe: for providing awards?
§_;gg_g_g}_, thc Look to Buck program docs not discicsc ihc ckmcm of rewarding thc
purchase: of thc product Hom an lnicmat webpage for ihcix response to purchase that pmduci.
in {ack, the Lock is Bock program suggests just the opposiic by focusing on thc rewards for tha `
iD£Gf`1'E`1CdiH1'i¤5 iiillhff {HEI?. GEC KCEIJHI pl.HGI"i&$€i'5 Qf {YR? p[`0d`LH$f. 3.5 $15 pC1`SO*I1S Z0 ICSJ£Zi VU axvzmtlas.
S The *444 panama refers no nh: possible use Mother imcwm xcchmiogics fc: the rcccim of izzfommicn by aha
swam system, such as a modem or kiosk, bm docs no: memicm ih: imamez cr suggas: 1ham¤n·CRS systems would
39
Therefore, the person of ordinery skill in the art would not have looked to the ‘4¤§4 patent as
particularly useful source for thinking about operation of o loyalty program for rewarding on—·
line product purchases.
@_j_gg_, to the extern that Claim I requires immediacy es claimed by Mr. Holger, ‘#t»44
patent and is directly et odds with that immediacy requizemenzi Because the Lock to Book
program is offering points based on the booking of reservations, the program contemplates at `
significant waiting period, based on either time or a subsequent event or both. 5,;; *444 pateni
C ol. 5, lines l'/’—44. Thos, she person of ordinary skill inthe art would understand tire disclosure
ofthe ‘-¢t=t»»=l patent, including its discussion ofthe success ofthe Look to Book program
incorporating a substantial waiting period, to teach away from any need for immediacy in the
availability of points.
4. The *887 patent and the “Look to Book†Program
Even if one combines those ove references, the combination does not contain ell ine
limitations of Claim 1 ofthe ‘412. potent.
The person of ordinary skill in the an would not have been motivated to combine the
*387 paienf. and the Look to Book program. The *837 patent relates to the technology For putting
stores onto websites as part of the development oi` lntemeubased commerce. in contrast, the
Look to Book program does not mention the Internet, or shopping through the Internet at all.
Nothing in those references themselves would have led the person ofordinsry skill in the art to
desirable or preferable.
20
have combined them.? l
Nor do any of the other prior an references titat Mr. Bulger cites provide a motivation to
combine the Look to Book program documents or with the ‘387 patent The Coming Age article
would not have motivated the person of ordinary sltiil in the art to move consumer focused
incentive programs to the Internet. indeed, as discussed above, the Cotoiog Age article would
likely have discouraged such movement, as it reflected the continuing difficulties in consumer l
access and use of the Internet in commercial transactions. As éiscosseci above, tho Quinn article _
did not discuss Intemeobased award catalogs ami, therefore, would not have provided a
motivation to combine the *887 patent and the Look to Book program.
5. The ‘88’7 Patent, “Loo§·t to Book’* Program, and the *218 Patent
For the reasons already discussed above, these three references would not render obvious
the *412 patent claims. The addition ofthe *2Et] patent would not add anything to the
combination of the *887 patent and the *2tG patent discussed above.
There would be even less motivation to combine these titre: references. As discussed
above, the ‘2§0 patent does not fall wititin the scope ofthe frequencytloyalry field. The idea ol`
compensating the public directly for reviewing ads over the Internet was very new {and
ultimately not very successful) at the time of the invention. The person of ordinary skill in the
art would not have viewed that patent as relating tothe use ofawartis to irncentivize consumers
relating to on—line pumhase of products.
C. The ‘887 Potent Does Not Anticipate Claims 10, 27 or 36 of the ‘4I2 Fnttsent.
9 The reference to AOL and other proprietary networks in the *887 patent would not have provided such a
motivation, for the reasons set forth ir: Mr. Youngs validity report at ll.
2t
Ciaim 30 provides:
A method fer redeeming ineemive. awards in an omlizzc
incentive program, said method comprising the steps cf;
impiementing an c>n—Eine incentive program that issues
award points to users, wherein said award pcinis are redeemable
by said user for an award;
Implementing an Imemct webpage accessible, via a
computer system, to at least one user ofseid on-line incentive
program for ¤n—Iine interactive communications between said user
and said Imemct webpage;
Offering can said Internet webpage, at ieasx one redeemabkz
award availabic in said user for exchange of said award points, and
Pennitting said user to initiaie a process te receive said at
least one redeemable award fer exchange of said award points
issued to said user through said c»n·1i:ae incentive program.
Claim E? provides:
A computer readable medium comprising a pluraiity ef
instructions, which when executed by ax computer, causes the
computer to perform the steps Gi`:
impicmenting an cm·li¤e incentive program that issues
award points :0 users, wherein said award peims are redeemable
by said user for an award;
Impiememiag an Inzemet webpage accessible, via zz
computer system, to at least one user snfsaid amlizze inceraiéve
program for czvline interactive communications between said user
and said Internet webpage;
Gffering on said Internet webpage, at least one redeemable
award available te said user for exehange efsaid award points, and
Permiuing said uses to initiate a process to receive said at
least one redcemabic award for exchange of said award points
issued to said user through said on-line incentive prugram.
Claim 35 provides:
22
A computer system for implementing an
on an Imcmet webpage, at least cm: rcdccmablc award available zu
said usc: fur cxchuugc ufas lcasa one award puim, and far
pczmining said user to initiate a process to receive at lcasi one
redeemable award for cxchangc of said award points, said award
points bcing issued from said oniine incentive program, and said
Intcmct webpage being accessible to said user for
webpage-
The ‘887 pawn: disclosure docs not disclose each ofthe elements cf Ciaims EG, 2? cz 36
of the ‘412 patent for at least two reasons.
First, as disausscd above at 14-15, the *887 Pawn: docs ram disciosc implementing an
“GH—li¥l€ incentive program? The ‘S87 ?a£cm docs not déscknsc a program webpage {ar any
mechanism for aha! matter} whereby as user can Qmcract 0n·¥in¤ with the incentive program.
Thcrcfuxc, for all ih: masons addrcsmd above, the *887 patent does not disclose an cm—§ine
incentive prcgmm.
Second, as discussed above at i6~'x7, the *887 patcnz docs not discimsc points that are
mdgemabie Fm an award or any “mdcemab!c awardâ€. The offer of discounts on items ahat the
user is going an purchase is mt an “awaré" as that tcm: is zsscé in aha specification of me *412
patem. Mariafs expms incorrectly suggest thai ihc *837 patent discloses an mechanism by which
gms could obtain "&ec pmducts.†§g_c; Ksiicr Rep. at E4. The ‘S3? patent docs mi. describe the
speeitias of me program but refers to what is avaiiabic cumsiszcmiy as "price: éisceumsf Sea
*887 patcm, cul. 27, lincs 66·67; gg; also Bolgcr Supp. Rep. at 5. Thx: use of price discounts as
incentives vmuld not indicate to the parser: of ordinary skili in ihc ara aha: frac products would be
available. Because {he °8S? param does not imr¤§ve the offer caf redeemable awards, iz dams nm
23
disclose any of tire claim elements that require a "redeems‘cie award?
Because the ‘88? patent falls to disclose at least these two elements of Claims 10, 27 and
Llc, those claims are not anticipated
B. Maritz Did Net "Deve1op the Idea of an On-line Award Catalog and On-line
Rederirptioaf Prior to the Invention
My review of the documents and testimony concerning Maritz‘s Goldmail System
indicates that Merit; did not develop the idea of an ori-line award catalog and on·line redemption
prior to the iriventinmm
[jig, the sole source for Mr. Bolger‘s view that tvlaritz wes discussing on-line
redemption is MARI 1340 and E13] E7, dated October t8, l995. That document on its face does
not refer to on·iine redemption, lout grgjg to an on-line catalog. Less than 10 days later, oe
October 27, 1995, the fulfillment process was described more clearly: “Cust0mers order items
via 300 number to Merit:. Customer Service? §gg; MAR we l7$’. Mr. Steinkemp, Mantis
designated witness on its Goldrneil system testified that, when it was launched in Eune @96,
Goldmail used an orsline catalog but used phone, mail and e-mail for redemptions, not on-line
redemption. E Szeinkamp Dep, lS»l9. Moreover, as reflected in MAR 109946 end confirmed
by Mr. Steinl
with teiepiaoee redemption. Therefore, the best interpretation of MARI i34·O is that it refers to
the use of en oreline catalog but not omlirie redemption.
MI. Steinkamp testified that he had no lcnowlectge Gfany work dune on
'° it is unclear from the Maritz expert reports whether amd, il' so, on what eesis, Merit: contends that these
Goidmail documents would constitute prior err or would render any patent claims invalid
24
Golrimail prior to October E3, l995. My review of Mr. S;orey’s testimony indicates that he
invented the invention claimed in the *4 t2 patent before October 18, 1995. @ Srerey Dep. ar
l95—98. Theretore, there Goes not appear to be any evictenee that any alleged invention relating
to Goldmaii was prior to the invention by Mr. Storey.
E. Claims E0, 27 and 36 ofthe ‘4I2 Patent Would Not Have Been Obvious.
I have examined all of the various combinations of references that the Moritz experts rely
on as a basis for their opinion ofobviousness. For the reasons set forth in Section IV, B above,
as well as those set forth below, l conclude that none of those combinations wooié have rerréered
Claims li}, 27 and 36 of the *4 E2 patent obvious.
1. The *444 }’ntertt and ‘88? Patent
Neither of these references discloses rhe on·iine redemption of points for awards. The
*444 patent does not disclose either an on-line awards catalog or on—line redemption. And, as
Mr. Bolger concedes, no form of the Look to Book program discloses on-line redemption of
points for awards. §_g Bulger Rep. at 29 Urodemption did not occur oniine"}. As discussed
above, the ‘887 patenr laeirs several elemenis, innloding in particular the redemption of points for
"awnrds," Thus, even were one to combine these two references, one woolci still not have had all
the elements of the invention of Claims li), 2*3 or35 of the *412 patent.
Moreover, the person of ordinary skill in the art would nor have had any motivation to
combine these two references. The @44 patent does not mention the internet or eiectronio
commerce and does not involve the use of discounts or other consumer-oriented rewards as it is
expressly targeting the travel agent. The *387 patent, in contrast, focuses almost entirely ori the
technology for developing n store for use in Intemet-based commerce and makes only e scant
35
reference to any form of inccmivcs and no mention at all cfa tzadiaianal pninxs-based kayahy
program. Thtzs, as discusscd above: with respect to Claim E of the *412 pazcnt, there would havs
hasn an motivation lc combine lhasa two references.
2. Quinn Article ané Look to Barak program or the *887 patent
As an initial matter, Mr. Bclgcfs reliance on thc Quinn article as representing an "0nlim:
awards analog" is based on a misimm·pr¤1miu¤ of the Quinn mich:. The Quinn article rclatcs to
MariLz’s incentives programs, not its loyalty programs. AEt11¤ug§a it uses thc tczm “cmlinc" tu
describe the catalogs lacing tested by Marina, thc dcscripiinn indicates that thc catalog is bcing
made available Only 0%: 2. private network of {hc clicnfs computers, nn? mn lhs lmcmet. I believe
this interpretation is confirmed by the testimony of Maritfs witnesses ccmceming {hc timing of
Mazitfs introduction of an Imcmc: based awards catalog for its incentives program. Ma1·it2’s
designated wimcss on its incentive program website testified that thc first usc of an Imcmct-
baseci awards catalog for Maritfs incentives program was not until 1998. §_g_c;:“ Lister Dep. at l6·
13*, 2
significant disclosure 10 the discicsurc cf the Lock tc Bock program documents, which include
the disclosure ofscmez sort of an awards calalcg displaycci in a private computer network.
Therefore, the same analysis as :0 thc combination of thc ‘S87 patent with the Lock to Boo};
patcni would apply ic aha combination wizh the Qainn article.
Finally, thc person ofcrdinary skili in lhs an would ncl have been mativatcci ac combine
the Quinn article with cizhcz zhc ‘88? pawn! or the Look to Back program. M:. Beige: slams tha:
Lhc person Ufordinary skill in thc an would have been mutivazcd so combine the teachings GI"
26
each because all of these references "rclatc to incentive programs, and spcciilcally loyalty based
frcqszent buyer programs? @9;; Bulger Rap, at 30. That is an inaccuraac description cf thc nature
of thcsc three rzfcrcnccs. The Look to Bock program is not properly described as a “frcqucm
buyer program" but is instead an incentive program for partners in the distribution channel.
Likewise, the Quinn article is referring to Maritfs inccmivcs programs, which are not frcqacnt
buyer programs at all, In contrast, aha: ‘88? patent is not what thc person uf ordinary skill in me
art would think ofas at loyalty based frccgttcznt bayer program because it uses only a form of
discounting, ROI any sort of reward stmcturc that was associated with standard loyalty programs,
such as those described in the specification of the *412 patent.
3. Luck to Buck Program
Dr. Keller assets (for the first time in his Supplemental Rcpon} that tht-: Lock 10 Book
program alone renders Claim 10 obvious. He concedes that the Lock to Book program docs not
disclose an Intcmczt webpage, but asscns, without providing any basis for believing it is so, that
cnc of ordinary skill in thc an would Iaava known how to operate an incentive program mzcmgh
an Internat webpage and "would have been motivated to do so." With respect to the limitation
rccguiring tha; thc system permit the usa: to initiate thc redemption ofpoints for the award
through the webpage, Dr. Keller asserts that it would have been obvious to use the CRS system
tc arrange for travel awarded through the program. That assertion is bslied by th fact that the
Look to Book program itself was nm operated that way and cléd not permit travel agents to
redeem travel awards through the CRS system.
23
F, Dependent Claims 11-17 and 288:4 Would Not Have Bean Obvious
The asserted dependent claims, Ciaims EE-17 and 28-34 af thc ‘4i2 patent, add
limitations rciating 10 me spccim operation of the c>n·E§nc·: imxcmivc program ciaimed in Claims
N} and 27. Mr. Boigcx paints to various pieces of prior art as containing unc element or ansthcr
of thc asserted claims and asserts xhar aha person cfcrdimry ski!} in thc an wcukd have thought it
obvious to add ihcasc fcahxrcs in {hc other pricr art. In fact, nomic cf thcsc rcfcrcncc ccmiainaiians
zakcs imc accoamt the fact zhat none of these fcaturcs had been used in conjunction with zhc
cpcraxicm of an amine incentive program through 2 webpage, H wcuid ram have been obvious tc
a person of ordinary skill in thc an to take features that had traditionally been performed offiinc
and put ahem imo the Internet scrtiug. Ai! of the arguments made above with respect to the
vaiidity of the independent ciaims apply as wei? to the ass¤:mc& dependent claims and am
iacmpumtcd imc the auaiysis of the dependent claims by reference. I have ako reviewed the
opinions c>f`Mari1z‘s expcns canccming the validity of these: dependent claims ami address the
additional limitations added by lhasa: ciaizrxs bciuw.
1, Claims 11 and 28
Claims 31 and 23 add to the iimitaiians of Claims IG and Z'! the elements of (I}
"acc¤ssing an account of said user"; {2) Wedccming a pasziczdar mv:-ud for said user based cm
said points issued to said user if said usc: has earned sufiiciem points to quakéfy for said
particular award; and {3) subtracting said points {mm said account of said user? Mr. Bulge: ané
Dr, Kcikr asscrz mat shes: ciaims ar: obvious in iight of thc references identified wizh respect 20
Ciaims ID and 27 in combination with a series of additional mfcrcnces.
Ms. Bclgm asscxis that thc snaps mf Claims 11 and 18 "wil! ncccssaxiiy bc pcri`0m1c:d" in
28
the frequent buyer paints program referred to in {he **887 patcutv g Bciger Supp. Rep. aa B3.
He also asseris that ihe addiliuuai steps ¤FC1aims il and IS wceld neceseariiy be perfomued in
the epesaticm of the §viari$z system zeferred to in the Quinn article. In addition to the ether
problems with the supposed disclesurcs of me *887* patent and che Quinn mieke, neither of muse
asaicles actuady describes anything abou! the way ihat the process of redeeming points is
acauaily conducted. Tlzczefcrc, it docs not fcliuw, as Mariws experts suggest, aha: any
disclosure of redemption inherently discloses these specific limitations. Indeed, the prior art
cited by Mariws expens contains at ieasi one example of a. program which permits users to
create a negative hakzmzed §_gg US, Patent No, 5,639,10% {the "` IBB patent") at Cai. 8, lines 49-
65.
ii is $$0 my opinion that Ciaims il and 28 are ne: rendered obvious by any of the other
combinations of references pm forward by Mr. Boiger and Dr. Keller. The *210 patent does not
discuss a paints eecuum for awards but instead desexibes accouzzts containing digitai cash that
can be used ao purchase infcmzazien. The other me references reiied an by Mr. Boiger deal uniy
with incentive programs that are pg; operated through interaction wi1h my kztezeaet webpage.
The ‘ 209 patent describes a debit card program, which perrnits users 10 obiain good or services
by redeeming points at retailers. U.S. Pateni Nc:. 5,805,045 (Wha 7345 patent"} describes the use
of a "smarl card“ for use at merchants to nbtain goods or services.
Mr. Belger does nm pmvide any basis ca wiaich he asserts that e person cfordinary skiii
in the an would be motivated to comhine any of these references with any of the refezcnces ihaa
he assems contain the elements of the indepcndem claims from which Claims i 3 and 28 depend.
AS addressed bclmv, the bmad brush asscrtiuns Mr. Bclgcr makes {IUIIUUHLEHE motivations to
29
combine these references do not withstand scrutiny.
2. Ckaims 22 and 29
Claims 52 and 29 add ic the limitations 0f`C§aims 11 and 27 121: elements c>f(1)
“dis;:1ayi¤g, via said Imcm:1 webpage, a catalczg nf awards redeemable with said award points of
said cm·iinc incentive system; and {2} accepting a selection by said user ahat indicates an award
from said cataE¤g.H
Tha ‘SS7 patent fails to disclcsc a catalog of axvards. lnszeacl, the disclosure ofthe: *387
patent discloses only the offczing ofdisccums on products purchased from a produc: catalog.
The person of oxdinary skill in the an would understand the *4 12 patent to require that thc award
causing be: something other than the produc; catalog listing items fm- sal:. Indeed, Mari;z‘s
counsel agreed wiih this interpretation in his nun-infringement opinions cm which Maritz rclicé.
§g;_ MAR} 1248132.
As discussed above, the Goidmail program, did not discicsc cm-line rcclcmpiioza of palms
and, Qucrefum, even if tha: program ware. combined with misc; zcfcrcmacs {nut spccificaily
icicntificd by Mz. Boigcr), omline redemption would stil} be missing from the combination.
Therefore, that reference combined with the ethz: references cited would not mudc: the
invention 0fClaims I2 zmd 29 cbvicas.
Likawisc, me Lock to Book program did not disclose ciaher an awards cazaiog available
zhmugh an Intcmet wsbpagc or a system that could accept the selection of a usc: from that
imcmet webpage of an award. Therefore, that reference ccmhimeé with the other references
“ 1 ul-mersaand xbm M1-. Bcxlger argues tha: Claims 12 ami 13 are invalid became ahey do ¤¤1¢:·:m-early
dcslgnazn the claims from which they Gcplmd. For purpnsas of my opinion, 1 have been asked uz assume sha: Claim
12 dcpmis from Claim 5 1, rather sham Ciaim E0.
30
med would not render the invcnlion of Claims 12 and 29 obvious.
Th: Quinn article also docs not disclose either an awards catalog available through an
Imcmm webpage cr as system than could accept. lhs sclccaiun cfs uscr from aha; Imcnzc-.:w: webpage
of an award. Mr. Young has also reviewed the disclosure ofthe Quinn article and dctcwnincé
tha; 1hE article does not indica-uc that the use of online in éaal article zcfcrs ta use of the lmemet.
Qgg Young Validity Rep. at I3.
Finally, even if any aftbcsc references in combinasicn xvouici pmvidc each of the
cicmcms of Claims 12 and 29, as discussed in more detail below, there is no H}O[$V&I';O1`l¥O
combine thas: rcfcrenccsg
3. Cizims 14 and 31
Claims 14 and 31 add to the limimions <;•FC§aims 20 and 27 the limitation ¤f"pc1mh:ing
a uscr to review an awards cataiog from said lntcmca webpage that comprises awards
redeemable for said swan:} p¤ims."
Other than the Guldmail documents, none 0i` the references cited by P~;Ia:·§t2’s experts
discloses use nfan lntcmct webpage from which said award catalog is displayed. As discussed
above in detail bath zhc Look tn Buck ?rog:am and ihc Quinn article arc addressing only me use
of award catalogs cm private compute: systems. The Exprcssnct press release docs not éisciosc
eitlscr an awards catalog or the review cf an awards catalog from an IHYETHEI webpage and the
Hilton press release docs not discios anything about the review ui an award cazaiog from an
lmcmct webpage. Tlwercforc, the combination cfany of lh: cited references with éhosc
*2 Dr. Keller also asserts aha: claims I2. 13. 29 amd 30 are indeiinizc. I disagree wizh his analysis. The parscse
uf ordinary skill in she an would be able an easily undsrsmznd aha scape of lhasa claims.
32
rcfemnccs wcuici bc Eacking the cicmanz of an awards catalog that the user can review from an
Ememcl webpage.
The Guldmail dccumcnas disciczsa only a vague inzcmioa m use an 0n·lina cataiag, the
details cf which are zmcicar. Moreover, as discussed above, Lhcrc was no discussion in those
ciccumems of 011-1inc mécmpticnp
Finally, as set forth below in more detail, neither of Mari1z’s experts has provided a basis:
for concluding that the person of ordinary skill in the art would haw: been motivated to combine
thas: references with any other particuiar rzfcrcnccs.
4. Ciaims 15 and 32
Claims 15 and 32 adds zo zh: limitations ofC1aim 10 and 27 the iimization 0f"pcm§a1§::g
a usc: to review an account from said internet webpage for said user, wherein said acccaum
¥•:H¤cts an amount of said award points credited tc said ssscr."
None of the references cited wuuid havc, in combination with 01hcr references, rendered
thc. invention of Claims I5 and 32 obvious. As discussed above, two cfthc references citcd [thc
Lock to Bock pmgram!’444 pamnt and the Quinn aniclc) do not disclose the limitaiicn because,
as cxplmned above, they do not disclose use of an inzcmct webpage at alk. Likewise, aha
American Express press rclcasc docs not rcfcr xo thc usc of an lmcmct webpage, but only to usc
of AOL's proprietary computer nciwork. gg "Exprcssn¢£ from American Express Debut Oil
America Online" {January 30, 1995 press release) (Exprcssmzt availabis: exclusively cm AOL}.
Therefore, name caf xhcse references can he said uu disclose the c§cmcm of permitting a usc: 10
’·’ Mari¤z's use ofthe Gcicimaél dowmcnzs in this manner raiscs Bm question of on wha; basis Marie: ccmmds
mas: dccumcnzs could possibiy consmme any cawgary of prior an recognized by § 202. Neither af Ma1i1z‘s cxpcris
addresses mis point in their reports.
32
review an account from such Internet webpage. Therefore, ihe oniy references to which M:.
Bolger cites that use internet webpages and make some reference to checking user accounts are
the two acivcrtiscmcnt—¤eading programs (the Goidmaii documents and the *2lG ptttciit} and the
Hilton press release iviarEtz`s experts do not captain any basis on which one could conclude that
the person of ordinary skiti in the axe wouid have been motivated to combine these enumerated
references with any reference or references that is claimed to disclose the other aiamanis of the
asserted claim,
5. Claims I6 and 33
Claims 16 and 33 add to the limitations 0f`Ctaim ii} and 27 the timitation of "pez·mitting a
user to preview information about said oo.-line incentive program fiom said Internet webpage?
Most of the prior art tcfcrciices that Mr. Bulger asserts contain this timitatiun do not
disclose the use of an {meme! webpage at all and, therefore, cannot be said to disclose offering a
user the abiiity to preview infomation “from said Internet svebpagef As discussed above, the
*444 patent, the Look to Book program documents} the Quinn article and the American Express
press release do not describe use of an Internet webpage at ali.
ivioreover, the person of ordinary skili ia the art would not have been motivated to
combine any of the semairtiug references with the *837 patent and, therefore, those combinations
do not render these claims obvious.
6. Claims ITF and 34
Claims I? and 34 adds to the limitations ot`Ciaims it) and 27 the limitation of
“pe:mitting a user to appiy for membership to said on—line incentive program from said internet
ivabpage?
33
Scvcrai of the rcfarcnccs cited by Mz. Bulger as disclosing this eiemcm do not do so
because they do nm include an intemct webpage at all. Ncithcr the *444 patcntidocumcms
canccming rhs Look to Book pmgram nor Sic American Exprcss ?rcss Release discloses usc cnf
an Intcmc; webpage, and therefore, would not have provided the claimed element to a
combination. The *210 patent and Gcldmail program dcczzmcnas do have some limited
disclosures relating ic pcrmiating a participant in zhcir programs fur rewmiing she mariers of
aévcniscmcnts sent ta them to apply 10 participate through aha: website. Noncihciess, ihcse
disclmsurcs would 1101 render these claims obvious so the person of ordinary skill in thc an
because there would bc no motivation to combine these references with any of the prior art
Maria; relics upon to make iis argument tha; the independent ciaims were obvicus.
G. Mutivatiozs to Combine
Mr, Bulger docs nm provide any spcciiic analysis of thc motivation so combine: thc prim
art that hc pieces mgcihcr 10 mak: his cbvicusncss analyses for any of the dependent claims.
lnszcad, he presents cmféy an omnibus view that the person of ordinary skill would be generally
motivated to combine the vméous pieces ofpricr art ciacd. Because of this unciiffcrcnziaicd
approach 20 the motivation 20 combine references, it is impossible to know what exactly Maritz
comancis would have motivated the person of ordinary skill in the an 10 combine any parricmlar
scr of references. Sh0u§d Mr, Bclgcr at soma paint provide more detail as ao motivation xc
combine any paxiicular scts of references, 1 will respond to ahcsc more detailed assertions if
necessary. M
'* Dr. Kelles‘s Supplcmcmal rcpon pmvidcs nvm more cunciuscry szatzmcms of ih: alleged mmévaaion to
cumhine. I zdcfress Mr. Bclgcfs assertions spnczitically but nl} of tha opinions herein are cqwaéiy applicablz :0 Dr.
§<¤1\m·’s aver: more general analysis. Should Dr. Keller cffcz more detail,} will respcnd za his assenicns as wel},
34
Mr, Bciger asserts that the moiivaticn tu combine arises from aha “na1urc of the problem
aédr¤sscd" by the *412 patent, which hc dcscribcs as "h¤w to inczcasc consumcr frequency and
loyalty to a. b¤siness' c—<:<>mm¤rc¤ website? ida not agrac with thai description of thc pmbicm
addressed by the *412 patent. Thu: sp¢ci§caticm of thc-: *412 patent describes a series of pmblcms
with thc prevailing methods for operating ioyalty/frequency programs at that iima. Om: sp¢cii¥c
problem identified with those programs is that “thc customer gcncraliy needs tc plan ahead in
sufiicicm time to crécr and receive the award cm1%§s:atc" or "thc pmbicm of obtaining the credit
instrument for redeeming thc axvarded paints? $3;; Col. 1, lines 38-40, 52-55. Another problem
identified in Qhc specification of the *412 patent was thc time lag bciwccn the customer aaking
thc action hciag incantivizcd and the award cfpaims, such as the situation when a perscm books
u flight but dom not rcccivc points until afzcr ncmally taking thc {Hgh:. §_qg Cot. 1, iincs 22-24.
The specification docs noi discuss thc needs of businesses in cwsommczce, but instead focuses on
improvements zo the opcrazicm of Rcqucncy and award redemption programs. Moreover, I do
nm see imw, evan if one accepted the charactcnizatéczz of the pmbicm made by Mr. Bclger, is
svculd motivate the person ofurdinary skill in the art Ec combine ihc many references aha: Mr.
Bolgezr relics on wiwich are 1101 rciatcd zo zhc operation of cwzcmmzzme websites.
Mr. Bulger inccmecxiy asserts thai aii of the prim act references included in his report are
within zh: sar:zcj
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