Guy Carpenter & Company, LLCDownload PDFPatent Trials and Appeals BoardAug 12, 202014837873 - (D) (P.T.A.B. Aug. 12, 2020) Copy Citation UNITED STATES PATENT AND TRADEMARK OFFICE 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 APPLICATION NO. FILING DATE FIRST NAMED INVENTOR ATTORNEY DOCKET NO. CONFIRMATION NO. 14/837,873 08/27/2015 Victoria Louise JENKINS 40191/01802 3132 30636 7590 08/12/2020 FAY KAPLUN & MARCIN, LLP 150 BROADWAY, SUITE 702 NEW YORK, NY 10038 EXAMINER SMITH, SLADE E ART UNIT PAPER NUMBER 3696 NOTIFICATION DATE DELIVERY MODE 08/12/2020 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): mmarcin@fkmiplaw.com okaplun@fkmiplaw.com PTOL-90A (Rev. 04/07) UNITED STATES PATENT AND TRADEMARK OFFICE BEFORE THE PATENT TRIAL AND APPEAL BOARD Ex parte VICTORIA LOUISE JENKINS and OTTO ERNST REINHOLD BEYER Appeal 2020-002816 Application 14/837,873 Technology Center 3600 Before ST. JOHN COURTENAY III, LARRY J. HUME, and PHILLIP A. BENNETT, Administrative Patent Judges. HUME, Administrative Patent Judge. DECISION ON APPEAL Pursuant to 35 U.S.C. § 134(a), Appellant1 appeals from the Examiner’s decision rejecting claims 1–58, which are all claims pending in the application. We have jurisdiction under 35 U.S.C. § 6(b). We AFFIRM. 1 We use the word “Appellant” to refer to “applicant” as defined in 37 C.F.R. § 1.42(a). Appellant identifies the real party in interest as Guy Carpenter & Company, LLC. Appeal Br. 2. Appeal 2020-002816 Application 14/837,873 2 STATEMENT OF THE CASE2 These teachings relate generally to “computerised [sic] systems for placing reinsurance and insurance risk.” See Spec. ¶ 1. Exemplary Claim Claim 1, reproduced below, is representative of the subject matter on appeal (italics added to contested dispositive prior-art limitation): 1. A computerized method of auctioning reinsurance capacity, the method performed by an auction server computer system communicating with a cedent computer and a plurality of bidder computers via a communications network, the server computer system comprising a processor, a memory, a received bids database, an auctions database; an adjusted bids database and an administration database; the method comprising the steps of: receiving at the server computer system bids from bidder computers to participate in a reinsurance auction, the auction having a predetermined reserve price and reserve quantity and each bid comprising a bid price and a bid quantity at that price, each bidder computer having a pre-determined maximum quantity biddable in the auction; validating the received bids at the server computer system and storing validated bids in the received bids database and the adjusted bids database of the computer system in order of time of receipt; for each received bid, comparing the sum of quantities of prior received bids and the received bid with the reserve quantity of the auction; 2 Our decision relies upon Appellant’s Appeal Brief (“Appeal Br.,” filed Sep. 9, 2019); Reply Brief (“Reply Br.,” filed Feb. 28, 2020); Examiner’s Answer (“Ans.,” mailed Dec. 31, 2019); Final Office Action (“Final Act.,” mailed Feb. 21, 2019); and the original Specification (“Spec.,” filed Aug. 27, 2015). Appeal 2020-002816 Application 14/837,873 3 if the sum of quantities is greater than the reserve quantity, signing down the quantity of one or more of the received bids and prior received bids according to a price priority and, for each price, according to a time of receipt priority so that the sum of quantities of the prior received bids and the received bid is equal to the reserve quantity; after the step of comparing, overwriting the quantity of signed down received or prior received bids in the adjusted bids database; and at the end of the auction, concluding reinsurance contracts with bids remaining in the adjusted bids database. Prior Art The Examiner relies upon the following prior art as evidence in rejecting the claims on appeal: Kraehenbuehl et al. (“Kraehenbuehl”) US 2002/0046067 A1 April 18, 2002 Rabenold et al. (“Rabenold”) US 2005/0187856 Al Aug. 25, 2005 Barry et al. (“Barry”) US 2006/0136324 A1 June 22, 2006 Lark et al. (“Lark”) US 7,409,360 B1 Aug. 5, 2008 Hough et al. (“Hough”) US 2013/0091047 Al April 11, 2013 Crutchfield et al. (“Crutchfield”) US 2014/0188688 Al July 3, 2014 Rejections on Appeal R1. Claims 1–58 stand rejected under 35 U.S.C. § 101 because the claimed invention is directed to a judicial exception (i.e., a law of nature, a natural phenomenon, or abstract idea) without significantly more. Final Act. 3. Appeal 2020-002816 Application 14/837,873 4 R2. Claims 1–3, 6, 7, 9, 18–31, 34, 35, 37, 45–51, 55, and 56 stand rejected under 35 U.S.C. § 103 as unpatentable over the combination of Kraehenbuehl and Hough. Final Act. 25. R3. Claims 4, 5, 32, and 33 stand rejected under 35 U.S.C. § 103 as unpatentable over the combination of Kraehenbuehl, Barry, and Hough. Final Act. 76. R4. Claims 8 and 36 stand rejected under 35 U.S.C. § 103 as unpatentable over the combination of Kraehenbuehl, Rabenold, and Hough. Final Act. 82. R5. Claims 10, 38, and 52–54 stand rejected under 35 U.S.C. § 103 as unpatentable over the combination of Kraehenbuehl, Lark, and Hough. Final Act. 85. R6. Claims 11–17, 39–44, 57, and 58 stand rejected under 35 U.S.C. § 103 as unpatentable over the combination of Kraehenbuehl, Crutchfield, and Hough. Final Act. 93. CLAIM GROUPING Based on Appellant’s arguments (Appeal Br. 7–13) and our discretion under 37 C.F.R. § 41.37(c)(1)(iv), we decide the appeal of patent-ineligible subject matter Rejection R1 of claims 1–58 on the basis of representative claim 1.3 We address claims 1–58, rejected under Rejections R2 through R6, infra. 3 “Notwithstanding any other provision of this paragraph, the failure of appellant to separately argue claims which appellant has grouped together shall constitute a waiver of any argument that the Board must consider the patentability of any grouped claim separately.” 37 C.F.R. § 41.37(c)(1)(iv). Appeal 2020-002816 Application 14/837,873 5 ISSUES AND ANALYSIS In reaching this decision, we consider all evidence presented and all arguments actually made by Appellant. To the extent Appellant has not advanced separate, substantive arguments for particular claims, or other issues, such arguments are waived. 37 C.F.R. § 41.37(c)(1)(iv). We agree with particular arguments presented by Appellant with respect to obviousness Rejections R2 through R6 of claims 1–58. However, we disagree with Appellant’s arguments with respect to subject matter eligibility Rejections R1 of claims 1–58 and, unless otherwise noted, we incorporate by reference herein and adopt as our own: (1) the findings and reasons set forth by the Examiner in the action from which this appeal is taken, and (2) the reasons and rebuttals set forth in the Examiner’s Answer in response to Appellant’s arguments. We highlight and address specific findings and arguments regarding claim 1 for emphasis as follows. 1. § 101 Rejection R1 of Claims 1–58 Issue 1 Appellant argues (Appeal Br. 7–13; Reply Br. 2–7) the Examiner’s rejection of claim 1 under 35 U.S.C. § 101 as being directed to patent- ineligible subject matter is in error because “the claimed matter is directed to a practical application.” Appeal Br. 7. In addition, when Appellant does not separately argue the patentability of dependent claims, the claims stand or fall with the claims from which they depend. In re King, 801 F.2d 1324, 1325 (Fed. Cir. 1986). Appeal 2020-002816 Application 14/837,873 6 Under the USPTO’s Revised Guidance, informed by our governing case law concerning 35 U.S.C. § 101, is claim 1 patent-ineligible under § 101? Principles of Law A. 35 U.S.C. § 101 An invention is patent-eligible if it is a “new and useful process, machine, manufacture, or composition of matter.” 35 U.S.C. § 101.4 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. Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 70 (2012) (brackets in original) (citing Diamond v. Diehr, 450 U.S. 175, 185 (1981)). 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. Alice Corp. v. CLS Bank Int’l, 573 U.S. 208, 217–18 (2014) (citing Mayo, 566 U.S. at 75–77). In accordance with that framework, we first determine what concept the claim is “directed to.” See Alice, 573 U.S. at 219 (“On their face, the claims before us are drawn to the concept of intermediated settlement, i.e., the use of a third party to mitigate settlement risk.”); see also Bilski v. Kappos, 561 U.S. 593, 611 (2010) (“Claims 1 and 4 4 This threshold analysis of whether a claim is directed to one of the four statutory categories of invention, i.e., a process, machine, manufacture, or composition of matter, is referred to as “Step 1” in the USPTO’s patent- eligibility analysis under § 101. MPEP § 2106. Appeal 2020-002816 Application 14/837,873 7 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, 67 (1972)). Concepts determined to be patent eligible include physical and chemical processes, such as “molding rubber products” (Diehr, 450 U.S. at 191); “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 (1853))); and manufacturing flour (Benson, 409 U.S. at 69 (citing Cochrane v. Deener, 94 U.S. 780, 785 (1876))). Abstract ideas may include, but are not limited to, fundamental economic practices, methods of organizing human activities, and mathematical formulas or relationships. Alice, 573 U.S. at 217–21. Under this guidance, we must therefore ensure at step one that we articulate what the claims are directed to with enough specificity to ensure the step one inquiry is meaningful. Id. at 217 (“[W]e tread carefully in construing this exclusionary principle lest it swallow all of patent law.”). Examples of claims that do not recite mental processes because they cannot be practically performed in the human mind include: (a) a claim to a method for calculating an absolute position of a GPS receiver and an absolute time of reception of satellite signals, where the claimed GPS receiver calculated pseudoranges that estimated the distance from the GPS Appeal 2020-002816 Application 14/837,873 8 receiver to a plurality of satellites, SiRF Technology, Inc. v. International Trade Commission, 601 F.3d 1319, 1331–33 (Fed. Cir. 2010); (b) a claim to detecting suspicious activity by using network monitors and analyzing network packets, SRI Int’l, Inc. v. Cisco Systems, Inc., 930 F.3d 1295, 1304 (Fed. Cir. 2019); (c) a claim to a specific data encryption method for computer communication involving a several-step manipulation of data, Synopsys, Inc. v. Mentor Graphics Corp., 839 F.3d 1138, 1149 (Fed. Cir. 2016) (distinguishing TQP Development, LLC v. Intuit Inc., 2014 WL 651935 (E.D. Tex. Feb. 19, 2014)) (the specific data encryption method “could not conceivably be performed in the human mind or with pencil and paper”). While a claim limitation to a process that “can be performed in the human mind, or by a human using a pen and paper” qualifies as a mental process, a claim limitation that “could not, as a practical matter, be performed entirely in a human’s mind” (even if aided with pen and paper) would not qualify as a mental process.5 In Diehr, the claim at issue recited a mathematical formula, but the Supreme Court held “[a] claim drawn to subject matter otherwise statutory does not become nonstatutory simply because it uses a mathematical formula.” Diehr, 450 U.S. at 187; see also id. at 191 (“We view respondents’ claims as nothing more than a process for molding rubber products and not as an attempt to patent a mathematical formula.”). Having said that, the Supreme Court also indicated that a claim “seeking patent 5 CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1372, 1375– 76 (Fed. Cir. 2011) (distinguishing Research Corp. Techs. v. Microsoft Corp., 627 F.3d 859 (Fed. Cir. 2010), and SiRF Tech., Inc. v. Int'l Trade Comm’n, 601 F.3d 1319 (Fed. Cir. 2010)). Appeal 2020-002816 Application 14/837,873 9 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. (citation omitted) (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 turn 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 (citation 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. (alterations in original) (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. B. USPTO Revised Guidance The PTO published revised guidance in the Federal Register concerning the application of § 101. 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. 50 (January 7, 2019) (hereinafter “Revised Guidance”) (https://www.govinfo.gov/content/pkg/FR-2019-01- 07/pdf/2018-28282.pdf). “All USPTO personnel are, as a matter of internal agency management, expected to follow the guidance.” Id. at 51; see also Appeal 2020-002816 Application 14/837,873 10 October 2019 Update at 1 (October 2019 Update: Subject Matter Eligibility) (hereinafter “October 2019 Update”). Under the Revised Guidance, we first look to whether the claim recites: (1) any judicial exceptions, including certain groupings of abstract ideas (i.e., mathematical concepts, certain methods of organizing human activity such as a fundamental economic practice, or mental processes);6 and (2) additional elements that integrate the judicial exception into a practical application (see Manual for Patent Examining Procedure (“MPEP”) §§ 2106.05(a)–(c), (e)–(h)).7 See Revised Guidance 52–53. 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.8 See Revised Guidance 56. 6 Referred to as “Revised Step 2A, Prong 1” in the Revised Guidance (hereinafter “Step 2A(i)”). 7 Referred to as “Revised Step 2A, Prong 2” in the Revised Guidance (hereinafter “Step 2A(ii)”). 8 Items (3) and (4) continue to be collectively referred to as “Step 2B” of the Supreme Court’s two-step framework, described in Mayo and Alice. Appeal 2020-002816 Application 14/837,873 11 Step 2A(i) – Abstract Idea Informed by our judicial precedent, the Revised Guidance extracts and synthesizes key concepts identified by the courts as abstract ideas to explain that the abstract idea exception includes the following groupings of subject matter, when recited as such in a claim limitation: (a) Mathematical concepts—mathematical relationships, mathematical formulas or equations, mathematical calculations; (b) Certain methods of organizing human activity — fundamental economic principles or practices (including hedging, insurance, mitigating risk); commercial or legal interactions (including agreements in the form of contracts; legal obligations; advertising, marketing or sales activities or behaviors; business relations); managing personal behavior or relationships or interactions between people (including social activities, teaching, and following rules or instructions); and (c) Mental processes—concepts performed in the human mind (including an observation, evaluation, judgment, opinion). Revised Guidance 52 (footnotes omitted). Under the Revised Guidance, if the claim does not recite a judicial exception (a law of nature, natural phenomenon, or subject matter within the enumerated groupings of abstract ideas above), then the claim is patent- eligible at Step 2A(i). This determination concludes the eligibility analysis, except in situations identified in the Revised Guidance.9 9 In the rare circumstance in which an examiner believes a claim limitation that does not fall within the enumerated groupings of abstract ideas should nonetheless be treated as reciting an abstract idea, the procedure described in of the Guidance for analyzing the claim should be followed. See Revised Guidance, Section III.C. Appeal 2020-002816 Application 14/837,873 12 However, if the claim recites a judicial exception (i.e., an abstract idea enumerated above, a law of nature, or a natural phenomenon), the claim requires further analysis for a practical application of the judicial exception in Step 2A(ii). Step 2A(ii) – Practical Application If a claim recites a judicial exception in Step 2A(i), we determine whether the recited judicial exception is integrated into a practical application of that exception in Step 2A(ii) by: (a) identifying whether there are any additional elements recited in the claim beyond the judicial exception(s); and (b) evaluating those additional elements individually and in combination to determine whether they integrate the exception into a practical application. The seven identified “practical application” sections of the MPEP,10 cited in the Revised Guidance under Step 2A(ii), are: (1) MPEP § 2106.05(a) Improvements to the Functioning of a Computer or To Any Other Technology or Technical Field (2) MPEP § 2106.05(b) Particular Machine (3) MPEP § 2106.05(c) Particular Transformation (4) MPEP § 2106.05(e) Other Meaningful Limitations (5) MPEP § 2106.05(f) Mere Instructions To Apply An Exception 10 See MPEP §§ 2106.05(a)–(c), (e)–(h). Citations to the MPEP herein refer to revision [R-08.2017]. Sections 2106.05(a), (b), (c), and (e) are indicative of integration into a practical application, while §§ 2106.05(f), (g), and (h) relate to limitations that are not indicative of integration into a practical application. Appeal 2020-002816 Application 14/837,873 13 (6) MPEP § 2106.05(g) Insignificant Extra-Solution Activity (7) MPEP § 2106.05(h) Field of Use and Technological Environment See Revised Guidance 55. If the recited judicial exception is integrated into a practical application as determined under one or more of the MPEP sections cited above, then the claim is not directed to the judicial exception, and the patent- eligibility inquiry ends. See Revised Guidance 54. If not, then analysis proceeds to Step 2B. Step 2B – “Inventive Concept” or “Significantly More” Under our reviewing courts’ precedent, it is possible that a claim that does not “integrate” a recited judicial exception under Step 2A(ii) is nonetheless patent eligible. For example, the claim may recite additional elements that render the claim patent eligible even though one or more claim elements may recite a judicial exception.11 The Federal Circuit has held claims eligible at the second step of the Alice/Mayo test (USPTO Step 2B) because the additional elements recited in the claims provided “significantly more” than the recited judicial exception (e.g., because the additional elements were unconventional in combination).12 Therefore, if a claim has been determined to be directed to a judicial exception under Revised Step 2A, we must also evaluate the additional elements individually and in combination under Step 2B to determine whether they provide an inventive 11 See, e.g., Diehr, 450 U.S. at 187. 12 See, e.g., Amdocs, Ltd. v. Openet Telecom, Inc., 841 F.3d 1288, 1300, 1304 (Fed. Cir. 2016); BASCOM Global Internet Services, Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1349–52 (Fed. Cir. 2016); DDR Holdings v. Hotels.com, L.P., 773 F.3d 1245, 1257–59 (Fed. Cir. 2014). Appeal 2020-002816 Application 14/837,873 14 concept (i.e., whether the additional elements amount to significantly more than the exception itself).13 Under the Revised Guidance, we must consider in Step 2B whether an additional element or combination of elements: (1) “Adds a specific limitation or combination of limitations that are not well-understood, routine, conventional activity in the field, which is indicative that an inventive concept may be present;” or (2) “simply appends well-understood, routine, conventional activities previously known to the industry, specified at a high level of generality, to the judicial exception, which is indicative that an inventive concept may not be present.” See Revised Guidance, Section III.B.14 In the Step 2B analysis, an additional element (or combination of elements) is not well-understood, routine or conventional unless the 13 The patent eligibility inquiry may contain underlying issues of fact. Mortg. Grader, Inc. v. First Choice Loan Servs. Inc., 811 F.3d 1314, 1325 (Fed. Cir. 2016). In particular, “[t]he question of whether a claim element or combination of elements is well-understood, routine and conventional to a skilled artisan in the relevant field is a question of fact.” Berkheimer v. HP Inc., 881 F.3d 1360, 1368 (Fed. Cir. 2018). 14 In accordance with existing Step 2B guidance, an Examiner’s finding that an additional element (or combination of elements) is well understood, routine, conventional activity must be supported with at least one of the four specific types of evidence required by the USPTO Berkheimer Memorandum, as shown above. For more information concerning evaluation of well-understood, routine, conventional activity, see MPEP § 2106.05(d), as modified by the USPTO Berkheimer Memorandum (USPTO Commissioner for Patents Memorandum dated Apr. 19, 2018, “Changes in Examination Procedure Pertaining to Subject Matter Eligibility, Recent Subject Matter Eligibility Decision (Berkheimer v. HP, Inc.)” (hereinafter “Berkheimer Memo”). Appeal 2020-002816 Application 14/837,873 15 examiner finds an evidentiary basis, and expressly supports a rejection in writing with, one or more of the following: 1. A citation to an express statement in the specification or to a statement made by an applicant during prosecution that demonstrates the well-understood, routine, conventional nature of the additional element(s). . . . 2. A citation to one or more of the court decisions discussed in MPEP § 2106.05(d)(II) as noting the well- understood, routine, conventional nature of the additional element(s). 3. A citation to a publication that demonstrates the well-understood, routine, conventional nature of the additional element(s). . . . 4. A statement that the examiner is taking official notice of the well-understood, routine, conventional nature of the additional element(s). . . . See Berkheimer Memo 3–4. If the Examiner or the Board determines under Step 2B that the element (or combination of elements) amounts to significantly more than the exception itself, the claim is eligible, thereby concluding the eligibility analysis. However, if a determination is made that the element and combination of elements do not amount to significantly more than the exception itself, the claim is ineligible under Step 2B, and the claim should be rejected for lack of subject matter eligibility. Appeal 2020-002816 Application 14/837,873 16 Analysis Step 1 – Statutory Category Claim 1, as a method claim, recites one of the enumerated categories of eligible subject matter in 35 U.S.C. § 101. Therefore, the issue before us is whether it is directed to a judicial exception without significantly more. Step 2A(i): Does the Claim Recite a Judicial Exception? The Examiner determined that the limitations of claim 1 cover the abstract idea of “conducting an auction for a limited amount of reinsurance capacity where eligible (i.e. ‘validated’) bids for quantities of capacity that can’t be fully filled are reduced in quantity (i.e. ‘signed down’) according to bid price priority (and bid time of receipt priority) so that contracts can still be created for the partial portions of those bids that can be filled at their lower (or later) bid prices at the end of the auction while honoring more fully the higher priced (or earlier received) bids to the extent that the limited amount of reinsurance capacity permits.” Final Act. 3–4 (underline omitted). The Examiner concludes the limitations: [F]all[] within the subject matter groupings of abstract ideas enumerated in Section I of the 2019 Revised Patent Subject Matter Eligibility Guidance: b) Certain methods of organizing human activity - fundamental economic principles or practices (including hedging, insurance, mitigating risk); commercial or legal interactions (including agreements in the form of contracts; legal obligations; advertising, marketing or sales activities or behaviors; business relations); managing personal behavior or relationships or interactions between people (including social activities, teaching, and following rules or instructions). c) Mental processes - concepts performed in the human mind (including an observation, evaluation, judgment, opinion). Final Act. 4. Appeal 2020-002816 Application 14/837,873 17 Appellant argues the Examiner’s rejection of claim 1 under 35 U.S.C. § 101 as being directed to patent-ineligible subject matter is in error because the claimed subject matter is integrated into a practical application under a Step 2A analysis. Appeal Br. 7–8. Appellant further argues: “The Appellant submits that the claimed subject matter cannot be reasonably characterized as solely encompassing the concept of performing an auction or creating a contract. As will be demonstrated below, the claims clearly recite elements that integrate the purported abstract idea into a practical application of that exception.” Appeal Br. 8. We conclude claim 1 does not recite the judicial exceptions of either natural phenomena or laws of nature. We evaluate, de novo, whether claim 1 recites an abstract idea based upon the Revised Guidance. First, we look to the Specification to provide context as to what the claimed invention is directed to. In this case, the Specification discloses that the invention relates generally to “systems for placing reinsurance and insurance risk.” Spec. 1. Appellant’s Abstract describes the invention as: A computerized [sic] auction system for enabling auctions of reinsurance placements. A server computer system comprises a processor, memory, auctions database, received bids database, adjusted bids database and administration database. The system communicates on line, or via a private network, with a cedent computer and a plurality of reinsurer computers. Selected reinsurers are invited to participate as bidders in an auction and, when the auction commences, can submit one or more bids in an attempt to secure participation at a price that is the same as or lower than a reserve price. The auction runs in real time and bids are ranked in ascending order of price and, within price, in ascending order of time of receipt. A bidder can enter new bids in an attempt to maintain participation in response to Appeal 2020-002816 Application 14/837,873 18 competitive bids from other bidders or in an attempt to increase participation. Each bidder can see the price, participation and rank for their own bids and for competitors’ bids. However, a bidder cannot see the identity the owners of competing bids in the auction. A new bid is validated and may be signed down to a lower participation or zero if the total participation of bids for a given bidder exceeds that bidder’s maximum permitted participation for the auction, or if the total participation of all bids exceeds the reserve participation for the auction. Progress of the auction is transparent to bidders who can see their bids being signed down and who can submit fresh bids at prices lower than the reserve price. Spec. (Abstract). In TABLE I below, we identify in italics the specific claim limitations in claim 1 that we conclude recite an abstract idea. We additionally identify in bold the additional (non-abstract) claim limitations that are generic computer components and techniques, and underline limitations representing extra or post-solution activity: Appeal 2020-002816 Application 14/837,873 19 TABLE I Independent Claim 1 Revised Guidance [L0] A computerized method of auctioning reinsurance capacity, the method performed by an auction server computer system communicating with a cedent computer and a plurality of bidder computers via a communications network, the server computer system comprising a processor, a memory, a received bids database, an auctions database; an adjusted bids database and an administration database; the method comprising the steps of: A method is a statutory subject matter class. See 35 U.S.C. § 101. See 35 U.S.C. § 101 (“Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.”). As claimed, a server computer system, computers, processor, memory, and databases represent generic computer components and functionality. See Spec. 12, l, 24–13, l, 11. [L1] receiving at the server computer system bids from bidder computers to participate in a reinsurance auction, the auction having a predetermined reserve price and reserve quantity and each bid comprising a bid price and a bid quantity at that price, each bidder computer having a pre-determined maximum quantity biddable in the auction; Receiving information, i.e., “receiving . . . bids . . . to participate in a reinsurance auction” or data gathering, is merely insignificant extra- solution activity that does not add significantly more to the abstract idea to render the claimed invention patent- eligible. Revised Guidance 55, n.31; see In re Bilski, 545 F.3d 943, 962 (Fed. Cir. 2008) (en banc), aff’d on other grounds, 561 U.S. 593 (2010) (“[T]he involvement of the machine or transformation in the claimed process must not merely be Appeal 2020-002816 Application 14/837,873 20 Independent Claim 1 Revised Guidance insignificant extra-solution activity.”). [L2a] validating the received bids at the server computer system and [L2b] storing validated bids in the received bids database and the adjusted bids database of the computer system in order of time of receipt; “[V]alidating the received bids” is an abstract idea, i.e., a certain method of organizing human activity in the form of a commercial interaction, i.e., a sales activity. See Revised Guidance 52. As claimed, “storing . . . bids in . . . [a] database” represents insignificant extra-solution activity. See Revised Guidance; see also MPEP § 2106.05(g). [L3] for each received bid, comparing the sum of quantities of prior received bids and the received bid with the reserve quantity of the auction; “[C]omparing the sum of quantities . . .” is an abstract idea, i.e., “an observation, evaluation, judgment, opinion” which could be performed as a mental process. See Revised Guidance 52. [L4] if the sum of quantities is greater than the reserve quantity, signing down the quantity of one or more of the received bids and prior received bids according to a price priority and, for each price, according to a time of receipt priority so that the sum of quantities of the prior received bids and “[S]igning down the quantity of one or more of the received bids,” as claimed, is an abstract idea, i.e., “an observation, evaluation, judgment, opinion,” which could be performed as a mental process. See Revised Guidance 52.15 15 The “‘mere automation of manual processes using generic computers’ . . . ‘does not constitute a patentable improvement in computer technology,’” Trading Techs. Int’l v. IBG LLC, 921 F.3d 1378, 1384 (Fed. Cir. 2019) Appeal 2020-002816 Application 14/837,873 21 Independent Claim 1 Revised Guidance the received bid is equal to the reserve quantity; [L5] after the step of comparing, overwriting the quantity of signed down received or prior received bids in the adjusted bids database; and “[O]verwriting the quantity of signed down received or prior received bids” represents insignificant post-solution activity. Revised Guidance 55, n.31; see also MPEP § 2106.05(g). [L6] at the end of the auction, concluding reinsurance contracts with bids remaining in the adjusted bids database. Concluding reinsurance contracts with bids remaining in the adjusted bids database is an abstract idea, i.e., a certain method of organizing human activity in the form of a commercial interaction, i.e., a sales activity. See Revised Guidance 52. Appeal Br. 24 (Claims App.) (bracketed labeling added). Under the broadest reasonable interpretation standard,16 and aside from any claimed computer-related aspects, we conclude limitations [L1] (quoting Credit Acceptance Corp. v. Westlake Servs., 859 F.3d 1044, 1055 (Fed. Cir. 2017)). 16 During prosecution, claims must be given their broadest reasonable interpretation when reading claim language in light of the specification as it would be interpreted by one of ordinary skill in the art. In re Am. Acad. of Sci. Tech. Ctr., 367 F.3d 1359, 1364 (Fed. Cir. 2004). Under this standard, we interpret claim terms using “the broadest reasonable meaning of the words in their ordinary usage as they would be understood by one of ordinary skill in the art, taking into account whatever enlightenment by way of definitions or otherwise that may be afforded by the written description contained in the applicant’s specification.” In re Morris, 127 F.3d 1048, 1054 (Fed. Cir. 1997). Appeal 2020-002816 Application 14/837,873 22 though [L6] identified in TABLE I above, recite abstract functions that would ordinarily be executed when auctioning reinsurance capacity. See Final Act. 3–10. We determine that claim 1, overall, recites certain methods of organizing human activity in the form of commercial transactions, i.e., sales activities, and alternatively, claim 1 recites fundamental economic principles or practices in the form of auctioning reinsurance capacity. This type of activity, i.e., for each received bid, comparing the sum of quantities of prior received bids and the received bid with the reserve quantity of the auction, for example, is emblematic of a commercial transaction, in the form of a sales activity or an economic practice.17 Thus, under Step 2A(i), we agree with the Examiner that claim 1 recites an abstract idea. Under our Revised Guidance, we specifically conclude claim 1 recites a judicial exception of a certain method of organizing human activity in the form of commercial interactions, i.e., sales activities (“auctioning reinsurance capacity”) and, alternatively, we conclude 17 Our reviewing court recognizes that “[a]n abstract idea can generally be described at different levels of abstraction.” Apple, Inc. v. Ameranth, Inc., 842 F.3d 1229, 1240 (Fed. Cir. 2016). That need not and, in this case does not, “impact the patentability analysis.” Id. at 1241. Further, “[t]he Board’s slight revision of its abstract idea analysis does not impact the patentability analysis.” Id. Moreover, merely combining several abstract ideas does not render the combination any less abstract. RecogniCorp, LLC v. Nintendo Co., 855 F.3d 1322, 1327 (Fed. Cir. 2017) (“Adding one abstract idea (math) to another abstract idea . . . does not render the claim non-abstract.”); see also FairWarning IP, LLC v. Iatric Sys., Inc., 839 F.3d 1089, 1093–94 (Fed. Cir. 2016) (determining the pending claims were directed to a combination of abstract ideas). Appeal 2020-002816 Application 14/837,873 23 claim 1 recites a fundamental economic practice. In either case, we conclude claim 1 recites an abstract idea. Step 2A(ii): Judicial Exception Integrated into a Practical Application? If the claims recite a judicial exception, as we conclude above, we proceed to the “practical application” Step 2A(ii) in which we determine whether the recited judicial exception is integrated into a practical application of that exception by: (a) identifying whether there are any additional elements recited in the claim beyond the judicial exception(s); and (b) evaluating those additional elements individually and in combination to determine whether they integrate the exception into a practical application. As to the specific limitations, in addition to the abstract limitations [L2a], [L3], [L4], and [L6] identified in TABLE I, above, we find limitation [L1] (“receiving . . . bids . . . to participate in a reinsurance auction”) recites insignificant data gathering. See MPEP § 2106.05(g). Data gathering, as performed by the steps or function in Appellant’s claims, is a classic example of insignificant extra-solution activity. See, e.g., In re Bilski, 545 F.3d 943, 963 (Fed. Cir. 2008) (en banc), aff’d sub nom, Bilski v. Kappos, 561 U.S. 593 (2010). We also find limitations [L2b] (“storing validated bids in the received bids database and the adjusted bids database of the computer system”) and [L5] (“overwriting the quantity of signed down received or prior received bids in the adjusted bids database”) recite insignificant post solution activity. The Supreme Court guides that the “prohibition against patenting abstract ideas ‘cannot be circumvented by’ . . . adding ‘insignificant postsolution activity.’” Bilski, 561 U.S. at 610–11 (quoting Diehr, 450 U.S. at 191–92). Appeal 2020-002816 Application 14/837,873 24 In addition, we conclude limitation [L0] (preamble) recites a “server computer system,” “cedent computer,” “bidder computers,” and “communications network” in which the server computer system includes “a processor,” “a memory,” a “received bids database,” an “auctions database,” “adjusted bids database” and an “administration database” which, as claimed, represent well-understood, routine and conventional components at a high level of generality. On this record, we are of the view that Appellant’s claims do not operate the recited generic computer components in an unconventional manner to achieve an improvement in computer functionality. See MPEP § 2106.05(a). We are not persuaded by Appellant’s argument that the “adjusted bids database” — by storing bids — enables a server to track bids in real-time while hosting an auction for reinsurance capacity integrates the recited abstract ideas into a practical application. Appeal Br. 10. We find each of the other limitations of claim 1 either recite abstract ideas, extra-solution activity, or generic computer components as identified in Step 2A(i), supra (see TABLE I, L0 through L6), and none of the limitations integrate the judicial exception of auctioning reinsurance capacity into a practical application as determined under one or more of the MPEP sections cited above. The claim as a whole merely uses instructions to implement the abstract idea on a computer using a database or, alternatively, merely uses a computer as a tool to perform the abstract idea in the environment of reinsurance auctioning. Accordingly, on this record, Appellant has not shown an improvement or practical application under the guidance of MPEP section 2106.05(a) Appeal 2020-002816 Application 14/837,873 25 (“Improvements to the Functioning of a Computer or to Any Other Technology or Technical Field”) or section 2106.05(e) (“Other Meaningful Limitations”). Therefore, we conclude the abstract idea is not integrated into a practical application, and thus the claim is directed to the judicial exception. Step 2B – “Inventive Concept” or “Significantly More” If the claims are directed to a judicial exception, and not integrated into a practical application, as we conclude above, we proceed to the “inventive concept” step. For Step 2B we must “look with more specificity at what the claim elements add, in order to determine ‘whether they identify an “inventive concept” in the application of the ineligible subject matter’ to which the claim is directed.” Affinity Labs of Texas, LLC v. DirectTV, LLC, 838 F.3d 1253, 1258 (Fed. Cir. 2016). In applying step two of the Alice analysis, our reviewing court guides we must “determine whether the claims do significantly more than simply describe [the] abstract method” and thus transform the abstract idea into patentable subject matter. Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 715 (Fed. Cir. 2014). We look to see whether there are any “additional features” in the claims that constitute an “inventive concept,” thereby rendering the claims eligible for patenting even if they are directed to an abstract idea. Alice, 573 U.S. at 221. Those “additional features” must be more than “well-understood, routine, conventional activity.” Mayo, 566 U.S. at 79. Limitations referenced in Alice that are not enough to qualify as “significantly more” when recited in a claim with an abstract idea include, as Appeal 2020-002816 Application 14/837,873 26 non-limiting or non-exclusive examples: adding the words “apply it” (or an equivalent) with an abstract idea18; mere instructions to implement an abstract idea on a computer19; or requiring no more than a generic computer to perform generic computer functions that are well-understood, routine and conventional activities previously known to the industry.20 Evaluating representative claim 1 under step 2 of the Alice analysis, we conclude it lacks an inventive concept that transforms the abstract idea of auctioning reinsurance capacity, i.e., receiving, validating and comparing bids and overwriting the quantity of signed-down bids in the adjusted bids database, and concluding reinsurance contracts with the bids remaining in the adjusted bids database, into a patent-eligible application of that abstract idea. The patent eligibility inquiry may contain underlying issues of fact. Mortg. Grader, 811 F.3d at 1325. In particular, “[t]he question of whether a claim element or combination of elements is well-understood, routine and conventional to a skilled artisan in the relevant field is a question of fact.” Berkheimer, 881 F.3d at 1368. As required under Berkheimer, the Examiner provides a particular type of evidence of the well-understood, routine, and conventional nature of 18 Alice, 573 U.S. at 221–23. 19 Alice, 573 U.S. at 222–23, e.g., simply implementing a mathematical principle on a physical machine, namely a computer. 20 Alice, 573 U.S. at 225 (explaining using a computer to obtain data, adjust account balances, and issue automated instructions involves computer functions that are well-understood, routine, conventional activities). Appeal 2020-002816 Application 14/837,873 27 the recited computer components and functions21 by concluding, the steps in claim 1 “do not constitute significantly more than the abstract idea because they comprise or include well-understood, routine, and conventional activities previously known to the industry (e.g. all or portion(s) of the ‘receiving[] bids’, ‘comparing [a] sum’, ‘overwriting [a] quantity’ steps), see Alice Corp., 134 S. Ct. at 2360, and/or that are otherwise not significant toward constituting any inventive concept beyond the abstract idea.” Final Act. 9. The Examiner cites additional case law in support of the evidentiary requirements under Berkheimer. Id. As further evidence of the conventional nature of the recited “adjusted bids database” in claim 1, the Specification merely discloses, “[t]he adjusted bids database stores details of live bids for each open auction.” Spec. 22. The recited “adjusted bids database” is consistently described in general terms throughout the Specification. See, e.g., Spec. 7, ll. 10–14. Thus, because the Specification describes the additional elements in general terms, without describing the particulars, we conclude the claim limitations may be broadly but reasonably construed as reciting conventional computer components and techniques, particularly in light of Appellant’s Specification, as quoted above.22 21 See Berkheimer Memo 4 (“A citation to one or more of the court decisions discussed in MPEP § 2106.05(d)(II) as noting the well-understood, routine, conventional nature of the additional element(s)”). 22 Claim terms are to be given their broadest reasonable interpretation, as understood by those of ordinary skill in the art and taking into account whatever enlightenment may be had from the Specification. In re Morris, 127 F.3d 1048, 1054 (Fed. Cir. 1997). Appeal 2020-002816 Application 14/837,873 28 With respect to the Step 2B analysis, we conclude, similar to Alice, the recitation of the recited “database,” “processor,” “memory,” “computers,” and “server computer system,” is simply not enough to transform the patent- ineligible abstract idea here of auctioning reinsurance capacity into a patent- eligible invention under Step 2B. See Alice, 573 U.S. at 221 (“[C]laims, which merely require generic computer implementation, fail to transform [an] abstract idea into a patent-eligible invention.”). We conclude the claims fail the Step 2B analysis because claim 1, in essence, merely recites various computer-based elements along with no more than mere instructions to implement the identified abstract idea using the computer-based elements. Therefore, in light of the foregoing, we conclude, under the Revised Guidance, that each of Appellant’s claims 1–58, considered as a whole, is directed to a patent-ineligible abstract idea that is not integrated into a practical application and does not include an inventive concept. Accordingly, we sustain the Examiner’s § 101 rejection of independent claim 1, and grouped claims 2–58, which fall therewith. See Claim Grouping, supra. 2. § 103 Rejections R2–R6 of Claims 1–58 For essentially the same reasons argued by Appellant (see generally Appeal Br. 14–18) we reverse the Examiner’s Rejection R2 of independent claim 1, and also Rejections R2 and R6 of independent claims 29, 57, and 58, which recites the dispositive limitation in commensurate form. For the Appeal 2020-002816 Application 14/837,873 29 same reasons, we also reverse rejections R2–R6 of all claims 2–28 and 30– 56 that depend therefrom.23 Issue 2 Appellant argues (Appeal Br. 14–18) the Examiner’s Rejection R2 of claim 1 under 35 U.S.C. § 103(a) as being obvious over the combination of Kraehenbuehl and Hough is in error. These contentions present us with the following issue: Did the Examiner err in finding the combination of Kraehenbuehl and Hough teach or at least suggest “[a] computerized method of auctioning reinsurance capacity, the method performed by an auction server computer system communicating with a cedent computer and a plurality of bidder computers via a communications network, the server computer system comprising a processor, a memory, a received bids database, an auctions database; an adjusted bids database and an administration database,” wherein the method includes, inter alia, the step of “for each received bid, comparing the sum of quantities of prior received bids and the received bid with the reserve quantity of the auction,” as recited in claim 1? 23 Because we agree with at least one of the dispositive arguments advanced by Appellant, we need not reach the merits of Appellant’s other arguments. See Beloit Corp. v. Valmet Oy, 742 F.2d 1421, 1423 (Fed. Cir. 1984) (finding an administrative agency is at liberty to reach a decision based on “a single dispositive issue”). Appeal 2020-002816 Application 14/837,873 30 Analysis Independent Claim 1 Appellant argues: In the entirety of Kraehenbuehl, there is not a single instance of disclosure in which a “sum” is determined based on data from previously received bids and a currently received bid, let alone “the sum of quantities of prior received bids and the received bid” as recited in claim 1. . . . Since Kraehenbuehl fails to disclose either determining a sum that is any way analogous to the “sum” recited in claim 1 and a reserve that is in any way analogous to the “reserve quantity” recited in claim 1, Kraehenbuehl cannot possibly be characterized as disclosing “for each received bid, comparing the sum of quantities of prior received bids and the received bid with the reserve quantity of the auction” as recited in claim 1. Like, Kraehenbuehl, Hough fails to provide a single instance of disclosure in which a “sum” is determined based on data from previously received bids and a currently received bid, let alone “the sum of quantities of prior received bids and the received bid” as recited in claim 1. Appeal Br. 15. See also Reply Br. 7–8. The Examiner finds Kraehenbuehl’s available and consumed capacities described in ¶¶ 54–62 teaches or at least suggests the disputed limitation “the sum of quantities of prior received bids and the received bid.” Final Act. 29. The Examiner additionally finds: Regarding “sum of quantities of prior received bids and the received bid”, KRAEHENBUEHL recites e.g. “the [total] consumed capacity [that] has been subtracted” par. [0062] including all of “its consumed capacity” par. [0060] pertaining to each of “[t]he AREs [] visited” par. [0060]. Regarding “reserve quantity”, KRAEHENBUEHL recites e.g. “a capacity of the reinsurance product to be sold” Abstract or e.g. “The Appeal 2020-002816 Application 14/837,873 31 amount that the reinsurance company agrees to insure” par. [0010] or “available capacity” pars. [0052], [0059]-[0060], [0062], [0064]. Ans. 9. We disagree with the Examiner’s finding because, for the reasons set forth by Appellant, we do not find the cited portions of Kraehenbuehl disclosing available and consumed capacities, or the total consumed capacity that has been subtracted, teach or suggest the disputed limitation “for each received bid, comparing the sum of quantities of prior received bids and the received bid with the reserve quantity of the auction,” as recited in claim 1. In particular, we do not find a teaching or suggestion for comparing any sum of quantities of bids as recited in claim 1 within the cited sections of Kraehenbuehl. Based upon the findings above, on this record, we are persuaded of at least one error in the Examiner’s reliance on the cited prior art combination to teach or suggest the disputed limitations of claim 1, such that we find error in the Examiner’s resulting legal conclusion of obviousness. Therefore, we do not sustain the Examiner’s obviousness rejection R2 of independent claim 1. Similarly, we do not sustain Rejection R2 of independent claim 29 and Rejection R6 of independent claims 57 and 58, which each recite the dispositive disputed limitation in commensurate form, and for which the Examiner relies upon the stated teachings of Kraehenbuehl in the same manner. For the same reasons, we also do not sustain Rejections R2–R6 of dependent claims 2–28 and 30–56 that variously and ultimately depend from independent claims 1 and 29. Appeal 2020-002816 Application 14/837,873 32 REPLY BRIEF To the extent Appellant may advance new arguments in the Reply Brief (Reply Br. 2–14) not in response to a shift in the Examiner’s position in the Answer, arguments raised in a Reply Brief that were not raised in the Appeal Brief or are not responsive to arguments raised in the Examiner’s Answer will not be considered except for good cause (see 37 C.F.R. § 41.41(b)(2)), which Appellant has not shown. CONCLUSIONS (1) The Examiner did not err with respect to the patent ineligibility Rejection R1 of claims 1–58 under 35 U.S.C. § 101, and we sustain the rejection. (2) The Examiner erred with respect to obviousness Rejections R2 through R6 of claims 1–58 under 35 U.S.C. § 103 over the cited prior art combinations of record, and we do not sustain the rejections. Because we have affirmed at least one ground of rejection with respect to each claim on appeal, we affirm the Examiner’s decision. See 37 C.F.R. § 41.50(a)(1). Appeal 2020-002816 Application 14/837,873 33 DECISION SUMMARY Claims Rejected 35 U.S.C. § Basis / References Affirmed Reversed 1–58 101 Subject Matter Eligibility 1–58 1–3, 6, 7, 9, 18–31, 34, 35, 37, 45– 51, 55, 56 103 Obviousness Kraehenbuehl, Hough 1–3, 6, 7, 9, 18–31, 34, 35, 37, 45– 51, 55, 56 4, 5, 32, 33 103 Obviousness Kraehenbuehl, Barry, Hough 4, 5, 32, 33 8, 36 103 Obviousness Kraehenbuehl, Rabenold, Hough 8, 36 10, 38, 52–54 103 Obviousness Kraehenbuehl, Lark, Hough 10, 38, 52–54 11–17, 39– 44, 57, 58 103 Obviousness Kraehenbuehl, Crutchfield, Hough 11–17, 39–44, 57, 58 Overall Outcome 1–58 FINALITY AND RESPONSE No time period for taking any subsequent action in connection with this appeal may be extended under 37 C.F.R. § 1.136(a)(1)(iv). See 37 C.F.R. § 41.50(f). AFFIRMED Copy with citationCopy as parenthetical citation