iVenture Card Traveler Ltd v. Smart Destinations, Inc. (PTAB 2016)

McDonnell Boehnen Hulbert & Berghoff LLP

Patent Directed to Programmable Ticketing System Determined to be Eligible for Covered Business Method Patent Review

Petitioner, iVenture Card Traveler Ltd, filed a Petition seeking to institute a covered business method patent review of all claims of U.S. Patent No. 7,765,128, owned by Smart Destinations, Inc.  The Board, applying the standard that requires demonstration that more likely than not Petitioner would prevail with respect to at least one challenged claim, the Board granted Petitioner's request to institute the CBM review.

The '128 Patent

The '128 patent is titled "Programmable Ticketing System."  The '128 patent describes a system and business model for allowing tourists access to a variety of attractions using a passcard.  The system may include reward terminals that are located at attractions and are configured to read smart cards presented to them and, assuming the card is valid for that location, allow the card holder to access the attraction.  Each smart card may be programmed with a product code that defines the attractions at which the card may be used.  Product codes may be stored in a central database along with a list of the attractions associated with each product code.  The list of attractions may be updated as desired, thereby updating and changing the attractions at which any given card may be used.

The subject matter of the '128 patent is illustrated by Figure 2 of the patent, which is reproduced below:

FIG. 2

The reward terminals are configured as smart card readers.  Reward terminals are located at each partner attraction and can read cards presented to it to indicate whether or not a card-visitor has access to the attraction.  A database is updated over a network with nightly downloads to the terminals of any changes to products that use the attractions (and the cards that, therefore, allow access) and uploads to the database of actual use data.  A user interface allows a system manager to access the system network and run programs on gateway or store or retrieve data from database.  A central controller is used to calculate compensation for each attraction based on level of use, e.g., the compensation for allowing the bearer of each card access to the attraction.

Thus, owners of cards have access to multiple attractions without having to pay separately for each attraction.  Rather, a person may simply pay once for a card and use that card to access attractions that are partners of the system.  Attractions may be paid by the system manager, at the end of a day, week, month, or other time frame, access fees corresponding to all the cards that have been used at that attraction during the time period.

Claim 1 is representative and is reproduced below:

1.  A manager system that permits access to a plurality of attractions, the system comprising:
    a network interface configured to:
        receive data corresponding to actual use of reward terminals to access respective attractions of the plurality of attractions for a time period, the reward terminals being located in proximity to the plurality of attractions, being configured to access the respective attractions using at least one product code, the data identifying at least one attraction; and
        provide at least one product definition to the reward terminals, the at least one product definition including associations between the at least one product code and the respective attractions, whereby a change in the associations between the at least one product code and the respective attractions changes the access to the respective attractions via the reward terminals using the at least one product code;
    a database to store the at least one product definition;
    a database to store the data corresponding to the actual use of the reward terminals to access the attractions; and
    a controller to calculate an aggregated compensation for each attraction based on the actual use of the reward terminals to access the respective attraction by a plurality of users, wherein the controller does not compensate the attractions based on the actual use of the reward terminals at a time of the actual use of the reward terminals via a card.

Standing-Financial Product or Service

A covered business method patent is "a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service."  AIA § 18(d)(1).

This prong was easily met since all independent claims cover methods or systems for calculating aggregated compensation.

Standing-Technological Invention Exception

The AIA excludes from covered business method patent review patents for a "technological invention."  AIA § 18(d)(1).  To determine whether a patent is for a "technological invention," the Board considers whether the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution.

Petitioner argued that all of the claim elements of the '128 patent were known in the prior art, and specifically that everything illustrated in Figure 2 of the '128 Patent, and described in the accompanying text, was conventional technology used in conventional ways before the asserted priority date.  The Petitioner further relied on testimony from its expert to demonstrate that each of the steps of each of the method claims and each of the elements of each of the system claims are present in the prior art.

The Board agreed, and found that the '128 patent is directed to a business problem, in contrast to a solution to a technical problem.  Among other reasons, the '128 patent itself describes the invention as "a system and business model for allowing tourists access to a variety of attractions."  Further, the claims were found to be directed to solving the business problem of calculating aggregated compensation based on actual use, as recited in the claims.

The Board thus agreed with Petitioner's analysis demonstrating that the claims address a business problem of calculating compensation and apply standard known computer components to achieve this business goal.

Thus, the exclusion for "technological inventions" was not found to apply here.  Thus, the '128 patent was found to be a CBM eligible patent for review.

Subject Matter Eligibility Under 35 U.S.C. § 101

Now that the '128 patent was found to be eligible for CBM review, the Petitioner still has to establish that the claims are more likely than not invalid for the CBM trial to be instituted.

The Petition challenged the '128 patent claims as directed to unpatentable subject matter under 35 U.S.C. § 101.

The Board followed the two-step framework set forth by the Supreme Court for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts.

In the first step, the Board determines whether the claims at issue are directed to an abstract idea.

The alleged abstract idea was that the claims are directed to calculating aggregated compensation for attractions based on actual usage (over some period of time, but not at the actual time of use).  The Petitioner asserted that using a card to access an attraction and calculating aggregated compensation based on actual use of the attraction have been disclosed in the prior art.  The Petitioner referred to prosecution of the application for the '128 patent, in which the applicant specifically distinguished the claims over prior art based on calculating "aggregate compensation  . . . wherein the controller does not compensate the attractions based on the actual use of the reward terminals at a time of the actual use of the reward terminals via a card."

The Board was persuaded by this reasoning.  This is a little confusing given that claims were found to be directed to an abstract idea simply because aspects of the claims were disclosed in the prior art.  Whether the claims recite "known" material should be addressed under novelty and obviousness -- not as a threshold for determining whether the claims recite subject matter eligible for patenting.

In any event, the Board turned to the second step, in which the Board considered the elements of each claim both individually and as an ordered combination to determine whether the additional elements transform the nature of the claim into a patent-eligible application.

The Board found that the claim elements recite off-the-shelf general purpose computing tools such as terminals and card readers, smart card technology, servers, standard databases, and a controller.  Thus, the Board easily found that claims of the '128 Patent merely teaches using generic computers, and computer components, to perform generic functions that do not improve the functioning of the computing devices or network communications and are not used in an unconventional way.  As a result, the Board was persuaded that the claims do not recite an inventive concept.

Thus, the Board determined that the Petitioner had made a sufficient showing that it is more likely than not to prevail on its challenge under 35 U.S.C. § 101 to at least one of the '128 patent claims.  As a result, the CBM trial was instituted.

Not a surprising result from the Board here, but another example of mixing analysis of patentable subject matter with novelty/obviousness, which is seen quite often for software patents these days.

Before Administrative Patent Judges Thomas L. Giannetti, Rama G. Elluru, and Christopher M. Kaiser
Decision by Administrative Patent Judge Thomas L. Giannetti

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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