Ex Parte Sullivan et al

Board of Patent Appeals and Interferences

Mar 19, 2007

09385489 (B.P.A.I. Mar. 19, 2007)

The opinion in support of the decision being entered today was not written
for publication and is not binding precedent of the Board.

UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE BOARD OF PATENT APPEALS
AND INTERFERENCES
____________

Ex parte THOMAS J. SULLIVAN, RICHARD J. WINDISH, DORR H.
LEWRIGHT, JOSEPH M. TRATTNER, SUZANNE K. ARENSON, GEORGE
COLUNGA, KATHY S. HACKETT, and JOICA C. CAMPBELL
____________

Appeal 2006-3387
Application 09/385,489
Technology Center 3600
____________

Decided: March 19, 2007
____________

Before ROBERT E. NAPPI, LINDA E. HORNER and ANTON W. FETTING,
Administrative Patent Judges.

HORNER, Administrative Patent Judge.

DECISION ON APPEAL

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STATEMENT OF THE CASE
Thomas J. Sullivan et al. (“Appellants”) seek our review under 35 U.S.C.
§ 134 of the Examiner’s final rejection of claims 1-32, 37-83, and 88-94, all of the
pending claims. We have jurisdiction under 35 U.S.C. § 6(b).

SUMMARY OF DECISION
We AFFIRM-IN-PART.

THE INVENTION
Appellants’ claimed invention relates to a system and method that captures,
records, tracks, reports, monitors, verifies, and settles product promotions for
retailers and manufacturers. Claim 1, reproduced below, is representative of the
subject matter on appeal.
1. A method for an independent system operator to
administer a trade promotion for a product involving a manufacturer
and a retailer having at least one store with an in-store POS system,
said method comprising the steps of the independent system operator:
before a start of the trade promotion by the retailer, capturing
terms of the trade promotion at least including promoted product
identification and at least one of (a) a predetermined payment value
the manufacturer will owe the retailer for each promoted product sold
by the retailer during the trade promotion, and (b) a predetermined
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payment value the manufacturer will owe the retailer for conducting
the trade promotion;
before the start of the trade promotion by the retailer, storing
the captured terms of the trade promotion in an independent system
operator database;
after the start of the trade promotion by the retailer, collecting
from the retailer product POS data from at least one in-store POS
system of the retailer;
filtering the product POS data using the promoted product
identification stored in the independent system operator database to
obtain promoted product POS data;
processing the promoted product POS data in accordance with
at least one of the stored (a) predetermined payment value the
manufacturer will owe the retailer for each promoted product sold by
the retailer during the trade promotion, and the stored (b)
predetermined payment value the manufacturer will owe the retailer
for conducting the trade promotion in the independent system operator
database to determine an amount of money the manufacturer owes to
the retailer for the trade promotion; and
facilitating the manufacturer's payment of the amount of money
owed to the retailer for the trade promotion.

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THE REJECTION
The Examiner relies upon the following as evidence of unpatentability:
Schultz US 5,056,019 Oct. 08, 1991
Jones US 5,832,458 Nov. 03, 1998
The Examiner rejected claims 1-32, 37-83, and 88-94 under 35 U.S.C.
§ 103(a) as being unpatentable over Jones in view of Schultz.

ISSUE
Appellants contend Jones does not teach using its audit system to determine
the amount of money the manufacturer owes the retailer for a trade promotion or
for paying or causing payment of that amount of money from the manufacturer to
the retailer (Br. 31). Appellants further contend that Jones teaches using its system
to passively audit retail POS transactions, including trade promotions, and does not
expressly or inherently disclose capturing and storing in its database at least one of
(a) a predetermined payment value the manufacturer will owe the retailer for each
promoted product sold by the retailer during the trade promotion, and (b) a
predetermined payment value the manufacturer will owe the retailer for conducting
the trade promotion (Br. 33). Appellants contend that Schultz does not cure the
deficiencies of Jones, because the Schultz system does not settle reward
promotions between the retailer and the manufacturer (Br. 39).
The Examiner admits that Jones does not expressly mention “promoted
product identification and predetermined payment value” (Answer 4). The
Examiner found, however, Jones teaches that by crafting the promotion contract
around performance goals evidenced by incremental sales volume increases, and
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having recourse to a valid third party audit of the performance achieved, both
retailer and manufacturer have a clear and current factual record to use in resolving
payment disputes (Answer 4). The Examiner thus determined that it would have
been inherent to track the performance that would help manufacturers determine
how much money they owed to the retailers, because manufacturers would have to
know the products that are in promotion and the payment value of the product for
settlement (Answer 4). The Examiner further found that Schultz teaches a central
management firm which audits and tracks all POS data obtained from retail stores
to settle all rewards promotions between retailers and manufacturers (Answer 5).
The Examiner determined that it would have been obvious to use the central
management firm of Schultz to perform all settlement between manufacturers and
retailers of the Jones system in order to make the system more fraud proof
(Answer 6).
The issue before us is whether Appellants have shown that the Examiner
erred in finding claims 1-32, 37-83, and 88-94 unpatentable over Jones and
Schultz.

FINDINGS OF FACT
We find the following facts by a preponderance of the evidence:
Jones teaches a system and method that electronically audits and tracks the
results of the retailer’s efforts while monitoring and recording all POS transactions.
Each transaction record empirically establishes the incremental sales volume
increase of a particular product promoted to support the trade promotion settlement
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process (Jones, col. 12, ll. 14-20 and Board Decision in related Appeal No. 2004-
0199 (May 19, 2004) (“Board Decision”) at 11).
Jones does teach capturing and storing terms of the trade promotion in an
electronic database of the independent system, where the terms of the trade
promotion include information of sales volume (Board Decision 11-12).
Jones teaches that the electronic database of the stored terms of the trade
promotion are retained in a history file for a predetermined period, perhaps 52
weeks (Jones, col. 12, ll. 14-16 and Board Decision 12).
Jones further teaches that predetermined and customized reports of the file
are sent to both the retailer and the manufacturer (Jones, col. 12, ll. 20-25 and
Board Decision 12).
By retaining the files for 52 weeks and providing reports of the files, Jones
teaches a method of enabling the retailer and manufacturer to access the electronic
database file to determine the stored terms of the trade promotions (Board Decision
12).
Jones does not teach capturing the terms of the trade promotion including
link codes for associate discounts if any of the trade promotions are electronically
discount trade promotions (Board Decision 13).
Jones does not teach that the independent system operator determines the
amount of money the manufacturer owes to the retailer for the trade promotion and
facilitates the manufacturer’s payment and the amount of money owed (Board
Decision 14).
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Jones teaches that the reports provided are sent to the manufacturer to
support the settlement process (Board Decision 14).
Jones does not teach, however, that the independent system operator
performs this settlement (Board Decision 14-15).
Jones discloses that the retailer must summarize the necessary information
on the promotional support activities, including the report from the electronic audit
system, and the retailer then invoices the manufacturer, and deducts the price
discount from checks paid by the retailer to the manufacturer (Jones, col. 12, ll. 25-
29).
Jones’s electronic audit system provides an independent audit of the
incremental sales volume increase during a trade promotion.
Schultz discloses a system in which a central management firm 3 stores
records of the purchase reward offers 2 defined by a manufacturer 1 (Schultz, col.
6, ll. 13-16).
Schultz discloses that the central management firm 3 collects data on a
customer’s purchases at a retail store 20 (Schultz, col. 7, ll. 20-47).
Schultz discloses that the central management firm 3 processes the purchase
records 30 for a consumer 19 and sends a reward certificate 18 to the consumer 19
when the consumer 19 earns a reward (e.g., by purchasing a required number of
reward products) (Schultz, col. 7, ll. 60-64 and col. 8, ll. 64-65).
The reward certificate 18 can be a negotiable check or a voucher to be
redeemed at a participating retail store 20 for cash or credit toward product
purchases (Schultz, col. 8, ll. 65-68).
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The program data collector 23, located in the retail store 20, stores
redemption records 30 for the rewards certificates 18 and the central management
firm 3 periodically receives these redemption records and uses the records to audit
the amount reimbursed to the retail store (Schultz, col. 9, ll. 3-7).
The manufacturer pays the central management firm 3 based on the number
of rewards earned and paid to consumers 19.
The only difference between Schultz and the invention of claim 1 is that the
settlement in Schultz occurs between the manufacturer and the customer based on
the number of promoted products purchased by the consumer, instead of between
the manufacturer and retailer based on the number of promoted products sold by
the retailer.
We find that a hypothetical person of ordinary skill in the art would be
presumed to know the prior art, including Jones and Schultz.
We also find that a hypothetical person of ordinary skill in the art would be
presumed to know of the advances in scan technology and the rapid development
of applications using POS transaction scan data for trade promotions at the time of
the invention.
This rapid development is demonstrated by considering several prior art
commercial systems, which used POS transaction data in a variety of trade
promotion applications, described in the following articles:
Anonymous, “Nielsen introduces new tracking systems, opens training
centers,” Marketing News, January 4, 1988, p. 33 (Appendix A) describes prior art
systems that use POS transaction data to monitor the effectiveness of marketing
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activities and help manufacturers and retailers make marketing promotion
decisions for consumer products.
Dom Del Prete, “Advances in scanner research yield better data quicker,”
Marketing News, January 7, 1991, p. 54 (Appendix B) describes prior art systems
that use POS transaction data to determine quickly whether a promotion is working
or a particular product is selling poorly.
Michael Garry, “How’s your scan data?” Progressive Grocer, October 1992,
Vol. 71, Issue 10, p. 83 (Appendix C) describes prior art systems that use POS
transaction data to plan new promotions by looking back at POS transaction data
collected during old promotions.
Julie Liesse, “Pay for performance picking up speed,” Advertising Age,
August 9, 1993, Vol. 64, Issue 33, p. 19 (Appendix D) describes prior art systems
that use POS transaction data to award retailers trade promotion dollars after
consumers buy the product.
Betsy Spethmann, “More Move To Scan Based Pay,” Brandweek, May 16,
1994, Vol. 35, Issue 20, p. 4 (Appendix E) describes prior art systems that use POS
transaction data to tabulate salespeople’s bonuses.
Michael Garry, “Computing promotions,” Progressive Grocer, July, 1995,
Vol. 74, Issue 7, p. 95 (Appendix F) describes prior art systems that use POS
transaction data to merge the POS transaction data with store-specific promotional
data to evaluate the effects of displays, ads and temporary price reductions and to
plan for future promotions.
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These articles demonstrate that in the late 1980’s and early 1990’s, the
industry improved scanner technology to an extent that the scan data from POS
transactions began to be more reliable. Once the industry had solved this problem,
the innovations in applications using this data to facilitate trade promotions rapidly
developed and those skilled in the art were sophisticated in the ways to use this
data.
The undisputed evidence indicates that there existed a felt need to
independently audit the number of promoted products sold during a trade
promotion.
The evidence also demonstrates that Jones created a system to meet this
need prior to Appellants’ invention. Any long-felt need to independently audit
trade promotions was satisfied by the prior art.
All that the claimed invention arguably provided in the way of unmet needs
over the Jones system was a way for a third party system to automate the
calculation of the amount owed by the manufacturer and initiate a payment or
generate an invoice for the amount.
Appellants’ objective evidence, however, does not demonstrate a long-felt
need for automation of this function and further does not show that manufacturers
and retailers were not already calculating and processing this amount with an
automated system of their own.
We find no support for the Declarant’s statement that at the time of the
invention, there was no system available to independently account for sales of
promoted product. Appellants failed to provide any objective evidence to
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demonstrate either (1) Jones’s attempts to commercialize its invention, or (2)
Jones’s failure of commercial success.

PRINCIPLES OF LAW
To determine whether a prima facie case of obviousness has been
established, we are guided by the factors set forth in Graham v. John Deere Co.,
383 U.S. 1, 17, 148 USPQ 459, 467 (1966), viz., (1) the scope and content of the
prior art; (2) the differences between the prior art and the claims at issue; and (3)
the level of ordinary skill in the art. Graham also suggests analysis of secondary
considerations such as commercial success, long felt but unsolved needs, failure of
others, etc. Id.
In determining the scope and content of the prior art, we consider not only
whether the elements are found expressly in the prior art reference, but also
whether the elements are found inherently therein. “To establish inherency, the
extrinsic evidence must make clear that the missing descriptive matter is
necessarily present in the thing described in the reference, and that it would be so
recognized by persons of ordinary skill. Inherency, however, may not be
established by probabilities or possibilities. The mere fact that a certain thing may
result from a given set of circumstances is not sufficient.” In re Robertson, 169
F.3d 743, 745, 49 USPQ2d 1949, 1950-51 (Fed. Cir. 1999) (citations omitted)
(internal quotation marks omitted).
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In determining the level of ordinary skill in the art, we consider various
factors to shed light on what a hypothetical person of ordinary skill would have
known at the time of the invention.
The person of ordinary skill in the art is a hypothetical
person who is presumed to know the relevant prior art.
Custom Accessories, Inc. v. Jeffrey-Allan Indus., Inc.,
807 F.2d 955, 962, 1 USPQ2d 1196, 1201 (Fed. Cir.
1986). In determining this skill level, the [Board] may
consider various factors including “type of problems
encountered in the art; prior art solutions to those
problems; rapidity with which innovations are made;
sophistication of the technology; and educational level of
active workers in the field.” Id. In a given case, every
factor may not be present, and one or more factors may
predominate. Id. at 962-63, 1 USPQ2d at 1201.
In re GPAC, 57 F.3d 1573, 1579, 35 USPQ2d 1116, 1121 (Fed. Cir. 1995).
In our determination of obviousness under 35 U.S.C. § 103, we also
carefully weigh, in addition to the evidence relied upon by the Examiner, the
objective evidence of nonobviousness provided by Appellants.
Establishing long-felt need requires objective evidence that an art recognized
problem existed in the art for a long period of time without solution. The
relevance of long-felt need and the failure of others to the issue of obviousness
depends on several factors. First, the need must have been a persistent one that
was recognized by those of ordinary skill in the art. Orthopedic Equipment Co. v.
All Orthopedic Appliances, Inc., 707 F.2d 1376, 217 USPQ 1281 (Fed. Cir. 1983);
see also In re Gershon, 372 F.2d 535, 539, 152 USPQ 602-65 (CCPA 1967).
Second, the long-felt need must not have been satisfied by another before the
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invention by applicant. Newell Companies v. Kenney Mfg. Co., 864 F.2d 757, 768,
9 USPQ2d 1417, 1426 (Fed. Cir. 1988) (“[O]nce another supplied the key element,
there was no long-felt need or, indeed, a problem to be solved.”) Third, the
invention must in fact satisfy the long-felt need. In re Cavanagh, 436 F.2d 491,
168 USPQ 466 (CCPA 1971).
In addition to our review of the Graham factors, we also considered the
requirement of a showing of a “teaching, suggestion, or motivation” to modify or
combine the prior art teachings. This requirement was recently described in In re
Kahn, 441 F.3d 977, 988, 78 USPQ2d 1329, 1337 (Fed. Cir. 2006),
[T]he “motivation-suggestion-teaching” test asks not
merely what the references disclose, but whether a person
of ordinary skill in the art, possessed with the
understandings and knowledge reflected in the prior art,
and motivated by the general problem facing the
inventor, would have been led to make the combination
recited in the claims. From this it may be determined
whether the overall disclosures, teachings, and
suggestions of the prior art, and the level of skill in the
art – i.e., the understandings and knowledge of persons
having ordinary skill in the art at the time of the
invention-support the legal conclusion of obviousness.
(internal citations omitted).
“In considering motivation in the obviousness analysis, the problem
examined is not the specific problem solved by the invention but the general
problem that confronted the inventor before the invention was made. Kahn, 441
F.3d at 988, 78 USPQ2d at 1336 (citations omitted).
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To establish a prima facie case of obviousness, the references being
combined do not need to explicitly suggest combining their teachings. See e.g.,
Kahn, 441 F.3d at 987-88, 78 USPQ2d at 1337-38 (“the teaching, motivation, or
suggestion may be implicit from the prior art as a whole, rather than expressly
stated in the references”); and In re Nilssen, 851 F.2d 1401, 1403, 7 USPQ2d 1500,
1502 (Fed. Cir. 1988) (“for the purpose of combining references, those references
need not explicitly suggest combining teachings.”).
An explicit teaching that identifies and selects elements
from different sources and states that they should be
combined in the same way as in the invention at issue, is
rarely found in the prior art. As precedent illustrates,
many factors are relevant to the motivation-to-combine
aspect of the obviousness inquiry, such as the field of the
specific invention, the subject matter of the references,
the extent to which they are in the same or related fields
of technology, the nature of the advance made by the
applicant, and the maturity and congestion of the field.
. . . .
Precedent has also recognized that “[t]he suggestion or
motivation to combine references does not have to be
stated expressly; rather it may be shown by reference to
the prior art itself, to the nature of the problem solved by
the claimed invention, or to the knowledge of one of
ordinary skill in the art.”
In re Johnston, 435 F.3d 1381, 1385, 77 USPQ2d 1788, 1790-91 (Fed. Cir. 2006)
(citing Medical Instrumentation and Diagnostics Corp. v. Elekta AB, 344 F.3d
1205, 1221-22 (Fed. Cir. 2003)). “The test for an implicit showing is what the
combined teachings, knowledge of one of ordinary skill in the art, and the nature of
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the problem to be solved as a whole would have suggested to those of ordinary
skill in the art.” Kahn, 441 F.3d at 987-88, 78 USPQ2d at 1336 (quoting In re
Kotzab, 217 F.3d 1365, 1370, 55 USPQ2d 1313, 1317 (Fed. Cir. 2000)).

ANALYSIS

CLAIMS 1-29, 37-76, 88, AND 89
Appellants argue claims 1-29, 37-76, 88, and 89 as a group (Br. 42-59).
Although Appellants list elements of certain dependent claims on pages 57-58 of
the Brief, Appellants do not provide any argument as to why Jones does not teach
the listed elements. A statement which merely points out what a claim recites will
not be considered an argument for separate patentability of the claim. 37 C.F.R. §
41.37(c)(vii) (2006). As such, we select claim 1 as a representative claim and the
remaining claims stand or fall together with claim 1
Independent claim 1 recites capturing and/or storing “terms of the trade
promotion” including “at least one of (a) a predetermined payment value the
manufacturer will owe the retailer for each promoted product sold by the retailer
during the trade promotion, and (b) a predetermined payment value the
manufacturer will owe the retailer for conducting the trade promotion.”
Appellants admit that Jones teaches an audit system for auditing and
monitoring POS transactions (including transactions involving trade promotions)
(Br. 42). Appellants further admit that Jones’s audit system must capture the
identification of the promoted product in order to provide the audit reports (Br. 44).
Appellants contend that Jones does not teach capturing a predetermined payment
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value and using this information to calculate what the manufacturer owes the
retailer and facilitating this payment (Br. 46-47).
The Examiner found that Jones inherently discloses capturing and storing a
predetermined payment value because Jones teaches that by crafting the promotion
contract around performance goals evidenced by incremental sales volume
increases, and having recourse to a valid third party audit of the performance
achieved, both retailer and manufacturer have a clear and current factual record to
use in resolving payment disputes (Answer 4). The Examiner thus determined that
it would be inherent to track the performance that would help manufacturers
determine how much money they owed to the retailers, because manufacturers
would have to know the products that are in promotion and the payment value of
the product for settlement (Answer 4).
Jones teaches tracking incremental sales volume increases to use as an
independent audit of the performance achieved by a trade promotion. We do not
see how this teaching, however, would necessarily require the independent auditor
to store a predetermined payment value of what the manufacturer will owe the
retailer for each promoted product sold by the retailer during the trade promotion
or a predetermined payment value of what the manufacturer will owe the retailer
for conducting the trade promotion. Jones does not disclose that its independent
audit would include a calculation of the amount that the manufacturer owes the
retailer as a result of an incremental sales volume increase during a trade
promotion. Rather, Jones teaches using its electronic audit system for a trade
promotion in which the manufacturer agrees to reimburse retailers relative to the
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sales performance of the selected items (e.g., incremental sales volume or
established trend line of sales volume for that retailer/retail chain) (Jones, col. 12,
ll. 4-8).
Jones’s electronic audit system audits and tracks the results of the retailer’s
promotion efforts while monitoring and recording all POS transactions for the
retailer (Jones, col. 12, ll. 12-14). Jones teaches that reports of these incremental
sales volume increases are sent to both the retailer and the manufacturer to support
the settlement process (Jones, col. 12, ll. 20-25). Jones discloses that the retailer
must summarize the necessary information on the promotional support activities,
including the report from the electronic audit system, and the retailer then invoices
the manufacturer, and deducts the price discount from checks paid by the retailer to
the manufacturer (Jones, col. 12, ll. 25-29). Thus, Jones’s electronic audit system
provides an independent audit of the incremental sales volume increase during a
trade promotion. Because Jones does not explicitly teach capturing and/or storing
predetermined payment value information and because Jones’s system has no need
of this information in order to provide its independent audit to the parties, the
Examiner has not shown how Jones inherently discloses the capture and/or storage
of this information.
The missing elements of Jones’s audit system are akin to the functions
typically provided by a third party escrow agent to parties of a contract. In
particular, an escrow agent typically holds onto property of one party to a contract
until such time as it determines that certain contractual conditions have been met,
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at which time the escrow agent releases the property to the other party to the
contract.
Schultz discloses such an escrow system in which a central management
firm holds onto a manufacturer’s reward certificates until such time as it
determines that the customer has met certain promotional conditions, at which time
the central management firm releases reward certificates to the customer. In
particular, Schultz discloses a system in which a central management firm 3 stores
records of the purchase reward offers 2 defined by a manufacturer 1 (Schultz, col.
6, ll. 13-16). Schultz discloses that the central management firm 3 collects data on
a customer’s purchases at a retail store 20 (Schultz, col. 7, ll. 20-47). Schultz
discloses that the central management firm 3 processes the purchase records 30 for
a consumer 19 and sends a reward certificate 18 to the consumer 19 when the
consumer 19 earns a reward (e.g., by purchasing a required number of reward
products) (Schultz, col. 7, ll. 60-64 and col. 8, ll. 64-65). The reward certificate 18
can be a negotiable check or a voucher to be redeemed at a participating retail store
20 for cash or credit toward product purchases (Schultz, col. 8, ll. 65-68). The
program data collector 23, located in the retail store 20, stores redemption records
30 for the rewards certificates 18 and the central management firm 3 periodically
receives these redemption records and uses the records to audit the amount
reimbursed to the retail store (Schultz, col. 9, ll. 3-7). The manufacturer pays the
central management firm 3 based on the number of rewards earned and paid to
consumers 19.
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What Schultz describes is an escrow service provided by the central
management firm on behalf of the manufacturer and consumer to settle the
amounts (i.e., reward certificates) owed by the manufacturer to the customer under
the terms of a trade promotion. In this case, Schultz captures and stores the terms
of the trade promotion (i.e., the number of products that must be purchased by the
customer in order to receive an award). Schultz uses the POS transaction data to
determine if the customer has met the terms of the deal. When the reward goal has
been met, Schultz calculates the amount owed by the manufacturer (i.e., the
amount of the reward for which the customer has qualified) and facilitates payment
of the amount owed by sending the customer a reward certificate. The only
difference between Schultz and the invention of claim 1 is that the settlement in
Schultz occurs between the manufacturer and the customer based on the number of
promoted products purchased by the consumer, instead of between the
manufacturer and retailer based on the number of promoted products sold by the
retailer.
We find that it would have been obvious, in view of the teaching of Schultz
to use an independent third party escrow agent to administer a trade promotion
between a manufacturer and a customer, to have enhanced the offerings of Jones’s
independent third party audit service to add an escrow service as between the
manufacturer and retailer.
We find that a hypothetical person of ordinary skill in the art would be
presumed to know the prior art, including Jones and Schultz. We also find that a
hypothetical person of ordinary skill in the art would be presumed to know of the
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advances in scan technology and the rapid development of applications using POS
transaction scan data in trade promotions at the time of the invention. This rapid
development is demonstrated by considering several prior art commercial systems,
which used POS transaction data in a variety of trade promotion applications,
including, (1) to determine quickly whether a promotion is working or a particular
product is selling poorly, (2) to monitor the effectiveness of marketing activities
and help manufacturers and retailers make marketing promotion decisions for
consumer products, (3) to merge the POS transaction data with store-specific
promotional data to evaluate the effects of displays, ads and temporary price
reductions and to plan for future promotions, (4) to plan new promotions by
looking back at POS transaction data collected during old promotions, (5) to
tabulate salespeople’s bonuses, and (6) to award retailers trade promotion dollars
after consumers buy the product1. These articles demonstrate that in the 1990’s,
the industry improved scanner technology to an extent that the scan data from POS
transactions began to be more reliable. Once the industry had solved this problem,
the innovations in applications using this data to facilitate trade promotions rapidly
developed and those skilled in the art were sophisticated in the ways to use this
data.
As such, we find that a hypothetical person of ordinary skill in the art,
having the independent third party audit system of Jones for facilitating auditing of
incremental sales volume increases during trade promotions, and having the
independent escrow service model of Schultz for facilitating administration of a

1 See Findings of Facts supra and Appendices A-F.
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trade promotion, would have been led to add the escrow service feature of Schultz
to the independent audit system of Jones as a way to enhance its service offerings
to its customers. Dystar Textilfarben GmbH & Co. Deutschland KG v. C.H.
Patrick Co., 464 F.3d 1356, 1368, 80 USPQ2d 1641, 1651 (Fed. Cir. 2006) (“an
implicit motivation to combine exists not only when a suggestion may be gleaned
from the prior art as a whole, but when the ‘improvement’ is technology-
independent and the combination of references results in a product or process that
is more desirable …. Because the desire to enhance commercial opportunities by
improving a product or process is universal-and even common-sensical-we have
held that there exists in these situations a motivation to combine prior art
references even absent any hint of suggestion in the references themselves.”) In
this case, the ordinary artisan possessed the requisite knowledge and skills
rendering him capable of adding the escrow service functionality of Schultz to the
audit system of Jones to make Jones’s system more commercially desirable.
We recognize that evidence of secondary considerations, such as that
presented by Appellants in this application must be considered in route to a
determination of obviousness/nonobviousness under 35 U.S.C. § 103. Accordingly,
we consider anew the issue of obviousness under 35 U.S.C. § 103, carefully
evaluating and weighing both the evidence relied upon by the Examiner and the
objective evidence of nonobviousness provided by Appellants.
Appellants presented a Declaration of Richard J. Windish (“Windish
Declaration”) as purported evidence of long-felt need. We find this evidence
insufficient, because the Windish Declaration fails to take into account that the
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system described in Jones already solved the identified long-felt need. The
Windish Declaration identifies the problem in the industry as follows:
In trade promotions, since there is no coupon, the
manufacturer does not have a processed physical coupon
to rely on to verify the appropriate payment to the retailer
for the promoted product sold during the trade
promotion. Thus, trade promotions inherently create a
significant verification problem for manufacturers.
(Windish Decl. ¶ 25.)
The Windish Declaration then states (Windish Decl. ¶¶ 26) that prior to
Appellants’ invention, the known systems and methods for administering trade
promotions were inadequate to resolve this verification problem because, inter
alia,
The retailers had control of all of the point of sale data
and thus control of the promotion redemption. The
manufacturer could only make estimates for resulting
point of sale data. Processed point of sale data often
resulted in discrepancies. Such discrepancies were
difficult to resolve and often remained unresolved.
(Windish Decl. ¶ 34.)
…
[T]he manufacturer did not have the ability to readily or
independently verify:
(a) the retailer’s calculated performance total due
to the retailer,
(b) the number of promoted products sold by the
retailer during the trade promotion period, or
(c) the amount of the discounts given to the
consumers for the promoted products during the trade
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promotion. (Windish Decl. ¶ 40).
Appellants also presented articles purporting to show a long-felt need to:
resolve misunderstandings over deal terms (Windish Decl. ¶ 60), improve
efficiency in resolving deductions and analysis (Windish Decl. ¶¶ 61-63),
administer the trade promotion (Windish Decl. ¶ 65), include the retailers and
provide an independent system for administering trade promotions (Windish Decl.
¶ 67), improve invoice accuracy (Windish Decl. ¶ 69), and improve
communications, increase data synchronization, and improve information systems
(Windish Decl. ¶ 70).
Even assuming that the Appellants’ objective evidence demonstrates the
needs asserted by Appellants, the Jones audit system solves the verification
problem and thus meets these needs by capturing the POS transaction data in an
independent third-party computer system and auditing the data so that the
manufacturer can independently verify the number of promoted products sold by
the retailer during the trade promotion period. Further, the manufacturer, using the
independently-verified number of products sold provided by Jones system, can also
verify the retailer’s calculated performance total due based on the terms of their
deal and calculate the amount of discounts that the retailer gave to the consumers
for the promoted products during the trade promotion.
The undisputed evidence indicates that there existed a felt need to
independently audit the number of promoted products sold during a trade
promotion. The evidence also demonstrates, however, that Jones created a system
to meet this need prior to Appellants’ invention. The relevant secondary
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consideration is “long-felt but unsolved need,” not long-felt need in isolation. See
Graham v. John Deere Co., 383 U.S. 1, 17, 148 USPQ 459, 467 (1966). Any long-
felt need to independently audit trade promotions was satisfied by the prior art.
Thus, the secondary considerations present in the instant case are not sufficient to
overcome the strong case for obviousness based on the prior art.
The Windish Declaration also asserts a long-felt need for an independent
third party to verify the agreed-upon contract terms of the trade promotion and to
settle the account between the manufacturer and the retailer. (Windish Decl. ¶ 29,
36). Although Jones does not calculate the total amount owed based on the deal
terms, it is our understanding that the payment owed under the claimed invention is
based on the benchmark of the total promoted products purchased during the trade
promotion. As such, if the third party audit system in Jones provides the
manufacturer with an independent number of promoted products sold, any alleged
long-felt need for settlement of the account between the manufacturer and retailer
has been substantially met as long as the manufacturer and the retailer are using the
same deal sheet to calculate the total amount owed. The Windish Declaration
states that prior to the present invention there was no unified or integrated
communication or verification of the agreed upon contract terms of the trade
promotion between the manufacturer and the retailer (Windish Decl. ¶ 29). We
find this difficult to believe with the sophistication of telecommunications devices
that were at the disposal of the parties at the time of the invention. All that would
be required is for the manufacturer to fax the final deal sheet to the retailer listing
the agreed-upon terms of the trade promotion contract. See Windish Decl. ¶ 27
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(admitting that “[t]he manufacturer usually sent or provided the deal sheet
manually or electronically (such as by mail, facsimile, or e-mail) to the retailer.”)
Then, using the audit numbers from the Jones system, and the agreed upon deal
sheet, the retailer’s and the manufacturer’s calculations of the total owed should be
the same.
All that the claimed invention arguably provides in the way of unmet needs
over the Jones system is a way for a third party system to automate the calculation
of the amount owed by the manufacturer and initiate a payment or generate an
invoice for the amount. Appellants’ objective evidence, however, does not
demonstrate a long-felt need for automation of this function by a third party and
further does not show that manufacturers and retailers were not already calculating
and processing this amount with an automated system of their own. Further, we do
not glean from Appellants’ objective evidence why the manufacturer or retailer
would need a third party to perform this calculation for them. Clearly, a third party
would charge for this service. The parties would need to balance the cost of
performing this function internally versus the cost of using an escrow service. This
is merely a cost-benefit analysis, but does not show a long-felt, but unmet need, in
the industry.
Appellants also attempted to show failure of others by contending that
Jones’s system for trade promotions has never been commercially successful
(Windish Decl. ¶56). Appellants failed to provide any objective evidence to
demonstrate either (1) Jones’s attempts to commercialize its invention, or (2)
Jones’s failure of commercial success. As such, we find no support for the
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Declarant’s statement that at the time of the invention, there was no system
available to independently account for sales of promoted product. On the contrary,
the disclosure in Jones provides just such an independent audit system for use by
manufacturers and retailers.
Weighing all evidence of obviousness against all evidence of non-
obviousness, we find that Appellants’ evidence of long-felt need is not sufficient to
overcome the obviousness of the claimed invention. As such, the invention of
claims 1-29, 37-73, 88, and 89 would have been obvious to one having ordinary
skill in the art at the time of the invention in view of Jones and Schultz.

CONCLUSIONS OF LAW
We conclude that the Appellants have not shown that the Examiner erred in
rejecting claims 1-29, 37-76, 88, and 89 under 35 U.S.C. § 103(a) as unpatentable
over Jones and Schultz.

CLAIMS 30-32
Appellants argue claims 30-32 as a group (Br. 59-61). As such, we select
claim 30 as a representative claim and the remaining claims stand or fall together
with claim 30. Appellants reiterate the same arguments made as to claim 1 in
support of patentability of claim 30. We do not find these arguments persuasive
for the reasons stated supra. Appellants further contend that claim 30 is not
obvious because Jones and Schultz do not disclose providing access to the
independent system operator database by the retailer and manufacturer to
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independently verify the terms of the trade promotion and providing access after
the start of the trade promotion to allow the retailer and manufacturer to determine
at least a portion of the amount of money the manufacturer will owe the retailer
(Br. 60-61).
The Examiner found Jones teaches providing access to the independent
system operator database by the retailer and manufacturer to independently verify
the terms of the trade promotion (Answer 15, citing Jones, col. 12, ll. 10-40) and
providing access after the start of the trade promotion to allow the retailer and
manufacturer to determine at least a portion of the amount of money the
manufacturer will owe the retailer (Answer 16, citing Jones, col. 12, ll. 10-25).
Jones discloses sending a report of the incremental sale volume increases to
both the retailer and the manufacturer only after each event to support the
settlement process (Jones, col. 12, ll. 20-25). The Examiner has not pointed to, nor
do we find, any disclosure in Jones that its audit system is accessible independently
to the retailer and the manufacturer to verify the terms of the trade promotion prior
to the start of the trade promotion by the retailer, or to see the accruing amount of
money owed by the manufacturer during the trade promotion, as required by claim
30. Schultz does not appear to cure this deficiency in Jones. As such, we do not
find sufficient teaching, suggestion, or motivation in Jones and Schultz that would
have led one having ordinary skill in the art at the time of the invention to the
invention as recited in claim 30. Claims 31 and 32 depend from and further limit
claim 30, and as such, are also not obvious in view of Jones and Schultz.
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Accordingly, we conclude that the Examiner erred in rejecting claims 30-32 under
35 U.S.C. § 103(a) as unpatentable over Jones and Schultz.

CLAIMS 77-83
Appellants argue claims 77-83 as a group (Br. 62-64). As such, we select
claim 77 as a representative claim and the remaining claims stand or fall together
with claim 77. Appellants reiterate the same arguments made as to claim 1 in
support of patentability of claim 77. We do not find these arguments persuasive
for the reasons stated supra. Appellants further contend that claim 77 is not
obvious because Jones and Schultz do not teach capturing link codes for associated
discounts if the trade promotion is an electronic discount trade promotion (Br. 63-
64). The Examiner found that Schultz teaches customer cards that enable the
retailer/manufacturer to issue electronic discounts to customers at the point-of-sale
based on the customer card linking to promotions (Answer 28, citing Schultz, col.
8, ll. 1-3 and 39-41 and col. 4, ll. 64-67). The Examiner determined that it would
have been obvious to a person of ordinary skill in the art at the time of the
invention to include in the system of Jones customer cards that are linked to
promotions in his trade promotion system because the cards would identify the
customers which could be used to better target advertisements and promotions to
the customers (Answer 28). We agree with the Examiner.
As evidenced by Schultz (col. 4, ll. 28-37), it was commonly known in the
art at the time of the invention that temporary price reductions, such as those
described in Jones (col. 11, ll. 21-23), could be implemented using a customer
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identification card. Such systems require a linking code to link to the discounted
price of the product once a customer card has been presented at the point-of-sale.
As such, if the trade promotion of Jones was a trade promotion based on customer
cards, the system would need to capture and store the linking codes associated with
the price reductions. We find sufficient motivation to use a customer card-type
trade promotion, as taught in Schultz, in the system of Jones to further enhance the
functionality of the system by allowing retailers and manufacturers to better track
consumer purchases and behavior and use this information to improve future trade
promotions.
Based on our findings as to the evidence of long-felt need made supra, and
weighing all evidence of obviousness against all evidence of non-obviousness, we
find that Appellants’ evidence of long-felt need is not sufficient to overcome the
obviousness of the claimed invention. As such, the invention of claims 77-83
would have been obvious to one having ordinary skill in the art at the time of the
invention in view of Jones and Schultz. Accordingly, we conclude that the
Appellants have not shown that the Examiner erred in rejecting claims 77-83 under
35 U.S.C. § 103(a) as unpatentable over Jones and Schultz.

CLAIMS 90-94
Appellants argue claims 90-94 as a group (Br. 64-67). As such, we select
claim 90 as a representative claim and the remaining claims stand or fall together
with claim 90. Appellants reiterate the same arguments made as to claim 1 in
support of patentability of claim 90. We do not find these arguments persuasive
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for the reasons stated supra. Appellants further contend that claim 90 is not
obvious because Jones and Schultz do not disclose: providing access to the
independent system operator database by the retailer and manufacturer prior to the
start of the trade promotion by the retailer to independently verify the terms of the
trade promotion and determine if the retailer changed the terms; enabling the
retailer, before the start of the trade promotion, to change at least one of the stored
terms of the promotion and capturing and storing the changed terms; and providing
access after the start of the trade promotion to allow the retailer and manufacturer
to determine at least a portion of the amount of money the manufacturer will owe
the retailer (Br. 66-67).
As we found supra for claim 30, Jones discloses sending a report of the
incremental sale volume increases to both the retailer and the manufacturer only
after each event to support the settlement process (Jones, col. 12, ll. 20-25). The
Examiner has not pointed to, nor do we find, any disclosure in Jones that its audit
system is accessible independently to the retailer and the manufacturer to verify the
terms of the trade promotion prior to the start of the trade promotion by the retailer,
or accessible to the retailer to change the terms, or accessible to both parties to see
the accruing amount of money owed by the manufacturer during the trade
promotion, as required by claim 90. Schultz does not appear to cure this
deficiency in Jones. As such, we do not find sufficient teaching, suggestion, or
motivation in Jones and Schultz that would have led one having ordinary skill in
the art at the time of the invention to the invention as recited in claim 90. Claims
91-94 depend from and further limit claim 90, and as such, are also not obvious in
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view of Jones and Schultz. Accordingly, we conclude that the Examiner erred in
rejecting claims 90-94 under 35 U.S.C. § 103(a) as unpatentable over Jones and
Schultz.

DECISION
The Examiner’s rejection of claims 1-29, 37-83, 88, and 89 under 35 U.S.C.
§ 103 is affirmed, and the Examiner’s rejection of claims 30-32 and 90-94 under
35 U.S.C. § 103 is reversed.
No time period for taking any subsequent action in connection with this
appeal may be extended under 37 CFR § 1.136(a).

AFFIRMED-IN-PART

jg
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