Ex Parte Morgenstern et al

Patent Trials and Appeals Board

Jan 31, 2019

13954946 - (D) (P.T.A.B. Jan. 31, 2019)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
13/954,946 07/30/2013
87851 7590
Facebook/Fenwick
Silicon Valley Center
801 California Street
Mountain View, CA 94041
02/04/2019
FIRST NAMED INVENTOR
Jared S. Morgenstern
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.
26295-24096 5261
EXAMINER
IWARERE, OLUSEYE
ART UNIT PAPER NUMBER
3687
NOTIFICATION DATE DELIVERY MODE
02/04/2019 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):
ptoc@fenwick.com
fwfacebookpatents@fenwick.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte JARED S. MORGENSTERN, GEORGE LEE, GUY ROM, and
DANIEL ALAN LEVY
Appeal2018-000480
Application 13/954,946
Technology Center 3600
Before ST. JOHN COURTENAY III, JUSTIN BUSCH, and
JASON M. REPKO, Administrative Patent Judges.
REPKO, Administrative Patent Judge.
DECISION ON APPEAL
Appeal2018-000480
Application 13/954,946
STATEMENT OF THE CASE
Appellants 1 appeal under 35 U.S.C. § 134(a) from the Examiner's
rejection of claims 1, 3-7, 9-18, and 20. See App. Br. 1. 2 Claims 2, 8, and
19 are canceled. Id. at 19-20, 25. We have jurisdiction under 35 U.S.C.
§ 6(b).
We affirm.
THE INVENTION
Appellants' invention allows for seeding or discounting credits in a
virtual currency system. Abstract. Specifically, the invention uses credits
with three types of values: internal, external, and face. Id. ,r 19. The
original rate for creating the credits sets the credit's internal value. Id. The
credit's exchange rate for real currency sets the external value. Id. And the
value shown to the user is the face value. Id.
Seeding credits refers to giving credits to users at no cost to the user.
Spec. ,r 56. By using seeded credits, users can try an online game for free,
which can be a way to promote the game. Id. Creating credits with unique
internal and external values allows credit seeding. Id. For example, setting
the internal value to zero allows credits to be seeded to the user for free.
Id. ,I 20.
1 According to Appellants, the real party in interest is Facebook Inc. of
Menlo Park, California. App. Br. 2.
2 Throughout this opinion, we refer to the Final Rejection ("Final Act."),
mailed August 3, 2016; the Appeal Brief ("App. Br."), filed May 1, 2017;
the Examiner's Answer ("Ans."), mailed August 16, 2017; and the Reply
Brief ("Reply Br."), filed October 17, 2017.
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Discounting the external value can lower the credit's redemption
value----e.g., setting an external value lower than a service's cost. Id. This
can occur when the credits are created or accepted as payment by a vendor.
Id. ,r 61, 62. In one embodiment, the user purchases credits with an internal
value less than the face value. Id. ,r 61. When the user submits the credits to
a vendor, the vendor receives less than full value. Id. In another
embodiment, a vendor accepts a value as payment for a good or service that
is less than its actual value. Id. ,r 62. In these examples, the vendor must
subsidize the cost of providing the good or service to the user. Id.
Claims 1, 13, and 18 are independent. Claim 1 is reproduced below:
1. A computer-implemented method comprising:
storing an account for each of a plurality of participants of a
virtual economy;
receiving a request from a vendor to create credits of a virtual
currency, the request specifying a preferred activity for a
participant to perform to receive the created credits;
recording a number of created credits and a set of attributes
associated with the created credits in a data store, the set
of attributes including:
a face value of the created credits, the face value being a
value of the created credits that is shown to the
participant;
an internal value of the created credits, the internal value
being an amount of real currency to be received
from a participant to be assigned the created credits,
and
an external value of the created credits, the external value
being an amount of real currency to be provided to
the vendor for redeeming the created credits, the
external value being greater than the internal value
and less than the face value;
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querying the data store for a part1c1pant of the plurality of
part1c1pants, the participant being associated with a
reduced spending activity in the virtual economy;
responsive to a determination that the participant has performed
the preferred activity, recording in the data store an
assignment of the created credits to an account of the
participant in exchange for receiving an amount of real
currency from the participant equaling the internal value
of the created credits;
receiving a request to transfer the created credits from the
account of the participant to an account of the vendor;
recording in the data store a transfer of the created credits from
the account of the participant to the account of the vendor;
receiving a request from the vendor to redeem the created credits;
and
providing an amount of real currency to the vendor, the amount
of real currency provided to the vendor equaling the
external value of the created credits.
THE REJECTION
Claims 1, 3-7, 9-18, and 20 stand rejected under 35 U.S.C. § 101 as
directed to patent-ineligible subject matter. Final Act. 2-5.
PRINCIPLES OF LAW
An invention is patent-eligible if it claims a "new and useful process,
machine, manufacture, or composition of matter." 35 U.S.C. § 101.
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).
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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)). Under 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
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 that "[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
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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
to a known structure or process may well be deserving of patent
protection.").
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.
The PTO recently published revised guidance on the application of
§ 101. USPTO's January 7, 2019 Memorandum, 2019 Revised Patent
Subject Matter Eligibility Guidance ("Memorandum"). 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
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human interactions such as a fundamental economic practice, or
mental processes); and
(2) additional elements that integrate the judicial exception into a
practical application (see MPEP § 2106.05(a}-(c), (e}-(h)).
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 is 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.
See Memorandum.
ANALYSIS
The Judicial Exception
The Examiner rejects representative3 claim 1 under 35 U.S.C. § 101
because the claims are directed to an abstract idea of currency exchanging
and tracking, which is a certain method of organizing human activities.
Final Act. 3. For the reasons discussed below, we are not persuaded that the
Examiner erred.
Claim 1 recites a method of exchanging and tracking credits.
Appellants use the term "credit" to mean "a unit of virtual currency used in
3 Appellants argue claims 1, 3-7, 9-18, and 20 as a group. See App. Br. 7-
17. We select independent claim 1 as representative of claims 1, 3-7, 9-18,
and 20. See 37 C.F.R. § 4I.37(c)(l)(iv).
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the virtual currency system." Spec. ,r 18. According to the Specification, a
virtual currency system is a way "to exchange goods and services in a virtual
online environment." Id. Claim 1 's method is implemented on a computer.
The recited method uses a computer to maintain records about participants
of a virtual economy and the created credits. The recited credits have a set
of attributes that include the face value, internal value, and external value.
When the vendor makes a request to redeem the credits, the recited method
requires providing an amount of "real currency" equal to the external value
of the created credits.
Exchanging and tracking currency is a commercial interaction and a
fundamental economic principle or practice. Because claim 1 covers this
commercial interaction, claim 1 is directed to subject matter that falls within
the group covering certain methods of organizing human activity. See
Memorandum 10 ( explaining that the grouping of certain methods of
organizing human activity includes "commercial or legal interactions" and
"fundamental economic principles or practices").
Appellants argue that claim 1 is directed to a narrower concept than
"currency exchanging and tracking." App. Br. 8. According to Appellants,
currencies do not conventionally have three values. Id. at 11. Appellants
argue that this feature is not common. Id.; see also id. at 14--15. For
example, Appellants argue that recording three values is not inherent to
currency exchanging and tracking. Id. at 11. In Appellants' view, there are
no "brick-and-mortar equivalents to storing different exchange rate values
for credits on an individual basis, and therefore the improvements to virtual
economies are technological improvements." Id. at 13. Appellants argue
that the "U.S. dollar can be used to exchange for the amount of Chinese
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Yuan, no matter which one dollar bill one uses." Reply Br. 5. Appellants
argue that, by contrast, the recited credits have an external and internal value
on a credit-by-credit basis. Id.
The three values are a feature of the recited currency system.
Essentially, Appellants' argument is that the claimed currency system has
features not found in existing ones-i.e., it is a new currency system. Id.
But "a claim for a new abstract idea is still an abstract idea." Synopsys, Inc.
v. Mentor Graphics Corp., 839 F.3d 1138, 1151 (Fed. Cir. 2016); see also
Intellectual Ventures I LLC v. Symantec Corp., 838 F.3d 1307, 1321 (Fed.
Cir. 2016) ("A narrow claim directed to an abstract idea, however, is not
necessarily patent-eligible .... "). So narrowing the abstract idea by using
three values for a currency does not render the claim any less abstract.
On this record, we are not persuaded that the Examiner erred in
concluding that claim 1 is directed to an abstract idea of currency
exchanging and tracking. Final Act. 3.
Integration into a Practical Application
Claim 1 recites features in addition to the abstract idea of currency
exchanging and tracking. Namely, claim 1 recites recording and retrieving
information about the participants and the credits in a data store in a virtual
environment. As we discuss below, these additional elements do not
integrate the judicial exception into a practical application. See
Memorandum 20-22 (citing MPEP § 2106.05(a}-(c), (e}-(h)).
Claim 1 does not purport to improve the functioning of the computer
itself or any other technology or technical field. See Alice, 573 U.S. at 210,
cited in MPEP § 2106.05(a). For example, Appellants have not shown that
the recited storing and querying data in a virtual environment improves
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operating efficiency or reduces storage costs. Rather, claim 1 purportedly
improves an economy and only uses a computer as a tool.
For instance, Appellants argue that the claims "improve on
conventional virtual economies." App. Br. 12. According to Appellants, the
claims use different internal and external values so vendors and the virtual
currency system can subsidize seeded credits. Id. at 10, 12 (citing
Spec. ,r,r 3, 4, 57); see also Reply Br. 6-7. Appellants argue that the steps
encourage economic participation. App. Br. 11-13.
Yet claim 1 does not recite how the computer meaningfully
contributes to this objective. As Appellants point out, it is the concept of
associating three values with the credits-not the data store or the
computer-that allows the credits to be seeded. Id. at 10, 12; see also
Spec. ,r,r 20, 56. These values are a feature of the currency system, not the
computer. In fact, the Specification explains that the recited data store uses
a generic database to store the values. See Spec. ,r 30. Thus, claim 1 merely
adds generic computer components to support the method's recordkeeping
needs, which is insufficient to integrate the judicial exception into a practical
application. See MPEP § 2106.05(a).
Appellants also argue that the claims recite that the credits are
assigned to a particular participant: one that is associated with reduced
spending activity and performs the preferred activity. App. Br. 15; Reply
Br. 7. Claim 1, though, does not recite a new way to track these participants.
Instead, claim 1 merely recites reduced spending activity as a characteristic
of the participant, without any determination or technical solution for
arriving at this characterization.
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Although a computer and data store are recited, claim 1 does not
apply or use the abstract idea in a "particular machine," as described in
Bilski. See MPEP § 2106.05(b) (citing Bilski, 561 U.S. at 604). For the
currency to exist in a computer environment, there must be some
representation of currency values stored somewhere. Beyond storing data,
the recited data store contributes only nominally or insignificantly to the
recited method. See TL! Commc 'ns LLC v. AV Auto, LLC, 823 F .3d 607,
613 (Fed. Cir. 2016) ( explaining that a server used in its ordinary capacity to
store images was insufficient to render the claim eligible), cited in MPEP
§ 2106.05(±).
Here, the recited data store and virtual economy merely link the use of
the judicial exception to a virtual environment. See Ans. 7. In Appellants'
view, "the claims provide an improvement to virtual economies," and this
"ensures that the claims are not directed to an abstract idea." App. Br. 11.
But following Appellants' argument to its logical conclusion would exalt
form over substance because a competent claim drafter could draft a claim to
almost any fundamental economic practice by reciting that it is performed in
a virtual economy and records its data in a "data store." See Flook, 437 U.S.
at 590 ("The notion that post-solution activity, no matter how conventional
or obvious in itself, can transform an unpatentable principle into a patentable
process exalts form over substance."), cited in MPEP § 2106.05(g), (h). In
this way, the involvement of the virtual environment is merely a field of use,
which does not integrate the judicial exception into a practical application.
Memorandum 19; see also MPEP § 2106.05 (f), (h).
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Thus, claim 1 does not integrate the judicial exception into a practical
application. See Memorandum 19--21 ( enumerating the above-discussed
considerations as part of prong two of step 2A).
The Inventive Concept
Claim 1 also lacks an inventive concept.
As to the inventive concept, Appellants argue that if the claims were
directed to currency exchanging and tracking, they would be anticipated or
obvious over the prior art. App. Br. 15. Appellants argue claim 1 's subject
matter is different from a reference about currency exchanging and tracking
that was listed in the Information Disclosure Statement and considered by
the Examiner. Id. at 17. According to Appellants, the additional limitations
ensure that the claims are not merely reciting currency exchanging and
tracking, but they provide significantly more than the abstract idea.
Id. at 15; Reply Br. 7-8. We disagree.
It is not "enough for subject-matter eligibility that claimed techniques
be novel and nonobvious in light of prior art, passing muster under
35 U.S.C. §§ 102 and 103." SAP Am., Inc. v. Investpic, LLC, 898 F.3d 1161,
1163 (Fed. Cir. 2018); see also Affinity Labs, 838 F.3d at 1263 (explaining
that "[ e ]ven assuming" that a particular claimed feature was novel, the
problem of abstractness was not avoided). Rather, to determine whether
claim 1 provides an inventive concept, we consider the additional elements,
individually and in combination, to determine whether (1) they add a
specific limitation beyond the judicial exception that is not "well-
understood, routine, conventional" in the field or (2) simply append well-
understood, routine, conventional activities previously known to the
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industry, specified at a high level of generality, to the judicial exception.
Memorandum 23.
Under this framework, claim 1 's additional elements simply append
well-understood, routine, conventional activities to the judicial exception.
Specifically, claim 1 's additional elements are recording and retrieving
information about the participants and the credits in a data store in a virtual
environment. Here, the Specification explains that the recited data store
simply uses a generically described database. Spec. ,r 30. Indeed, claim 1
merely uses the data store for recordkeeping, which is well-understood,
routine, and conventional. See MPEP § 2106.05( d)(II)(iii) ( citing Alice, 573
U.S. at 224 ( creating and maintaining "shadow accounts"); Ultramercial,
Inc. v. Hulu, LLC, 772 F.3d 709, 716 (Fed. Cir. 2014) (updating an activity
log)). Considering the elements in combination, Appellants have not shown
that the recited storing and querying data improves operating efficiency,
reduces storage costs, or otherwise operates in an unconventional way.
Thus, the additional elements, individually and in combination, do not
provide an inventive concept. See Memorandum 23.
Appellants' inventive-concept argument focuses on economic
improvements. See App. Br. 15-17; Reply Br. 7. According to Appellants,
the claimed features improve an economy because they encourage
participants with a reduced spending activity to participate. App. Br. 15;
Reply Br. 7. In this way, Appellants' alleged inventive concept is the
abstract idea. Yet "[i]t is clear from Mayo that the 'inventive concept'
cannot be the abstract idea itself," and a number of Federal Circuit cases
"have held claims ineligible because the only alleged 'inventive concept' is
the abstract idea." Berkheimer v. HP Inc., 890 F.3d 1369, 1374 (Fed. Cir.
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2018) (denial of rehearing en bane) (Moore, J., concurring); see also SAP
Am., 898 F.3d at 1168 ("What is needed is an inventive concept in the non-
abstract application realm.").
On this record, Appellants have not persuaded us of error in the
rejection of representative claim 1 under 35 U.S.C. § 101. Thus, we sustain
the Examiner's rejection of claim 1, 3-7, 9-18, and 20, which are argued as
a group. Seen. 3 supra.
DECISION
We affirm the Examiner's decision to reject claims 1, 3-7, 9-18, and
20.
No time period for taking any subsequent action in connection with
this appeal maybe extended under 37 C.F.R. § 1.136(a)(l)(iv).
AFFIRMED
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