Harvey, Gregory W. et al.

Patent Trials and Appeals Board

Nov 14, 2019

14299653 - (D) (P.T.A.B. Nov. 14, 2019)

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.
14/299,653 06/09/2014 Gregory W. Harvey 0136285.0648560-CJC 8386
26874 7590 11/14/2019
FROST BROWN TODD LLC
3300 Great American Tower
301 East Fourth Street
Cincinnati, OH 45202
EXAMINER
SIGMOND, BENNETT M
ART UNIT PAPER NUMBER
3694
NOTIFICATION DATE DELIVERY MODE
11/14/2019 ELECTRONIC
Please find below and/or attached an Office communication concerning this application or proceeding.
The time period for reply, if any, is set in the attached communication.
Notice of the Office communication was sent electronically on above-indicated "Notification Date" to the
following e-mail address(es):
patents@fbtlaw.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

Ex parte GREGORY W. HARVEY, SAMUEL N. BROWN,
DAVID S. SINK, AARON WILKINSON, MICHAEL MENEFEE,
MARK S. SAUM, COLM BERGIN, BRUCE PARKER,
RALF ERICH SCHULZ, JON BUELL, and JASON FISHER
____________

Appeal 2018-008092
Application 14/299,653
Technology Center 3600
____________

Before JOSEPH A. FISCHETTI, BRUCE T. WIEDER, and
KENNETH G. SCHOPFER, Administrative Patent Judges.

WIEDER, Administrative Patent Judge.

DECISION ON APPEAL
Appellant1 seeks review under 35 U.S.C. § 134 from the Examiner’s
final rejection of claims 1–17. 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. Appellant identifies the real party in interest as
Modopayments, LLC. (Appeal Br. 1.)
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CLAIMED SUBJECT MATTER
Appellant’s “invention relates to electronic payment processing and
offer systems, and more specifically to a system and method for making and
redeeming offers in conjunction with a secure, mobile, electronic payment
processing system.” (Spec. ¶ 2.)
Claims 1 and 11 are the independent claims on appeal. Claim 1 is
illustrative. It recites (paragraph numbering added):
1. A system for allowing a consumer to complete a payment
transaction with a merchant at a merchant location using a mobile
device of the consumer and a point of sale terminal of the
merchant, the system comprising:
[(1)] a remote server in communication with the mobile
device, the mobile device associated with the consumer and
registered with the system, the mobile device configured to
detect a presence of the consumer at the merchant location, the
remote server configured to verify an identity of the consumer
using identifying characteristics of the mobile device and to form
a virtual payment account number, the virtual payment account
number formed by merging a checkout code with a merchant
code, wherein the checkout code is selected from a range of
available numbers determined by the merchant code assigned to
the merchant location, and wherein the checkout code sent to the
consumer changes with each visit to the merchant location and is
specific to the payment transaction, the remote server further
configured to send the checkout code to the consumer using the
mobile device; and
[(2)] wherein the point of sale terminal is configured to
process the payment transaction at the request of the consumer,
and wherein the checkout code is merged with the merchant
code, the merchant code provided to the merchant prior to the
payment transaction, wherein the merged checkout code and
merchant code form the virtual payment account number, and
wherein the system processes the payment transaction using the
virtual payment account number as a mechanism for payment
using the merchant’s existing payment processing system.

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REJECTIONS
Claims 1–17 are rejected under 35 U.S.C. § 112, second paragraph, as
being indefinite for failing to particularly point out and distinctly claim the
subject matter which the inventors regard as the invention.
Claims 1–17 are rejected under 35 U.S.C. § 101 as directed to a
judicial exception without significantly more.

ANALYSIS
The § 112, second paragraph, rejection
Appellant does not separately argue the rejected claims. We select
claim 1 as representative. Claims 2–17 will stand or fall with claim 1. See
37 C.F.R. § 41.37(c)(1)(iv).
The Examiner determines that claim 1 is indefinite. Specifically, the
Examiner determines that “[i]t is unclear if the mobile device and point of
sale terminal are part of the systems or are just devices that the server is in
contact with.” (Final Action 12.)
Appellant argues that “Applicant has recited the mobile device of the
consumer and a point of sale terminal of the merchant in the preamble and
specifically claimed only the system’s interaction with those devices.”
(Appeal Br. 6.) But Appellant also argues that “[t]he claims may recite a
remote server, mobile device, or a point of sale terminal. But these elements
are part of a whole system or method that solves several challenges.” (Id.
at 9.)
A claim must “particularly point[] out and distinctly claim[] the
subject matter which the applicant regards as his invention.” 35 U.S.C.
§ 112, ¶ 2. Specifically,
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the second paragraph of § 112 contains two requirements: “first,
[the claim] must set forth what ‘the applicant regards as his
invention,’ and second, it must do so with sufficient particularity
and distinctness, i.e., the claim must be sufficiently ‘definite.’”
In determining whether the claim is sufficiently definite, we must
analyze whether “one skilled in the art would understand the
bounds of the claim when read in light of the specification.”

Allen Eng’g Corp. v. Bartell Indus., Inc., 299 F.3d 1336, 1348 (Fed.
Cir. 2002). The Federal Circuit has stated that
when the USPTO has initially issued a well-grounded rejection
that identifies ways in which language in a claim is ambiguous,
vague, incoherent, opaque, or otherwise unclear in describing
and defining the claimed invention, and thereafter the applicant
fails to provide a satisfactory response, the USPTO can properly
reject the claim as failing to meet the statutory requirements of
§ 112(b).

In re Packard, 751 F.3d 1307, 1311 (Fed. Cir. 2014).
In this case, paragraph (1) of claim 1 recites “the system comprising:
a remote server in communication with the mobile device.” In other words,
the claimed system requires both a remote server and a mobile device, and
that the server be in communication with the mobile device. Absent the
mobile device, it is unclear with what the server would be in
communication. Therefore, we disagree with the Examiner that it is unclear
whether the mobile device is part of the claimed system.
Paragraph (2) of claim 1 recites “wherein the point of sale terminal is
configured to process the payment transaction” and “wherein the system
processes the payment transaction.” This suggests that the point of sale
terminal is part of the claimed system. However, as noted above, Appellant
argues that the point of sale terminal itself is not a part of the claimed
system. (See Appeal Br. 6.) As also noted above, Appellant also argues that
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the elements (remote server, mobile device, and point of sale terminal) are
part of a whole system. (Appeal Br. 9.)
“We employ a lower threshold of ambiguity when reviewing a
pending claim for indefiniteness than those used by post-issuance reviewing
courts.” Ex parte Miyazaki, 89 USPQ2d 1207, 1211 (BPAI 2008)
(precedential). Specifically, “if a claim is amenable to two or more plausible
claim constructions, the USPTO is justified in requiring the applicant to
more precisely define the metes and bounds of the claimed invention by
holding the claim unpatentable under 35 U.S.C. § 112, second paragraph, as
indefinite.” Id.; see also In re Packard, 751 F.3d at 1311.
In view of the above, we agree with the Examiner that it is unclear
whether the point of sale terminal itself is part of the claimed system. In
short, the Examiner has presented a well-grounded rejection identifying why
paragraph (2) of claim 1 is unclear in this context. Claims 2–17 fall with
claim 1.2 See 37 C.F.R. § 41.37(c)(1)(iv).

The § 101 rejection
“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.” 35 U.S.C. § 101. Section 101, however,

2 We note that independent claim 11 refers to a “payment processing
terminal of the merchant” rather than a “point of sale terminal of the
merchant,” as recited in claim 1. But, particularly in view of Appellant’s
arguments discussed above (see Appeal Br. 6, 9), we agree with the
Examiner that it is unclear whether the payment processing terminal itself is
part of the claimed system. (See Final Action 12.)
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“‘contains an important implicit exception: Laws of nature, natural
phenomena, and abstract ideas are not patentable.’” Alice Corp. Pty. Ltd. v.
CLS Bank Int’l, 573 U.S. 208, 216 (2014) (quoting Assoc. for Molecular
Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 589 (2013)).
Alice applies a two-step framework, earlier set out in Mayo
Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66
(2012), “for distinguishing patents that claim laws of nature, natural
phenomena, and abstract ideas from those that claim patent-eligible
applications of those concepts.” Alice, 573 U.S. at 217.
Under the two-step framework, it must first be determined if “the
claims at issue are directed to a patent-ineligible concept.” Id. at 218. If the
claims are determined to be directed to a patent-ineligible concept, e.g., an
abstract idea, then the second step of the framework is applied to determine
if “the elements of the claim . . . contain[] an ‘inventive concept’ sufficient
to ‘transform’ the claimed abstract idea into a patent-eligible application.”
Id. at 221 (citing Mayo, 566 U.S. at 72–73, 79).
With regard to step one of the Alice framework, we apply a “directed
to” two prong test to: 1) evaluate whether the claim recites a judicial
exception, and 2) if the claim recites a judicial exception, evaluate whether
the claim “appl[ies], rel[ies] on, or use[s] the judicial exception in a manner
that imposes a meaningful limit on the judicial exception, such that the claim
is more than a drafting effort designed to monopolize the judicial
exception.” See USPTO, 2019 Revised Patent Subject Matter Eligibility
Guidance, 84 Fed. Reg. 50, 54 (Jan. 7, 2019) (hereinafter “2019 Guidance”).
Here, the Examiner determines that claim 1 is “directed towards the
abstract idea of systems for conducting a payment transaction,” and, in
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particular, “directed towards a method of organizing human activity because
[it] describe[s] concepts relating to interpersonal and intrapersonal
activities.” (Final Action 3.)
Appellant disagrees and argues that claim 1 recites “a system for
allowing a consumer to complete a payment transaction with a merchant at a
merchant location using a mobile device of the consumer and a point of sale
terminal of the merchant.” (Appeal Br. 9.)
Under step one of the Alice framework, we “look at the ‘focus of the
claimed advance over the prior art’ to determine if the claim’s ‘character as a
whole’ is directed to excluded subject matter.” Affinity Labs of Texas, LLC
v. DIRECTV, LLC, 838 F.3d 1253, 1257 (Fed. Cir. 2016) (quoting Elec.
Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1353 (Fed. Cir. 2016)).
The ‘directed to’ inquiry . . . cannot simply ask whether the
claims involve a patent-ineligible concept, because essentially
every routinely patent-eligible claim involving physical products
and actions involves a law of nature and/or natural phenomenon
. . . . Rather, the ‘directed to’ inquiry applies a stage-one filter to
claims, considered in light of the specification, based on whether
‘their character as a whole is directed to excluded subject
matter.’ Internet Patents Corp. v. Active Network, Inc., 790 F.3d
1343, 1346 (Fed. Cir. 2015).

Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1335 (Fed. Cir. 2016). In
other words, the first step of the Alice framework “asks whether the focus of
the claims is on the specific asserted improvement in [the relevant
technology] or, instead, on a process that qualifies as an ‘abstract idea’ for
which computers are invoked merely as a tool.” Id. at 1335–36; see also
2019 Guidance at 54–55.
The Specification provides evidence as to what the claimed invention
is directed. In this case, the Specification describes the invention as relating
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“to electronic payment processing and offer systems, and more specifically
to a system and method for making and redeeming offers in conjunction
with a secure, mobile, electronic payment processing system.” (Spec. ¶ 2.)
Claim 1 provides further evidence. Claim 1 recites “[a] system for allowing
a consumer to complete a payment transaction with a merchant at a
merchant location using a mobile device of the consumer and a point of sale
terminal of the merchant . . . comprising: a remote server in communication
with the mobile device,” “the mobile device configured to detect the
presence of the consumer at the merchant location, the remote server
configured to verify an identity of the consumer . . . and to form a virtual
payment account number.” Claim 1 further recites that “the point of sale
terminal is configured to process the payment transaction,” “and . . . the
system processes the payment transaction using the virtual payment account
number . . . using the merchant’s existing payment processing system.”
Regardless of whether the point of sale terminal is part of the claimed
system, this evidence shows that claim 1 is directed to conducting a payment
transaction. This is in accord with the Examiner’s determination. (See Final
Action 3.) The Federal Circuit has found claims directed to similar subject
matter to be directed to abstract ideas. See, e.g., Inventor Holdings, LLC v.
Bed Bath & Beyond, Inc., 876 F.3d 1372 (Fed. Cir. 2017) (Determining
claims directed to “pay[ing] for items ordered from a remote seller at a third-
party’s local establishment” to be directed to an abstract idea.), CyberSource
Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1374 (Fed. Cir. 2011)
(Determining claims directed to “a method for detecting credit card fraud” to
be directed to an abstract idea.), Smart Sys. Innovations, LLC v. Chicago
Transit Auth., 873 F.3d 1364, 1372 (Fed. Cir. 2017) (Determining claims
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“directed to the formation of financial transactions in a particular field . . .
and data collection related to such transactions” to be directed to an abstract
idea.).
Claim 1 recites that the remote server is in communication with the
mobile device, but the claim does not specify how this communication is
accomplished. Claim 1 recites that the mobile device is configured to detect
a presence of the consumer at the merchant, but the claim does not specify
how this detection is accomplished or what is done with the result. Claim 1
recites that the remote server is configured to verify an identity of the
consumer using identifying characteristics of the mobile device, but the
claim does not specify what characteristics of the mobile device are used or
how they are used to verify the consumer’s identity. With regard to the
point of sale terminal, claim 1 recites that the point of sale terminal is
configured to process the payment transaction, but the claim does not
specify how this processing is accomplished. In short, regardless of whether
we consider the point of sale terminal to be part of the claimed system,
claim 1 recites functional results to be achieved by any means. These
recited functional results are directed to “commercial or legal interactions
(including agreements in the form of contracts; legal obligations;
advertising, marketing or sales activities or behaviors; business relations),”
i.e., certain methods of organizing human activity. (See Guidance at 52.)
Thus, under prong one of the two prong test in the 2019 Guidance, claim 1
recites an abstract idea.
With regard to prong two, we are asked to determine if additional
elements in claim 1 “apply, rely on, or use the judicial exception in a manner
that imposes a meaningful limit on the judicial exception, such that the claim
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is more than a drafting effort designed to monopolize the judicial
exception.” But here we are hindered in our analysis by the indefiniteness of
the claim. Specifically, as discussed above, it is unclear if the point of sale
terminal is part of the claimed system.
This is particularly problematic because it is unclear what functions
are performed by the point of sale terminal. Paragraph (2) of claim 1 recites
that “the point of sale terminal is configured to process the payment
transaction,” but, as noted above, the claim does not specify how this is
accomplished. Paragraph (2) recites that “the checkout code is merged with
the merchant code,” but it does not indicate that this is performed by the
point of sale terminal, or how this is otherwise accomplished.3 Paragraph
(2) recites that “the system processes the payment transaction using the
virtual payment account number . . . using the merchant’s existing payment
processing system.” But the claim does not indicate whether the point of
sale terminal is part of the system that processes the transaction, nor does it
indicate how the system communicates with the merchant’s existing

3 Claim 1 recites that “the remote server [is] configured . . . to form a virtual
payment account number, the virtual payment account number formed by
merging a checkout code with a merchant code.” But claim 1 also recites
that
the point of sale terminal is configured to process the payment
transaction . . . and wherein the checkout code is merged with the
merchant code, . . . , wherein the merged checkout code and
merchant code form the virtual payment account number, and
wherein the system processes the payment transaction using the
virtual payment account number.
It is unclear if the recitation “wherein the checkout code is merged with the
merchant code” is merely describing the merger that is performed by the
remote server in paragraph (1), or if a merger is also performed by the point
of sale terminal in paragraph (2).
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payment processing system if the point of sale system is part of the system
processing the payment transaction. Because we are unable to interpret the
claim, e.g., to determine what function(s) are performed by the point of sale
terminal and whether it is part of the claimed system, we determine that the
rejection under § 101 is necessarily based on speculative assumptions about
the meaning of the claims. See In re Steele, 305 F.2d 859, 862–63
(CCPA 1962). Therefore, we will not sustain the rejection of claim 1 under
§ 101. It must be understood, however, that our decision regarding this
rejection of claim 1 is based solely on the ambiguity and indefiniteness of
the claim.
With regard to independent claim 11, and as noted above, claim 11
refers to a “payment processing terminal of the merchant” rather than a
“point of sale terminal of the merchant,” as recited in claim 1. Claim 11
recites “wherein the payment processing terminal at the merchant is
configured to initiate the payment transaction at the request of the
consumer.” But, particularly in view of Appellant’s arguments discussed
above (see Appeal Br. 6, 9), it is unclear whether the payment processing
terminal itself is part of the claimed system.
Moreover, Appellant seeks to analogize the pending claims to the
claims in BASCOM Global Internet Services, Inc. v. AT&T Mobility LLC,
827 F.3d 1341 (Fed. Cir. 2016). (Appeal Br. 13.) Specifically, Appellant
argues that “the patent application describes a particular arrangement of
elements to bring technical and business improvements over the prior art.”
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(Id.)4 In BASCOM, the court determined that “an inventive concept can be
found in the non-conventional and non-generic arrangement of known,
conventional pieces.” BASCOM, 827 F.3d at 1350. Specifically,
BASCOM’s content filter could be “installed remotely in a single location”
and “this particular arrangement of elements is a technical improvement
over the prior art ways of filtering.” Id. Here, however, not only is it
unclear how the point of sale terminal/payment processing terminal is
arranged in the claimed system, it is not even clear that the terminal is part
of the claimed system. (See supra.)
In sum, “our analysis of the claims leaves us in a quandary as to what
in fact is covered by them.” See In re Steele, 305 F.2d at 862. Therefore,
we do not sustain the rejection under § 101 of independent claims 1 and 11,
or dependent claims 2–10 and 12–17, because the rejection is necessarily
based on speculative assumptions as to the meaning of the claims. See id.
at 862–63; see also 37 C.F.R. § 41.37(c)(1)(iv). As noted above, it must be
understood that our decision regarding this rejection is based solely on the
ambiguity of the claims.

4 We acknowledge that some of these considerations may be more properly
evaluated under step two of the Alice framework. However, for purposes of
maintaining consistent treatment within the USPTO, we evaluate it under
step one. (See 2019 Guidance.)
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CONCLUSION

The Examiner’s rejection of claims 1–17 under 35 U.S.C. § 112,
second paragraph, is affirmed.
The Examiner’s rejection of claims 1–17 under 35 U.S.C. § 101 is
reversed.

Specifically:
Claims
Rejected
35 U.S.C. § Reference(s)/Basis Affirmed Reversed
1–17 112, second
paragraph
indefiniteness 1–17
1–17 101 eligibility5 1–17
Overall
Outcome
1–17

No time period for taking any subsequent action in connection with
this appeal may be extended under 37 C.F.R. § 1.136(a). See 37 C.F.R.
§ 1.136(a)(1)(iv).
AFFIRMED

5 As explained above, our decision regarding this rejection is based solely on
the ambiguity of the claims.