Ex Parte Walraven et al

Patent Trials and Appeals Board

Apr 9, 2019

14056261 - (D) (P.T.A.B. Apr. 9, 2019)

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.
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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.
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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-
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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.
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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
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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
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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.
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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.
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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
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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.
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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
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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.
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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
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"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.
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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
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