Ex Parte Matsuda et al

Patent Trials and Appeals Board

Mar 21, 2019

13450235 - (D) (P.T.A.B. Mar. 21, 2019)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE FIRST NAMED INVENTOR
13/450,235 04/18/2012 Paul J. Matsuda
66945 7590 03/25/2019
KILPATRICK TOWNSEND & STOCKTONLLP/VISA
Mailstop: IP Docketing - 22
1100 Peachtree Street
Suite 2800
Atlanta, GA 30309
UNITED STATES DEPARTMENT OF COMMERCE
United States Patent and Trademark Office
Address: COMMISSIONER FOR PATENTS
P.O. Box 1450
Alexandria, Virginia 22313-1450
www .uspto.gov
ATTORNEY DOCKET NO. CONFIRMATION NO.
79900-830241 (080540USC6) 5967
EXAMINER
SHEIKH, ASFAND M
ART UNIT PAPER NUMBER
3627
NOTIFICATION DATE DELIVERY MODE
03/25/2019 ELECTRONIC
Please find below and/or attached an Office communication concerning this application or proceeding.
The time period for reply, if any, is set in the attached communication.
Notice of the Office communication was sent electronically on above-indicated "Notification Date" to the
following e-mail address(es):
ipefiling@kilpatricktownsend.com
KTSDocketing2@kilpatrick.foundationip.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Exparte PAUL J. MATSUDA, SARAH E. PERRY, and
TRACY L. WILK
Appeal2017-005824
Application 13/450,235 1
Technology Center 3600
Before JOHN A. EVANS, LARRY J. HUME, and CATHERINE SHIANG,
Administrative Patent Judges.
HUME, Administrative Patent Judge.
DECISION ON APPEAL
This is a decision on appeal under 35 U.S.C. § 134(a) of the Final
Rejection of claims 40-45, 47-54, 57---60, and 63---69, which are all claims
pending in the application. Appellants have canceled claims 1-39. We have
jurisdiction under 35 U.S.C. § 6(b ).
We AFFIRM.
1 According to Appellants, the real party in interest is Visa International
Service Association. App. Br. 3.
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Application 13/450,235
STATEMENT OF THE CASE2
The Invention
Appellants' disclosed embodiments and claimed invention "relate[] to
electronic commerce and more particularly to systems and methods for
conducting electronic commerce between individuals." Spec. 1: 10-11.
Exemplary Claim
Claim 40, reproduced below, is representative of the subject matter on
appeal:
40. A method of integrating an escrow period with the
purchase of goods, the method comprising:
recording, on a transaction server, a transaction record
comprising a purchase price of the goods, a first account for an
individual buyer, shipping information of the buyer, and
a second account for an individual seller, the seller and
the buyer connecting to the transaction server over a network
with a seller terminal and a buyer terminal, respectively, to
provide information regarding the purchase;
debiting, by the transaction server, the first account of the
buyer by an amount equal to the purchase price;
placing, by the transaction server, the amount into an
escrow account; and
establishing, by transaction server, an escrow period
during which the amount is held in the escrow account; and
2 Our decision relies upon Appellants' Appeal Brief ("App. Br.," filed
Aug. 9, 2016); Reply Brief ("Reply Br.," filed Feb. 21, 2017); Examiner's
Answer ("Ans.," mailed Dec. 21, 2016); Final Office Action ("Final Act.,"
mailed Feb. 9, 2016); and the original Specification ("Spec.," filed
Apr. 18, 2012) (ultimately claiming benefit of US 60/135,103, filed
Feb. 19, 1999);.
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establishing a unique tracking number for the goods,
wherein the unique tracking number allows the buyer to track
shipment of the goods from the seller to the buyer with the
buyer terminal.
Prior Art
The Examiner relies upon the following prior art as evidence in
rejecting the claims on appeal:
Walker et al. ("Walker '207") US 5,794,207 Aug. 11, 1998
Cook US 5,860,068 Jan. 12, 1999
Gebb US 6,067,532 May 23, 2000
Walker et al. ("Walker '396") US 6,240,396 Bl May 29, 2001
Rejections on Appeal3
RI. Claim 67 stands rejected under 35 U.S.C. § 112(b) as being
indefinite. Final Act. 6.
R2. Claims 40-45, 47-54, 57---60, and 63---69 stand rejected under
35 U.S.C. § 101 as being directed to patent-ineligible subject matter. Final
Act. 7.
R3. Claims 40-44, 47-54, 57---60, and 63---67 stand rejected under
35 U.S.C. § 103(a) as being unpatentable over the combination of Gebb,
Walker '207, and Cook. Final Act. 8.
3 There is a discrepancy between the Final Action, the Answer, and the
pending claims on Appeal with respect to exactly which claims stand
rejected under patent-eligibility Rejection R2. Compare Final Act. 7 with
Ans. 2. Lacking any mention of this discrepancy by Appellants, we assume
that all claims 40-45, 47-54, 57---60, and 63-69 on appeal are subject to
Rejection R2.
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R4. Claims 45, 55, 68, and 69 stand rejected under 35 U.S.C.
§ I03(a) as being unpatentable over the combination of Gebb, Walker '207,
Cook, and Walker '396. Final Act. 13.
CLAIM GROUPING
Based on Appellants' arguments (App. Br. 6-25) and our discretion
under 37 C.F.R. § 4I.37(c)(l)(iv), we decide the appeal of patent-ineligible
subject matter Rejection R2 of claims 40-45, 47-54, 57---60, and 63---69 on
the basis of representative claim 40; and we also decide the appeal of
obviousness Rejection R3 of claims 40-44, 47-54, 57-60, and 63---67 on the
basis of representative claim 40. Remaining claims 45, 55, 68, and 69 in
Rejection R3, not argued separately, stand or fall with the respective
independent claim from which they depend. 4 We address separately argued
indefiniteness Rejection RI of claim 67, infra.
ISSUES AND ANALYSIS
In reaching this decision, we consider all evidence presented and all
arguments actually made by Appellants. To the extent Appellants have not
advanced separate, substantive arguments for particular claims, or other
issues, such arguments are waived. 37 C.F.R. § 4I.37(c)(l)(iv).
4 "Notwithstanding any other provision of this paragraph, the failure of
appellant to separately argue claims which appellant has grouped together
shall constitute a waiver of any argument that the Board must consider the
patentability of any grouped claim separately." 37 C.F.R. § 4I.37(c)(l)(iv).
In addition, when Appellants do not separately argue the patentability of
dependent claims, the claims stand or fall with the claims from which they
depend. In re King, 801 F.2d 1324, 1325 (Fed. Cir. 1986).
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Based upon our review of the record, we find a preponderance of the
evidence supports particular arguments advanced by Appellants with respect
to indefiniteness Rejection RI claim 67 for the specific reasons discussed
below.
However, we disagree with Appellants' arguments with respect to
Rejections R2 through R4 of claims 40-45, 47-54, 57-60, and 63---69 and,
unless otherwise noted, 5 we incorporate by reference herein and adopt as our
own: ( 1) the findings and reasons set forth by the Examiner in the action
from which this appeal is taken, and (2) the reasons and rebuttals set forth in
the Examiner's Answer in response to Appellants' arguments. We highlight
and address specific findings and arguments regarding claim 40 for
emphasis as follows.
1. § 112, ,r 2 Rejection RI of Claim 67
Issue 1
Appellants argue (App. Br. 5-6) the Examiner's rejection of claim 67
under 35 U.S.C. § 112(b) as being indefinite is in error. These contentions
present us with the following issue:
Did the Examiner err in concluding claim 67, recited as a dependent
hybrid system claim, is indefinite for failing to particularly point out and
distinctly claim the subject matter which the inventors regard as the
invention?
5 We review ineligible subject matter Rejection R2 de nova.
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Analysis
The Examiner concludes "[ c ]laim 67 claims a system claim; however
[it] appears to additionally claim another independent Claim 50, which is a
server (i.e., device). This causes the claim to be indefinite as it is unclear if
the server and all its components are being claimed or just a generic server."
Final Act. 6-7.
In contrast, "Appellants submit claim 67 is clear and definite to the
person of ordinary skill in the art. In particular, as the Examiner notes, claim
67 claims a system, which includes the server computer recited in claim 50
as well as a buyer terminal and a seller terminal. Thus, it is clear that since
claim 67 depends upon independent 50, dependent claim 67 includes all of
the limitations in independent claim 50." App. Br. 5.
We conclude that hybrid claim 67 is not indefinite for merely reciting
a system that comprises a server in dependent form, among other elements.
Cf Rembrandt Data Techs., LP v. AOL, LLC, 641 F.3d 1331, 1339 (Fed.
Cir. 2011) (holding an apparatus claim reciting an active transmitting step to
be indefinite). Therefore, we do not sustain indefiniteness Rejection R2 of
claim 67.
2. § 101 Rejection R2 of Claims 40-45, 47-54, 57---60, and 63-69
Issue 2
Appellants argue (App. Br. 6-17; Reply Br. 2-5) the Examiner's
rejection of claim 40 under 35 U.S.C. § 101 as being directed to patent-
ineligible subject matter is in error. These contentions present us with the
following issue:
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Under the USPTO' s Revised Guidance, informed by our governing
case law concerning 35 U.S.C. § 101, is claim 40 patent-ineligible under
§ 101?
PRINCIPLES OF LAW
A. 35 U.S.C. § 101
"Whether a claim is drawn to patent-eligible subject matter is an issue
of law that we review de novo." SiRF Tech., Inc. v. Int'! Trade Comm 'n,
601 F.3d 1319, 1331 (Fed. Cir. 2010).
An invention is patent-eligible if it claims a "new and useful process,
machine, manufacture, or composition of matter." 35 U.S.C. § 101. 6
However, the Supreme Court has long interpreted 35 U.S.C. § 101 to include
implicit exceptions: "[l]aws of nature, natural phenomena, and abstract
ideas" are not patentable. E.g., Alice Corp. v. CLS Bank Int 'l, 573 U.S. 208,
216 (2014).
In determining whether a claim falls within an excluded category, we
are guided by the Supreme Court's two-step framework, described in Mayo
and Alice. Id. at 217-18 (citing Mayo Collaborative Servs. v. Prometheus
Labs., Inc., 566 U.S. 66, 75-77 (2012)). In accordance with that framework,
we first determine what concept the claim is "directed to." See Alice, 573
U.S. at 219 ("On their face, the claims before us are drawn to the concept of
intermediated settlement, i.e., the use of a third party to mitigate settlement
6 This threshold analysis of whether a claim is directed to one of the four
statutory categories of invention, i.e., a process, machine, manufacture, or
composition of matter, is referred to as "Step l" in the patent-eligibility
inquiry under § 101.
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risk."); see also Bilski v. Kappas, 561 U.S. 593, 611 (2010) ("Claims 1 and 4
in petitioners' application explain the basic concept of hedging, or protecting
against risk.").
Concepts determined to be abstract ideas, and thus patent ineligible,
include certain methods of organizing human activity, such as fundamental
economic practices (Alice, 573 U.S. at 219-20; Bilski, 561 U.S. at 611 );
mathematical formulas (Parker v. Flook, 437 U.S. 584, 594--95 (1978)); and
mental processes ( Gottschalk v. Benson, 409 U.S. 63, 69 (1972)). Concepts
determined to be patent eligible include physical and chemical processes,
such as "molding rubber products" (Diamond v. Diehr, 450 U.S. 175, 191
( 1981) ); "tanning, dyeing, making water-proof cloth, vulcanizing India
rubber, smelting ores" (id. at 182 n.7 (quoting Corning v. Burden, 56 U.S.
252, 267---68 (1854))); and manufacturing flour (Benson, 409 U.S. at 69
(citing Cochrane v. Deener, 94 U.S. 780, 785 (1876))).
In Diehr, the claim at issue recited a mathematical formula, but the
Supreme Court held "[a] claim drawn to subject matter otherwise statutory
does not become nonstatutory simply because it uses a mathematical
formula." Diehr, 450 U.S. at 176; see also id. at 191 ("We view
respondents' claims as nothing more than a process for molding rubber
products and not as an attempt to patent a mathematical formula."). Having
said that, the Supreme Court also indicated that a claim "seeking patent
protection for that formula in the abstract ... is not accorded the protection
of our patent laws, ... and this principle cannot be circumvented by
attempting to limit the use of the formula to a particular technological
environment." Id. ( citing Benson and Flook); see, e.g., id. at 187 ("It is now
commonplace that an application of a law of nature or mathematical formula
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to a known structure or process may well be deserving of patent
protection.").
However, the Federal Circuit has held claims ineligible as directed to
an abstract idea when they merely collect electronic information, display
information, or embody mental processes that could be performed by
humans. Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1353-54 (Fed.
Cir. 2016) ( collecting cases). At the same time, "all inventions at some level
embody, use, reflect, rest upon, or apply laws of nature, natural phenomena,
or abstract ideas." Mayo, 566 U.S. at 71. Abstract ideas may include, but
are not limited to, fundamental economic practices, methods of organizing
human activities, and mathematical formulas or relationships. Alice 573
U.S. 208 at 218-22. Under this guidance, we must therefore ensure at step
one that we articulate what the claims are directed to with enough specificity
to ensure the step one inquiry is meaningful. Id. at 217 ("[W]e tread
carefully in construing this exclusionary principle lest it swallow all of
patent law.").
If the claim is "directed to" an abstract idea, we tum to the second
step of the Alice and Mayo framework, where "we must examine the
elements of the claim to determine whether it contains an 'inventive
concept' sufficient to 'transform' the claimed abstract idea into a patent-
eligible application." Alice, 573 U.S. at 221 (quotation marks omitted). "A
claim that recites an abstract idea must include 'additional features' to
ensure 'that the [claim] is more than a drafting effort designed to
monopolize the [abstract idea]."' Id. (quoting Mayo, 566 U.S. at 77).
"[M]erely requir[ing] generic computer implementation[] fail[ s] to transform
that abstract idea into a patent-eligible invention." Id.
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B. USPTO Guidance
The PTO recently published revised policy guidance in the Federal
Register concerning the application of§ 101. 2019 Revised Patent Subject
Matter Eligibility Guidance, 84 Fed. Reg. 50 (January 7, 2019) (hereinafter
"Guidance") (https://www.govinfo.gov/content/pkg/FR-2019-01-07 /pdf/
2018-28282.pdf).
Under that Guidance, we first look to whether the claim recites:
( 1) any judicial exceptions, including certain groupings
of abstract ideas (i.e., mathematical concepts, certain methods
of organizing human activity such as a fundamental economic
practice, or mental processes); 7 and
(2) additional elements that integrate the judicial
exception into a practical application (see MPEP
§§ 2106.05(a}-(c), (e}-(h)). 8
Only if a claim (1) recites a judicial exception and (2) does not
integrate that exception into a practical application, do we then look to
whether the claim:
(3) adds a specific limitation beyond the judicial
exception that are not "well-understood, routine, conventional"
in the field (see MPEP § 2106.05(d)); or
( 4) simply appends well-understood, routine,
conventional activities previously known to the industry,
specified at a high level of generality, to the judicial exception. 9
7 Referred to as "Revised Step 2A, Prong l" in the Guidance (hereinafter
"Step 2A(i)").
8 Referred to as "Revised Step 2A, Prong 2" in the Guidance (hereinafter
"Step 2A(ii)").
9 Items (3) and (4) continue to be collectively referred to as "Step 2B" of the
Supreme Court's two-step framework, described in Mayo and Alice.
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See Guidance.
Step 2A(i)-Abstract Idea
Informed by our judicial precedent, the recent Guidance extracts and
synthesizes key concepts identified by the courts as abstract ideas to explain
that the abstract idea exception includes the following groupings of subject
matter, when recited as such in a claim limitation:
(a) Mathematical concepts-mathematical relationships,
mathematical formulas or equations, mathematical calculations;
(b) Certain methods of organizing human activity-
fundamental economic principles or practices (including
hedging, insurance, mitigating risk); commercial or legal
interactions (including agreements in the form of contracts;
legal obligations; advertising, marketing or sales activities or
behaviors; business relations); managing personal behavior or
relationships or interactions between people (including social
activities, teaching, and following rules or instructions); and
( c) Mental processes----concepts performed in the human
mind (including an observation, evaluation, judgment, opinion).
Under the Guidance, if the claim does not recite a judicial exception
(a law of nature, natural phenomenon, or subject matter within the
enumerated groupings of abstract ideas above), then the claim is patent-
eligible at Step 2A(i). This determination concludes the eligibility analysis,
except in situations identified in the Guidance. 10
10 In the rare circumstance in which an examiner believes a claim limitation
that does not fall within the enumerated groupings of abstract ideas should
nonetheless be treated as reciting an abstract idea, the procedure described in
of the Guidance for analyzing the claim should be followed. See Guidance,
Section III.C.
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However, if the claim recites a judicial exception (i.e., an abstract idea
enumerated above, a law of nature, or a natural phenomenon), the claim
requires further analysis for a practical application of the judicial exception
in Step 2A(ii).
Step 2A(ii)-Practical Application
If a claim recites a judicial exception in Step 2A (i), we determine
whether the recited judicial exception is integrated into a practical
application of that exception in Step 2A(ii) by: (a) identifying whether there
are any additional elements recited in the claim beyond the judicial
exception( s ); and (b) evaluating those additional elements individually and
in combination to determine whether they integrate the exception into a
practical application.
The seven identified "practical application" sections of the MPEP, 11
cited in the Guidance under Step 2A(ii), are:
(1) MPEP § 2106.05(a) Improvements to the Functioning of
a Computer or To Any Other Technology or Technical
Field
(2) MPEP § 2106.05(b) Particular Machine
(3) MPEP § 2106.05(c) Particular Transformation
(4) MPEP § 2106.05(e) Other Meaningful Limitations
(5) MPEP § 2106.05([) Mere Instructions To Apply An
Exception
(6) MPEP § 2106.05(g) Insignificant Extra-Solution Activity
11 See MPEP § 2106.05(a}-(c), (e}-(h). Citations to the MPEP herein refer
to revision [R-08.2017].
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(7) MPEP § 2106.05(h) Field of Use and Technological
Enviromnent
If the recited judicial exception is integrated into a practical
application as determined under one or more of the MPEP sections cited
above, then the claim is not directed to the judicial exception, and the patent-
eligibility inquiry ends. If not, then analysis proceeds to Step 2B.
Step 2B - "Inventive Concept" or "Significantly More"
Under our precedent, it is possible that a claim that does not
"integrate" a recited judicial exception under Step 2A(ii) is nonetheless
patent eligible. For example, the claim may recite additional elements that
render the claim patent eligible even though a judicial exception is recited in
a separate claim element. 12 The Federal Circuit has held claims eligible at
the second step of the Alice/Mayo test (USPTO Step 2B) because the
additional elements recited in the claims provided "significantly more" than
the recited judicial exception (e.g., because the additional elements were
unconventional in combination). 13 Therefore, if a claim has been
determined to be directed to a judicial exception under Revised Step 2A, we
must evaluate the additional elements individually and in combination under
Step 2B to determine whether they provide an inventive concept (i.e.,
12 See, e.g., Diehr, 450 U.S. at 187.
13 See, e.g., Amdocs (Israel), Ltd. v. Openet Telecom, Inc., 841 F.3d 1288,
1300, 1304 (Fed. Cir. 2016); BASCOM Global Internet Services, Inc. v.
AT&T Mobility LLC, 827 F.3d 1341, 1349-52 (Fed. Cir. 2016); DDR
Holdings v. Hotels.com, 773 F.3d 1245, 1257-59 (Fed. Cir. 2014).
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whether the additional elements amount to significantly more than the
exception itself). 14
Under the Guidance, we must consider in Step 2B whether an
additional element or combination of elements: (1) "Adds a specific
limitation or combination of limitations that are not well-understood,
routine, conventional activity in the field, which is indicative that an
inventive concept may be present;" or (2) "simply appends well-understood,
routine, conventional activities previously known to the industry, specified
at a high level of generality, to the judicial exception, which is indicative
that an inventive concept may not be present." See Guidance, III.B. 15
In the Step 2B analysis, an additional element ( or combination of
elements) is not well-understood, routine or conventional unless the
examiner finds an evidentiary basis, and expressly supports a rejection in
writing with, one or more of the following:
14 The patent eligibility inquiry may contain underlying issues of fact.
Mortg. Grader, Inc. v. First Choice Loan Servs. Inc., 811 F.3d 1314, 1325
(Fed. Cir. 2016). In particular, "[t]he question of whether a claim element or
combination of elements is well-understood, routine and conventional to a
skilled artisan in the relevant field is a question of fact." Berkheimer v. HP
Inc., 881 F.3d 1360, 1368 (Fed. Cir. 2018).
15 In accordance with existing Step 2B guidance, an Examiner's conclusion
that an additional element ( or combination of elements) is well understood,
routine, conventional activity must be supported with a factual
determination. For more information concerning evaluation of well-
understood, routine, conventional activity, see MPEP § 2106.05( d), as
modified by the USPTO Berkheimer Memorandum (USPTO Commissioner
for Patents Memorandum dated Apr. 9, 2018, "Changes in Examination
Procedure Pertaining to Subject Matter Eligibility, Recent Subject Matter
Eligibility Decision (Berkheimer v. HP, Inc.)" (hereinafter "Berkheimer
Memo").
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1. A citation to an express statement in the
specification or to a statement made by an applicant during
prosecution that demonstrates the well-understood, routine,
conventional nature of the additional element(s).
2. A citation to one or more of the court decisions
discussed in MPEP § 2106.05(d)(II) as noting the well-
understood, routine, conventional nature of the additional
element( s ).
3. A citation to a publication that demonstrates the
well-understood, routine, conventional nature of the additional
element(s).
4. A statement that the examiner is taking official
notice of the well-understood, routine, conventional nature of
the additional element( s ).
See Berkheimer Memo.
The analysis in Step 2B further determines whether an additional
element or combination of elements:
(a) Adds a specific limitation or combination of
limitations that are not well-understood, routine, conventional
activity in the field, which is indicative that an inventive
concept may be present; or
(b) simply appends well-understood, routine,
conventional activities previously known to the industry,
specified at a high level of generality, to the judicial exception,
which is indicative that an inventive concept may not be
present.
Guidance, and see Berkheimer Memo.
If the Examiner or the Board determines under Step 2B that the
element ( or combination of elements) amounts to significantly more than the
exception itself, the claim is eligible, thereby concluding the eligibility
analysis.
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However, if a determination is made that the element and combination
of elements does not amount to significantly more than the exception itself,
the claim is ineligible under Step 2B, and the claim should be rejected for
lack of subject matter eligibility.
ANALYSIS
Step 1
Claim 40, as a method (process) claim, recites one of the enumerated
categories of eligible subject matter in 35 U.S.C. § 101. Therefore, the issue
before us is whether it is directed to a judicial exception without
significantly more.
Step 2A(i): Does the Claim Recite a Judicial Exception?
The Examiner determined that claim 40 is directed to "a fundamental
economic practice and/or mathematical relationships/formulas (i.e., a
transaction involving an escrow period)," (Final Act. 7), and thereafter
modified the analysis in the Answer by determining claim 40 is "directed to
integrating an escrow period with the purchase of goods, which is
considered an abstract idea." Ans. 2-3.
We find claim 40 does not recite the judicial exceptions of either
natural phenomena or laws of nature, we reevaluate whether an abstract idea
is recited by claim 40 based upon the Guidance. We conduct our review for
abstractness de nova.
The Specification provides context as to what the claimed invention is
directed. In this case, the Specification discloses that the invention "relates
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to electronic commerce and more particularly to systems and methods for
conducting electronic commerce between individuals." Spec. 1: 10-11.
Appellants' Abstract describes the invention as:
Receiving payment includes the establishment, at a first
server, a transaction record including information identifying a
payment amount, a first account to be credited by the payment
amount, and a second account to be debited by a debit amount.
A financial authorization network performs an authorization
analysis on at least the second account. The second account is
debited if the authorization analysis is successfully completed,
and the first account is directly credited by the payment amount
to conclude the transaction. Risk analysis may be performed for
each individual. Payment is integrated with shipping.
Spec. 36.
Claim 40 recites "[a] method of integrating an escrow period with the
purchase of goods," that includes the steps of:
( 1) "recording ... a transaction record comprising a
purchase price of the goods, a first account for an individual
buyer, shipping information of the buyer, and a second account
for an individual seller, the seller and the buyer connecting ...
to provide information regarding the purchase;"
(2) "debiting ... the first account of the buyer by an
amount equal to the purchase price;"
(3) "placing ... the amount into an escrow account;"
( 4) "establishing ... an escrow period during which the
amount is held in the escrow account;" and
( 5) "establishing a unique tracking number for the goods
[that] allows the buyer to track shipment of the goods from the
seller to the buyer."
Claims App 'x.
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Under their broadest reasonable interpretation standard, 16 we conclude
at least limitations (2) through (4) recite steps that would ordinarily occur
when conducting transactions related to the purchase of goods using an
escrow account. See Final Act. 7.
For example, debiting the buyer's account in the amount of the
purchase price is an operation that generally occurs with sales of goods.
Further, when use of an escrow account is involved, placing the debited
amount in the escrow account and establishing escrow rules, e.g., an escrow
period during which the amount is held in escrow, are typical escrow
operations.
We conclude the purchase of goods is a commercial interaction that
includes sales activities or behaviors, and use of an escrow account includes
an agreement in the form of a legal interaction that incurs a legal obligation,
both of which may be considered, under the Revised Guidelines, as certain
methods of organizing human activity.
We also determine that claim 40, directed to commercial interactions
as a certain method of organizing human activity, may also be performed by
pen and paper. This type of activity, i.e., debiting a buyer's account by an
16 During prosecution, claims must be given their broadest reasonable
interpretation when reading claim language in light of the specification as it
would be interpreted by one of ordinary skill in the art. In re Am. Acad. of
Sci. Tech. Ctr., 367 F.3d 1359, 1364 (Fed. Cir. 2004). Under this standard,
we interpret claim terms using "the broadest reasonable meaning of the
words in their ordinary usage as they would be understood by one of
ordinary skill in the art, taking into account whatever enlightenment by way
of definitions or otherwise that may be afforded by the written description
contained in the applicant's specification." In re Morris, 127 F.3d 1048,
1054 (Fed. Cir. 1997).
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amount equal to the purchase price, and placing the debited amount in an
escrow account for a predetermined period of time, for example, includes
longstanding conduct that existed well before the advent of computers and
the Internet, and could be carried out by a human with pen and paper. See
CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1375 (Fed. Cir.
2011) ("That purely mental processes can be unpatentable, even when
performed by a computer, was precisely the holding of the Supreme Court in
Gottschalk v. Benson.").
To summarize the Step 2A(i) analysis, we conclude limitations
(2) "debiting ... the first account of the buyer by an amount equal to the
purchase price;" (3) "placing ... the amount into an escrow account;" and
( 4) "establishing ... an escrow period during which the amount is held in
the escrow account" recite commercial interactions in the form of a sales
activity. Accordingly, under the Revised Guidelines, we conclude the
claims recite certain methods of organizing human activity, which is an
abstract idea.
Step 2A(ii): Judicial Exception Integrated into a Practical Application?
If the claims are directed to a patent-ineligible concept, as we
conclude above, we proceed to the "practical application" Step 2A(ii) in
which we determine whether the recited judicial exception is integrated into
a practical application of that exception by: (a) identifying whether there are
any additional elements recited in the claim beyond the judicial exception(s);
and (b) evaluating those additional elements individually and in combination
to determine whether they integrate the exception into a practical
application.
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In addition to the abstract (2) "debiting," (3) "placing," and
( 4) "establishing" limitations identified in Step 2A (i), supra, claim 40 recites
(1) "recording, on a transaction server, a transaction record comprising a
purchase price of the goods, a first account for an individual buyer, shipping
information of the buyer, and a second account for an individual seller, the
seller and the buyer connecting to the transaction server over a network with
a seller terminal and a buyer terminal, respectively, to provide information
regarding the purchase;" and (5) "establishing a unique tracking number for
the goods, wherein the unique tracking number allows the buyer to track
shipment of the goods from the seller to the buyer with the buyer terminal."
As to the specific limitations, we find limitation (1) recites
insignificant data gathering. See MPEP § 2106.05(g). Data gathering, as
performed by the steps or function in Appellants' claims, is a classic
example of insignificant extra-solution activity. See, e.g., In re Bilski, 545
F.3d 943, 963 (Fed. Cir. 2008) (en bane), aff'd sub nom, Bilski v. Kappas,
561 U.S. 593 (2010).
We also find limitation ( 5) recites insignificant post solution
activity. 17 The Supreme Court guides that the "prohibition against patenting
abstract ideas 'cannot be circumvented' [by] adding 'insignificant
postsolution activity."' Bilski, 561 U.S. at 610-11 (quoting Diehr, 450 U.S.
at 191-92). On this record, we are of the view that Appellants' claims do
not operate the recited generic computer components in an unconventional
17 We also note the step of "establishing a unique tracking number" could be
classified as an abstract idea because it can be carried out by a human in the
mind or by use of pen and paper. See CyberSource, 654 F.3d at 1375.
20
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manner to achieve an improvement in computer functionality. See MPEP
§ 2106.05(a).
Regarding Appellants' preemption argument (App. Br. 9), "[ w ]hile
preemption may signal patent ineligible subject matter, the absence of
complete preemption does not demonstrate patent eligibility .... Where a
patent's claims are deemed only to disclose patent ineligible subject matter
under the Mayo framework, as they are in this case, preemption concerns are
fully addressed and made moot." Ariosa Diagnostics, Inc. v. Sequenom,
Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015); see also OIP Techs., Inc. v.
Amazon.com, Inc., 788 F.3d 1359, 1362---63 (Fed. Cir. 2015) ("[T]hat the
claims do not preempt all price optimization or may be limited to price
optimization in the e-commerce setting do not make them any less
abstract").
Appellants allege the Federal Circuit's holding in Enfzsh is instructive.
App. Br. 11. In Enfish, our reviewing court held claims directed to a self-
referential logical model for a computer database patent-eligible under step
one of Alice. Enfzsh, LLC v. Microsoft Corp., 822 F.3d 1327, 1330 (Fed.
Cir. 2016). The disclosed technique enabled faster searching and more
effective storage of data than previous methods. Id. at 1333. The court
found the claims directed to "a specific improvement to the way computers
operate, embodied in the self-referential table" (id. at 1336), and explained
that the claims are "not simply directed to any form of storing tabular data,
but instead are specifically directed to a self-referential table for a computer
database" that functions differently than conventional databases. Id. at 1337.
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We find the rejected claims are dissimilar to Enfzsh 's self-referential
logical model for a computer database, and the Specification does not
support a determination that the computer related claim elements are
unconventional. See Spec. 9: 6-11, 31.
Accordingly, we conclude the recited judicial exception is not
integrated into a practical application as determined under one or more of
the MPEP sections cited above, such that the claim is directed to the judicial
exception.
Step 2B - "Inventive Concept" or "Significantly More"
If the claims are directed to a patent-ineligible concept, as we
conclude above, we proceed to the "inventive concept" step. For Step 2B we
must "look with more specificity at what the claim elements add, in order to
determine 'whether they identify an "inventive concept" in the application of
the ineligible subject matter' to which the claim is directed." Affinity Labs
of Texas, LLC v. DIRECTV, LLC, 838 F.3d 1253, 1258 (Fed. Cir. 2016)
(quoting Elec. Power Grp., 830 F.3d at 1353).
In applying step two of the Alice analysis, our reviewing court guides
we must "determine whether the claims do significantly more than simply
describe [the] abstract method" and thus transform the abstract idea into
patentable subject matter. Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709,
715 (Fed. Cir. 2014). We look to see whether there are any "additional
features" in the claims that constitute an "inventive concept," thereby
rendering the claims eligible for patenting even if they are directed to an
abstract idea. Alice, 573 U.S. at 221. Those "additional features" must be
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more than "well-understood, routine, conventional activity." Mayo, 566
U.S. at 79.
Limitations referenced in Alice that are not enough to qualify as
"significantly more" when recited in a claim with an abstract idea include, as
non-limiting or non-exclusive examples: adding the words "apply it" (or an
equivalent) with an abstract idea 18; mere instructions to implement an
abstract idea on a computer19; or requiring no more than a generic computer
to perform generic computer functions that are well-understood, routine and
conventional activities previously known to the industry. 20
Evaluating representative claim 40 under Step 2B of the Alice
analysis, we agree with the Examiner that it lacks an inventive concept that
transforms the abstract ideas of debiting an account and establishing an
escrow account that holds the funds for a period of time into a patent-eligible
application of that abstract idea. See Final Act. 7; Ans. 6. 21
18 Alice, 573 U.S. at 221-23.
19 Alice, 573 U.S. at 221, e.g., simply implementing a mathematical
principle on a physical machine, namely a computer (citing Mayo, 566 U.S.
at 84--85).
20 Alice, 573 U.S. at 225, e.g., using a computer to obtain data, adjust
account balances, and issue automated instructions.
21 The Examiner determined:
In sum, the examiner finds that the claims "are directed to
the use of conventional or generic technology in a nascent but
well-known environment, without any claim that the invention
reflects an inventive solution to any problem presented by
combining the two." In re TL! Communications LLC, No. 2015-
1372 (May 17, 2016). Accordingly, when considered
individually and in ordered combination, the examiner finds the
claims to be directed to ineligible subject matter.
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Further, The Examiner reiterates, and we agree:
As noted supra, the analysis makes it clear that the
computer functions performed by the transaction server of
recording .... , debiting ... , placing ... and establishing ...
are well-understood, routine and conventional generic computer
functions previously known to the industry. This conclusion
was not made in a vacuum. Rather, the ground of rejection
clearly note that these computer functions are deemed to be
generic computer functions, based on the following analogous
functions that courts have already recognized as generic
computer functions: receiving, processing, and storing data,
electronic recordkeeping, automating mental tasks, and
receiving or transmitting data over a network, e.g., using the
Internet to gather data.
Ans. 8.
Appellants rely upon the Federal Circuit's holding in DDR Holdings 22
to contend the appealed claims are patent-eligible. App. Br. 10. In
particular, Appellants argue:
[T]he present claims are necessarily rooted in computer
technology in order to overcome a problem of being able to
facilitate a transaction between two individuals who might be
remotely located with respect to each other, and being able to
provide each individual with the confidence that the transaction
will be conducted with accuracy and without fraud. The
problem to be solved is necessarily rooted in computer
technology and the solution is a computer implemented
solution.
Further, the pending claims are also similar to the
subject-matter eligible claims of DDR Holdings as they do not
merely recite the performance of some business practice known
from the pre-Internet world along with some generic
requirement to perform it using the Internet. Appellants submit
Ans. 6.
22 DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014).
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that there is no "pre-computer" business practice directly
analogous to the steps in independent claim 40. Should the
Examiner believe that some "pre-computer" analogue to the
present claims existed prior to the filing of the present
application, then the Examiner is requested to identify what that
analogue is.
App. Br. 11.
Appellants' reliance on DDR (App. Br. 10-11) is misplaced as the
recited claims do not improve the computer. In DDR, the claims at issue
involved, inter alia, "web pages displays [with] at least one active link
associated with a commerce object associated with a buying opportunity of a
selected one of a plurality of merchants" ( claim 1 of US 7,818,399). The
Federal Circuit found the claims in DDR to be patent-eligible under step one
of the Alice test because "the claimed solution is necessarily rooted in
computer technology in order to overcome a problem specifically arising in
the realm of computer networks." DDR Holdings, 773 F.3d at 1257.
Specifically, the Federal Circuit found the claims addressed the "challenge
of retaining control over the attention of the customer in the context of the
Internet." Id. at 1258. We find the rejected claims are dissimilar to DDR's
web page with an active link, and the Specification does not support the
view that the computer related claim elements are unconventional. See
Spec. 9:6-11, 31.
We note the patent eligibility inquiry may contain underlying issues of
fact. Mortg. Grader, 811 F.3d at 1325. In particular, "[t]he question of
whether a claim element or combination of elements is well-understood,
routine and conventional to a skilled artisan in the relevant field is a question
of fact." Berkheimer, 881 F.3d at 1368.
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As evidence of the conventional nature of the claimed network
components and processes, we again refer to Appellants' Specification at
page 9, line 6 through page 11, line 31. In particular:
Payment system 100 includes a number of terminals 108a-
108n and a number of servers 104a-n. In general, terminals
108a-n are small computers or "personal computers" or
workstations operated by human operators to retrieve, browse,
or interact with infolmation and service providers across the
Internet. Servers 104a-n, in general, are larger computers or
workstations configured and used to store data and information
for retrieval over the Internet. In this simplified scenario,
terminals 108a-108n are clients and servers 104a-n are the
servers in the client-server relationship. Because of the design
of the Internet and the web, roles of the computers can be
reversed in any given transaction, for example, the smaller
computers may also act as "servers" by providing information
to the larger computers.
Spec. 9:6-14.
We agree with the Examiner that the claim limitations may be broadly
but reasonably construed as reciting conventional computer components and
techniques, particularly in light of Appellants' Specification, as quoted
above.
With respect to the Step 2B analysis, we agree with the Examiner
because, as in Alice, the recitation of either a "method of integrating an
escrow period with the purchase of goods," that includes a "transaction
server," a "network", and a buyer terminal (claim 40); or a "transaction
server" that includes a "storage device," and a "a processor connected to the
storage device" ( claim 50), is simply not enough to transform the patent-
ineligible abstract idea here into a patent-eligible invention. See Alice, 573
U.S. at 221 ("[C]laims, which merely require generic computer
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implementation, fail to transform [an] abstract idea into a patent-eligible
invention.").
Accordingly, based upon the findings above, on this record, and in
light of the Guidance, we sustain the Examiner's§ 101 rejection of
independent claim 40, and grouped claims 41--45, 47-54, 57---60, and 63---69,
not argued separately, and which fall therewith. See Claim Grouping, supra.
3. § 103 Rejection R3 of Claims 40--44, 47-54, 57---60, and 63-67
Issue 3
Appellants argue (App. Br. 17-25; Reply Br. 6) the Examiner's
rejection of claim 40 under 35 U.S.C. § 103(a) as being obvious over the
combination of Gebb, Walker '207, and Cook is in error. These contentions
present us with the following issues:
Did the Examiner err in finding the cited prior art combination teaches
or suggests the limitations of claim 40, allegedly because: (1) the Examiner
failed to provide a rational underpinning to modify Gebb in the manner
suggested; (2) the modification proposed by the Examiner would have been
contrary to the intended purpose of Gebb; and (3) improper hindsight was
used to arrive at the present rejection?
Analysis
The test for obviousness is what the combined teachings of the prior
art would have suggested to the hypothetical person of ordinary skill in the
art. In re Keller, 642 F.2d 413,425 (CCPA 1981).
Appellants contend "[ o ]bviousness has not been established, because
there is no rational underpinning to modify Gebb in the manner provided by
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the Examiner." App. Br. 18. Appellants further argue, "Gebb essentially
discloses a ticket consignment system .... The Examiner acknowledges that
Gebb fails to teach or suggest placing an amount in an 'escrow account' but
alleges that one [ skilled in the art] would have been modified Gebb with
Walker '207 ." Id.
Contrary to the Examiner's allegation, there is absolutely no
need for any sort of "escrow account" in Gebb, since the buyer
in Gebb simply pays for a particular ticket held by a host
system, and the buyer can get the ticket (col. 8, lines 30-35).
There is no reason to put the buyer's money into escrow, since
Gebb's ticket system verifies all tickets posted on its system,
verifies the buyer's credit, and guarantees payment to the seller
( col. 2, lines 24-28). Stated differently, Gebb's ticket
redistribution system apparently dispenses with the need for a
buyer to worry about not getting what was expected.
Furthermore, adding an escrow account to Gebb's system would
make the system more cumbersome, slower, and more costly to
maintain than it already is, so Gebb teaches away from the
modification proposed by the Examiner. Consequently, there is
absolutely no reason to modify Gebb with an "escrow account"
as alleged by the Examiner.
App. Br. 18-19.
The relevant inquiry is whether the Examiner has set forth "some
articulated reasoning with some rational underpinning to support the legal
conclusion of obviousness." In re Kahn, 441 F.3d 977, 988 (Fed. Cir. 2006)
(cited with approval inKSRint'l Co. v. Teleflex, Inc., 550 U.S. 398,418
(2007)).
In the Final Action, the Examiner provides the following rationale for
combining Gebb with Walker '207:
[I]t would have been obvious to one of ordinary skill in the art
at the time the invention was made to combine the teachings of
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Walker with the method of Gebb to include placing, by a
central controller, the amount into an escrow account; and
establishing, by the central controller, an escrow period during
which the amount is held in the escrow account to provide users
with a means for to ensure fund availability and delivery of
goods thus increasing buyer/seller confidence.
Final Act. 9--10. 23 We find this stated basis of motivation meets the
articulated reasoning and rational underpinning requirements of KSR, cited
above.
Further, "[a] reference may be said to teach away when a person of
ordinary skill, upon reading the reference, would be discouraged from
following the path set out in the reference, or would be led in a direction
divergent from the path that was taken by the applicant." Ricoh Co., Ltd. v.
Quanta Computer, Inc., 550 F.3d 1325, 1332 (Fed. Cir. 2008) (citations
omitted). A reference does not teach away if it merely expresses a general
preference for an alternative invention from amongst options available to the
ordinarily skilled artisan, and the reference does not discredit or discourage
investigation into the invention claimed. In re Fulton, 391 F.3d 1195, 1201
(Fed. Cir. 2004). One of ordinary skill in the art would have understood
Walker '307's use of an escrow account, i.e., an account to withhold
payment until a particular event has occurred or until a particular time has
passed, to be an alternative implementation of Gebb's ticket redistribution
system, particularly in light of Gebb's teaching at column 9, lines 10-17:
23 The Examiner also provides a rationale to combine the teachings and
suggestions of Gebb and Walker '207 with Walker '396, however this
rationale is not pertinent to Appellants' specific allegations of improper
motivation to combine Gebb and Walker '207 with respect to the "escrow
account" limitation, as identified above. Final Act. 10.
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[ A ]ter the event occurs and no complaints are logged related to
the specific ticket, the information from the actual tickets is
compared to the information previously submitted by the seller.
If verified, the seller's previously reported credit card in credit
card database 54 is credited a predetermined amount, such as,
for example, the face value of the ticket less a transaction fee
(step 120).
Gebb, col. 9, 11. 10-17.
We find this disclosure at least teaches or suggests use of an "escrow
account." In particular, and similar to the holding in Fulton, Gebb does not
disparage the use of an escrow account. Furthermore, the Examiner relies
upon the explicit teaching in Walker '207 of an escrow account. "Escrow
account 299 allows payment to be delayed until the seller completes delivery
of the goods." Walker '207 col. 22, 11. 9-10.
We specifically note Appellants' challenge to the references
individually is not convincing of error in the Examiner's position because all
of the features of the secondary reference need not be bodily incorporated
into the primary reference, but consideration should be given to what the
combined teachings, knowledge of one of ordinary skill in the art, and the
nature of the problem to be solved as a whole would have suggested to those
of ordinary skill in the art (see In re Keller, 642 F.2d 413, 425 (CCPA
1981) ). Furthermore, the artisan is not compelled to blindly follow the
teaching of one prior art reference over the other without the exercise of
independent judgment. See Lear Siegler, Inc. v. Aeroquip Corp., 733 F.2d
881, 889 (Fed. Cir. 1984).
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Finally, Appellants argue the Examiner engaged in impermissible
hindsight to combine Gebb, Walker '207, and Cook in the manner
suggested. App. Br. 23-25.
Here, in applying the guidance of KSR, we see the hindsight question
before us as a balancing test-whether the Examiner's proffered
combination of references is merely "the predictable use of prior art
elements according to their established functions" (KSR, 550 U.S. at 417),
consistent with common sense; or, would an artisan reasonably have
combined the cited references in the manner proffered by the Examiner but
for having the benefit of the claim to use as a guide?
On this record, Appellants have provided no evidence that combining
such teachings was "uniquely challenging or difficult for one of ordinary
skill in the art," Leapfrog Enters., Inc. v. Fisher-Price, Inc., 485 F.3d 1157,
1162 (Fed. Cir. 2007), nor have Appellants presented evidence that this
incorporation yielded more than expected results.
Rather, we find that Appellants' invention is simply a combination of
known teachings that realize a predictable result. The Supreme Court has
determined the conclusion of obviousness can be based on the interrelated
teachings of multiple patents, the effects of demands known to the design
community or present in the marketplace, and the background knowledge
possessed by a person having ordinary skill in the art. KSR, 550 U.S. at 418.
The skilled artisan would "be able to fit the teachings of multiple patents
together like pieces of a puzzle" since the skilled artisan is "a person of
ordinary creativity, not an automaton." Id. at 420-21.
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Therefore, in the absence of persuasive evidence to the contrary, we
fail to find that Gebb teaches away from use of an escrow account, or that
incorporating an escrow account with the teachings of Gebb would be
contrary to Gebb 's stated purpose, or that the Examiner engaged in
impermissible hindsight in combining the Gebb, Walker '207, and Cook
references in the manner suggested.
Therefore, based upon the findings above, on this record, we are not
persuaded of error in the Examiner's reliance on the cited prior art
combination to teach or suggest the disputed limitation of claim 40, nor do
we find error in the Examiner's resulting legal conclusion of obviousness.
Therefore, we sustain the Examiner's obviousness rejection of independent
claim 40, and grouped claims 41--44, 47-54, 57---60, and 63---67 which fall
therewith. See Claim Grouping, supra.
3. Rejection R4 of Claims 45, 55, 68, and 69
In view of the lack of any arguments directed to obviousness
Rejection R4 of claims 45, 55, 68, and 69 under§ 103, we sustain the
Examiner's rejection of these claims. Arguments not made are waived.
REPLY BRIEF
To the extent Appellants may advance new arguments in the Reply
Brief (Reply Br. 2---6) not in response to a shift in the Examiner's position in
the Answer, we note arguments raised in a Reply Brief that were not raised
in the Appeal Brief or are not responsive to arguments raised in the
Examiner's Answer will not be considered except for good cause (see 37
C.F.R. § 4I.41(b)(2)), which Appellants have not shown.
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CONCLUSIONS
(1) The Examiner erred with respect to indefiniteness Rejection RI
of claim 67 under 35 U.S.C. § 112, second paragraph, and we do not sustain
the rejection.
(2) Based upon our de nova review of the patent-ineligible subject
matter Rejection R2 of claims 40-45, 47-54, 57---60, and 63---69 under 35
U.S.C. § 101, we sustain the rejection.
(3) The Examiner did not err with respect to obviousness
Rejections R3 and R4 of claims 40-45, 47-54, 57---60, and 63-69 under 35
U.S.C. § I03(a) over the cited prior art combinations of record, and we
sustain the rejections.
Because we have affirmed at least one ground of rejection with
respect to each claim on appeal, we affirm the Examiner's decision. See 37
C.F.R. § 4I.50(a)(l).
DECISION
We affirm the Examiner's decision rejecting claims 40-45, 47-54,
57---60, and 63---69. No time period for taking any subsequent action in
connection with this appeal may be extended under 3 7 C.F .R. §
1.I36(a)(l)(iv). See 37 C.F.R. § 4I.50(f).
AFFIRMED
33