Ex Parte Walraven et alDownload PDFPatent Trials and Appeals BoardApr 9, 201914056261 - (D) (P.T.A.B. Apr. 9, 2019) Copy Citation UNITED STA TES p A TENT AND TRADEMARK OFFICE APPLICATION NO. FILING DATE 14/056,261 10/17/2013 131244 7590 04/09/2019 Hunton Andrews Kurth LLP/JPMorgan Chase Intellectual Property Department 2200 Pennsylvania A venue, NW Suite 800 Washington, DC 20037 FIRST NAMED INVENTOR Amy Moye Walraven 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. 47004.000773 6913 EXAMINER TRAN,HAI ART UNIT PAPER NUMBER 3697 MAIL DATE DELIVERY MODE 04/09/2019 PAPER 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. PTOL-90A (Rev. 04/07) UNITED ST ATES PATENT AND TRADEMARK OFFICE BEFORE THE PATENT TRIAL AND APPEAL BOARD Ex parte AMY MOYE WALRAVEN, SETHMARSHALGOLDKRANTZ,andRAYNAHALPIN Appeal 2017-006842 1 Application 14/056,261 Technology Center 3600 Before JEAN R. HOMERE, CARL W. WHITEHEAD JR., and KARA L. SZPONDOWSKI,Administrative Patent Judges. SZPONDOWSKI, Administrative Patent Judge. DECISION ON APPEAL Appellants appeal under 35 U.S.C. § 134(a) from the Examiner's Final Rejection of claims 23--43, constituting all claims currently pending in the application. App. Br. 1. Claims 1-22 have been canceled. Claims App'x. We have jurisdiction under35 U.S.C. § 6(b). We AFFIRM. 1 Appellants identify the real party in interest as JP Morgan Chase, N.A. App. Br. 1. Appeal2017-006842 Application 14/056,261 STATEMENT OF THE CASE According to Appellants, the claimed subject matter relates to a method and system for detecting, monitoring and investigating fraudulent activity. Spec. ,r 2. Claims 23 and 33 are independent, and recite a method and system, respectively. See App. Br. 15-17. Claim 23, reproduced below, is representative of the claimed subject matter: 23. A method that identifies potentially fraudulent transactions based on a score that represents how data is clustered comprising: training, using a computer processor, a prediction model to identify potentially fraudulent transactions from non-fraudulent transactions, wherein training the prediction model is performed using a set of literal transactions, a subset of the literal transactions representing known past fraudulent transactions, such that the prediction model is trained to predict transactions input into the prediction model as fraudulent or non-fraudulent; clustering, using a computer processor, transactions into clusters wherein each cluster is formed by grouping transactions with common factors; generating, using a computer processor, a score at regular, predetermined intervals, the score being representative of how data is grouped in each cluster; and generating, using a computer processor, an optimal set of predictors based at least in part on the score for identifying potentially fraudulent transactions. App. Br., Claims App'x, 15. REJECTION Claims 23--43 standrejectedunder35 U.S.C. § 101 as being directed to patent-ineligible subject matter. 2 Appeal2017-006842 Application 14/056,261 ANALYSIS An invention is patent-eligible if it claims a "new and useful process, machine, manufacture, or composition of matter." 3 5 U.S. C. § 101. However, the Supreme Court has long interpreted 3 5 U.S. C. § 101 to include implicit exceptions: "[l]aws of nature, natural phenomena, and abstract ideas" are not patentable. E.g.,AliceCorp. v. CLSBankint'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. at217-18 (citing Mayo CollaborativeServs. v. Prometheus Labs., Inc., 566U.S. 66, 75-77 (2012)). Inaccordancewiththat framework, we frrst 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 (Parkerv. Flook, 437 U.S. 584, 594--95 (1978)); and mental processes (Gottschalkv. Benson, 409 U.S. 63, 69 (1972)). If the claim is "directed to" an abstract idea, we tum to the second step oftheAlice andMayo 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- 3 Appeal2017-006842 Application 14/056,261 eligible application." Alice, 573 U.S. at221 (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?, 2019 Memorandum,2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. 50 ("Memorandum"). Under that guidance, we frrst 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); 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, 84 Fed. Reg. at 52-57. 4 Appeal2017-006842 Application 14/056,261 USP TO Memorandum, Step 2A Prong 1 Underthe first step in the Alice/Mayo framework, the Examiner determines the claims are directed to identifying fraudulent transactions, which is the abstract idea of"an idea of itself." Final Act. 5---6; Ans. 5, 11. Appellants argue "[ t ]he claims do not recite a mathematical algorithm, nor do they recite a fundamental economic or longstanding commercial practice," but, rather, "the claims address a business challenge ( e.g., identifying fraudulent transactions) that is particular to prediction model." App. Br. 5. Appellants further argue "it is clear the claims are directed to a device with computer hardware, including a processor, a storage medium, program logic, which means the claims are not directed to an abstract idea." App. Br. 6. Appellants argue the claims are similar to those in DDR Holdings in that the "type of complex analysis, recited by the pending claims, is not possible without use of a computer," so the claims "were not subject to a prior art process that was doing the same thing but outside a computing environment." App. Br. 6. Appellants do not persuasively argue why the claims are not directed to an abstract idea. Appellants' invention "relates generally to detecting, monitoring, and investigating fraudulent activity." Spec. ,r 2. Appellants' Specification describes that "fraud detection is a manual process that involves culling through billions of transactions to find fraud patterns" and "timeliness of fraud detection is also a major concern." Spec. ,r 3. Appellants describe frrst party fraud, where a customer intentionally defrauds an entity (such as bank or fmancial institution) without a third party victim. Spec. ,r 4. Appellants explain frrst party fraud is harder to detect because a victim is nonexistent and "because the fraudsters can mimic the 5 Appeal2017-006842 Application 14/056,261 behavior of a best customer." Spec. ,r,r 4, 6. Appellants state"[ c ]urrent fraud tools do not account for such fraudulent activities and are not effective in addressing this type of fraud." Spec. ,r 6. Appellants attemptto solve these problems by, inter alia, "analyzing data and creating links to identify anomalies in the data for first party fraud identification." Spec. ,r 20; see also Spec. ,r 24 ("analyze customer activity to identify links and/or patterns"). Appellants explain "[ o ]nee a fraud cluster is identified, various actions may be invoked." Spec. ,r 26. Independent claim 23 recites ( 1) "training ... a prediction model to identify potentially fraudulent transactions from non-fraudulent transactions, wherein training the prediction model is performed using a set of literal transactions, a subset of the literal transactions representing known past fraudulent transactions, such that the prediction model is trained to predict transactions input into the prediction model as fraudulent or non-fraudulent''; (2) "clustering ... transactions into clusters wherein each cluster is formed by grouping transactions with common factors"; (3) "generating ... a score at regular, predetermined intervals, the score being representative of how data is grouped in each cluster"; and ( 4) "generating ... an optimal set of predictors based at least in part on the score for identifying potentially fraudulent transactions." App. Br. 15. Independent claim 33 recites similar limitations. App. Br. 16-17. Appellants have not persuasively explained why this sequence of steps for verifying fraudulent transactions is not directed to a mental process, as identified in the Office Guidance. See Memorandum 84 Fed. Reg. at 52. The claims here are similar to those found ineligible in FairWarning IP, LLC v. Iatric Systems, Inc., 839 F.3d 1089 (Fed. Cir. 2016). In 6 Appeal2017-006842 Application 14/056,261 Fair Warning, the claims were directed to the abstract idea of "collecting and analyzing information to detect misuse and notifying a user when misuse is detected." 839 F.3d at 1093. Similarly, here, claims 23 and 33 recite analyzing information to detect fraudulent transactions. See Elec. Power Grp. LLCv. Alstom, 830 F.3d 1350, 1353-54 (Fed. Cir. 2016) (collecting information and "analyzing information by steps people go through in their minds, or by mathematical algorithms, without more, [are] essentially mental processes within the abstract-idea category."). Appellants have not presented persuasive arguments that the steps/limitations of the claims cannot be mentally or manually performed. Although Appellants argue the analysis is "complex" and "is not possible without the use of a computer" (App. Br. 6), Appellants do not provide any evidence in support of this argument. We further note the claim language does not require, for example, any recitation pertaining to the amount of data analyzed. In other words, there is nothing in the claims preventing such analysis from being performed on a smaller set of data by a human. Essentially, Appellants seek to automate a manual process. See, e.g., GIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1363 (Fed. Cir. 2015). Moreover, the mere mention of certain computer components in the claims ( e.g. "processor," "storage medium") does not impose sufficiently meaningful limitations on claim scope beyond these mental steps. Intellectual Ventures I LLC v. Symantec Corp., 838 F.3d 1307, 1318 (Fed. Cir. 2016); CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1372-73, 1375 (Fed. Cir. 2011) (non- precedential). Accordingly, we conclude the claims recite a mental process, and thus, an abstract idea. 7 Appeal2017-006842 Application 14/056,261 USP TO Memorandum, Step 2A Prong 2 In determining whether the claims are "directed to" the identified abstract idea, we next consider whether the claims recite additional elements that integrate the judicial exception into a practical application. 2 We discern no additional element ( or combination of elements) recited in the claims that integrates the judicial exception into a practical application. See Memorandum, 84 Fed. Reg. at 54--55. Appellants argue the claims are similar to those in DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014) in that they are "necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks" and do not "merely recite the performance of some business practice known from the pre- Internet world along with the requirement to perform it on the Internet". App. Br. 5---6. Appellants argue "[t]he claimed invention addresses a computer-centric challenge of identifying and addressing fraudulent transactions," which is addressed by "training a prediction model to identify potentially fraudulent transactions from non-fraudulent transactions, clustering, using a computer processor, transactions into clusters wherein each cluster is formed by grouping transactions with common factors; and generating, using a computer processor, a score at regular, predetermined 2 We acknowledge that some of the considerations at Step 2A, Prong Two, properly may be evaluated under Step 2 of Alice (Step 2B of the Office guidance). For purposes of maintaining consistent treatment within the Office, we evaluate them under Step 1 of Alice (Step 2A of the Office guidance). See Memorandum, 84Fed. Reg. at 55 n.25, 27-32. 8 Appeal2017-006842 Application 14/056,261 intervals, the score being representative of how data is grouped in each cluster." App. Br. 10. Appellants also argue the claims improve the functioning of the computer itself and effect an improvement in a technical field in that the claimed invention "improves efficiency of identifying potential fraudulent activities." App. Br. 10; see App. Br. 12-13; see also Reply Br 3. We are not persuaded by Appellants' arguments. Initially, we note that Appellants argue, one the one hand that "[t]he claims address a business challenge (e.g., identifying fraudulent transactions) that is particular to prediction model" (App. Br. 5), and on the other hand that the claims "address[] a computer-centric challenge of identifying and addressing fraudulent transactions" (App. Br. 10). Appellants have not persuasively explained why the claims address a "computer-centric challenge." Rather, Appellants' Specification supports that the claimed invention is directed to a business challenge, namely, detecting, monitoring, and investigating fraudulent activity. See Spec. ,r,r 2---6, 69. Unlike the claims in DDR, the claims here are not "necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks." Moreover, the claims do not constitute an improvement to the functioning of the computer; they merely adapt the mental process of verifying fraudulent transactions to an execution of steps performed by a computer. See Credit Acceptance Corp. v. Westlake Services, 859 F.3d 1044, 1055 (Fed. Cir. 2017) ("Our prior cases have made clear that mere autmnation of manual processes using generic computers does not constitute a patentable iinproven1ent in computer technology."). Appellants' arguments address the efficiencies provided by the automation of the mental 9 Appeal2017-006842 Application 14/056,261 process, rather than an improvement to the functioning of the computer. However, "relying on a computer to perform routine tasks more quickly or more accurately is insufficient to render a claim patent eligible." GIP Techs., 788 F.3d at 1363 ( citing Alice, 573 U.S. at 224 ("use of a computer to create electronic records, track multiple transactions, and issue simultaneous instructions" is not an inventive concept)); Bancorp Servs., L.L. C. v. SunLifeAssur. Co. of Can. (US.), 687 F.3d 1266, 1278 (Fed. Cir. 2012) (a computer "employed only for its most basic function ... does not impose meaningful limits on the scope of those claims"); FairWarning, 839 F. 3d at 1095 ("[ w ]hile the claimed system and method certainly purport to accelerate the process of analyzing audit log data, the speed increase comes from the capabilities of a general-purpose computer, rather than the patented method itself'). For similar reasons, Appellants' arguments that "the claimed computer processor is integral to the claimed invention" in that "it is not possible for the steps of the claims to be performed without a computer" is also not persuasive. See App. Br. 12 (citing SiRF Tech., Inc. v. Int'l Trade Comm 'n, 601 F.3d 1319, 1333 (Fed. Cir. 2010)). As discussed above, Appellants do not persuasively explain why the steps cannot be performed without a computer. Moreover, SiRF states: In order for the addition of a machine to impose a meaningful limit on the scope of a claim, it must play a significant part in permitting the claimed method to be performed, rather than function solely as an obvious mechanism for permitting a solution to be achieved more quickly, i.e., through the utilization of a computer for performing calculations. 10 Appeal2017-006842 Application 14/056,261 601 F.3d at 1333; see also Bancorp, 687 F.3d at 1277-78. Here, the claimed processor merely permits the fraud verification to be performed more efficiently. Moreover, Appellants also do not provide persuasive argument to rebut the Examiner's fmdings that the additional claim elements, including the computer processor and storage medium, provide anything other than generic computer functionality. See Ans. 5---6. Appellants' Specification supports that the claims recite merely generic computer components and functionality. E.g., Spec. ,r 75 (processor may include "a personal or laptop computer, a telephone, or PDA ... a microprocessor, a microcontroller or other general or special purpose device operating under programmed control"); ,r 78 ("the processing machine used to implement the invention may be a general purpose computer"); ,r 86 ( the storage medium "may be in the form of paper, paper transparencies, a compact disk, a DVD, an integrated circuit, a hard disk, a floppy disk, an optical disk, a magnetic tape, a RAM, a ROM, a PROM, a EPROM, a wire ... as well as any other medium or source of data that may be read by the processors"); see Spec. if 76, 79-85, 87-89. In other words, we agree with the Examiner that the additional limitations amount to generic computer components claimed to perform their basic functions. See Ans. 5---6. Appellants also argue there is no risk of pre-emption by allowing the pending claims. App. Br. 7-9. Appellants' preemption argument is likewise unpersuasive of Examiner en-or. Although preemption "might tend to i111pede i11novation more than it would tend to promote it, 'thereby thwarting the primary object of the patent laws"' (Alice, 134 S. Ct at 2354 (citing Afayo, 132 S. Ct. at 1293)), "the absence of complete preemption does not demonstrate patent 11 Appeal2017-006842 Application 14/056,261 eligibility." AriosaDiagnostics,lnc. v. Sequenom,Jnc., 788F.3d 1371, 1379(Fed.Cir. 2015);seealso O!PTechs., Inc. v.Amazon.cmn,lnc., 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 thee- commerce setting do not make them any less abstract"). For these reasons, we are not persuaded of error in the Examiner's determination that the claims are directed to an abstract idea. USP TO Memorandum, Step 2B Turning to step 2 of the Alice/1v!ayo framework, we look to whether claim 1: (a) adds a specific limitation or combination of limitations that are not well-understood, routine, conventional activity in the field, 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. I\t1emorandmn, 84 Fed. Reg. at 56. The Exmniner determines the additional elements ( computer processor, storage mediun1) are generic cmnputer components clanned to perfonn generic computer functions, which are well-understood, routine and conventional limitations that amount to 1nere instructions to implen1ent the abstract idea on a computer. Final Act. 7; Ans. 6 Appellants further argue the claims "do not broadly and generically claim use of the Internet or computer to perform an abstract business practice," but "are specific to efficiently and effectively addressing and identifying potential fraud by clustering transactions into clusters and further generating a score at regular, predetermined intervals, the score being representative of how data is grouped in each cluster - a result that overrides the routine and conventional use of a general computer." App. Br. 8. 12 Appeal2017-006842 Application 14/056,261 Appellants argue "[ w ]hen viewed as an ordered combination, the claimed invention is not merely the routine or conventional use of the Internet." App. Br. 8; Reply Br. 3. As discussed above, the claims are directed to verifying fraudulent transactions. Thus, even when viewed as a whole, nothing in the claims adds significantly more (i.e., an inventive concept) to the abstract idea. Similarly, as set forth above, the additional elements in the claim amount to no more than mere instructions to apply the exception using generic computer components (e.g., the processor, storage medium), which is insufficient to provide an inventive concept. Appellants do not direct our attention to anything in the Specification that indicates the claimed processor and storage medium perfonn anything other than well-understood, routine, and conventional functions, such as receiving, storing, and processing. See Elec. Power Group, 830 F.3d at 1355 ("Nothing in the clanns, understood in light of the specification, requires anythn1g other than off-the-sheli~ conventional computer, network, and display technology for gathering, sending, and presenting the desired information"); buyS~4Fl1,'. Inc. v. Google. Inc., 765 F.3d 1350, 1355 (Fed. Cir. 2015) ("That a cmnputerreceives and sends information over a network----with no further specification----is not even arguably inventive"); Alice, 573 U.S. at 224----26 (receivn1g, storing, sendn1g information over networks insufficient to add an n1ventive concept); see Ans. 10----11. Although Appellants rely on Bascom, (Reply Br. 4), Appellants have not adequately explained how the clairns are performed such that they are not routine, conventional functions of a generic computer. The claims at issue do not require any nonconventiona1 computer components, or even a 13 Appeal2017-006842 Application 14/056,261 "non-conventional and non-generic arrangement of known, conventional pieces," but merely call for performance of the claimed information receiving, processing, and displaying "on a set of generic computer components." Bascom, 827 F.3dat 1349-52. We agree with the Examiner that the additional technological elements in the claims, when considered both individually and as an ordered combination, are directed to generic computer components that perform well-understood, routine, and conventional functions. See Final Act. 6-7, Ans. 5-7. Appellants further argue the claims "are admittedly novel and nonobvious" because the Examiner has not applied a prior art rejection. App. Br. 7, 8. To the extent Appellants argue the claims necessarily contain an "inventive concept" based on their alleged novelty or non-obviousness over the cited references, Appellants misapprehend the controlling precedent. Although the second step in the Alice/Mayo 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, 573 U.S. at 217-218. A novel and nonobvious claim directed to a purely abstract idea is, nonetheless, patent-ineligible. See Mayo, 566 U.S. at 90. Accordingly, for the foregoing reasons, we sustain the Examiner's 35 U.S.C. § 101 rejection of claims 1----20. 14 Appeal2017-006842 Application 14/056,261 DECISION For the above reasons, the Examiner's rejection of claims 1-20 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)(l )(iv). AFFIRMED 15 Copy with citationCopy as parenthetical citation