Ex Parte Roth

Patent Trial and Appeal Board

Mar 26, 2018

13004785 (P.T.A.B. Mar. 26, 2018)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE FIRST NAMED INVENTOR
13/004,785 0111112011 Jason Roth
30554 7590 03/28/2018
MAHAMEDI IP LAW LLP
1901 S. Bascom Ave.
Suite 600
Campbell, CA 95008
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.
LESC.POOl 1170
EXAMINER
CAMPEN, KELLY SCAGGS
ART UNIT PAPER NUMBER
3691
NOTIFICATION DATE DELIVERY MODE
03/28/2018 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):
uspto@m-iplaw.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte JASON ROTH
Appeal2017-000207
Application 13/004, 785 1
Technology Center 3600
Before CYNTHIA L. MURPHY, BRADLEY B. BAY AT, and
ALYSSA A. FINAMORE, Administrative Patent Judges.
BAY AT, Administrative Patent Judge.
DECISION ON APPEAL
Jason Roth (Appellant) seeks our review under 35 U.S.C. § 134(a) of
the final rejection of claims 1-3, 5-9, 11-17, 19-23, 25-29, 31, and 32
under 35 U.S.C. §101 as being directed to non-statutory subject matter.
Appeal Brief 11 ("App. Br.," filed May 16, 2016). We have jurisdiction
under 35 U.S.C. § 6(b ).
We AFFIRM.
1 Appellant identifies the real party in interest as "LogicEase Solutions Inc."
App. Br. 3. Claims 33-37 are withdrawn from consideration; claims 4, 10,
18, 24, and 30 have been cancelled. Id.
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Application 13/004,785
STATEMENT OF THE CASE
Claimed Subject Matter
Appellant's "invention relate[s] generally to systems and methods for
assessing metrics of loans, financial instruments and/or financial entities
using one or more data processing systems." Spec. i-f 2.
Claims 1, 7, 13, 21, and 2 7 are the independent claims on appeal.
Claim 1, reproduced below, is illustrative of the subject matter on appeal.
1. A data processing system for computing a performance
metric of a loan under consideration, the data processing
system comprising:
one or more processors coupled to one or more memory
resources, the one or more processors configured to:
retrieve data about a set of reference loans selected
from a plurality of baseline loans stored in the one or more
memory resources, the set of reference loans selected based
on one or more characteristics of the loan under
consideration, the one or more characteristics including
expected time-frames of application, origination, funding
or closing of the loan under consideration, types of
property securing the loan under consideration, geographic
location of one or more borrowers of the loan under
consideration, or geographic location of one or more
properties securing the loan under consideration;
select at least one attribute of at least one reference
loan from the retrieved data of the set of reference loans;
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compute at least one score value corresponding to
the at least one reference loan using data corresponding to
the at least one selected attribute, wherein the at least one
score value corresponding to the at least one reference
loan includes a probability figure that an event will occur
with respect to the at least one reference loan, the event
relevant to an operational risk associated with the at least
one reference loan;
compute at least one score value for the loan under
consideration using the at least one computed score value
corresponding to the at least one reference loan, wherein
each of the at least one score value for the loan under
consideration is a quantitative indicator for the
performance metric of the loan under consideration;
compute the performance metric of the loan under
consideration using the at least one score value computed
for the loan under consideration, the performance metric
quantifying an operational risk associated with the loan
under consideration by being predictive of whether the
loan under consideration is in compliance with at least one
government or market requirement, given the probability
figure that the event will occur; and
assess an expected performance of the loan under
consideration based on the performance metric.
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ANALYSIS
Non-Statutory Subject Matter
At the outset, Appellant stipulates "the pending claims stand or fall
together" as a group based on arguments presented with respect to claim 1.
App. Br. 12; Reply Brief 2 ("Reply Br.," filed Sept. 28, 2016). We select
claim 1 as the representative claim for this group, and the remaining
claims 2, 3, 5-9, 11-17, 19-23, 25-29, 31, and 32 stand or fall with claim 1.
In determining whether the claims on appeal are directed to patent-
ineligible subject matter, the Examiner applied the now common two-step
test introduced in Mayo Collaborative Services v. Prometheus Laboratories,
Inc., 132 S. Ct. 1289 (2012) and further explained by the Supreme Court in
Alice Corp. Pty. Ltd. v. CLS Bank International, 134 S. Ct. 2347 (2014).
The first step in that analysis is to determine whether the claim at issue is
directed to a patent-ineligible concept such as an abstract idea. Alice, 134 S.
Ct. at 2355. If so, the inquiry proceeds to step two to look at the claim for
"something more" by "examin[ing] 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." Id. at 2354, 2357
(quoting Mayo, 132 S. Ct. at 1294, 1298). This inventive concept must do
more than simply recite "well-understood, routine, conventional activity."
Mayo, 132 S. Ct. at 1298.
Alice Step One
Applying the framework in Alice, and as the first step of that analysis,
the Examiner determined "[t]he claims are directed to the abstract idea of
creating [a] loan contract after loan data analysis." Final Action 3 ("Final
Act.," mailed July 15, 2015). In response to Appellant's argument that the
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Application 13/004,785
claimed subject matter is not directed to a contract (see App. Br. 13-14), the
Examiner modified the abstract idea as being "the concept of the loan data
analysis." Answer 14 ("Ans.," mailed July 28, 2016). The Examiner
explained that"[ w ]hile the claims do not explicitly recite 'loan data
analysis,' the concept of 'loan data analysis,' is described" in the
performance of the recited claim steps. Id. at 4. According to the Examiner:
The evaluation of performance as recited in the claim is a concept
relating to mitigating risks similar to the fundamental economic
practices found by the courts to be abstract ideas (e.g., hedging
in In re Bilski, mitigating settlement risk in In re Alice) as well
as mathematical calculations as recited in the claim is a concept
similar to the mathematical relationships/formulas found by the
courts to be abstract ideas (e.g. computing a price for the sale of
a fixed income asset and generating a financial analysis output
(Freddie Mac), and calculating the difference between local and
average data values (In re Abele).
Id. at 5.
We are unpersuaded of reversible error and find that the Examiner's
articulations of the abstract idea are related, but the dispute calls for a
detailed explanation into what the claims are "directed to." See Reply Br. 3-
4.
The "directed to" inquiry cannot simply ask whether the claims
involve a patent-ineligible concept, because "all inventions at some level
embody, use, reflect, rest upon, or apply laws of nature, natural phenomena,
or abstract ideas." See Mayo, 132 S. Ct. at 1293. Rather, the "directed to"
inquiry applies a stage-one filter to claims, considered in light of the
Specification, based on whether "their character as a whole is directed to
excluded subject matter." Internet Patents Corp. v. Active Network, Inc.,
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790 F.3d 1343, 1346 (Fed. Cir. 2015); see also Enfish, LLC v. Microsoft
Corp., 822 F.3d 1327, 1335 (Fed. Cir. 2016).
Representative claim 1 is drawn to a "data processing system for
computing a performance metric of a loan under consideration ... [to]
assess an expected performance of the loan under consideration based on the
[computed] performance metric." See Claim 1 supra. With respect to
computer-enabled claimed subject matter, it is helpful to determine whether
"the claims at issue ... can readily be understood as simply adding
conventional computer components to well-known business practices" or
not. Enfish, 822 F.3d at 1338; see also Affinity Labs of Tex., LLC v.
DIRECTV, LLC, 838 F.3d 1253, 1257 (Fed. Cir. 2016). In Enfzsh, for
example, the court noted that "[ s ]oftware can make non-abstract
improvements to computer technology just as hardware improvements can."
Enfzsh, 822 F.3d at 1335. The court put the question as being "whether the
focus of the claims is on [a] specific asserted improvement in computer
capabilities ... or, instead, on a process that qualifies as an 'abstract idea'
for which computers are invoked merely as a tool." Id. at 1335-36. The
court found that the "plain focus of the claims" there was on "an
improvement to computer functionality itself, not on economic or other tasks
for which a computer is used in its ordinary capacity." Id. at 1336. Thus,
the question being, whether the claim as a whole "focus[ es] on a specific
means or method that improves the relevant technology" or is "directed to a
result or effect that itself is the abstract idea and merely invoke [ s] generic
processes and machinery." McRO, Inc. v. Bandai Namco Games Am. Inc.,
837 F.3d 1299, 1314 (Fed. Cir. 2016).
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Claim 1 recites a data processing system comprising "one or more
processors coupled to one or more memory resources." The "one or more
processors configured to" (1) "retrieve" data about reference loans stored in
the one or more memory resources; (2) "select" an attribute of a reference
loan from the retrieved data; (3) "compute" a score value of the reference
loan corresponding to the selected attribute; ( 4) "compute" a score value for
the loan under consideration using the computed score in (3); (5) "compute"
the performance metric of the loan under consideration using the computed
score in (4); and (6) "assess" an expected performance of the loan based on
the computed score in (5).
Generally, "retriev[ ing]," "select[ ing]," "comput[ ing]," "assess [ ing]"
or "evaluating" are operations that generic computers are capable of
performing. Cf Alice, 134 S. Ct. at 23 60 (stating "[ n ]early every computer
will include a 'communications controller' and 'data storage unit' capable of
performing the basic calculation, storage, and transmission functions
required"). Also the type of information processed (e.g., loan data) is not
patentably distinguishing. See Elec. Power Grp., LLC v. Alstom S.A., 830
F.3d 1350, 1353 (Fed. Cir. 2016) ("[C]ollecting information, including when
limited to particular content (which does not change its character as
information), [is] within the realm of abstract ideas."); see also Content
Extraction & Transmission LLC v. Wells Fargo Bank, Nat'! Ass 'n, 776 F.3d
1343, 1347 (Fed. Cir. 2014).
Reading claim 1 as a whole, the above recited operations seek to
achieve a result: to determine the likelihood of loss on a particular asset or
loan-the concept of risk assessment. The focus of the claim is evaluating
and assessing financial risk to help determine if a loan under consideration is
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worthwhile by comparing it to one or more baseline loans. Thus, the focus
here is not on improving any technology, but on using generic computer
operations, in which a computer is used in its ordinary capacity, for
predicting and assessing loan risk, such as risk of default. Cf In re TL!
Commc'ns LLC Patent Litig., 823 F.3d 607, 613 (Fed. Cir. 2016)
(explaining that the claims' focus "was not on an improved telephone unit or
an improved server").
"The 'abstract idea' step of the inquiry calls upon us to look at the
'focus of the claimed advance over the prior art' to determine if the claim's
'character as a whole' is directed to excluded subject matter." Enfzsh, 822
F.3d at 1335 (quoting Internet Patents Corp., 790 F.3d at 1346). In that
regard, the Background section of the Specification discusses the problem:
Individuals and other entities that are generally involved
with the origination of loans often evaluate on a case by case
basis whether to become involved in the origination of one or
more particular loans. To make that decision, the individual or
entity may want to assess the risks and benefits associated with
the origination of the particular loan or loans by determining one
or more corresponding performance metrics.
Loans associated with an individual or other entity can
pose operational risks to that individual or other entity, including
financial and regulatory risks. Consequently, individuals and
other entities contemplating entering into a business transaction
with that individual or entity may need to assess the operational
risks that the loan or loans may pose to the individual or entity.
To make that assessment, it may be helpful to employ one or
more performance metrics for the respective loan or loans
associated with that individual or entity.
To assist with the assessment of such operational impacts,
there is a need for a system that can assess performance metrics
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for one or more loans, and/or for individuals or entities that may
be associated with one or more loans.
Spec. i-fi-13, 4, and 8, respectively.
According to the Specification, the inventor solved this problem by
assessing a performance metric (i.e., risk of default of the loan, expected
financial loss or gain, risk of fraud) of a loan under consideration by having
the assessment performed using a data processing system. See Spec. i-fi-1 9-
14. The advance lies in automating risk assessments for lending by
assessing the expected or predicted performance of a loan based on
computing performance metrics for the loan. In other words, the claimed
advance over the prior art lies in automating an act that could be performed
and has long been performed in the field of finance by a human, e.g.,
mentally, using pen and paper, and/or manually, without the use of a
computer or any other machine. Indeed, the concept of assessing and
managing loan risk is an economic and business practice long prevalent in
the lending industry and our financial system, and as such, squarely within
the realm of an abstract ideas. See Int 'l Sec. Exch., LLC v. Chicago Bd.
Options Exch., Inc., No. CBM2013-00049 (PTAB March 2, 2015), aff'd,
Chicago Bd. Options Exch., Inc. v. Int'! Sec. Exch., LLC, 640 F. App'x 986
(mem) (Fed. Cir. 2016) (nonprecedential) (Rule 36)) (The claims were
directed to the abstract idea of "risk management.").
Therefore, we see no reversible error in the Examiner's analysis and
articulation of the abstract idea, discussed above. 2
2 "An abstract idea can generally be described at different levels of
abstraction." Apple, Inc. v. Ameranth, Inc., 842 F.3d 1229, 1240-41 (Fed.
Cir. 2016)
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Alice Step Two
Step two is "a search for an 'inventive concept'-i.e., an element or
combination of elements that is 'sufficient to ensure that the patent in
practice amounts to significantly more than a patent upon the [ineligible
concept] itself."' Alice, 134 S. Ct. at 2355 (alteration in original) (quoting
Mayo, 132 S. Ct. at 1294). The relevant inquiry here is whether "additional
substantive limitations ... narrow, confine, or otherwise tie down the claim
so that, in practical terms, it does not cover the full abstract idea itself."
Accenture Global Servs., GmbH v. Guidewire Software, Inc., 728 F.3d 1336,
1344--45 (Fed. Cir. 2013) (internal quotations and citation omitted). The
Supreme Court in Alice cautioned that merely limiting the use of an abstract
idea "to a particular technological environment" or implementing the
abstract idea on a "wholly generic computer" is not sufficient as an
additional feature to provide "practical assurance that the process is more
than a drafting effort designed to monopolize the [abstract idea] itself."
Alice, 134 S. Ct. at 2358 (citations omitted).
Applying the framework in Alice, and as the second step of that
analysis, the Examiner found:
The additional elements or combination of elements in the claims
other than the abstract idea per se amount to no more than mere
instructions to implement the idea on a computer. Viewed as a
whole, these additional claim elements do not provide
meaningful limitations to transform the abstract idea into a patent
eligible application of the abstract idea such that the claims
amount to significantly more than the abstract idea itself.
Final Act. 3. According to the Examiner:
The claim as a whole, does not amount to significantly
more than the abstract idea itself because: the claim does not
affect [sic] an improvement to another technology or technical
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field; the claim does not amount to an improvement to the
functioning of a computer itself; and, the claim does not move
beyond a general link of an abstract idea to a particular
technological environment.
Accordingly, the Examiner concludes that there are no
meaningful limitations in the claim that transform the judicial
exception into a patent eligible application such that the claim
amounts to significantly more than the judicial exception itself.
Id. at 4.
Appellant argues that "the elements of Claim 1 are not routine and
conventional and go beyond conventional activities previously known to the
industry. For example, the claimed system can observe pattern changes in
risk due to combinations of particular loans identified as being similar (e.g.
'a set of reference loans')." App. Br. 16. Appellant asserts that the
computation of the predictive performance metric is based on a number of
intermediate steps that involve a probability figure that an event will occur.
Id. In contrast to traditional, manual or procedural risk analysis, Appellant
argues that "the claimed system can observe pattern changes in risk due to
combinations of myriad particular values of similar loans." Id. at 17.
However, claim 1 does not recite any specialized hardware, and
Appellant has not apprised us of any. Indeed, paragraph 40 of the
Specification discloses that the claimed data processing system
includes any desktop computer, laptop, netbook, electronic
notebook, ultra mobile personal computer (UMPC), client
computing device, server computer or server system (whether
configured as a single server or as a bank of multiple servers),
cloud computing system or platform, web appliance, network
router, switch or bridge, mobile telephone, personal digital
assistant, personal digital organizer, or any other computer
system, device, component or machine capable of processing
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electronic data. In various implementations, a data processing
system could act as a client, as a server, or as both a client and a
server.
Thus, the Specification indicates that the data processing system can be built
using a general purpose computer including "computer executable
instructions (whether in source code or object code), and any other computer
executable instructions may be stored on any such memory medium." Spec.
i-f 4 7. The use of a generic processor coupled to any memory medium
configured to perform the recited steps does not confer patent eligibility,
similar to the claims at issue in Alice. See Dealertrack, Inc. v. Huber, 674
F.3d 1315, 1334 (Fed. Cir. 2012) ("In considering patent eligibility under
§ 101, one must focus on the claims.").
Claim 1 uses a generic processor to perform "well-understood,
routine, conventional activit[ies] previously known to the industry. Alice,
134 S. Ct. at 2359 (quoting Mayo, 132 S. Ct. at 1294); see Mayo, 132 S. Ct.
at 1300 (explaining that "simply appending conventional steps, specified at a
high level of generality, to ... abstract ideas cannot make those ... ideas
patentable"). The activities Appellant argues are not routine or conventional
involve the comparison of data (baseline loans to loans under consideration
to assess similarities) (see Spec. i-f 36), and computation of score values and
metrics-which are the most basic functions performed by a generic
computer. At its most basic, a "computer" is "an automatic electronic
device for performing mathematical or logical operations." Oxford English
Dictionary 640 (2d ed. 1989). The use of a computer in an otherwise patent-
ineligible process for no more than its most basic functions-making
calculations or computations, fails to circumvent the prohibition against
patenting abstract ideas and mental processes. We are not apprised of any
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claimed element for accomplishing the claimed solution that is other than
what was generically known for performing those conventional functions.
We do not see, and Appellant does not adequately explain to us, what
particular assertedly inventive technology for performing the recited
functions is required for achieving the claimed result. See Credit
Acceptance Corp. v. Westlake Servs., 859 F.3d 1044, 1057 (Fed. Cir. 2017)
("[T]he claims do not provide details as to any non-conventional software
for enhancing the financing process."); see Intellectual Ventures I LLC v.
Capital One Fin. Corp., 850 F.3d 1332, 1342 (Fed. Cir. 2017) ("Our law
demands more" than claim language that "provides only a result-oriented
solution, with insufficient detail for how a computer accomplishes it.");
Elec. Power Grp., 830 F.3d 1350, 1354 (explaining that claims are directed
to an abstract idea where they do not recite "any particular assertedly
inventive technology for performing [conventional] functions").
To the extent that Appellant maintains that the elements of the claim
necessarily amount to "significantly more" than the abstract idea because the
claimed system is allegedly patentable over the prior art, Appellant
misapprehends the controlling precedent. See App. Br. 17-18; Reply Br. 6.
Although the second step in the Alice framework is termed a search for an
"inventive concept," the analysis is not an evaluation of novelty or non-
obviousness, but rather, a search for "an element or combination of elements
that is 'sufficient to ensure that the patent in practice amounts to
significantly more than a patent upon the [ineligible concept] itself."' Alice,
134 S. Ct. at 2355 (alteration in original) (quoting Mayo, 132 S. Ct. at 1294).
In other words, a novel and nonobvious claim directed to a purely abstract
idea is, nonetheless, patent ineligible. See Mayo, 132 S. Ct. at 1304
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(rejecting the suggestion that Sections 102, 103, and 112 might perform the
appropriate screening function and noting that in Mayo such an approach
"would make the 'law of nature' exception ... a dead letter"); see also
Genetic Techs. Ltd. v. Merial L.L.C., 818 F.3d 1369, 1376 (Fed. Cir. 2016)
("[U]nder the Mayo/Alice framework, a claim directed to a newly discovered
law of nature (or natural phenomenon or abstract idea) cannot rely on the
novelty of that discovery for the inventive concept necessary for patent
eligibility."). Thus, an abstract idea does not transform into an inventive
concept just because the Examiner has not found prior art that discloses or
suggests it. Even if a claimed concept is "[g]roundbreaking, innovative, or
even brilliant" does not by "itself satisfy the § 101 inquiry." Ass 'n for
Molecular Pathologyv. Myriad Genetics, Inc., 133 S. Ct. 2107, 2117 (2013).
Indeed, "[t]he 'novelty' of any element or steps in a process, or even of the
process itself, is of no relevance in determining whether the subject matter of
a claim falls within the § 101 categories of possibly patentable subject
matter." Diamond v. Diehr, 450 U.S. 175, 188-89 (1981).
Contrary to Appellant's contention (App. Br. 18), neither the problem
nor the solution here are rooted in computer technology. Unlike the claims
at issue in cases such as DDR Holdings LLC v Hotels.com LP., 773 F.3d
1245, 1257 (Fed. Cir. 2014) (claims at issue being "necessarily rooted in
computer technology in order to overcome a problem specifically arising in
the realm of computer networks") and Enfzsh (claims at issue being "directed
to a specific implementation of a solution to a problem in the software arts"),
Appellant merely addresses a business problem through the use of generic
computer implementation that does not add any meaningful limitations to
transform the abstract idea.
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Appellant's argument regarding preemption is, likewise,
unpersuasive. See Reply Br. 3. The Supreme Court has explained that "the
prohibition against patenting abstract ideas cannot be circumvented by
attempting to limit the use of [the abstract idea] to a particular technological
environment." Alice, 134 S. Ct. at 2358. Where claims are deemed to recite
only patent-ineligible subject matter under the two-step Alice analysis, as
here, "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.), cert. denied, 136 S. Ct. 701 (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.").
Accordingly, we reach the same conclusion as the Examiner, namely
that the claims on appeal do not pass muster under 35 U.S.C § 101.
Therefore, we sustain the rejection of independent claim 1, and claims 2, 3,
5-9, 11-17, 19-23, 25-29, 31, and 32, which fall with claim I.
DECISION
The Examiner's rejection of claims 1-3, 5-9, 11-17, 19-23, 25-29,
31, and 32 under 35 U.S.C. § 101 is affirmed.
No time period for taking any subsequent action in connection with
this appeal may be extended under 37 C.F.R. § 1.136(a).
AFFIRMED
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