Kroy IP Holdings, LLC v. Autozone, Inc.,
Filing
162
CLAIM CONSTRUCTION MEMORANDUM OPINION AND ORDER. Signed by Judge William C. Bryson on 12/23/2014. (ch, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
KROY IP HOLDINGS, L.L.C.,
Plaintiff,
v.
AUTOZONE, INC.,
Defendant.
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Case No. 2:13-CV-888-WCB
LEAD CASE
CLAIM CONSTRUCTION MEMORANDUM OPINION AND ORDER
On November 19, 2014, the Court held a hearing to determine the proper construction of
the disputed claim terms in U.S. Patent No. 7,054,830 (“the ’830 patent”), owned by plaintiff
Kroy IP Holdings, LLC. After considering the arguments made by the parties in their claim
construction briefing (Dkt. Nos. 82, 85, and 91) and at the claim construction hearing, and with
due consideration of the claim construction orders relating to the same patent in the related case
of Kroy IP Holdings, LLC v. Safeway, Inc., No. 2:12-cv-800, the Court issues the following
construction of the terms as to which the parties disagree.
I. BACKGROUND
The ’830 patent, entitled “System and Method for Incentive Programs and Award
Fulfillment,” is directed to the use of computers and the Internet to design and implement
incentive award systems that can be used to promote merchants’ products and services to
consumers. The two independent claims of the ’830 patent, claims 1 and 19, recite as follows:
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1. A system for incentive program participation and automated award fulfillment,
comprising:
a host computer coupled to a network;
a first database accessible from said host computer; and
an automated award fulfillment application executed on said host
computer for participation in incentive programs of a plurality of providers
in communication with an inventory management system associated with
each of said plurality of providers wherein said automated award
fulfillment application program provides sponsor-selected fulfillment, said
automated award fulfillment application program comprising:
code adapted to provide a sponsor-selected specific award unit
item, said sponsor-selected specific award unit item being tailored to
demographic and psychographic preferences of a sponsor-selected
consumer user, and
code adapted to provide a sponsor-selected geographic location for
fulfillment.
19. A method for providing an incentive program 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 communications 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.
The ’830 patent is the subject of ongoing litigation in the Safeway case, in which the
Court issued two previous claim construction orders. See case no. 2:12-cv-800, Dkt. Nos. 90 and
141. The parties in this case now ask the Court to construe some of the same terms and some
additional terms; with respect to certain claim terms, the defendants have asked the Court to
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adopt a claim construction different from the one it adopted in the Safeway case. The Court will
address each of the disputed claim terms in the order in which they appear in the parties’ briefs.
II. DISCUSSION
1. “[in] communication with an inventory management system” and “an inventory
management system”
The plaintiff’s proposed construction of “in communication with an inventory
management system, as used in claim 1 and claim 19 is: No construction is necessary apart from
the construction of “an inventory management system.”
The plaintiff’s proposed construction of “an inventory management system,” as used in
claim 1 and claim 19, is: “at least one system that provides an inventory of an item (e.g.,
merchandise) or types of items (e.g., coupons, points, services) recorded in the award database.”
The defendants’ proposed construction of “in communication with an inventory
management system,” as used in claim 1, is: “which electronically connects an awards database
to a system that provides a quantity of items (i.e., products or services) or types of items (i.e.,
categories of products or services) currently available for redemption in a retailer’s inventory.”
The defendants’ proposed construction of “in communication with an inventory
management system,” as used in claim 19, is: “an electronic connection between an awards
database and a system that provides a quantity of items (i.e., products or services) or types of
items (i.e., categories of products or services) currently available for redemption in a retailer’s
inventory.”
Defendant Starbucks’ proposed construction of “[in] communication with an inventory
management system,” as used in both claim 1 and claim 19, is: “at least one system that
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provides an inventory of award unit items (i.e. products or services) currently available for
redemption electronically connected to a software program used for award fulfillment.”
The Court in the Safeway case construed the term “inventory management system” as:
“At least one system that provides an inventory of an item (e.g., merchandise) or types of items
(e.g., coupons, points, services) recorded in the award database.” See Safeway, Dkt. No. 90, at
40-45; Dkt. No. 141, at 5-7. The Safeway Court did not construe the words “[in] communication
with.”
Analysis: The claim language requiring “communication with an inventory management
system” is very broad. It does not require any particular type of communication or any particular
type of inventory management system. It is enough, according to Kroy, that the automated
award fulfillment application program on the host computer is in electronic communication with
an inventory management system associated with each provider.
The defendants make several arguments as to how the “[in] communication with an
inventory management system” limitation should be construed.
a. First, the defendants contend that the term “inventory management system” should be
limited to the inventory management system of a retailer. While there is nothing in the claim
language to support that restrictive reading, the defendants urge that portions of the specification
and Kroy’s statements in its brief in response to a request for inter partes review before the
Patent Trial and Appeal Board (“PTAB”) require that the limitation be construed in that manner.
After examining the specification and the statements Kroy made to the PTAB, the Court is
satisfied that, read in context, neither the specification nor the statements to the PTAB constitute
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a representation by Kroy that the “inventory management system” referred to in the claims is
limited to inventory management systems maintained by retailers.
Nothing in the specification limits the claimed inventory management systems to those of
retailers, as that term is generally understood.
Importantly, the patent expressly defines
“retailer,” and it does so in a manner that gives that term a very broad definition for purposes of
the patent, much broader than the definition of the term as ordinarily used. The term “retailer,”
according to the specification, “encompasses any individual or company that wishes to provide
awards and prizes to be associated with incentive programs.” ’830 patent, col. 7, ll. 54-56. In
light of that very broad definition of “retailer,” even if the patent were construed as limited to
“retailers,” it would still apply to any entity providing prizes associated with incentive programs,
even if the entity were not a “retailer” in the ordinary sense of that term. Accordingly, limiting
the scope of the claims to “retailers,” as that term is commonly understood, would create the risk
of artificially and improperly narrowing the patent in a manner contrary to its terms.
Because of the potential for confusion arising from the breadth of the patent’s definition
of the term “retailer,” the Court will use the ordinary meaning of the term “retailer” in the course
of its analysis of the claims’ scope. However, it is important to keep in mind that the patent’s
broad definition of “retailer” provides the first, and simplest, answer to the defendants’
arguments that the patent must be read narrowly as applicable only to retailers, as that term is
used in common parlance.
While it is clear from the specification that the inventory management systems can be
those of retailers, and frequently will be, the specification does not indicate that the term must be
limited to “retailers,” as that term is ordinarily used. For example, Figure 2 of the patent and the
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associated text in the specification provides an example of the operation of the invention,
illustrating the “particular systems necessary for operation of the present invention.” ’830
patent, col. 10, ll. 39-40. To depict the operation of those systems, the figure includes a
representation of a “member retailer computer” connected to a “retailer inventory system.”
However, neither the figure nor the associated text indicates that the inventory management
system of the claims must be that of a retailer, as opposed to, for example, a wholesaler or a
manufacturer. See id., col. 10. ll. 39-50; Fig. 2. In other passages quoted by the defendants, the
specification simply points out that the systems and methods of the patent “permit retailers to
make retail items in their inventory available to sponsors for association with incentive programs
as prizes,” id., col. 6, ll. 20-23, and “permit automated fulfillment of specific items listed in
computer inventory systems of retailers at a retail location,” id., col. 8, ll. 16-17. Those
statements regarding the capabilities of the invention are not restrictive in nature and do not in
any way suggest that the “inventory management systems” of the patent are limited to inventory
management systems of conventional retailers.
Similarly, Figure 15 and the associated portions of the specification provide an
“overview” of the “functions accomplished by the system and method of the present invention.”
See ’830 patent, col. 12, line 9, through col. 15, line 56. Figure 15, however, is best understood
as exemplary only; not all of the elements found in the figure, or in the portion of the
specification that describes the figure, are required limitations of claims 1 and 19. From context,
it is clear that the paragraph of the specification that describes the “participation of retailers in
the present method” merely describes the manner in which the system and method can operate
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when a retailer elects to offer prizes through an incentive program. See ’830 patent, col. 15, ll.
24-53.
In particular, Figure 15 shows the operation of the patented system when the
promotional prize is awarded to a customer by a retailer. The specification describes the figure
as depicting the “participation of retailers in the present method and system.” Id., col. 15, ll. 2425. It explains that a retailer can “list information regarding prizes the retailer wishes to include
in a menu of various prizes offered by the retailer.” Id., col. 15, ll. 38-40. It adds that the “award
database that is created by participation by the retailer is also connected via an electronic data
exchange to the retailer’s proprietary inventory system,” which allows the award database to be
“automatically updated to reflect the retailer’s current inventory according to inventory
numbers.” Id., col. 15, ll. 41-46. The Court does not interpret those portions of the specification
as indicating that under the claimed system and method the term “inventory management
system” refers only to an inventory management system maintained by a retailer.1
The defendants argue that in the brief Kroy filed before the PTAB, Kroy explicitly
limited the “inventory management system” of the ’830 patent to that of a retailer. The Court
has examined the brief and finds the defendants’ argument on that score unconvincing. The
defendants quote portions of the brief in which Kroy referred to an amendment made in the
course of the prosecution of the ’830 patent. In the brief, Kroy stated that “[t]he remarks
accompanying the amendment emphasized, consistent with the specification, that this limitation
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Other portions of the specification cited by the defendants are of the same general
character. They relate to Figures 2, 5, 13, and 15, all of which illustrate the operation of the
invention as applied to retailers. Accordingly, those portions of the specification naturally refer
to retailers’ inventory systems. See ’830 patent, col. 11, ll. 49-52; col. 20, line 58, through col.
21, line 2; col. 39, ll. 18-27; col. 46, ll. 24-29.
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[the inventory management system limitation] refers to a system associated with retailers’
inventory information, and not the award database on the host computer.” Preliminary Response
of Patent Owner (filed July 30, 2014), Dkt. No. 85-5, at 16. That statement, however, was not
making the point that the inventory management system could only be associated with a retailer.
Instead, it was making the point that the inventory management system was not associated with
the award database on the host computer.
Moreover, the brief separately stated that the
inventory management system is “associated with providers, such as retailers, and manages
inventory information regarding the providers’ inventory of awards or products relating to
awards.” Id. (emphasis added). Thus, the brief supports Kroy’s position that the inventory
management system is that of providers “such as retailers,” and is not exclusively limited to
retailers, as that term is ordinarily used.
Other portions of Kroy’s brief from which the defendants quote are equally unhelpful to
the defendants’ argument. The defendants quote Kroy’s statement that “[t]he disclosed system
integrates the incentive program host system with one or more retail inventory management
systems to access retail inventory information . . . .” Preliminary Response of Patent Owner
(filed July 30, 2014), Dkt. No. 85-5, at 5. But that quotation comes immediately after a sentence
that reads: “The invention of the’830 patent is particularly advantageous for retailers who wish
to sponsor personalized incentive programs to promote their products and/or services, reward
loyal customers, attract new customers, drive retail foot traffic to their locations, etc.” It is thus
apparent that the reference to “retail inventory management systems” was in the context of the
“particularly advantageous” use of the invention by retailers. Not only does the quoted matter
not indicate that the invention is limited to retailers, but the previous sentence gives rise to the
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opposite inference. Similarly, the brief’s statement that the invention “provides a mechanism for
tracking inventory data associated with retailers who participate in the sponsor’s incentive
programs,” id. at 1, is merely a characterization of a feature of the invention, not a restrictive
definition of its scope.
The defendants quote from the prosecution history of the ’830 patent in which the
applicants distinguished a prior art reference to Klug by arguing that, among other things, Klug
“does not address access to any retailer, or any inventory systems of any providers, i.e.,
retailers.” Again, however, that remark does not indicate that the ’830 claims are limited to
retailers, as that term is ordinarily understood; at most, it suggests only that retailers are likely to
be the most common users of the invention.
Thus, the Court does not interpret the intrinsic evidence to support the defendants’ effort
limit the meaning of the term “inventory management system” to the inventory systems of
“retailers,” in the usual sense of that term. That is particularly true in light of the defendants’
representation at the claim construction hearing that their use of the term “retailers” in this
context is meant to refer to specific retail outlets. See Claim Construction Hearing Transcript,
Dkt. No. 144, at 61-62. There is nothing in the record to suggest that the term “inventory
management system” is limited to an inventory management system of retailers in general, and
there is certainly nothing to suggest that the claim language is meant to be limited to the
inventory systems of individual stores.
b.
The defendants’ second argument is that “in communication with” means
“electronically connect[ed] . . . to” and that the patent requires that “the award database and the
inventory management system” must be “electronically connected to one another via an
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electronic data interchange.” There appears to be no dispute that the “communication” in
question is electronic, since the computerized system described in the patent is entirely
electronic.
However, Kroy fairly criticizes the defendants’ proposal because it omits the
requirement of “communication,” which entails more than mere “connection.”
The better
construction of “in communication with” is simply “in electronic communication with.”
As support for their contention that the inventory management system must be
electronically connected to the award database, the defendants again rely on an excerpt from the
specification describing the exemplary depiction of the invention in Figure 15. For the same
reasons given above, that example does not restrictively define the claim terms. The defendants’
citations to a submission that Kroy filed in the Safeway case is also unhelpful on this point, as
the submission did not refer to a connection between the inventory management system and the
award database, but instead referred to a “communication between the award fulfillment
application program and the inventory management system.” See Plaintiff Kroy’s Opposition to
Defendants’ Motion for Summary Judgment of Invalidity Under 35 U.S.C. Section 101, case no.
2:12-cv-800, Dkt. No. 151, at 7. Kroy’s language, unlike the defendants’, tracks the text of
claims 1 and 19. The Court therefore rejects the defendants’ proposed construction, except to the
extent that it includes the concept that the “communication” referred to in the claim language
must be electronic in nature.
c. The defendants next argue that the items in the inventory referred to in the “inventory
management system” limitation should be specifically limited to “products or services.” In
support of that argument, the defendants point to two excerpts from the specification. Those
passages, however, discuss the operation of the invention in the context of retail stores with
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inventory consisting of products, or products and services. See ’830 patent, col. 11, ll. 49-51
(referring to exemplary Figure 15); col. 44, ll. 1-34 (referring to “an embodiment of the
invention” in which the customer visits a retail store to obtain his prize, in the form of either a
product or services). Those passages therefore deal with particular embodiments. While those
embodiments may be the ones most likely to be encountered in practice, the discussion of those
embodiments in the specification does not address the full breadth of the inventions as claimed.
In support of the contention that the inventory management system should be construed
as limited to tracking products and services, the defendants argue that it would make little sense
for the inventory management system to contain information regarding the quantity of awards
such as coupons or loyalty points. That argument, however, would seem to support limiting the
inventory management system to products alone, as the term “inventory” is most naturally
applied to products. Yet the defendants acknowledge that the inventory management system
applies not only to products but also to services. If it is appropriate for a merchant to have an
“inventory” of available services, such as the number of free car washes that a service station is
prepared to provide as incentive rewards, it would seem no more unnatural to refer to an
inventory of the number of frequent flyer miles that an airline is prepared to distribute to
customers as loyalty awards. While a commercial inventory will often involve products, a
company could offer a promotion in which the prizes were coupons redeemable for discounts on
vacation trips, and the company could have an inventory of discount coupons that it is prepared
to make available for various trips.
Nothing would prevent that company’s inventory
management system from qualifying as the inventory management system of the ’830 patent.
Accordingly, the Court concludes that nothing in the patent or other evidence adduced by the
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defendants requires that the items subject to the “inventory management system” are limited to
products or services.
d. Finally, the defendants contend that the “inventory management system” should be a
system that “provides a quantity of items” currently available for redemption in the retailer’s
inventory. In their claim construction brief, the defendants argued that an inventory must consist
of a “listing,” but shortly before the claim construction hearing, the defendants abandoned that
argument in favor of their contention that an inventory management system is a system “that
provides a quantity of items (i.e., products or services) or types of items (i.e., categories of
products or services) currently available for redemption in a retailer’s inventory.”
The
defendants have provided no briefing in support of that claim construction.
While the term “quantity” is generally consistent with the concept of an inventory, an
inventory is not limited to a measure of quantities of items, which might be suggested by
defining inventory in terms of quantity. Moreover, the Court is not persuaded that the term
“quantity” adds clarity to the unelaborated term “inventory” in the definition of “inventory
management system.” The Court therefore will not adopt the defendants’ proposed definition of
the limitation “in communication with an inventory management system.”2
e. Starbucks proposes its own construction of “in communication with an inventory
management system.” Based on the specification and the prosecution history, Starbucks argues
that an inventory management system must be capable of identifying the items currently
available for redemption. For the reasons given above, the evidence does not support Starbucks’
2
In their claim construction brief, the defendants acquiesced in the modification of their
proposed claim construction of “an inventory management system,” in accordance with Kroy’s
submission that the Court’s construction should define the article “an” to mean “one or more.”
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argument that the inventory must be limited to products or services. However, the specification
supports Starbucks’ argument that the inventory management system must be able to perform the
task of identifying the items available for redemption.
To be sure, the discussions of that function in the specification are in the context of
particular embodiments of the invention. See ’830 patent, col. 11, ll. 49-52; col. 15, ll. 44-47;
col. 39, ll. 18-34. The prosecution history, however, provides stronger support for Starbucks’
general point. In an August 26, 2002, amendment, the applicants distinguished a prior art patent
to Kanter. See Amendment and Reply (filed Aug. 26, 2002), Dkt. No. 85-7, at 24-25. In so
doing, the applicants stated that the claimed invention, unlike Kanter, allows sponsors to
communicate with an inventory management system to obtain “real time knowledge and
allocation of inventory,” and allows an award to be “allocated from inventory to ensure
availability upon a visit by the specific consumer user.” Id. at 24.
Based on the parties’ arguments, the Court will define the term “inventory management
system” somewhat differently than it did in the Safeway case. The Court will construe the term
“[in] communication with an inventory management system,” which was not separately
construed in the Safeway case, according to its plain terms, with only slight elaboration.
The Court’s construction of “[in] communication with an inventory management system”
is “[in] electronic communication with an inventory management system.”
The Court’s construction of “inventory management system” is “at least one system that
provides an inventory of items that are currently available for redemption.”
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2. “a sponsor-selected geographic location for fulfillment”
The plaintiff’s proposed construction of “a sponsor-selected geographic location for
fulfillment” is: “at least one geographic location selected by a sponsor for fulfillment.”
The defendants’ proposed construction of “a sponsor-selected geographic location for
fulfillment” is: “a geographic location selected by a sponsor for award fulfillment.”
The Court’s construction of “a sponsor-selected geographic location for fulfillment” in
the Safeway case was: “at least one specific geographic location selected by a sponsor for
fulfillment.”
Analysis: There are only two differences between the parties’ respective constructions:
first, Kroy would add the phrase “at least one” as a modifier of “geographic location; and second,
the defendants would add the term “award” before the word “fulfillment.”
As to the first difference between the parties, the defendants argue that even though the
word “a” generally means “one or more” in patent practice, it does not mean “one or more” in
this setting, because the concept of a sponsor-selected geographic location for fulfillment
necessarily entails the sponsor’s selection of a single location. Otherwise, the defendants argue,
it is the customer who selects the location for fulfillment.
That argument is unpersuasive. Even if the sponsor selects more than a single location
for fulfillment, the location for fulfillment is still sponsor-selected; the customer is simply given
the ability to choose among the locations designated by the sponsor. On the other hand, if there
is effectively no selection done by the sponsor—for example, if the sponsor allows the customer
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to redeem his award at any retail outlet owned or operated by the sponsor—the geographic
location for fulfillment would not be sponsor-selected in any meaningful sense.3
Although the defendants argue that the specification and the prosecution history support
their proposed claim construction, the Court does not find either to be enlightening on this issue.
The portions of the specification cited by the defendants are exemplary illustrations of the
invention, as shown in Figures 14, 15, and 24, and do not purport to describe the full scope of the
claims. Likewise, the accompanying text in the specification merely describes those examples
by reference to the “nearest retail location for fulfillment of the prize,” ’830 patent, col. 22, ll. 23; col. 46, ll. 29-33, or an instruction to the consumer to “go to store Y,” id., col. 43, ll. 33-34.
Those descriptions are plainly exemplary and not limiting. As for the prosecution history, the
applicants added the claim language requiring “a sponsor-selected geographic location for
fulfillment” at the suggestion of the examiner, but the defendants point to nothing in the
prosecution record that suggests that the added language requires that the sponsor select only a
single location.
As for the addition of the word “award” in the defendants’ proposed claim construction,
that is consistent with the use of the term “fulfillment” in the claims, which refer to the
inventions as systems and methods for providing “automated award fulfillment.” The reference
to “fulfillment” in the portion of the claims dealing with sponsor-selected geographic locations
3
The defendants acknowledge that “the geographic location can be broader than a single
store, so long as it is a single geographic location, such as a zip code, area code or point of sale,
not simply a store of the consumer’s choosing.” Dkt. No. 85, at 18. The defendants’ position
thus seems to be that a sponsor can offer a consumer the right to award fulfillment at any of one
a group of stores, as long as those stores can be characterized as belonging to the same
“geographic location,” such as a zip code, an area code, or presumably even a region of the
country. That concession seems to be at odds with the defendants’ argument that if the consumer
has a choice as to where to redeem his award, the geographic location limitation is not satisfied.
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relates back to the award fulfillment to which the claims are generally directed. The Court will
therefore adopt that portion of the defendants’ proposed construction.
The Court’s construction of “a sponsor-selected geographic location for fulfillment is:
“at least one geographic location selected by a sponsor for award fulfillment.”
3. “a sponsor-selected specific award unit item”
The plaintiff’s proposed construction of “a sponsor-selected specific award unit item” is:
“a specific award item and all the corresponding identifying or classifying information selected
by a sponsor.”
The defendants’ proposed construction of “a sponsor-selected specific award unit item”
is: “a specific award unit item selected by a sponsor and all of the corresponding identifying or
classifying information.”
The Court’s construction of “a sponsor-selected specific award unit item” in the Safeway
case was: “a specific award item and all of the corresponding identifying or classifying
information selected by a sponsor.”
Analysis: The use of the terms “award,” “award unit,” and “award unit item” in the
patent gives rise to some difficulty in understanding the patent, particularly because the term
“award unit item” is not defined in the specification. Nonetheless, as the Court noted in the
claim construction order in the Safeway case, case no. 2;12-cv-8800, Dkt. No. 90, at 22-24, with
some effort it is possible to make sense of the relationship among those terms and discern the
meaning of the claim term “specific award unit item.”
The term “award” is specifically defined in the patent to be synonymous with the word
“prize.”
An “award” is defined as “encompass[ing] all types of incentives, including
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merchandise, coupons, points, cash, services and other forms of incentives.” ’830 patent, col. 7,
ll. 44-47. As for the term “award unit,” the specification provides that 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, 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.”
Id., col. 41, ll. 11-22 (emphasis added).
Given the express definitions of the terms “award” and “award unit,” Judge Payne in his
claim construction order in the Safeway case concluded that a “specific award unit item” is best
understood to mean “a specific award item and all of the corresponding identifying or classifying
information.” This Court agrees. The Court understands the term “award unit item” to be a
single item consisting of all of the elements that make up an award unit, as that term is used in
the patent. In that context, the best description of the award component of the award unit item is
an “award item.” That is the term that Judge Payne used in his construction of the claim term “a
sponsor-selected specific award unit item,” and this Court concludes that it constitutes the best
available explanation for a set of terms that are, unfortunately and unnecessarily, rather opaque.
The Court’s construction of “a sponsor-selected specific award unit item” is: “a specific
award item and all the corresponding identifying or classifying information selected by a
sponsor.”
4. “award fulfillment”
The plaintiff proposes that no construction of the term “award fulfillment” is necessary.
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Defendant Starbucks’ proposed construction of “award fulfillment” is: “redemption of an
award for a specific award unit item selected by a sponsor.”
The defendants’ alternative proposed construction of “award fulfillment” is: “redemption
of a sponsor-selected award at a sponsor-selected location.”
The Court in the Safeway case was not asked to construe the term “award fulfillment”
and did not do so.
Analysis: The term “award fulfillment” is an unfamiliar term that has a special meaning
in connection with its use in the ’830 patent. The Court believes that construction of the term
could prove useful to an understanding of the patent, and for that reason the Court will construe
the term. In addition, lying beneath the dispute over the construction of the term “award
fulfillment” is a fundamental disagreement among the parties as to the scope of the claims, which
needs to be addressed.
The evidence in the record supports Starbucks’ proposed construction of the term “award
fulfillment.” Figure 22 of the patent depicts “the basic steps of award fulfillment.” ’830 patent,
col. 41, ll. 3-4. In describing the process depicted in Figure 22, the specification explains that
after “the consumer wins an award,” the award fulfillment is concluded when “the award is
redeemed.” Id., col. 41, ll. 6-9. The prosecution history likewise supports Starbucks’ proposed
construction. During prosecution, the applicants characterized “automated award fulfillment” as
a process in which “a sponsor of a program designates what award will be provided and the
location for redemption by the consumer user.” Amendment and Reply (June 8, 2001), Dkt. No.
85-16, at 16.
See also Amendment and Reply (August 26, 2002), Dkt. No. 85-8, at 24
(“Automated award fulfillment, according to the present invention, includes sponsor designated
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or selected redemption whereby the sponsor . . . may designate the location of the redemption.”);
Reply and Request for Reconsideration (Jan. 25, 2002), Dkt. No. 85-15, at 26 (in the case of
automated award fulfillment, “a sponsor of a program designates what award will be provided
and the location for redemption by the consumer user.”).
The Court’s construction of the term “award fulfillment” is: “redemption of an award
for a specific award unit item selected by a sponsor.”
While the Court could stop with simply defining the term “award fulfillment,” that would
not address the central dispute among the parties that relates to what steps in the process of
award fulfillment are required by the claims. The defendants argue that the claims require that
the customer actually redeem the award. Kroy argues that the claims do not require the act of
redemption by the customer, but require only actions by the sponsor, up to and including
designating the specific award to be redeemed and designating the geographic location for
redemption. On this issue, the Court agrees with Kroy.
By their terms, neither claim 1 nor claim 19 contains any limitation requiring actual
redemption of the award by the customer. Claim 1 recites that the “automated award fulfillment
application program provides sponsor-selected fulfillment,” and the claim further recites that the
“automated award fulfillment program” comprises code adapted to provide “a sponsor-selected
award unit item tailored to demographic and psychographic preferences of a sponsor-selected
consumer user,” and code adapted to provide “a sponsor-selected geographic location for
fulfillment.” Those limitations are all directed to features of the program. They do not require
any action on the part of the consumer, such as actual redemption of the award. Nor would the
act of redemption by the consumer be a feature of the recited program.
19
With respect to claim 19, the step of “providing automated award fulfillment” comprises
“providing sponsor-selected fulfillment,” which further comprises providing “a sponsor-selected
specific award unit item,” providing that item “tailored according to demographic and
psychographic preferences of a sponsor-selected consumer user,” and providing “a sponsorselected geographic location for fulfillment.” The claim does not recite a step in which the
consumer actually redeems the award.
Thus, even though “award fulfillment” refers to
redemption of an award, the claimed method for providing automated award fulfillment is not
required to include the final step of redemption of the award. By analogy, a method for selling
sports cars could include various promotional steps designed to promote sales, but it would not
be necessary for it to require that any customer actually buy a car.
The defendants argue that Kroy’s position on this issue is inconsistent with the
specification and the prosecution history, but the Court is not persuaded that it is. With respect
to the specification, the defendants rely on Figure 22 and the accompanying text, ’830 patent,
col. 40, line 59, through col. 41, line 10. In particular, the defendants rely on the statement in the
specification that at step 658 in Figure 22, “the award is redeemed at a retailer using a card.” Id.,
col. 41, l. 8-9. The figure and the pertinent discussion in the specification, however, merely
describe the overall process of redemption as applied when redemption occurs at a retail
location. Typically, that process will conclude with the customer’s receipt of the award at the
retailer’s location., as the specification states. But that does not mean that claims 1 or 19,
although directed to a system and method for award fulfillment, require the performance of each
step in the redemption process, nor does the specification so indicate.
20
The prosecution history is also unhelpful to the defendants. The references they cite do
not indicate that the act of redemption by the consumer is a limitation of either claim 1 or claim
19. Instead, the reference on which they principally rely characterizes the “automated award
fulfillment” as permitting “a sponsor of a program [to designate] what award will be provided
and the location for redemption by the consumer user.” Amendment and Reply (filed June 8,
2001), Dkt. No. 85-17, at 16. The same is true of the other portions of the prosecution history
cited by the defendants, which identify sponsor selection of the award and sponsor selection of
the location for redemption as features of the “automated award fulfillment,” but do not identify
actual redemption by the consumer as a required step. See Amendment and Reply (filed Aug.
26, 2002) (“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 . . . will be provided to the consumer user . . . and may designate the location of
the redemption . . . .”); Reply and Request for Reconsideration (filed Jan. 25, 2002), Dkt. No. 8515, at 25 (“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 . . . will be provided to the consumer user, and may designate the location of the
redemption . . . .”).4
4
Citing one of Kroy’s filings from the Safeway case, the defendants argue that in that
case Kroy conceded that the consumer’s act of redemption is a required element of the asserted
claims. See case no. 1:12-cv-800, Dkt. No. 62, at 2. The Court does not interpret that filing in
the way the defendants do. The issue Kroy was addressing in the cited passage was the
defendants’ contention that “automated award fulfillment” excludes customer participation in the
act of redemption. While Kroy’s language in the filing was imprecise, the point of Kroy’s
response was that the claims are not inconsistent with consumer participation in the award
redemption. That is quite different from conceding that consumer redemption is a limitation of
the asserted claims.
21
Based on a close examination of the claim language and the cited portions of the
specification and the prosecution history, the Court concludes that the act of award redemption
by the consumer is not a required limitation of either claim 1 or claim 19.
5. “host”
The plaintiff’s proposed construction of “host” is: “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 defendants’ proposed construction of “host” is: “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.”
The Court is also not persuaded that a document submitted by one of the inventors to
show the date of conception amounts to a concession that customer redemption is a required
limitation of both claim 1 and claim 19. The statement in the document that “[a]ward fulfillment
is the process by which declared prize winners redeemed promised awards from contest
sponsors,” Dkt. No. 85-17, at 4, is a general characterization of the award fulfillment process; it
does not purport to be a representation as to the precise scope of the asserted claims.
Finally, a reference from the prosecution history that the defendants cited at the claim
construction hearing, but not in their brief, provides no support for their argument. In that
reference, Reply and Request for Reconsideration (filed Oct. 23, 2003), Dkt. No. 82-3, at 117-48,
the applicants distinguished a prior art patent to Scroggie on the ground that Scroggie “merely
designates the actual delivery to a ‘fulfillment house,’ . . . whereas the present invention allows
the sponsor to coordinate the delivery of the award, or, alternatively, to designate to the
consumer where the award may be retrieved.” Id. at 146. That remark focuses on the actions of
the sponsor in dictating where the award will be redeemed, not on the customer’s actual act of
redemption.
22
The Court in the Safeway case construed 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.”
Analysis: Both the plaintiff’s and the defendants’ proposed constructions are taken
directly from the definition of “host” in the patent. See ’830 patent, col. 8, ll. 10-17. The only
difference between the two is that Kroy’s proposed construction omits the last portion of the
definition. Kroy argues that the last portion of the definition is unnecessary because it simply
reiterates matters already required by the claims.
The shorter version of the definition would be more intelligible to a jury than the longer
version. Moreover, the last portion of the definition given in the specification describes the
function of the host rather than being essential to the definition of the term. And that function is
set forth in other limitations of the claims. This issue does not appear to involve a serious
substantive disagreement among the parties, and in the Court’s view, neither proposed
construction would be erroneous. However, the Court deems it preferable to use the shorter and
more readily understandable version of the definition.
The Court’s construction of the term “host” is: “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.”
6. “incentive program” and “incentive programs”
The plaintiff’s proposed construction of the term “incentive program” is: “any program
for creating incentives.”
23
The defendants’ proposed construction of the term “incentive program” is: “any program
for creating incentives which includes an algorithm that instructs the HTTP server to send a
message to the consumer database updating the consumer database to reflect that the consumer
has won an incentive program.”
The Court in the Safeway case did not construe the terms “incentive program” or
“incentive programs.”
Analysis: The specification explicitly defines “incentive program” as follows: “The
phrase ‘incentive program’ should be understood to include any program for creating incentives,
including programs within a sponsoring firm, such as employee incentive programs, and outside
the firm, such as customer promotions.” ’830 patent, col. 7, ll. 38-42; see also id., col. 1, ll. 3943 (“Incentive programs offer 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.”). That
definition is consistent with the definition proposed by Kroy and the one adopted by the Court in
the Safeway case.
The defendants urge that the Court use definitional language taken from a different part
of the specification, where the specification addresses a “host incentive program” and states that
such a program “is required to include, as part of the program, an algorithm that instructs the
HTTP server to send a message to the consumer database that updates the consumer database to
reflect that the consumer has won that incentive program.” Id., col. 26, ll. 55-60. Those
additional requirements, however, are referred to only in connection with certain embodiments
discussed in the specification. In particular, the specification discloses embodiments, such as
24
those based on Figure 15, that include a host system with an HTTP server and a consumer
database. It is in the context of those embodiments that the specification refers to an algorithm
that instructs the HTTP server to update the consumer database when the consumer wins a
particular incentive program award. The language urged by the defendants is therefore not
necessary or appropriate as a definition for the general terms “incentive program” and “incentive
programs.”
The Court’s construction of the terms “incentive program” and “incentive programs” is:
“any program[s] for creating incentives.”
7. “provider” and “providers”
The plaintiff’s proposed construction of the term “provider” is: “individual or company
that offers or provides an incentive program or provides awards associated with an incentive
program.”
The defendants propose that no construction is necessary for the term “provider” apart
from the construction of the term “providers.”
The plaintiff proposes that no construction of the term “providers” is necessary apart
from the definition of the terms “provider” and “plurality of providers.”
The defendants’ proposed construction of the term “providers” is:
“individuals or
companies that wish to offer or provide incentive programs or provide awards associated with an
incentive program.”
The Court in the Safeway case construed the term “provider” as: “individual or company
that offers or provides awards associated with an incentive program.”
25
Analysis: There is very little difference between the competing definitions of “provider”
and “providers.” The dispute over whether the Court should define the term “provider” or
instead define only the term “providers” is silly. The Court will define the term in the singular,
fully confident that an English-speaking jury required to deal with the term “providers” would be
fully capable of extrapolating from the singular to the plural.
The defendants propose to use the words “wish to offer or provide incentive programs” in
place of Kroy’s suggestion of “offers or provides awards associated with an incentive program.”
The defendants offer the terms “wish to” because those words are used in the patent’s definition
of the related terms “retailer,” “sponsor,” and “host.”
Kroy’s proposal, however, is more
straightforward, and since there is no suggestion from either side that the difference in wording
would make a whit of difference as a practical matter, the Court will adopt Kroy’s proposed
language as part of its construction.
The Court’s construction of the term “provider” is: “individual or company that offers
or provides an incentive program or provides awards associated with an incentive
program.” To the extent that it is necessary to construe the term “plurality of providers,” the
Court’s construction is: “one or more providers.”
8. “psychographic preferences”
The plaintiff’s proposed construction of the term “psychographic preferences” is:
“preferences associated with a consumer’s attitudes, interests, values, opinions, lifestyles, or
behaviors.”
26
The defendants argue that the term “psychographic preferences” is indefinite. In the
alternative, their proposed construction of the term “psychographic preferences” is: “preferences
based on a consumer’s attitudes, interests, values, opinions, or lifestyle.”
The Court in the Safeway case held that the term “psychographic preferences” is not
indefinite. The Court construed the term to mean: “preferences associated with a consumer’s
attitudes, interests, values, opinions, lifestyles, or behaviors.”
Analysis:
The Court will address the claim construction issue first and then the
defendants’ argument that the term “psychographic preferences” is indefinite.
a. With respect to the issue of claim construction, there are two differences between the
parties’ proposed constructions: (1) Kroy uses the term “associated with” to describe the
relationship between preferences and the listed factors, while the defendants use the term “based
on”; and (2) Kroy includes the term “behaviors” among the listed factors, while the defendants
include all the other common factors, but omit that one. The Court favors Kroy’s construction
on both points, for the following reasons.
First, the terms “associated with” and “based on” convey the same general concept, but
the term “associated with” is more precise than “based on” for describing the relationship
between the listed factors and customers’ preferences. For example, a consumer who has shown
an interest in professional baseball might be thought to be a good candidate for marketing
football merchandise; in such a case, a willingness to purchase football-related products might be
thought to be “associated with” a demonstrated interest in baseball, but would not necessarily be
said to be “based on” such an interest.
27
Second, it is appropriate to include “behavior” among the listed factors in the definition
of psychographic preferences. Patterns of behavior—particularly the forms of behavior that are
of interest to marketers, such as purchasing habits—are closely related to lifestyle; conduct
consisting of a pattern of purchases could either be characterized as a form of behavior or could
be regarded as indicative of a particular lifestyle.
And the defendants acknowledge that
“lifestyle” is a proper factor to include in the definition of “psychographic preferences.”
Moreover, behavior is often associated with, and indicative of, “interests,” another term that the
defendants agree should be included in the definition of “psychographic preferences.” A person
who purchases large amounts of fly-fishing equipment would be exhibiting a type of behavior
from which it could be inferred that the person is interested in fly fishing. The inclusion of the
term “behavior” therefore does not constitute a significant departure from the definition already
agreed upon by the defendants.
The defendants’ expert, Dr. Michael Lewis, testified at the claim construction hearing
that a person of skill in the art would not consider it proper to include “behavior” in the
definition of “psychographic preference.” Claim Construction Hearing Transcript, Dkt. No. 144,
at 14-15. Citing what he characterized as a leading textbook on marketing, Philip Kotler,
Marketing Management (11th ed. 2003), Dr. Lewis testified that behavior is “a fundamentally
different type of variable” that is treated separately from demographic and psychographic
variables. Claim Construction Hearing Transcript, Dkt. No. 144, at 15-17.
There are two problems with Dr. Lewis’s testimony about whether “behavior” qualifies
as a factor considered in the psychographic analysis. First, the intrinsic evidence in this case,
about which Dr. Lewis did not testify, shows that the term “psychographic preferences,” as used
28
in the ’830 patent, is intended to include consideration of behavior. Second, several of the
references offered by the defendants in support of Dr. Lewis’s testimony also refer to behavior as
one of the factors that bears on psychographic analysis.
As to the first problem with Dr. Lewis’s testimony, the specification and the prosecution
history provide support for construing the claim language as including “behavior” in the list of
factors associated with psychographic preferences. Describing the embodiment of Figure 15, the
specification explains that the sponsor can “obtain information regarding consumer participation
in [the] sponsor’s incentive programs.
Thus, the sponsor can obtain psychographic,
demographic, or other information relevant to the participation of consumers in sponsor’s
incentive programs.”
’830 patent, col. 15, ll. 17-23.
Regarding another embodiment, the
specification notes that the system “tags a purchase in order to store information about consumer
behavior.” Id., col. 42, ll. 54-56. And regarding still another embodiment, the specification touts
the system’s in-store connectivity “in order to monitor purchasing behavior.” Id., col. 40, ll. 1-3.
Finally, in the course of the prosecution, the applicants referred to psychographic criteria as
“behavior based demographic” criteria. Response to Non-Final Office Action (filed Oct. 23,
2003), Dkt. No. 82-3, at A742. Those excerpts from the specification and the prosecution history
all suggest that the patent uses the term “psychographic preferences” to refer to preferences that
are associated with factors that include consumer behavior, and in particular purchasing
behavior.
As to the second problem with Dr. Lewis’s testimony, the Court finds that the extrinsic
evidence introduced in the claim construction proceedings did not provide clear support for his
position. At the outset, the Court notes that, as the defendants complain, the evidence Kroy cites
29
in support of its definition of “psychographic preferences” is thin. Kroy did not offer any expert
evidence on this issue, and the extrinsic evidence Kroy cited in its brief consisted of a single
definition from an on-line dictionary and a Wikipedia article from the Internet. The dictionary
reference provides a useful definition of “psychographics” as “market research or statistics
classifying population groups according to psychological variables (as attitudes, values, or
fears).” However, the dictionary definition contains no reference to “behavior,” and therefore
does not support Kroy’s argument that the word “behavior” should be included in the
construction of the term “psychographic preferences.”5 For what it is worth, the Wikipedia
article on the word “psychographic” refers to “psychographic variables” as including “beliefs,
attitudes, values and behaviors.” In addition, the Wikipedia article refers to the categories of
psychographic factors used in market segmentation as including activity, interest, opinion,
attitudes, values, and behavior. http://en.wikipedia.org/wiki/Psychographic.
While Kroy’s extrinsic evidence on the “behavior” issue is thin, the weaknesses in Kroy’s
extrinsic evidence are compensated for by evidence that was introduced through the defendants’
expert, Dr. Lewis, and evidence submitted in connection with the defendants’ claim construction
brief. That evidence included several references that support the view that psychographic traits
are associated with behavior. For example, Peter D. Bennett, Dictionary of Marketing Terms (2d
ed. 1995), published by the American Marketing Association, defines “psychographic analysis,”
for purposes of “consumer behavior,” to refer to a technique “that investigates how people live,
5
Kroy cited to the on-line version of Merriam-Webster’s Collegiate Dictionary and
listed the date for that source as 2013. The defendants criticize that reference as being published
long after the date of the application in this case. However, the print version of the MerriamWebster dictionary that is more nearly contemporaneous with the application contains exactly
the same definitional language. Merriam-Webster’s Collegiate Dictionary 1004 (11th ed. 2003).
30
what interests them, and what they like; it is also called life style analysis or AIO because it
relies on a number of statements about a person’s activities, interests, and opinions.” See Dkt.
No. 85-23, at 7. Another dictionary in the marketing field, Wolfgang J. Koschnick, Dictionary
of Social and Market Research (1996), defines “psychographics” to mean “[t]he 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.” Dkt. No. 8522, at 4. Both of those sources define the term “psychographic” with reference, inter alia, to
activities, which is to say, behavior.
Some of the references specifically relied on by Dr. Lewis echo the same theme. A 1975
paper by Wells entitled Psychographics: A Critical Review, Dkt. No. 85-6, at 18, refers to
psychographic researchers looking into “activities, interests, opinions, needs, values, attitudes,
and personality traits.” At the hearing, Dr. Lewis acknowledged that the term “activities,” as
used in the Wells article, is another word for “behavior.”
Claim Construction Hearing
Transcript, Dkt. No. 144, at 28. The Wells article provided, as an example, a “psychographic
profile” of a heavy user of shotgun ammunition, in which several of the factors involved interests
and opinions, while other factors involve activities or behavior. And a 1984 paper by Anderson
and Golden, entitled Lifestyle and Psychographics: A Critical Review and Recommendation,
Dkt. No. 85-6, at 38, noted that psychographic research has sometimes been known as “lifestyle”
or “activity and attitude” research. The paper added: “Contemporary interpretations in the
marketing literature generally define lifestyle to encompass both characteristic patterns of overt
behavior and cognitive processes and properties, including such dimensions of personality as
31
values, attitudes, opinions, belief and interests.” Id. at 41. Thus, Dr. Lewis’s authorities link
behavior to lifestyle and to the analysis of psychographic factors generally.
While Dr. Lewis stated in his declaration and in his testimony that a person of ordinary
skill would not have considered “psychographic preferences” to include “behaviors,” he admitted
upon questioning that the terms “psychographic analysis” and “lifestyle analysis” “tend to be
used interchangeably.” Claim Construction Hearing Transcript, Dkt. No. 144, at 38. He also
agreed that, as a general matter, “certain behaviors tend to be associated with certain lifestyles.”
Id. at 39-40.
Although the Court found Dr. Lewis to be a generally credible and knowledgeable
witness, the Court did not find his testimony persuasive on the question whether “behavior” can
properly be considered a factor bearing on “psychographic preferences.” His testimony did not
take any account of the intrinsic evidence in the ’830 patent, and it was, at minimum, in tension
with some of the references that the defendants themselves introduced in support of their claim
construction submission. The Court therefore does not credit Dr. Lewis’s testimony that the term
“psychographic preferences,” as used in the ’830 patent, should not be understood to include
consideration of “behavior.” Accordingly, based on the intrinsic and extrinsic evidence that was
called to the Court’s attention, the Court concludes that it is proper to include the term
“behavior” in the definition of “psychographic preferences,” as that term is used in the ’830
patent.
The Court’s construction of the term “psychographic preferences” is: “preferences
associated with a consumer’s attitudes, interests, values, opinions, lifestyles, or behaviors.”
32
b. As part of their claim construction argument, the defendants contend that the term
“psychographic preferences” is indefinite.
They argue that the meaning of the term
“psychographic preferences,” as used in the ’830 patent, would not have been reasonably clear to
a person of skill in the art at the time of the application. That argument, if accepted, would have
the effect of rendering all of the asserted claims invalid.
See Nautilus, Inc. v. Biosig
Instruments, Inc., 134 S. Ct. 2120 (2014).
Raising the issue of indefiniteness in the course of claim construction proceedings is
appropriate. As the Federal Circuit has explained, “indefiniteness is a question of law and in
effect part of claim construction.” ePlus, Inc. v. Lawson Software, Inc., 700 F.3d 509, 517 (Fed.
Cir. 2012); see also Atmel Corp. v. Information Storage Devices, Inc., 198 F.3d 1374, 1379 (Fed.
Cir. 1999) (indefiniteness “is inextricably intertwined with claim construction”); Personalized
Media Communications, LLC v. Int’l Trade Comm’n, 161 F.3d 696, 705 (Fed. Cir. 1998) (“A
determination of claim indefiniteness is a legal conclusion that is drawn from the court’s
performance of its duty as the construer of patent claims.”). However, in light of the statutory
presumption of patent validity, 35 U.S.C. § 282, the standard for holding a patent invalid for
indefiniteness is exacting. The Federal Circuit has stated that a patent may be held invalid for
indefiniteness only upon a showing of clear and convincing evidence. See Halliburton Energy
Servs., Inc. v. M-I LLC, 524 F.3d 1244, 1249-50 (Fed. Cir. 2013); Young v. Lumeris, Inc., 492
F.3d 1336, 1345-47 (Fed. Cir. 2007); Intel Corp. v. VIA Techs., Inc., 319 F.3d 1357, 1366 (Fed.
Cir. 2003); Endo Pharms. Inc. v. Watson Labs., Inc., 2014 WL 2859349, at *8 (E.D. Tex. June
23, 2014); L.C. Eldridge Sales Co. v. Azen Mfg. Pte., Ltd., 2013 WL 2285749, at *1 (E.D. Tex.
May 23, 2013). Based on the evidence adduced in the claim construction proceedings, the Court
33
is not prepared to find that the defendants have shown, by clear and convincing evidence, that the
asserted claims are indefinite.6
The defendants’ indefiniteness argument rests largely on the declaration and testimony of
Dr. Lewis. At the claim construction hearing, Dr. Lewis testified that in light of the reference to
“psychographic preferences” in the asserted claims, there are “significant problems” with “the
scope of the invention being understandable by a person skilled in the art” at the time of the
application in 1997.
In particular, he identified two problems with the use of the term
“psychographic preferences” in the patent.
First, he said that the combination of
“psychographic” and “preferences” gave rise to “an implicit type of design or algorithm that’s
beneath the surface in that in terms of how do we take psychographic traits or variables and, you
know, take those, develop psychographic segments, and from there map those to consumer needs
and preferences. The patent is silent in terms of that mechanism or that procedure.” Claim
Construction Hearing Transcript, Dkt. No. 144, at 10. Second, he said that “[d]uring this time
period and really up until the present day, the term ‘psychographic’ has been extremely muddled
in terms of a bunch of alternative definitions. And, so, it would be very difficult for a person
skilled in the art to understand the scope of the patent.” Id. at 10-11.
Dr. Lewis’s first point—that the patent does not teach how to “develop psychographic
segments” and “map those to consumer needs and preferences”—does not pertain to
6
The case of Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., No. 13-854 (S. Ct.),
which is currently pending before the Supreme Court, involves questions relating to a claim of
indefiniteness raised in the course of claim construction proceedings. It is possible that the Teva
case could affect the analysis in this case. However, that case principally concerns the standard
of review of determinations made by district courts in the course of claim construction
proceedings, so the Court sees no reason to postpone issuance of this claim construction order
pending the Supreme Court’s decision in Teva.
34
indefiniteness at all, but instead is directed to lack of enablement. Dr. Lewis’s testimony in that
regard therefore does not support the defendants’ indefiniteness contention.
Dr. Lewis’s second point—that the term “psychographic,” as used in the marketing field,
“has been extremely muddled in terms of a bunch of alternative definitions—is addressed to the
use of the term “psychographic” in the marketing field generally, not to the use of the term in the
particular context of the ’830 patent. The Court therefore does not find Dr. Lewis’s testimony
particularly persuasive with regard to how a person of ordinary skill in the art would understand
the meaning of the term “psychographic preferences” as it is used in claims 1 and 19.
Although Kroy did not introduce expert testimony on the issue of indefiniteness, the
evidence pertinent to claim construction, summarized in part 8a, above, provides significant
guidance as to the meaning of the term “psychographic preferences,” as that term is used in the
patent. First, and contrary to Dr. Lewis’s testimony, the extrinsic evidence introduced by both
parties showed that there is substantial agreement as to the core meaning of the term
“psychographic” as that term is used in expressions such as “psychographic research.” Each of
several dictionaries in the field of marketing, published roughly contemporaneously with the
application in this case, defined the term similarly, and those definitions were similar to the
definitions proposed by the parties. Significantly, the fact that the definitions offered by the
respective parties are so close to identical is some indication that the term “psychographic
preferences” has a core meaning that is generally well understood. While the parties disagreed
about whether the term “behavior” should be included in the Court’s construction of the term, the
definitions in the marketing dictionaries, and the discussions in the papers by Wells and by
35
Anderson and Golden, showed that “behavior” is widely regarded as a factor associated with
psychographic characteristics.
The defendants argue that while the term “psychographic” has been used by persons of
skill in the marketing field for some time, the term “psychographic preferences,” which is used
in the ’830 patent, is not known in the field and is indefinite even if the term “psychographic”
has a reasonably well-settled meaning. While the term “psychographic preferences” may be
clumsy and is not a term commonly used in the field of marketing, its meaning is nonetheless
reasonably clear. The term simply refers to preferences that are associated with psychographic,
as opposed to demographic, factors.
The context in which the term “psychographic preferences” is used in the claims supports
that interpretation. The limitation in which the disputed term appears refers to a “sponsorselected specific award unit item being tailored to demographic and psychographic preferences
of a sponsor-selected consumer user.” That is, the limitation requires that the sponsor select
prizes tailored to preferences of the consumer, where those preferences are ascertained through
analysis of demographic and psychographic factors. Demographic factors are well understood to
be objective characteristics such as age, sex, ethnicity, and the like; the use of “psychographic”
in the patent in juxtaposition with “demographic” lends support to the understanding that
psychographic factors are subjective characteristics, such as attitudes, interests, values, and
opinions, and the expression of those characteristics in lifestyle and behavior.
The specification repeatedly uses the term “psychographic” in combination with the term
“demographic,” in referring to information about customers compiled as a result of their
participation in incentive programs.
See ’830 patent, col. 13, ll. 18-21 (noting that a
36
“psychographic or demographic sub-record” can be compiled that “may include information
obtained through consumer responses to inquiries answered by the consumer during participation
in incentive programs.”); id., col. 15, ll. 16-23 (sponsor can query the consumer database “to
obtain information regarding consumer participation in that sponsor’s incentive programs,”
thereby obtaining “psychographic, demographic, or other information relevant to the
participation of consumers in sponsor’s incentive programs”); id., col. 18, ll. 47-51 (information
“relating to a consumer’s participation in the sponsor’s incentive programs” may include
“demographic or psychographic information about the types of consumers who are
participating”); id., col. 41, ll. 62-67 (“A demographic and psychographic sub-record may
include sub-records that include information obtained from consumers through the consumer’s
participation in each of the sponsor’s incentive programs, such as survey-completion and
question-and-answer incentive programs.”).
As in the case of the juxtaposition of
“demographic” and “psychographic” in the claims, the use of the two terms together in the
specification supports the inference that psychographic factors are those factors other than
objective demographic characteristics that are associated with a customer’s purchasing
preferences.
Based on all the evidence adduced in the claim construction proceedings, and applying
the governing standard of proof, the Court finds that the meaning of the term “psychographic
preferences,” as used in the ’830 patent, would be reasonably clear to a person of ordinary skill
in the field of marketing. The legal consequence of that finding is that the term “psychographic
preferences” is not indefinite and the asserted claims of the ’830 patent are not invalid for
indefiniteness. See Nautilus, 134 S. Ct. at 2129 (a patent’s claims are not indefinite if the claims,
37
“viewed in light of the specification and prosecution history, inform those skilled in the art
about the scope of the invention with reasonable certainty.”). Accordingly, the Court denies
defendants’ request that the Court hold the term “psychographic preferences” to be indefinite.
IT IS SO ORDERED.
SIGNED this 23d day of December, 2014.
_____________________________
WILLIAM C. BRYSON
UNITED STATES CIRCUIT JUDGE
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