Kroy IP Holdings, LLC v. Safeway, Inc.,

Filing 90

MEMORANDUM AND OPINION. Signed by Magistrate Judge Roy S. Payne on 06/04/2014. (nkl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
KROY IP HOLDINGS, LLC,
Plaintiff,
v.
SAFEWAY, INC. et. al.,
Defendant.
KROY IP HOLDINGS, LLC,
Plaintiff,
v.
THE KROGER CO.,
Defendant.

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Civil Action No. 2:12-cv-00800-JRG-RSP

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Civil Action No. 2:13-cv-00141-JRG-RSP

MEMORANDUM OPINION AND ORDER
On April 9, 2014, the Court held a hearing to determine the proper construction of the
disputed claim terms in United States Patent No. 7,054,830. After considering the arguments
made by the parties at the hearing and in the parties’ claim construction briefing (Dkt. Nos. 47,
52, and 62), the Court issues this Claim Construction Memorandum and Order.

Page 1 of 49 

TABLE OF CONTENTS
I.

BACKGROUND ................................................................................................................ 3

II.

APPLICABLE LAW .......................................................................................................... 7

III.

CONSTRUCTION OF AGREED TERMS ........................................................................ 9

IV.

CONSTRUCTION OF DISPUTED TERMS ................................................................... 11
A.
B.

“a sponsor-selected specific award unit item”..................................................... 20

C.

“sponsor-selected consumer user” ....................................................................... 24

D.

“demographic … preferences” ............................................................................ 28

E.

“psychographic preferences” ............................................................................... 31

F.

“provider” ............................................................................................................ 36

G.

“inventory management system” ......................................................................... 40

H.
V.

“a sponsor-selected geographic location for fulfillment” .................................... 11

“host” and “host computer” ................................................................................. 45

CONCLUSION ................................................................................................................. 48

Page 2 of 49 

I.

BACKGROUND

Plaintiff brings suit alleging infringement of United States Patent No. 7,054,830 (“the
‘830 Patent”) titled “System and Method for Incentive Programs and Award Fulfillment.” The
‘830 Patent issued on May 30, 2006, and was filed on October 5, 1999.
The ‘830 Patent generally relates to a computer-based system that permits sponsors to
create and administer incentive programs targeted to consumers.1 The specification describes
incentive programs as offering awards and incentives to modify behavior of individual
consumers and to direct the consumers to some pre-determined action, such as purchase of
products or services upon visiting a retail site, viewing advertising, testing a product, or the like.
‘830 Patent at 1:39–43. The specification further states that companies may use awards and
incentives to increase awareness of product offerings, to attract the attention of a newly
identified audience, to encourage certain behavior, to obtain information, and for other purposes.
Id. at 1:43–48.
Regarding known systems at the time of filing, the specification states that these “systems
do not offer sponsors the ability to conveniently generate incentive programs, to track
participation of consumers in multiple incentive programs, or to provide for automated
fulfillment of awards.” Id. at 4:20–24. Specifically, the specification states:
[C]urrent incentive program and award systems available over the Internet are
quite limited. First, most systems are limited to a specific type of incentive
program or to products and services of a single sponsoring company. Also, most
such systems require a sponsoring company to use an independent contractor to
code the computer software necessary for running the incentive program. Further,

1

The Abstract of the ‘830 Patent follows:
A method and system for providing incentive programs over a computer network
is provided in which a host may provide sponsoring companies with the capability
to buy prepackaged or self-built incentive programs, offer such incentive
programs to consumers, provide sponsoring companies and retailers with the
capability to associate prizes with incentive programs, provide sponsoring
companies, retailers and consumers with convenient fulfillment of prizes, and
store and manipulate databases regarding all of the foregoing. 
Page 3 of 49 

most such systems rely on conventional mechanisms for award fulfillment, such
as issuing a paper certificate to the customer by mail that is redeemable at a retail
location of the sponsoring company.
Id. at 5:17–25. Thus, according to the specification, “[t]he present invention provides a new
incentive program and award system for using a computer network, preferably the Internet, to
provide consumer access to expanded incentive programs using a conventional computer, to
permit sponsors to build, buy, store, modify, offer, track and administer incentive programs and
to permit sponsors and retailers to offer improved award fulfillment for participants in incentive
programs.” Id. at 5:47–54.
Figure 2 provides a high-level overview of a system architecture for the disclosed system.

‘830 Patent at Figure 2. Referring to Figure 2, the specification describes that “a consumer
computer 12, a sponsor computer 14, and a retailer computer 16 are connected by a
telecommunications connection 38 over the Internet to a host computer 18.” Id. at 10:39–43.
Page 4 of 49 

The specification describes that a sponsor may access the host computer (18) using a sponsor
computer (14) to create an incentive program.2 Id. at 17:6–21. The specification adds that the
sponsor may either obtain pre-packaged incentive programs or build new incentive programs by
entering the parameters of and associating awards with the sponsor’s incentive programs. Id. at
6:13–19, 14:3–10, 14:23–46, 14:63–15:5. For example, the specification states that a set of
computer programs may prompt the sponsor for the parameters needed to build a new promotion
or incentive program, such as type of program, duration of the promotion, target participants,
associated awards, conditions to obtain awards, etc. Id. at Figures 11–12, 30:47–53, 31:55–
32:20, 35:3–22. The specification states that the host computer then creates the underlying
software code to implement the sponsor designed incentive program, creates HTML pages with
appropriate graphics, text and fields for the end customer, and stores records and other
information in appropriate databases. Id. at 32:21–24, 33:12–52.
After the incentive program is created, the specification states that consumers may
participate in the incentive programs by using a consumer computer (12) to interact with a
consumer section of web site hosted on a server of a host computer (18).3 Id. at 12:18–33. The
specification notes that the incentive programs could include a variety of games, or,

2

The specification defines the term “host” as “any individual or company who wishes to
provide a system for permitting sponsoring companies to offer incentive programs to consumers,
employees, suppliers, partners and the like of the individual or company, and for creation of
databases of retail, catalog, sponsor and other items that permit automated fulfillment of specific
items listed in computer inventory systems of retailers at a retail location.” ‘830 Patent at 8:10–
17. The specification defines the term “sponsor” as “any individual or company that wishes to
offer an incentive program or promotion.” Id. at 7:51–53.
3

The specification defines the term “consumer” as “any individual or user who wishes to
participate in awards or incentive programs offered by sponsors. Consumers may be third parties,
such as partners or suppliers, may be employees of sponsors, or may be customers of the
sponsor’s merchandise or the merchandise of third parties; thus, the present invention is intended
to encompass systems and methods by which a company offers incentive programs to individuals
within its organization, such as via a computer intranet, as well as systems and methods for
providing incentive programs to third parties via external computer networks.” 830 Patent at
7:65–8:9.  
Page 5 of 49 

alternatively, may include entering data, completing surveys, clicking on one or more icons in a
pre-determined manner, or other “win eligible” activities, such as answering questions or
participating in a customer loyalty program. Id. at 13:40–48, 30:57–31:3. The specification also
describes that the consumer may be provided with an electronic card for storing information
associated with the consumer for use when the consumer redeems an award at a retail point-ofsale device. Id. at 6:46–51, 13:25–39, 22:17–31, 42:4–15.
The specification further states that the disclosed system permits sponsors to target
incentive programs and awards to categories of consumers based on consumer demographic and
psychographic preferences. Id. at 42:43–44. The specification adds that this information may be
obtained during consumer registration, from tracking consumer participation in incentive
programs, and/or from consumer responses to specific inquiries. Id. at Figures 16–17, 13:3–25,
15:16–23, 18:43–54, 31:37–40, 41:62–67. The specification also states that the sponsor may
also provide parameters that control award fulfillment and redemption, which are stored in a
database. Id. at 6:13–19, 20:13–16, 21:58–63, 41:11–20, 46:42–56.
Finally, the specification describes that retailers may participate in the fulfillment or
delivery of awards to consumers.4 Id. at 6:20–23, 7:54–56. The specification describes that a
retailer can access the system via a retailer computer (16) to make retail items in their inventory
available to sponsors for association with incentive programs as awards. Id. at 11:33–52, 15:31–
47. The specification further provides that the “system may further include an electronic data
interchange 126 from the retailer computer 16 to a retailer inventory system 212, which permits
access between the retailer components and the host computer 18 over the Internet.” Id. at
10:47–50. The specification also states that an entity may have the dual roles of both retailer and

4

The specification defines the term “retailer” as “any individual or company that wishes to
provide awards and prizes to be associated with incentive programs.” ‘830 Patent at 7:54–64.
Page 6 of 49 

sponsor of an incentive program. Id. at 21:15–17.
Claim 19 is asserted in this case and recites the following elements (disputed terms in
italics):
19. A method for providing an incentive programs and automating
award fulfillment, comprising:
providing a host computer;
providing an incentive program on the host computer,
wherein a participant may participate in said incentive
program;
providing a database of awards on the host computer
associated with the incentive program; and
providing automated award fulfillment of said awards to
participants, including providing communication with an
inventory management system associated with each of a
plurality of providers wherein said automated award
fulfillment comprises
providing sponsor-selected fulfillment comprising
providing a sponsor-selected specific award unit
item,
providing said sponsor-selected specific award unit item
tailored according to demographic and
psychographic preferences of a sponsor-selected
consumer user, and
providing a sponsor-selected geographic location for
fulfillment.
II.

APPLICABLE LAW

“It is a ‘bedrock principle’ of patent law that ‘the claims of a patent define the invention
to which the patentee is entitled the right to exclude.’” Phillips v. AWH Corp., 415 F.3d 1303,
1312 (Fed. Cir. 2005) (en banc) (quoting Innova/Pure Water Inc. v. Safari Water Filtration Sys.,
Inc., 381 F.3d 1111, 1115 (Fed. Cir. 2004)). To determine the meaning of the claims, courts start
by considering the intrinsic evidence. See id. at 1313. C.R. Bard, Inc. v. U.S. Surgical Corp.,
388 F.3d 858, 861 (Fed. Cir. 2004); Bell Atl. Network Servs., Inc. v. Covad Commc’ns Group,
Inc., 262 F.3d 1258, 1267 (Fed. Cir. 2001).

The intrinsic evidence includes the claims

themselves, the specification, and the prosecution history. See Phillips, 415 F.3d at 1314; C.R.
Page 7 of 49 

Bard, Inc., 388 F.3d at 861. Courts give claim terms their ordinary and accustomed meaning as
understood by one of ordinary skill in the art at the time of the invention in the context of the
entire patent. Phillips, 415 F.3d at 1312–13; Alloc, Inc. v. Int’l Trade Comm’n, 342 F.3d 1361,
1368 (Fed. Cir. 2003).
The claims themselves provide substantial guidance in determining the meaning of
particular claim terms. Phillips, 415 F.3d at 1314. First, a term’s context in the asserted claim
can be very instructive. Id. Other asserted or unasserted claims can also aid in determining the
claim’s meaning because claim terms are typically used consistently throughout the patent. Id.
Differences among the claim terms can also assist in understanding a term’s meaning. Id. For
example, when a dependent claim adds a limitation to an independent claim, it is presumed that
the independent claim does not include the limitation. Id. at 1314–15.
“[C]laims ‘must be read in view of the specification, of which they are a part.’” Id.
(quoting Markman v. Westview Instruments, Inc., 52 F.3d 967, 979 (Fed. Cir. 1995) (en banc)).
“[T]he specification ‘is always highly relevant to the claim construction analysis. Usually, it is
dispositive; it is the single best guide to the meaning of a disputed term.’” Id. (quoting Vitronics
Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1582 (Fed. Cir. 1996)); Teleflex, Inc. v. Ficosa N. Am.
Corp., 299 F.3d 1313, 1325 (Fed. Cir. 2002). This is true because a patentee may define his own
terms, give a claim term a different meaning than the term would otherwise possess, or disclaim
or disavow the claim scope. Phillips, 415 F.3d at 1316. In these situations, the inventor’s
lexicography governs. Id. The specification may also resolve ambiguous claim terms “where
the ordinary and accustomed meaning of the words used in the claims lack sufficient clarity to
permit the scope of the claim to be ascertained from the words alone.” Teleflex, Inc., 299 F.3d at
1325. But, “‘[a]lthough the specification may aid the court in interpreting the meaning of
Page 8 of 49 

disputed claim language, particular embodiments and examples appearing in the specification
will not generally be read into the claims.’” Comark Commc’ns, Inc. v. Harris Corp., 156 F.3d
1182, 1187 (Fed. Cir. 1998) (quoting Constant v. Advanced Micro-Devices, Inc., 848 F.2d 1560,
1571 (Fed. Cir. 1988)); see also Phillips, 415 F.3d at 1323. The prosecution history is another
tool to supply the proper context for claim construction because a patent applicant may also
define a term in prosecuting the patent. Home Diagnostics, Inc., v. Lifescan, Inc., 381 F.3d 1352,
1356 (Fed. Cir. 2004) (“As in the case of the specification, a patent applicant may define a term
in prosecuting a patent.”).
Although extrinsic evidence can be useful, it is “‘less significant than the intrinsic record
in determining the legally operative meaning of claim language.’” Phillips, 415 F.3d at 1317
(quoting C.R. Bard, Inc., 388 F.3d at 862). Technical dictionaries and treatises may help a court
understand the underlying technology and the manner in which one skilled in the art might use
claim terms, but technical dictionaries and treatises may provide definitions that are too broad or
may not be indicative of how the term is used in the patent. Id. at 1318. Similarly, expert
testimony may aid a court in understanding the underlying technology and determining the
particular meaning of a term in the pertinent field, but an expert’s conclusory, unsupported
assertions as to a term’s definition are entirely unhelpful to a court. Id. Generally, extrinsic
evidence is “less reliable than the patent and its prosecution history in determining how to read
claim terms.” Id.
III.

CONSTRUCTION OF AGREED TERMS

The parties have agreed to the construction of the following terms:
Claim Term/Phrase
“sponsor”5

Agreed Construction
“any individual or company that wishes to offer an

5

Consistent with the parties’ agreed construction, the specification defines the term “sponsor”
Page 9 of 49 

“plurality of providers”

incentive program or promotion”
“two or more providers”

“plurality of sponsors”

“two or more sponsors”

6

Joint Claim Construction Chart, Dkt. No. 41 at 1–2. In view of the parties’ agreements on the
proper construction of each of the identified terms, the Court hereby ADOPTS AND
APPROVES the parties’ agreed constructions. The parties also agree that that the terms “first
database,” “sponsor-selected fulfillment,” and “geographic proximity” do not require
construction. (Dkt. Nos. 52 at 33; 62 at 4 n.1.) Pursuant to the parties’ agreement, the Court will
not construe these terms.
During the hearing, the Court provided the parties with proposed constructions for the
disputed terms/phrases.

The parties agreed to the Court’s proposed construction for the

following terms:
Claim Term/Phrase
“automated award fulfillment”

Agreed Construction
No construction necessary

“associated with each”

No construction necessary

“incentive program”

“any program for creating incentives”

“award”

“all types of incentives, including merchandise,
coupons, points, cash, services and other forms
incentives”

In view of the parties’ agreement on the proper construction of each of the identified terms, the
Court hereby ADOPTS AND APPROVES the parties’ agreed constructions.

as “any individual or company that wishes to offer an incentive program or promotion.” ‘830
Patent at 7:51–53.
6

The term “provider” as used within the phrase “plurality of providers” remains in dispute.
(Dkt. No. 41 at 1.)
Page 10 of 49 

IV.

CONSTRUCTION OF DISPUTED TERMS

The parties’ dispute focuses on the meaning and scope of nine terms/phrases in the ‘830
patent.
A. “a sponsor-selected geographic location for fulfillment”
Disputed Term
“a sponsorselected
geographic
location for
fulfillment”

Claim
Plaintiff’s Proposal
1, 6, 11, No construction necessary.
19, 26-28
If construed, the term means:
“one or more places selected
by a sponsor for fulfillment”

Defendants’ Proposal
“specific store where award
can be redeemed selected by
the sponsor (not the
consumer)”

The parties dispute whether the phrase “a sponsor-selected geographic location for
fulfillment” requires construction.7 Plaintiff contends that the disputed phrase is not ambiguous
in the context of the claims and therefore does not require construction. (Dkt. No. 47 at 34.) In
the alternative, Plaintiff contends that the disputed phrase has a broad and easily understandable
meaning derived from the ordinary meanings of the chosen words “geographic” and “location.”
(Dkt. No. 47 at 34.) Plaintiff argues that the well-established meaning of “geographic location”
refers to and includes any designated place, and is not limited to a “specific store.” (Dkt. No. 47
at 35.) Plaintiff references dictionary definitions for the terms “geographic” and “location,” and
concludes that the term “geographic location” applies to any identifiable place, region, territory,
area, etc. within the greater earth. (Dkt. No. 47 at 35–36.) Plaintiff argues that a store location is
one example of a geographic location, but not the only type. (Dkt. No. 47 at 36.) Plaintiff notes

7

Defendants propose construing both the shorter phrase “geographic location for fulfillment”
and the longer phrase “sponsor-selected geographic location for fulfillment.” Defendants did not
provide a persuasive reason for construing these phrases separately. (Dkt. No. 52 at 9.)
Moreover, Defendants’ proposed construction for “geographic location for fulfillment” is
included in their proposed construction for the phrase “sponsor-selected geographic location for
fulfillment.” Accordingly, the Court will construe the longer phrase “sponsor-selected
geographic location for fulfillment.”
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that the claims do not recite providing “a specific store” for fulfillment. (Dkt. No. 47 at 36.)
Plaintiff further argues that each of the claims at issue recite the open-ended transitional
phrase “comprising,” and therefore the presumption that the article “a” means “one or more”
applies. (Dkt. No. 47 at 36.) Plaintiff contends that nothing in the claims, specification or
prosecution history file requires that the invention must be implemented by the sponsor selecting
a single store for redemption. (Dkt. No. 47 at 36.)

Instead, Plaintiff contends that the

specification expressly describes the designation of multiple locations. (Dkt. No. 47 at 37.)
Plaintiff also argues that claims 4 and 9 indicate that the sponsor-selected geographic location is
not confined to being a store location. (Dkt. No. 47 at 37–38.) Finally, Plaintiff contends that
neither the patent specification nor its prosecution history supports Defendants’ construction of
the disputed phrase. (Dkt. No. 47 at 38–40.) Instead, Plaintiff argues that the implementation
where the consumer is directed to a particular store to redeem an award is only one possible
embodiment, and that the specification contains no limiting language requiring that a sponsor
must always designate a single store for redemption. (Dkt. No. 47 at 38–40.) Plaintiff further
contends that the prosecution history supports its construction. (Dkt. No. 47 at 40.)
Defendants respond that their construction for the term “geographic location” finds
support throughout the intrinsic record. (Dkt. No. 52 at 9.)

Defendants contend that the

specification expressly discloses that the invention makes use of databases to identify the nearest
retail location for fulfillment, which means that the location must be a specific store and not a
geographic location. (Dkt. No. 52 at 9–10.)

Defendants also contend that the patentee’s

argument to the Patent Office relinquished any potential claim construction that would cover a
retailer limiting incentives based on a geographic region. (Dkt. No. 52 at 10–11.) Defendants
further argue that Plaintiff improperly relies on dictionary definitions to overcome Defendants’
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arguments. (Dkt. No. 52 at 12.) Defendants also argue that the strong presumption that the
article “a” means “one or more” is overcome by the prosecution history. (Dkt. No. 52 at 13.)
Defendants also suggest that arguments made in a foreign counterpart application are relevant
evidence and should limit the claims to a specific store. (Dkt. No. 52 at 13–14.)
Regarding the term “sponsor-selected,” Defendants contend that the patentee disclaimed
a consumer selecting the location for fulfillment. (Dkt. No. 52 at 15.) In making this argument,
Defendants ask the Court to find not only that the sponsor must select at least one specific
location for fulfillment, but that the sponsor must only select a single location, and that the claim
language cannot be met if a sponsor selects additional geographic locations. Defendants first
argue that the claims state “sponsor-selected” and that the only logical inference is that the
geographic location for fulfillment is not consumer selected. (Dkt. No. 52 at 15.) Defendants
further argue that the patentee disclaimed consumer selection of a fulfillment location by arguing
to the Patent Office that the sponsor, and not the consumer, selects the geographic location for
fulfillment. (Dkt. No. 52 at 15.) Defendants also argue that the patentee disclaimed consumer
selection of a location for fulfillment in arguments before the European Patent Office. (Dkt. No.
52 at 15–16.)
Plaintiff responds that Defendants incorrectly argue that the claims should be limited to
an exemplary embodiment. (Dkt. No. 62 at 11.)

Plaintiff contends that this embodiment

presupposes the sponsor selecting multiple locations for award redemption, otherwise there
would be no purpose in the host determining the nearest location when an award is won. (Dkt.
No. 62 at 11.) Plaintiff further argues that none of the claims recite the additional steps of
determining the nearest retail location or instructing the consumer user of that location. (Dkt. No.
62 at 11.) Thus, according to Plaintiff, the passages referenced by Defendants have no bearing
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on the meaning of “a sponsor-selected geographic location” in the claims at issue. (Dkt. No. 62
at 11.)
Plaintiff also argues that in view of the broad disclosure in the specification the article
“a” in “a sponsor-selected geographic location for fulfillment” invokes a strong legal
presumption that the plural meaning “one or more” was not overcome. (Dkt. No. 62 at 11.)
Plaintiff further argues that the statements made during prosecution were not a “clear and
unmistakable disavowal” of scope. (Dkt. No. 62 at 11.) Plaintiff notes that the patentee did not
amend the claims to require that the sponsor designate fulfillment at a specific store. (Dkt. No.
62 at 12.)

Plaintiff also contends that Defendants’ portrayal of the Scroggie reference is

incomplete and misleading because the patentee emphasized that the difference was that the
sponsor designated the location of award fulfillment. (Dkt. No. 62 at 12.) Plaintiff further
contends that Defendants’ reliance on proceedings in the European Patent Office is legally
improper and fails to evidence a disclaimer of claim scope. (Dkt. No. 62 at 12–13.) Finally,
regarding the term “sponsor-selected,” Plaintiff argues that Defendants have not shown an
ambiguity in “sponsor-selected” or that any disclaimer occurred necessitating the construction
“selected by the sponsor (not the consumer).”
For the following reasons, the Court construes “a sponsor-selected geographic location
for fulfillment” to mean “at least one specific geographic location selected by a sponsor for
fulfillment.”
1. The Claim Language
The Court first turns to the language of the claims, as it provides “substantial guidance as
to the meaning of particular claim terms.” Phillips, 415 F.3d at 1313 (citing Vitronics, 90 F.3d at
1582). The phrase “a sponsor-selected geographic location for fulfillment” appears in claims 1,
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6, 11, 19, and 26–28. The Court finds that the phrase is used consistently in the claims and is
intended to have the same meaning in each claim. Regarding the term “sponsor-selected,” the
Court finds that the plain language of the claims makes clear that the “geographic location” is
“selected by a sponsor,” and not the consumer. Independent claims 1 and 19 reference both a
“sponsor” and a “consumer.”

In further describing the claimed “geographic location” as

“sponsor-selected,” the claims recite that the location is selected by the sponsor and not the
consumer.
Regarding the phrase “geographic location,” the Court notes that none of the claims
require or further specify that this location is limited to a “specific store” as Defendants propose.
Indeed, the claims use the open-ended transitional phrase “comprising” and recite “a geographic
location.” KCJ Corp. v. Kinetic Concepts, Inc., 223 F.3d 1351, 1356 (Fed. Cir. 2000) (“This
court has repeatedly emphasized that an indefinite article ‘a’ or ‘an’ in patent parlance carries the
meaning of ‘one or more’ in open-ended claims containing the transitional phrase
‘comprising.’”). Likewise, claim 9, which depends indirectly from independent claim 6, recites
fulfillment options including “receiving fulfillment at a sponsor designated geographic location;
receiving online fulfillment; receiving offline fulfillment; receiving fulfillment at a merchant;
receiving fulfillment at a retailer; or receiving fulfillment at point of sale (POS).”

This

demonstrates that a person of ordinary skill in the art would understand that a “sponsor-selected
geographic location” is broader than a “specific store,” and may include a merchant, a retailer, or
a POS. Accordingly, the claim language does not support Defendants’ construction for the term
“geographic location.” However, although the claims are not limited to a “specific store,” the
claims do require at least one specific geographic location, whether it be a merchant’s location,
a retailer’s location, or a POS. The Court now turns to the remaining intrinsic evidence.
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2. The Intrinsic Evidence
In addition to the claims, the remaining intrinsic evidence in this case indicates that the
term “geographic location” should not be limited to a “specific store.” The specification
describes an exemplary embodiment as follows:
Next, at a step 430, the award database 204 is updated to reflect the association
of the prize with the particular consumer who has won the prize. Next, at a step
432, the award database 204 may be queried to determine the available
geographic locations of prizes of the type won by the consumer.
Next at a step 434, the host computer 18 executes an algorithm that
selects the appropriate fulfillment option for the prize. In particular, by
comparing the geographic information of the consumer in the consumer
database 200 and the information in the award database 204, the host computer
18 identifies the nearest retail location for fulfillment of the prize or, if no
location is suitable, the prize may be mailed to the consumer.
‘830 Patent at 21:58–22:4 (emphasis added). Defendants contend that the “nearest” retail
location implies one specific location because multiple locations cannot each be “nearest.”
(Dkt. No. 52 at 9.) Although this may be true for this exemplary embodiment, the Court finds
that the claims are not limited to this exemplary embodiment. Liebel-Flarsheim Co. v. Medrad,
Inc., 358 F.3d 898, 906 (Fed. Cir. 2004) (“[T]his court has expressly rejected the contention
that if a patent describes only a single embodiment, the claims of the patent must be construed
as being limited to that embodiment.”).
Moreover, Defendants do not address the fact that the specification indicates that there
can be multiple “locations” of the prizes, and that the locations of the prizes are not limited to
a specific store. For example, the specification states that “the award database 204 may be
queried to determine the available geographic locations of prizes of the type won by the
consumer.” ‘830 Patent at 21:62–63 (emphasis added). Similarly, the specification states that
“manufacturers could launch promotions across multiple store networks with a single fulfillment
card.” ‘830 Patent at 42:62–63 (emphasis added). Thus, the specification contemplates prizes
Page 16 of 49 

being located at multiple stores and not a single “specific store” as Defendants propose.
Indeed, Defendants concede that “the specification does not expressly state that the sponsor
must designate a single store for redemption.” (Dkt. No. 52 at 14.) Thus, the Court concludes
that a person of ordinary skill in the art would understand that the specification indicates that
the recited “geographic location” includes at least one location.
Defendants next argue that the claims should be limited to a “specific store” based on
arguments made during prosecution. To distinguish the prior art relied on by the Patent Office,
the applicant stated the following:
Automated award fulfillment, according to the present invention, includes
sponsor designated or selected redemption whereby the sponsor of the award
may … designate the location of the redemption (see Specification at page 95,
line 20, for example). The selection can also include a specific consumer user
selected by the sponsor which can, e.g., be instructed to go to a store identified
as having the award by the inventory management system to pick up the award
unit (See for example page 97, line 14-17). The award unit can then be allocated
from inventory to ensure availability upon a visit by the specific consumer user.
For example, the location may include the geographical location of the retailer,
merchant, or point of sale (POS) (See for example page 96, lines 2-20).
Dkt. No. 53 at 40 (Jan. 25, 2002 Reply to OA) (emphasis in original). Defendants contend that
this argument, as well as the restatement of the claim language “sponsor-selected geographic
location for fulfillment” in a later response, constitute a clear disclaimer. (Dkt. No. 52 at 11.)
The Court disagrees that this is a “clear and unmistakable disavowal” of scope. Purdue
Pharma LP v. Endo Pharm. Inc., 438 F. 3d 1123, 1136 (Fed. Cir. 2006). First, in the January
25, 2002 Response, the patentee did not argue that the claims were distinguishable because the
geographic location was located to a “specific store.” Instead, the patentee argued that “the
location may include the geographical location of the retailer, merchant, or point of sale
(POS).” (Dkt. No. 53 at 40.) Thus, the patentee indicated that the geographic location could be
multiple locations and did not limit the claims to a “specific store.” Moreover, the prosecution
Page 17 of 49 

history makes clear that the patentee distinguished the claims based on a sponsor selecting the
location for fulfillment, and not the consumer. Specifically, in distinguishing the Scroogie
reference the patentee stated:
First, the present invention allows far more flexibility for the sponsor of the
incentive program to design his award fulfillment program, via various
selections, see claims as amended. Second, the present invention actually
contradicts Scroggie in that the purpose of Scroggie is to provide convenience to
the consumers, while the object of the present invention is to provide
convenience to the sponsor.
Dkt. 53 at 108–109 (Oct. 23, 2003 Reply to OA) (emphasis in original). Thus, the patentee’s
disclaimer relates to the “sponsor-selected” term, and not the “geographic location” term of
this phrase. This is consistent with the claim amendments presented with these arguments and
the plain language of the issued claims. Similarly, the mere fact that a consumer might, for
example, select one of two sponsor-selected specific geographic locations for redemption does
not run contrary to either the claim language or goal evinced during prosuection of
“provid[ing] convenience to the sponsor.”
Finally, Defendants argue that an argument made during prosecution of a foreign
counterpart application is relevant evidence that should be considered by the Court. (Dkt. No.
52 at 13.)

First, the Federal Circuit has noted “that ‘the varying legal and procedural

requirements for obtaining patent protection in foreign countries might render consideration of
certain types of representations inappropriate’ for consideration in a claim construction
analysis of a United States counterpart.” TI Grp. Auto. Sys. (N. Am.), Inc. v. VDO N. Am.,
L.L.C., 375 F.3d 1126, 1136 (Fed. Cir. 2004) (quoting Caterpillar Tractor Co. v. Berco, S.p.A.,
714 F.2d 1110, 1116 (Fed. Cir. 1983)). Second, even assuming that the foreign patentability
statements are relevant to the Court’s claim construction analysis, the Court finds the evidence
offered by Defendants unpersuasive. The foreign passages are not absolute and use permissive
Page 18 of 49 

language that the invention “can” direct a consumer to pick up an award at a specific
geographic location or that it “allows” for this.
Moreover, the patentee argued that the claims in the foreign application were
distinguishable because the prior art is “customer-oriented, unlike the present invention, which
is provider-oriented.” (Dkt. No. 58 at 16) (emphasis in original). Similar to the United States
prosecution history, the patentee focused on the sponsor selection versus the customer
selection to distinguish the claims. Accordingly, the Court concludes that the “geographic
location” should not be limited to a “specific store,” but that the sponsor must select at least
one specific geographic location for fulfillment.
3. The Extrinsic Evidence
Plaintiff references dictionary definitions for the terms “geographic” and “location,” and
concludes that the term “geographic location” applies to any identifiable place, region, territory,
area, etc. within the greater earth. (Dkt. No. 47 at 35–36.) Defendants disagree and contend that
it would be legal error to rely on dictionary definitions presented by Plaintiff given the intrinsic
record. (Dkt. No. 52 at 12.) As discussed above, the intrinsic record does not limit the term
“geographic location” to a “specific store.” Notwithstanding, the Court finds that the term
“geographic location” is unambiguous, is easily understandable by a jury, and requires no
construction. Moreover, the Court has resolved the dispute regarding the proper scope of
“geographic location” by finding that it is not limited to a “specific store,” but does require at
least one specific geographic location.
4. Court’s Construction
In light of the intrinsic evidence, the Court construes “a sponsor-selected geographic
location for fulfillment” to mean “at least one specific geographic location selected by a
Page 19 of 49 

sponsor for fulfillment.”
B. “a sponsor-selected specific award unit item”
Disputed Term
“a sponsorselected specific
award unit item”

Claim
Plaintiff’s Proposal
1, 6, 11
“a specific award and
19, 26-28 corresponding identifying
and/or classifying information
selected by the sponsor to be
associated with a particular
incentive program”

Defendants’ Proposal
“the specific item available
as an award from the
inventory management
system selected by the
sponsor (not the
consumer)”

The parties dispute whether the phrase “a sponsor-selected specific award unit item”
should be construed as “a specific award and corresponding identifying and/or classifying
information,” as Plaintiff proposes, or as “the specific item available as an award from the
inventory management system,” as Defendants propose.8 The parties also dispute whether the
construction should explicitly state that the consumer does not select the specific item available
as an award.
Plaintiff argues that the specification provides a definition for “award unit” and describes
how the disclosed system permits a sponsor to select award units for its incentive programs.
(Dkt. No. 47 at 29.) Plaintiff further argues that Defendants’ construction conflates the disputed
phrase with the term “award” despite the specification description that an award unit is not just
an award. (Dkt. No. 47 at 29.) Finally, Plaintiff argues that the claims do not mention a sponsor
selecting an inventory management system. (Dkt. 47 at 29–30.)
Defendants respond that the intrinsic evidence gives “award unit item” a specific

8

Defendants propose construing both the shorter phrase “specific award unit item” and the
longer phrase “a sponsor-selected specific award unit item.” Defendants did not provide a
persuasive reason for construing these phrases separately. (Dkt. No. 52 at 16) Moreover,
Defendants’ proposed construction for “specific award unit item” is included in their proposed
construction for the phrase “a sponsor-selected specific award unit item.” Accordingly, the
Court will construe the longer phrase “a sponsor-selected specific award unit item.”
Page 20 of 49 

meaning and that the terms “awards,” “award units,” and “award unit items” must have
progressively narrower definitions, with “award” being the broadest term. (Dkt. No. 52 at 16.)
Defendants contend that an award unit “item” must be an item that is selected as an award unit.
(Dkt. No. 52 at 17.) Defendants argue that Plaintiff’s construction should be rejected because it
reads the word “item” out of the claims to broaden the scope of the claims. (Dkt. No. 52 at 17.)
Defendants argue that this is a problem for Plaintiff because it accuses Defendants’ online
coupon systems of infringement and coupons are not items in a retailer’s inventory. (Dkt. No. 52
at 17.) Defendants further argue that the patentee disclaimed a consumer selecting the specific
award unit item during prosecution. (Dkt. No. 52 at 18–19.)
Plaintiff responds that Defendants incorrectly abandon the explicit definitions provided in
the specification because of the word “item” in the claim. (Dkt. No. 62 at 8.) Plaintiff contends
that the word “item” simply implies a specific instance of a “sponsor-selected specific award
unit.” (Dkt. No. 62 at 8.)

Plaintiff states that it has no objection to modifying its construction to

start with: “a specific award item . . .” because the word “item” does not affect the scope of this
claim limitation. (Dkt. No. 62 at 8.) Plaintiff further contends that Defendants’ focus on “retail
items” in the specification is misplaced because “retail items” are only one type of “item” that
can be associated with the incentive programs of the invention via a corresponding “award unit
item.” (Dkt. No. 62 at 8.) Plaintiff also argues that Defendants’ assertion that the resulting claim
scope would exclude awards in the form of coupons is incorrect because the specification makes
clear that the invention applies to coupon awards. (Dkt. No. 62 at 8.) Finally, Plaintiff contends
that construing “sponsor-selected” to mean “selected by the sponsor (not the consumer)” would
be overkill. (Dkt. No. 62 at 9.)
For the following reasons, the Court construes “a sponsor-selected specific award unit
Page 21 of 49 

item” to mean “a specific award item and all of the corresponding identifying or classifying
information selected by a sponsor.”
1. The Claim Language
The phrase “a sponsor-selected specific award unit item” appears in claims 1, 6, 11, 19
and 26-28. The Court finds that the phrase is used consistently in the claims and is intended to
have the same meaning in each claim. The Court further finds that the term “award” and “award
unit item” are not used interchangeably. For example, dependent claim 4 recites that the
“automated award fulfillment application program is adapted to allow designation or redemption
of an award.” ‘830 Patent at Claim 4 (emphasis added). Whereas independent claim 1 recites
“code adapted to provide a sponsor-selected specific award unit item.” ‘830 Patent at Claim 1
(emphasis added).

The intended difference between “award” and “award unit” is further

described in the specification. Accordingly, the Court will now turn to the remaining intrinsic
evidence.
2. The Intrinsic Evidence
The specification defines an “award” and an “award unit,” and further clarifies how the
terms are related. First, the specification states:
The term ‘prize’ and the term ‘award’ should be understood to be synonymous
and to encompass all types of incentives, including merchandise, coupons, points,
cash, services and other forms of incentives.
‘830 Patent at 7:44–47. Thus, contrary to Defendants’ contention, the specification explicitly
states that an “award” encompasses all types of incentives, including coupons. The specification
then describes an “award unit” as follows:
The items stored in the award database may include the method of fulfillment (i.e.
by a third party, by a sponsor or by a retailer), identification numbers of the item,
which may be accomplished by utilizing the retailer’s inventory identifying data,
a description of the item and the number of items available. In the case of retailer
redemption, additional items could include a number assigned to the merchant,
Page 22 of 49 

the merchant’s store number, and the geographic location of the award or reward
items, which may be sorted by zip code or area code. The prize or reward and all
of the corresponding identifying or classifying information can be characterized
as an award unit. An understanding of the award unit is important, because
consumers may win award units, not just awards.
‘830 Patent at 41:11–24 (emphasis added). The specification further describes permitting a
sponsor to select award units for its incentive program:
As described above, via an interface (and after selection or design of an incentive
program) a sponsor could select an award unit to be associated with a particular
sponsor incentive program, and the subsequent association will be stored in the
sponsor database 202. . . . The sponsor could also input its own awards and 40
associated information (description, fulfillment method, etc.) in order to define
the award units to be associated with the sponsor’s incentive program or
programs.
‘830 Patent at 41:33–43. Given this description, the Court finds that a person of ordinary skill in
the art would understand a “specific award unit item” to mean a “specific award item and all of
the corresponding identifying or classifying information.” Contrary to Defendants’ suggestion,
this does not read the word “item” out of the claims because it requires both a specific award
item and all of the corresponding identifying or classifying information. (Dkt. No. 52 at 17.)
Moreover, the Court disagrees with Defendants that one sentence in the specification relating to
retail items requires construing the phrase as “items available as an award from the inventory
management system.” Dkt. No. 52 at 17 (Citing ‘830 Patent at 6:20-23). “Retail items” are one
type of “item” that can be associated with the claimed incentive programs via a corresponding
“award unit item.” Accordingly, the Court finds that a “specific award unit item” to mean a
“specific award item and all of the corresponding identifying or classifying information.”
Regarding the term “sponsor-selected,” the Court agrees with Defendants that the
patentee disclaimed a consumer selecting the specific award unit item during prosecution. To
distinguish the claims from the prior art the patentee stated the following:
Kanter’s system does not allow a sponsor to designate an item to be redeemed.
Page 23 of 49 

Kanter has no knowledge of merchant provider’s inventory data, let alone real
time knowledge and allocation of inventory. Kanter only allows a designation of a
redemption location and a general amount of redemption. Kanter, also teaches
consumer user selection of an item to be redeemed in exchange for accumulated
credit value.
…
Automated award fulfillment, according to the present invention, includes
sponsor designated or selected redemption whereby the sponsor of the award
may select or determine what award unit (see Specification at page 93, line 9, for
example) will be provided to the consumer user, by communicating with an
inventory management system of multiple providers and may designate the
location of the redemption (see Specification at page 95, line 20, for example).
Dkt. 53 at 167–168 (Aug. 26, 2002 Reply to OA) (emphasis in original). With this argument,
the patentee focused on the sponsor selection aspect to distinguish the claims from the prior art.
Thus, the Court finds that the patentee clearly limited the scope of the claims to sponsor-selected
award unit items. Thus, the claimed “award unit item” must be selected by a sponsor and not the
consumer.
3. Court’s Construction
In light of the intrinsic and extrinsic evidence, the Court construes “a sponsor-selected
specific award unit item” to mean “a specific award item and all of the corresponding
identifying or classifying information selected by a sponsor.”
C. “sponsor-selected consumer user”
Disputed Term
“sponsor-selected
consumer user”

Claim
1, 6, 11,
14, 19, 2628, 32, 34

Plaintiff’s Proposal
No construction necessary.
If construed, the term
means: “one or more
consumer users selected by
a sponsor.”

Defendants’ Proposal
“a particular consumer
selected from a group of
consumers by the sponsor
based on demographic and
psychographic criteria”

The parties dispute whether the phrase “sponsor-selected consumer user” requires
construction. Plaintiff contends that it does not require construction, and in the alternative, that it
Page 24 of 49 

should be construed as “one or more consumer users selected by a sponsor.” Defendants
contend that the phrase should be construed as “a particular consumer selected from a group of
consumers by the sponsor based on demographic and psychographic criteria.” Thus, the dispute
is focused on whether the phrase relates to “one or more consumer users,” as Plaintiff proposes,
or “a particular consumer,” as Defendants propose. The parties also dispute if the consumer is
selected based on demographic and psychographic criteria, as Defendants propose.
Plaintiff contends that the only aspect of the phrase that potentially requires clarification
is the article “a,” which means “one or more.” (Dkt. No. 47 at 33.) Plaintiff argues that the
claims indicate that a specific award unit item is both (1) selected by a sponsor and (2) tailored to
demographic and psychographic preferences of a sponsor-selected consumer user. (Dkt. No. 47
at 33.)

Plaintiff contends that Defendants’ proposal would add an unwarranted limitation

because the claims do not say that the consumer user is selected by a sponsor based on
demographic and psychographic criteria. (Dkt. No. 47 at 33.)
Defendants respond that the patentee expressly represented to the Patent Office that the
consumer user is selected by a sponsor based on demographic and psychographic criteria. (Dkt.
No. 52 at 19.) Thus, Defendants contend that their construction should be adopted because it
excludes from the claim a broader interpretation expressly disclaimed by the patentee during
prosecution. (Dkt. No. 52 at 20.)
Plaintiff responds that the claims recite “a . . . consumer user” and do not recite the
singular phrase “a particular consumer,” or the additional limitation of selecting a particular
consumer from a group based on demographic and psychographic criteria. (Dkt. No. 62 at 10.)
Plaintiff further argues that the patentee’s statements were made in response to an indefiniteness
rejection based under § 112 ¶ 2, and that the patentee responded by defending the broad claim
Page 25 of 49 

scope. (Dkt. No. 62 at 10.)
For the following reasons, the Court construes “sponsor-selected consumer user” to
mean “at least one consumer user selected by a sponsor”
1. The Claim Language
The phrase “sponsor-selected consumer user” appears in claims 1, 6, 11, 14, 19, 26-28,
32, and 34. The Court finds that the phrase is used consistently in the claims and is intended to
have the same meaning in each claim. The Court also finds that the claim language provides
guidance on the meaning of the disputed phrase. Specifically, all of the independent claims state
that the “sponsor-selected specific award unit [is] … tailored to the … preferences of a sponsorselected consumer user.”

Because the claims use the open-ended transitional phrase

“comprising” and recite “a sponsor-selected consumer user,” the claims are not limited to a
“particular consumer,” but instead require “at least one consumer.”

Likewise, the claim

language does not require that the selection of the consumer be “based on demographic and
psychographic criteria.” Indeed, the claim language only requires that the specific award unit to
be tailored to the “preferences” of a consumer user. The Court will now turn to the remaining
intrinsic evidence.
2. The Intrinsic Evidence
Defendants do not contend that the specification provides examples where the
consumer is selected by a sponsor “based on demographic and psychographic criteria.” Instead,
the specification provides that a sponsor can obtain this information “or other information
relevant to the participation of consumers in sponsor’s incentive programs.” ‘830 Patent at
15:21–22. Consistent with the claim language, the specification further states that one benefit
of the fulfillment procedure is that “[s]ponsors are able to target awards for giveaway by
Page 26 of 49 

demographic preferences or geography.” ‘830 Patent at 42:43-44. In other words, the claims
recite that the awards are “tailored to the … preferences of a sponsor-selected consumer user,”
and not that the consumer is selected based on his preferences.
To support their construction, Defendants point to a single sentence from the
prosecution history and contend that it provides a clear disclaimer. Specifically, the patentee
stated the following in response to an indefiniteness rejection:
The Examiner proceeds to reject the claims under 112 second paragraph as
allegedly being indefinite for failing to particularly point out and distinctly
claim the invention. Applicant has amended the claims as required by previous
office actions in five separate amendments, and requests reconsideration of the
rejection. There is nothing indefinite about claiming an invention broadly. An
Applicant is entitled to claim an invention as broadly as the prior art allows. Just
because a claim is broad in scope, does not make it indefinite. Applicant asserts
that from any fair reading of the claims, it should be clear to those skilled in the
art how the consumer user is awarded, and how a consumer user is selected by a
sponsor based on demographic and psychographic (behavior based
demographic) criteria, as required by the first Examiner to place the claim in
condition for allowance.
Dkt. No. 53 at 106 (Oct. 23, 2003 Reply to OA). Defendants argue that the patentee’s
statement that “a consumer user is selected by a sponsor based on demographic and
psychographic” is a clear disclaimer and limits the claims to their construction. The Court
disagrees. First, the patentee followed the alleged disclaimer with the statement that the
recited claim language was “required by the first Examiner to place the claim in condition for
allowance.” The prosecution history indicates that the first Examiner did not require the
consumer user to be selected by a sponsor based on demographic and psychographic
preferences. Instead, as recited in the claims, the first Examiner only required that a sponsor
designate an award/consumer and that the award be tailored to the preference of a consumer.
Dkt. No. 48 at 251 (Jan. 5, 2002 Examiner Interview Summary).
Moreover, the patentee was not arguing for a narrow claim scope or attempting to
Page 27 of 49 

distinguish the claims from prior art. Instead, the patentee stated that “[t]here is nothing
indefinite about claiming an invention broadly … Just because a claim is broad in scope, does
not make it indefinite.” (Dkt. No. 53 at 106.) The patentee then elaborated that the claims
make clear “how a consumer user is awarded, and how a consumer user is selected by a
sponsor based on demographic and psychographic (behavior based demographic) criteria ….”
(Dkt. No. 53 at 106.) The Court agrees and finds that the claims recite that this is performed
by providing a “sponsor-selected specific award unit item tailored according to demographic
and psychographic preferences of a sponsor-selected consumer user.” ‘830 Patent at Claim 19.
3. Court’s Construction
In light of the intrinsic evidence, the Court construes “sponsor-selected consumer
user” to mean “at least one consumer user selected by a sponsor.”
D. “demographic … preferences”
Disputed Term
“demographic …
preferences”

Claim
1, 4, 6,
11, 17,
19, 26-28,
34

Plaintiff’s Proposal
“preferences associated with
a group of consumers that
has a particular set of
qualities

Defendants’ Proposal
preferences based on directly
observable traits of a
consumer (e.g., sex, marital
status, income, occupation,
location)

The parties dispute whether the term “demographic … preferences” should be construed
as “preferences associated with a group of consumers that has a particular set of qualities,” as
Plaintiff proposes, or as “preferences based on directly observable traits of a consumer,” as
Defendants propose. Plaintiff provides dictionary definitions and contends that “demographic
information” relates to a set of qualities or characteristics associated with a particular group of
people. (Dkt. No. 47 at 30-31.) Plaintiff states that it agrees with Defendants’ construction to the
extent that it refers to preferences based on consumer traits such as sex, marital status, income,
occupation and location. (Dkt. No. 47 at 31.) However, Plaintiff disagrees with Defendants’
Page 28 of 49 

proposal of “directly observable traits” because it is not clear and creates a risk of jury
confusion. (Dkt. No. 47 at 31.) For example, Plaintiff contends that income is a well-accepted
demographic trait that may not be directly observable. (Dkt. No. 47 at 31.)
Defendants respond that their construction is consistent with the plain language of the
claims, which distinguish demographic and psychographic preferences, and is consistent with
their extrinsic evidence. (Dkt. No. 52 at 23–24.) Defendants argue that Plaintiff’s construction
should be rejected because it is based on general purpose dictionaries dated well before the ‘830
Patent’s priority date or well after its issue date. (Dkt. No. 52 at 24.) Defendants also argue that
Plaintiff’s construction should be rejected because the phrase “that has a particular set of
qualities” is ambiguous and unbounded. (Dkt. No. 52 at 24.) Defendants further contend that
Plaintiff’s proposed construction would improperly encompass its construction for the distinct
term “psychographic preferences,” which would make that phrase meaningless. (Dkt. No. 52 at
24.)
Plaintiff responds that Defendants have not shown that the accepted definitions for the
disputed term have changed significantly over time. (Dkt. No. 62 at 9.) Plaintiff further argues
that Defendants’ reliance on both a 1996 source and a 2008 source contradicts their suggestion
that Plaintiff’s sources should be disregarded on the basis of temporal relevance. (Dkt. No. 62 at
9.) Plaintiff argues that the issue is not who has the better dictionary, but instead construing the
terms to avoid jury confusion. (Dkt. No. 62 at 9.) Plaintiff further argues that Defendants’
inclusion of “direct observability” risks jury confusion because not all demographics are directly
observable (e.g., a person’s income). (Dkt. No. 62 at 9.) For the following reasons, the Court
construes “demographic … preferences” to mean “preferences based on traits of a
consumer, such as sex, marital status, income, occupation, and location.”
Page 29 of 49 

1. The Intrinsic Evidence
The term “demographic … preferences” appears in claims 1, 4, 6, 11, 17, 19, 26-28, and
34. The Court finds that the term is used consistently in the claims and is intended to have the
same meaning in each claim. The claim language also indicates that “demographic preferences”
is distinct from “psychographic preferences” by reciting that the “sponsor-selected specific
award unit item” is “tailored to demographic and psychographic preferences of a sponsorselected consumer user.” See, e.g., ‘830 Patent at Claim 1 (emphasis added). The Court will
now turn to the remaining intrinsic evidence.
The specification provides an example of a type of demographic by stating the following:
If the sponsor wishes to query the consumer database 200 at the step 354, then at
a step 357 the host computer 18 conducts a search of the consumer database 200
for various information relating to consumer’s participation in the sponsor’s
incentive programs. For example, such information may include demographic or
psychographic information about the types of consumers who are participating in
the sponsor’s incentive programs. For example, the sponsor may be able to
determine the median age of consumers who are participating in the sponsor’s
incentive programs.
‘830 Patent at 18:43–54 (emphasis added).

Consistent with the examples provided in

Defendants’ construction, the median age of a consumer is a trait of a consumer.9 The Court will
now turn to the extrinsic evidence provided by the parties.
2. The Extrinsic Evidence
Defendants provide an excerpt from The Dictionary of Social Market Research,
published in 1996, which defines and contrasts demographics and psychographics as follows:
The categorization of a market or other population groups, e.g., consumers, on the
basis of psychological – as distinguished from demographic – dimensions,
including activities, interests, opinions, values, attitudes, lifestyles, personality
traits, such as innovativeness, sophistication, etc. In contrast, demographics
describe states of physical being – age, sex, marital status, income, occupation,

9

In its Opening Brief, Plaintiff stated that “[w]e would not object to adding Defendants’
representative list of demographic traits to Kroy’s proposed interpretation.” (Dkt. No. 47 at 31.)
Page 30 of 49 

location, education, religious affiliation.
Dkt. No. 59 at 4 (Dictionary of Social Market Research) (emphasis added). As with the example
in the specification, this reference provides examples of demographics that are consistent with
the examples listed in Defendants’ construction.

Accordingly, the Court finds that

“demographic … preferences” means “preferences based on traits of a consumer, such as sex,
marital status, income, occupation, and location.”
Regarding the parties’ constructions, the Court finds that Plaintiff’s “particular set of
qualities” language fails to adequately distinguish this term from the term “psychographic
preferences.” For example, consumers with a particular set of “attitudes, interests, values, etc,”
have a “particular set of qualities.”

Similarly, the Court finds that Defendants “directly

observable traits” is ambiguous and could create jury confusion. For example, income is a wellaccepted demographic that may not be directly observable. Moreover, neither the intrinsic nor
extrinsic evidence describes direct observability as the decisive aspect of a demographic trait.
Accordingly, the Court rejects these aspects of the parties’ constructions.
3. Court’s Construction
In light of the intrinsic and extrinsic evidence, the Court construes “demographic …
preferences” to mean “preferences based on traits of a consumer, such as sex, marital
status, income, occupation, and location.”
E. “psychographic preferences”
Disputed Term
“psychographic
preferences”

Claim
1, 4, 6,
11, 17,
21, 26-28,
34

Plaintiff’s Proposal
“preferences associated with
a consumer’s attitudes,
interests, values, opinions or
behaviors”

Page 31 of 49 

Defendants’ Proposal
“preferences based on nondirectly observable traits of a
consumer (e.g., interests,
opinions values, attitudes,
lifestyles)”

The parties dispute whether the term “psychographic preferences” should be construed as
“preferences associated with a consumer’s attitudes, interests, values, opinions or behaviors,” as
Plaintiff proposes, or as “preferences based on non-directly observable traits of a consumer,” as
Defendants propose. Plaintiff provides dictionary definitions and contends that “psychographic
preferences” relates to a set of qualities or characteristics associated with a particular group of
people. (Dkt. No. 47 at 30–31.)

Plaintiff notes that the parties agree that a consumer’s

“psychographic preferences” are based on traits such as such as interests, opinions, values,
attitudes and lifestyles. (Dkt. No. 47 at 32.) However, Plaintiff disagrees with Defendants’
construction because it contends that the meaning of “directly observable traits” is not clear and
creates a risk of jury confusion. (Dkt. No. 47 at 31.) For example, Plaintiff contends that
lifestyle choices and behavior are well accepted psychological traits that may be directly
observable. (Dkt. No. 47 at 33.)
Defendants respond that the specification is silent as to the meaning of the term
“psychographic preferences” and direct the Court to industry-specific dictionaries. (Dkt. No. 52
at 20–21.) Based on the industry-specific dictionaries, Defendants contend that “psychographic
preferences” should be construed as non-directly observable traits. (Dkt. No. 52 at 21.)
Defendants argue that this construction is in harmony with the intrinsic record and should be
adopted. (Dkt. No. 52 at 21.) Defendants further argue that Plaintiff’s extrinsic evidence should
be discounted because the definitions were provided after the patent issued. (Dkt. No. 52 at 22.)
Defendants also argue that the weight given to Plaintiff’s extrinsic evidence should be
discounted because the definitions introduce ambiguity into the claim term. (Dkt. No. 52 at 22.)
Finally, Defendants contend that their construction is consistent with the extrinsic evidence they
provided. (Dkt. No. 52 at 22–23.)
Page 32 of 49 

Plaintiff responds that Defendants have not shown that the accepted definitions for the
disputed term have changed significantly over time. (Dkt. No. 62 at 9.) Plaintiff further argues
that Defendants’ reliance on both a 1996 source and a 2008 sources contradicts their suggestion
that Plaintiff sources should be disregarded on the basis of temporal relevance. (Dkt. No. 62 at
9.) Plaintiff contends that the issue is not who has the better dictionary, but instead construing
the terms to avoid jury confusion. (Dkt. No. 62 at 9.) Plaintiff argues that Defendants’ inclusion
of “non-direct observability” risks jury confusion because some “psychographic preferences”
may be directly observable (e.g., lifestyle choices and behavior). (Dkt. No. 62 at 9.)
For the following reasons, the Court construes “psychographic preferences” to mean
“preferences associated with a consumer’s attitudes, interests, values, opinions, lifestyles,
or behaviors.”
1. The Intrinsic Evidence
The term “psychographic preferences” appears in claims 1, 4, 6, 11, 17, 21, 26-28, and
34. The Court finds that the term is used consistently in the claims and is intended to have the
same meaning in each claim. As with the previous term, the claim language and specification
indicate that “psychographic preferences” is distinct from “demographic” by reciting that the
“sponsor-selected specific award unit item” is “tailored to demographic and psychographic
preferences of a sponsor-selected consumer user.” See, e.g., ‘830 Patent at Claim 1 (emphasis
added).
Defendants state that specification is silent to the meaning of the term and provide
extrinsic evidence to support their construction. (Dkt. No. 52 at 20.) Defendants contend that
their construction is consistent with the specification, which discloses that psychographic or
demographic information may be “obtained through consumer responses to inquiries answered
Page 33 of 49 

by the consumer” or through “survey-completion and question-and-answer incentive programs.”
‘830 Patent at 13:18–22; 41:62–67. The Court does not disagree. However, this portion of the
specification that describe collecting consumer data is also consistent with Plaintiff’s
construction. Thus, the Court will turn to the extrinsic evidence.
2. The Extrinsic Evidence
Defendants provide an excerpt from The Dictionary of Social Market Research,
published in 1996, which defines and contrast demographics and psychographics as follows:
The categorization of a market or other population groups, e.g., consumers, on the
basis of psychological – as distinguished from demographic – dimensions,
including activities, interests, opinions, values, attitudes, lifestyles, personality
traits, such as innovativeness, sophistication, etc. In contrast, demographics
describe states of physical being – age, sex, marital status, income, occupation,
location, education, religious affiliation. Because a person is seldom able to define
these traits directly, they must be measured indirectly. Psychographics, therefore,
are subject to ambiguous definition. They are “soft” statistics. By contrast, most
demographic statistics have unambiguous definitions that cut across population
segments and cultures. Some marketers argue that psychographics have replaced
demographics for planning and marketing consumer products.
Dkt. No. 59 at 4 (Dictionary of Social Market Research) (emphasis added). Defendants also
provide the following excerpt from The Encyclopedia of Survey Research Methods, which
defines psychographic measure as:
[A] variable that represents a personal characteristic of an individual that is not [p.
635 ↓ ] a physical trait, as are demographic measures (age, gender, height, etc.).
Rather, psychographic variables include personality traits, lifestyle preferences or
interests, values or beliefs, and attitudes or opinions. Because psychographics are
not directly observable, as are many demographics, nor do they have a “factual”
basis as do demographics, their measurement is less precise. Surveys are
routinely used to measure psychographics, and they can serve as powerful
independent variables in helping explain many dependent variables of interest.
Dkt. No. 59 at 8 (Encyclopedia of Survey Research Methods) (emphasis added). Defendants
contend that these two sources “explain that psychographic traits are non-directly observable
traits.” (Dkt. No. 52 at 21.) Defendants reach this conclusion based on the one sentence
Page 34 of 49 

emphasized above. (Dkt. No. 52 at 21.) However, analyzed in the context of all the relevant
extrinsic evidence presented by the parties, the Court does not agree that this one sentence
requires “psychographic preferences” to be preferences based non-directly observable traits.
Granted, a number of psychographics traits may not be directly observable, but some are directly
observable. For example, lifestyle choices and behavior are well accepted psychological traits
that may be directly observable.

Thus, the Court agrees with Plaintiff that Defendants’

construction risks jury confusion and would introduce ambiguity into the claims.
That said, the Court appreciates that Defendants’ construction attempts to clarify for the
jury the distinctions between “demographic preferences” and “psychographic preferences.”
(Dkt. No. 52 at 22.) However, the Court finds that Defendants’ concern is addressed by the
Court finding that the recited “psychographic preferences” are distinct from the recited
“demographic preferences.” Moreover, the parties agree that a consumer’s “psychographic
preferences” are based on traits such as interests, opinions, values, attitudes, and lifestyles. (Dkt.
No. 47 at 32.) Likewise, Plaintiff’s proposed construction is consistent with the extrinsic
evidence presented by Defendants. Accordingly, the Court adopts Plaintiff’s construction with
the addition of “lifestyles” to the list of traits included in Defendants’ construction.
3. Court’s Construction
In light of the intrinsic and extrinsic evidence, the Court construes “psychographic
preferences” to mean “preferences associated with a consumer’s attitudes, interests, values,
opinions, lifestyles, or behaviors.”

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F. “provider”
Disputed Term
“provider”

Claim
1-4, 6, 11, 1517, 19, 26-29,
31, 32, 35, 36

Plaintiff’s Proposal
“a participant who provides
awards associated with an
incentive program”

Defendants’ Proposal
“individual or company that
provides an incentive
program”

The parties dispute whether the term “provider” should be construed as “a participant
who provides awards associated with an incentive program,” as Plaintiff proposes, or as
“individual or company that provides an incentive program,” as Defendants propose. Plaintiff
contends that Defendants’ construction confuses the term “provider” with the term “sponsor.”
(Dkt. No. 47 at 24.)

Plaintiff notes that the parties have stipulated to a construction for

“sponsor,” and argues that the specification does not use the terms “provider” and “sponsor”
interchangeably. (Dkt. No. 47 at 24.)

Plaintiff further argues that dependent claim 2

conclusively shows that “provider” is not synonymous with “sponsor,” but instead encompasses
all types of incentive program participants. (Dkt. No. 47 at 24.) Plaintiff further contends that
the specification supports construing provider as a participant who provides awards associated
with an incentive program. (Dkt. No. 47 at 24–25.)
Defendants respond that claims 1 and 19 recite “incentive programs of a plurality of
providers,” and that this plain language of the claims evidences that “provider” means
“individual or company that provides an incentive program.” (Dkt. No. 52 at 30.) Defendants
also note that the specification does not use the term “provider” with reference to any of the
primary components of the system of the invention, but instead implicitly discloses that the term
“provider” means an individual or company that “provides” something. (Dkt. No. 52 at 30.)
Defendants argue that Plaintiff’s construction reads the term “provider” out of the claim by
conflating it with the term “participant.” (Dkt. No. 52 at 30–31.) Specifically, Defendants note
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that claim 19 recites both a “plurality of providers” and “a participant,” and argue that Plaintiff’s
construction would eliminate the distinction between the terms “participant” and “provider” in
this claim. (Dkt. No. 52 at 30–31.)
Plaintiff responds that Defendants correctly observe that the word “provider” refers to an
individual or company that provides something. (Dkt. No. 62 at 6.) However, Plaintiff contends
that the “something” are the awards associated with an incentive program. (Dkt. No. 62 at 6.)
Plaintiff further argues that the claims do not recite “providers of incentive programs” and that
the full context of the claims shows that “provider” refers to one who provides awards. (Dkt. No.
62 at 6.)
For the following reasons, the Court construes “provider” to mean “individual or
company that offers or provides an incentive program or provides awards associated with
an incentive program.”
1. The Claim Language
The term “providers” appears in claims 1-4, 6, 11, 15-17, 19, 26-29, 31, 32, 35, and 36.
The Court finds that the phrase is used consistently in the claims and is intended to have the
same meaning in each claim. The Court also finds that the claim language provides substantial
guidance on the meaning of the disputed phrase. For example, claim 1 recites “participation in
incentive programs of a plurality of providers.” Here, the claim language indicates that it is the
consumer that participates in the incentive programs of a plurality of providers.

Indeed,

dependent claim 3 further specifies this by reciting “wherein the consumer user participates in
said incentive programs of the plurality of providers via interaction with said browser.” In order
for the consumer to participate in the incentive program, the incentive program must be offered
or provided by the plurality of providers. Likewise, claim 19 explicitly recites “wherein a
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participant may participate in said incentive program” and that awards are provided to
participants by “an inventory management system associated with each of a plurality of
providers.” Thus, the claim language indicates that the term “provider” is used broadly and
includes an individual or company that offers or provides an incentive program, as well as an
individual or company that provides awards associated with an incentive program.

Thus,

contrary to Plaintiff’s suggestion, the term “provider” is not limited to only providing the actual
awards associated with an incentive program, but may also include an individual or company
that offers or provides an incentive program.
However, the Court agrees with Plaintiff that the claims indicate that the term “sponsor”
and “provider” do not have the same scope. In fact, the claims indicate that “provider” is
broader than “sponsor.” Specifically, dependent claim 2 recites the system of claim 1 “wherein
said plurality of providers comprise at least one of a host, a retailer, a merchant, and a sponsor.”
Thus, the claims indicate that a “provider” is not limited to one type of provider (e.g., a sponsor).
And as discussed below, the specification provides explicit definitions for different types of
“providers.” Accordingly, the Court will now turn to the remaining intrinsic evidence.
2. The Intrinsic Evidence
Although the specification does not use the term “provider” with reference to a primary
component of the system, the specification does explicitly define types of “providers.” For
example, the specification defines “host,” “sponsor,” and “retailer” as follows:
The term “sponsor,” as used herein, encompasses any individual or company
that wishes to offer an incentive program or promotion.
…
The term “retailer,” as used herein, encompasses any individual or company that
wishes to provide awards and prizes to be associated with incentive programs.
…
The term “host,” as used herein, encompasses any individual or company who
wishes to provide a system for permitting sponsoring companies to offer
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incentive programs to consumers, employees, suppliers, partners and the like of
the individual or company, and for creation of databases of retail, catalog,
sponsor and other items that permit automated fulfillment of specific items
listed in computer inventory systems of retailers at a retail location.
‘830 Patent at 7:51-8:21.

Considering these definitions, the Court finds that Plaintiff’s

construction is too narrow and could exclude a “sponsor” and “host” from the scope of a
“provider” because these individuals or companies do not necessarily provide the actual
awards associated with an incentive program. Indeed, Plaintiff’s construction is limited to a
“retailer” as the term is defined in the specification.
Plaintiff points to the specification disclosure that awards may alternatively be provided
by the incentive program sponsor, the host, or other parties as justification for its construction.
(Dkt. No. 47 at 24.) However, the fact that a “sponsor” or a “host” may also provide an award,
in addition to offering an incentive program, does not warrant narrowing the term “provider” to
only providing awards. Indeed, providing an award is not possible until the incentive program is
provided or offered to the consumer.
Likewise, the Court finds that Defendants’ construction could limit “provider” to only a
“host” because the specification defines “host” as individual or company that “provides” an
incentive program. Again, this is not correct because the claims only require allowing a
consumer to participate in an incentive program, which would encompass either offering or
providing an incentive program. In other words, a “sponsor” can be a “provider” because it
“offers” an incentive program to the consumer. Indeed, the specification discloses that in one
exemplary embodiment “a typical consumer may log on to the web site, register as with the host
system, and participate in one or more incentive programs.” ’830 Patent at 13:40–42. (emphasis
added). In order to participate in one or more incentive program, the incentive programs have to
be offered and provided to the consumer. Accordingly, the Court does not adopt either parties’
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construction, but instead construes “provider” to mean “individual or company that offers or
provides an incentive program or provides awards associated with an incentive program.”
3. Court’s Construction
In light of the intrinsic evidence, the Court construes “provider” to mean “individual
or company that offers or provides an incentive program or provides awards associated
with an incentive program.”
G. “inventory management system”
Disputed Term
“inventory
management
system”

Claim
1, 4, 6, 11,
16, 19, 2628, 32, 34

Plaintiff’s Proposal
No construction necessary.
If construed, the term
means: “one or more
systems that manage
inventory”

Defendants’ Proposal
“a system maintained by a
retailer to keep track of its
available merchandise”

The parties dispute whether the phrase “inventory management system” requires
construction. Plaintiff contends that the phrase does not require construction. In the alternative,
Plaintiff contends that the phrase should construed as “one or more systems that manage
inventory.” Defendants contend that the phrase should be construed as “a system maintained by
a retailer to keep track of its available merchandise.”
Plaintiff argues that Defendants’ construction improperly narrows the claim by requiring
the inventory management system to be maintained by a retailer (Dkt. No. 47 at 26.) Plaintiff
contends that the term “provider” is not limited to a traditional retailer, and also refers to a
merchant, sponsor, host, or other party that provides awards for an incentive program. (Dkt. No.
47 at 26.) Plaintiff also argues that Defendants’ construction would introduce ambiguity into the
claims because it is not clear what the phrase “maintained by” means or requires. (Dkt. No. 47 at
26.) Plaintiff argues that Defendants’ construction is also incorrect because the claims are not
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limited to tracking awards in the form of “merchandise,” but may also include other types of
awards. (Dkt. No. 47 at 26.) Finally, Plaintiff contends that the only possible need for judicial
construction is to confirm the general rule that the indefinite article “an” means “one or more.”
(Dkt. No. 47 at 26.)
Defendants respond that the specification discloses that a retailer maintains a retailer
inventory system to determine whether items are in inventory. (Dkt. No. 52 at 27.) Defendants
also argue that during prosecution the patentee distinguished the prior art by touting the benefit
of real-time knowledge. (Dkt. No. 52 at 27.) Thus, according to Defendants the patentee
relinquished the open-ended construction Plaintiff now proposes. (Dkt. No. 52 at 28.)
Plaintiff responds that the phrase is not ambiguous and therefore should not be construed.
(Dkt. No. 62 at 6.) Plaintiff also argues that the claim language is broader than the embodiment
that Defendants point to in the specification. (Dkt. No. 62 at 6.) Plaintiff contends that this
example is described as utilizing the inventory system of a retailer, but the claims recite “an
inventory management system” and not an inventory management system maintained by a
retailer. (Dkt. No. 62 at 6.) Plaintiff further argues that the specification states that “retailer”
refers to “any individual or company that wishes to provide awards and prizes to be associated
with incentive programs …” (Dkt. No. 62 at 7.) Plaintiff contends that to avoid limiting the
claims to require an inventory management system of a traditional retailer, the patentee more
generally recited an inventory management system “associated with each of said plurality of
providers.” (Dkt. No. 62 at 7.)
Plaintiff also argues that Defendants’ requirement that the system “keep track of …
available merchandise” is extraneous to the broader claim language. (Dkt. No. 62 at 7.) Finally,
Plaintiff argues that the prosecution history states that the invention involves “communication
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with an inventory management system of multiple providers,” which is consistent with the plain
claim language. (Dkt. No. 62 at 7.) Plaintiff also argues that the prosecution history states that
an “award unit can then be allocated from inventory to ensure availability,” which confirms that
the system may track “award units” and not just “merchandise.” (Dkt. No. 62 at 7)
For the following reasons, the Court construes the term “inventory management
system” to mean “at least one system that provides an inventory of an item (e.g.,
merchandise) or type of items (e.g., coupons, points, services) recorded in the award
database.”
1. The Claim Language
The term “inventory management system” appears in claims 1, 4, 6, 11, 16, 19, 26-28,
32, and 34. The Court finds that the term is used consistently in the claims and is intended to
have the same meaning in each claim. Claims 1 and 19 recites an “inventory management
system associated with each of said plurality of providers.” As discussed above, dependent
claim 2 recites that the “plurality of providers comprise at least one of a host, a retailer, a
merchant, and a sponsor.” Thus, the Court agrees that the claims do not support Defendants’
requirement that the system is “maintained by a retailer.” Instead, the patentee recited the
broader term “provider,” which may be a retailer, but is not required to be a retailer.
Likewise, claims 1 and 19 refer to a “sponsor-selected specific award unit item” and not
strictly merchandise. As discussed above regarding the phrase “sponsor-selected specific award
unit item,” merchandise is not the only specific award item. Finally, the Court notes that the
claims use the open-ended transitional phrase “comprising” and recite “an inventory
management system.” Accordingly, the Court finds that the claims encompass either a singular
or plural interpretation (i.e., “at least one system”). The Court will now turn to the remaining
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intrinsic evidence.
2. The Intrinsic Evidence

The specification describes both an “award database” and an “inventory system” of a
retailer at a retail location. See, e.g., ‘830 Patent at 8:17. For example, the specification states
that the inventory system can update the award database with the retailer’s current inventory as
follows:
The award database 204 that is created by participation by the retailer is also
connected via an electronic data interchange 126 to the retailer’s proprietary
inventory system 212. Thus, the award database 204 can be automatically updated
to reflect the retailer’s current inventory according to inventory numbers, such as
SKUs, type of inventory, or the like.
‘830 Patent at 15:41–47.

The specification further describes the award database and the

retailer’s inventory system as follows:
The award database 204 is also a conventional database, such as an Oracle
database. An application program, such as an Oracle Program controls the input
of data into the database, the structure of data records in the database, and the
modification of or addition to data in the database. The award database consists of
records for each registered retailer, as well as associated records for the retailer,
including the prizes offered by the retailer, the prices of such prizes, the
geographic location of the prizes, and any other information entered by the
retailer, including information directly provided to the award database 204
through an electronic data interchange 126 connected by a custom interface with
the inventory system 212 of the retailer. An application program connects the
award database to the retailer’s inventory system, so that each prize
recorded in the award database can be tied, by an inventory number or SKU,
to the exact item, or type of items, in the inventory of the retailer. In
particular, the award database 204 can identify the geographic location of the
prize, so that an application program can determine the closest geographic
location of the retailer to the location of the consumer who has won a particular
prize. The database is then updated as new retailers are added, and the record for
each retailer is updated upon the occurrence of specific events, including a
retailer's adding a new prize, purchase of a prize, a consumer winning a prize,
selection of a fulfillment option, and the like. Each event that requires an update
of the award database calls the application program, such as an Oracle program,
necessary to modify the relevant records in the award database.
‘830 Patent at 46:13–41 (emphasis added). Thus, the specification discloses that the claimed
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“inventory management system” provides an inventory of an item or type of items recorded in
the award database. And as further defined in the specification, the item or type of items
recorded in the award database may include “all types of incentives, including merchandise,
coupons, points, cash, services and other forms of incentives.” ‘830 Patent at 7:45–47.
Finally, the prosecution history confirms that “inventory management system” should be
construed to mean a system that provides an inventory of an item (e.g., merchandise) or type of
items (e.g., coupons, points, services) recorded in the award database. To distinguish the claims
from the prior art, the patentee stated the following:
Kanter has no knowledge of merchant provider’s inventory data, let alone real
time knowledge and allocation of inventory.
…
Automated award fulfillment, according to the present invention, includes
sponsor designated or selected redemption whereby the sponsor of the award
may select or determine which award unit (see Specification at 93, line 9, for
example) will be provided to the customer, by communication with an inventory
management system of multiple providers and may designate the location of the
redemption (see Specification at page 95, line 20, for example). The selection can
also include a specific consumer user selected by the sponsor which can, e.g., be
instructed to go to a store identified as having the award by the inventory
management system to pick up the award unit (See for example page 97, line 1417). The award unit can then be allocated from inventory to ensure availability
upon a visit by the specific consumer user.
Dkt. No. 49 at 41 (Aug. 26, 2002 Reply to OA) (emphasis in original). Clearly, the patentee
argued that knowledge and allocation of inventory is an important aspect of the recited inventory
management system. It allows a sponsor to identify a store having an item or type of items and
directs the consumer to that store. Given the prosecution history, the Court finds that Plaintiff’s
construction does not adequately capture the arguments made by the patentee.

Indeed,

“managing inventory” may fail to capture providing an inventory of an item or type of items
recorded in the award database, as described in the intrinsic evidence. Accordingly, the Court
does not adopt either parties’ construction.
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3. Court’s Construction
In light of the intrinsic evidence, the Court construes “inventory management system”
to mean “at least one system that provides an inventory of an item (e.g., merchandise) or
type of items (e.g., coupons, points, services) recorded in the award database.”
H. “host” and “host computer”
Disputed Term
Claim
“host”
2, 31, 32, 35

“host
computer”

Plaintiff’s Proposal
“any individual or company
who wishes to provide a
system for permitting
sponsoring companies to
offer incentive programs to
consumers, employees,
suppliers, partners and the
like of the individual or
company”

Defendants’ Proposal
“individual or company who
wishes to provide a system for
permitting sponsoring
companies to offer incentive
programs to customers”

1, 3, 4, 6, 7,
11, 15, 16,
17, 19

As an initial matter, the parties ask the Court to construe the term “host” and not
specifically the term “host computer” that appears in asserted claims 1 and 19. Because the
terms are related and appear separately in various claims, the Court will construe both “host” and
“host computer” to avoid confusion. The parties’ constructions are close to the definition of
“host” provided in the specification with the dispute focusing on whether the term “host” should
include “any individual or company,” as Plaintiff proposes, or whether the term should be
construed as an “individual or company,” as Defendants propose. The parties also dispute
whether the construction requires listing that incentive programs are offered to “consumers,
employees, suppliers, partners and the like of the individual or company,” as Plaintiff proposes,
or whether the incentive programs are offered only to “customers,” as Defendants propose.
Plaintiff notes that the parties offer slight variants of the definition of “host” that is
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provided in the specification. (Dkt. No. 47 at 22.) Plaintiff further notes that “host” does not
appear separate from “host computer” in asserted claims 1 and 19. (Dkt. No. 47 at 22.) Because
the parties have not presented “host computer” as a disputed term, Plaintiff contends that the
Court should not construe the term “host.” (Dkt. No. 47 at 22.) Alternatively, Plaintiff argues
that if the Court construes the term “host,” then it should adopt the definition provided in the
specification. (Dkt. No. 47 at 22.)
Defendants respond that although the parties appear to agree in concept for the
construction of the term “host,” Defendants’ proposal would be more helpful to a jury. (Dkt. No.
52 at 31.)

Defendants argue that the term “any” used in Plaintiff’s construction creates

confusion when substituted into the claim. (Dkt. No. 52 at 31.) Defendants also argue that the
claims are limited to “a sponsor-selected consumer user,” so including “employees, suppliers,
partners and the like of the individual or company” in the construction would be inconsistent or
at least confusing. (Dkt. No. 52 at 31.)
Plaintiff responds that the Court should either adopt the express definition from the patent
specification or decide not to construe the term “host.” (Dkt. No. 62 at 5.) Plaintiff argues that
Defendants’ construction inappropriately limits the host to providing incentive programs to
“customers,” whereas the specification more broadly states “to consumers, employees, suppliers,
partners and the like ….” (Dkt. No. 62 at 5.)
For the following reasons, the Court construes “host” to mean “any individual or
company who wishes to provide a system for permitting sponsoring companies to offer
incentive programs to consumers, employees, suppliers, partners and the like of the
individual or company.”

The Court construes “host computer” to mean “a computer

provided by a host.”
Page 46 of 49 

1. The Intrinsic Evidence
The term “host” appears in claims 2, 31, 32, and 35. The Court finds that the term is used
consistently in the claims and is intended to have the same meaning in each claim. The term
“host computer” appears in claims 1, 3, 4, 6, 7, 11, 15, 16, 17, and 19. The Court finds that the
term is used consistently in the claims and is intended to have the same meaning in each claim.
As indicated by the parties, the Court finds that it would be confusing to construe the term “host”
without also construing the term “host computer.” The plain language of the claims indicate that
a “host” is not a “host computer,” but instead a “host” provides a “host computer.” For instance,
independent claim 1 recites a “host computer” coupled to a network, while dependent claim 2
recites that the “plurality of providers comprise at least one of a host.” Thus, to construe “host”
without also construing “host computer” could lead to confusion because the claims do not use
“host” interchangeably with “host computer.” Accordingly, the Court will construe both “host”
and “host computer.” The Court will now turn to the remaining intrinsic evidence.
As noted by Plaintiff, the specification provides an explicit definition for the term “host.”
The specification defines host as follows:
The term “host,” as used herein, encompasses any individual or company who
wishes to provide a system for permitting sponsoring companies to offer incentive
programs to consumers, employees, suppliers, partners and the like of the
individual or company, and for creation of databases of retail, catalog, sponsor
and other items that permit automated fulfillment of specific items listed in
computer inventory systems of retailers at a retail location.
‘830 Patent at 8:10–17. The Court finds that Plaintiff’s construction mirrors the definition
provided in the specification and should be adopted for the term “host.” Defendants do not
provide a persuasive reason why the Court should not adopt the definition provided by the
patentee in the specification. Indeed, the parties have agreed to the definition of “sponsor” that
is provided in this same section of the specification. Likewise, because the Court is also
Page 47 of 49 

construing the term “host computer,” Defendants’ concern for confusion is addressed. For
example, the construction for “host” need not be inserted in the term “host computer” in the
asserted claims as Defendants suggest.
Regarding the term “host computer,” the Court finds that the term should be construed to
mean “a computer provided by a host.” The specification provides an exemplary embodiment of
a host computer and indicates that it is part of the host system. ‘830 Patent at 11:63–12:8.
Furthermore, the specification provides that the incentive programs offered to consumers “may
be incentive programs provided by the operator of the host system, or third party incentive
programs that have been identified by the host for listing on a directory.” ‘830 Patent at 12:42–
44. Thus, the host computer is a computer provided by a host that permits sponsoring companies
to offer incentive programs.
2. Court’s Construction
In light of the intrinsic evidence, the Court construes “host” to mean “any individual or
company who wishes to provide a system for permitting sponsoring companies to offer
incentive programs to consumers, employees, suppliers, partners and the like of the
individual or company.”

The Court construes “host computer” to mean “a computer

provided by a host.”
V.

CONCLUSION

The Court adopts the above constructions. The parties are ordered that they may not
refer, directly or indirectly, to each other’s claim construction positions in the presence of the
jury. Likewise, the parties are ordered to refrain from mentioning any portion of this opinion,
other than the actual definitions adopted by the Court, in the presence of the jury. Any reference
to claim construction proceedings is limited to informing the jury of the definitions adopted by
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the Court.
It is SO ORDERED.
SIGNED this 3rd day of January, 2012.
SIGNED this 4th day of June, 2014.

____________________________________
ROY S. PAYNE
UNITED STATES MAGISTRATE JUDGE

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