Lawrence M. Ausubel et al.

Patent Trials and Appeals Board

Aug 20, 2019

13843338 - (D) (P.T.A.B. Aug. 20, 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.
13/843,338 03/15/2013 Lawrence M. Ausubel 0601.1010 8214
49455 7590 08/20/2019
STEIN IP, LLC
1990 M STREET, NW
SUITE 610
WASHINGTON, DC 20036
EXAMINER
SMITH, LINDSEY B
ART UNIT PAPER NUMBER
3625
NOTIFICATION DATE DELIVERY MODE
08/20/2019 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):
docketing@steinip.com
PTOL-90A (Rev. 04/07)

UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

Ex parte LAWRENCE M. AUSUBEL and OLEG V. BARANOV1
____________

Appeal 2018-003291
Application 13/843,338
Technology Center 3600
____________

Before MURRIEL E. CRAWFORD, JOSEPH A. FISCHETTI, and
NINA L. MEDLOCK, Administrative Patent Judges.

CRAWFORD, Administrative Patent Judge.

DECISION ON APPEAL
STATEMENT OF THE CASE
Appellants seek our review under 35 U.S.C. § 134 of the Examiner’s
final rejection of claims 1–51. We have jurisdiction under 35 U.S.C. § 6(b).
Appellants appeared for oral hearing on August 8, 2019.
SUMMARY OF DECISION
We AFFIRM.
THE INVENTION
Appellants claim a computer-implemented auction and, more
particularly, a computer-implemented auction that includes elements of
clock auctions and/or combinatorial auctions. (Spec. ¶ 4, Title).

1 According to Appellants, the real party in interest is Efficient Auctions
LLC.
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Claim 1 is representative of the subject matter on appeal.
1. A computer system for conducting an auction
of a plurality of types of items among a plurality of
bidders, said system comprising:
receiving means for determining whether to
continue the auction based on the received bids;
constraining means for constraining bids that are
employed by said deteremining means, said constraining
means for constraining bids with an activity rule so that a
bid will only be accepted which, when taken together
with the bidder’s prior bids, reveals a consistent set of
objectives; and
pricing means for calculating one bidder’s
guaranteed winning value associated with a package of
the plurality of types of items and outputting said one
bidder’s guaranteed winning value, said one bidder’s
guaranteed winning value based upon the bids of other
bidders than said one bidder and the activity rule applied
to the other bidders by said constraining means.

THE REJECTION
Claims 1–51 are rejected under 35 U.S.C. § 101.
Claims 1, 10, and 19 are rejected under 35 U.S.C. § 103(a) as
unpatentable over Ausubel et al. (US 2004/0054551 A1, pub. Mar. 18, 2004)
(“Ausubel 2004”) and Ausubel (US 2006/0167787 A1, pub. July 27, 2006)
(“Ausubel 2006”).
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ANALYSIS
35 U.S.C. § 101 REJECTION
We will sustain the rejection of claims 1–16, 18–19, and 22 under
35 U.S.C. § 101.
The Supreme Court
set forth a framework for distinguishing patents that
claim laws of nature, natural phenomena, and abstract
ideas from those that claim patent-eligible applications of
those concepts. First, . . . determine whether the claims at
issue are directed to one of those patent-ineligible
concepts. . . . If so, . . . then ask, “[w]hat else is there in
the claims before us?” . . . To answer that question, . . .
consider the elements of each claim both individually and
“as an ordered combination” to determine whether the
additional elements “transform the nature of the claim”
into a patent-eligible application. . . . [The Court]
described step two of this analysis as a search for an
“‘inventive concept’”—i.e., an element or combination of
elements that is “sufficient to ensure that the patent in
practice amounts to significantly more than a patent upon
the [ineligible concept] itself.”
Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347, 2355 (2014) (citing Mayo
Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 72–73 (2012))
(citations omitted).
To perform this test, we must first determine whether the claims at
issue are directed to a patent-ineligible concept. The Federal Circuit has
explained that “the ‘directed to’ inquiry applies a stage-one filter to claims,
considered in light of the [S]pecification, based on whether ‘their character
as a whole is directed to excluded subject matter.’” See Enfish, LLC v.
Microsoft Corp., 822 F.3d 1327, 1335 (Fed. Cir. 2016) (quoting Internet
Patents Corp., 790 F.3d 1343, 1346 (Fed. Cir. 2015)). It asks whether the
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focus of the claims is on a specific improvement in relevant technology or
on a process that itself qualifies as an “abstract idea” for which computers
are invoked merely as a tool. See id. at 1335–36.
In so doing we apply a “directed to” two prong test: 1) evaluate
whether the claim recites a judicial exception, and 2) if the claim recites a
judicial exception, evaluate whether the judicial exception is integrated into
a practical application. 2019 Revised Patent Subject Matter Eligibility
Guidance, 84 FR 50, 57 (Jan. 7, 2019) (“Guidance”).
The Examiner determines that the claims are directed to conducting an
auction and providing an opportunity for parties to enter into a contractual
relationship, which the Examiner determines to be a fundamental economic
practice. (Final Act. 6–7; Ans. 7). The Examiner also determines that
conducting an auction encompasses conducting an auction of a plurality of
types of items. (Ans. 7). The Examiner also determines that the claims are
directed to automating tasks that can be performed mentally or with pen and
paper, including concepts relating to performing mathematical concepts such
as mathematical algorithms, mathematical relationships, mathematical
formulas and calculations such as “constraining bids” with an activity rule
and “calculating” one bidder’s guaranteed winning value. (Ans. 10).
The Examiner finds the claims do not include additional elements that
are sufficient to amount to significantly more than the judicial exception.
The Examiner further finds that claim 1 recites generic computer
components that perform functions of receiving data, performing a
calculation, modifying data and calculating a value which are well-
understood, routine and conventional activities previously known to the
industry. (Final Act. 7). The Examiner concludes that these additional
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elements, taken alone, do not amount to significantly more than the abstract
idea and as an ordered combination the elements add nothing that is not
already present when looking at the elements individually. (Final Act. 7).
The Specification describes the invention as providing improvements
applicable to auctions. In a first set of embodiments, the present invention is
an improved activity rule that constrains the bids that may be submitted by a
bidder, based on the bidder’s own prior bids. Such activity rules tend to
reduce the possibilities for strategic behavior in the auction and improve the
quality of information reported throughout the auction, thereby potentially
improving the auction’s performance. In a second set of embodiments, the
present invention is an improved pricing rule that appropriately discounts
the amounts (as compared to linear pricing) of bids that need to be submitted
by a bidder. Such pricing rules reduce the need for bidders to submit
unnecessarily high bids, thereby potentially improving the auction’s
performance, particularly when bidders are budget-constrained. (Spec.
¶ 14). As such, the Specification supports the Examiner’s determination that
the claims are directed to conducting an auction and providing an
opportunity for parties to enter into a contractual relationship.
Claim 1 also supports this determination by reciting “a computer
system for conducting an auction of a plurality of types of items,” “receiving
means for receiving bids,” “determining means for determining whether to
continue the auction,” “constraining means constraining bids,” and “pricing
means for calculating one bidders guaranteed winning value.” As such, the
steps of claim 1 relate to steps performed in conducting an auction. In
addition, the steps of claim 1 are related to receiving data (bids), processing
data (determining whether to continue auction, constraining bids and
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calculating a winning value) and therefore the steps of claim 1 support the
Examiner’s determination that the steps recite automating tasks that can be
performed mentally or with pen and paper including concepts relating to
performing mathematical concepts. In this regard, the steps of receiving
bids, determining whether to continue an auction, constraining bids and
calculating a winning value can be performed in the human mind or with a
pen and paper using a mathematical operation.
We thus agree with the Examiner’s determination that claim 1 recites
steps performed to conduct an auction. We determine more specifically that
claim 1 recites steps performed to conduct an auction of a plurality of types
of items. Conducting an auction of a plurality of types of items is a
fundamental economic practice and a mental process. Guidance, 84 Fed.
Reg. at 52.
The various steps recited in claim 1, which are performed to conduct
an auction, relate to a commercial interaction and a sales activity and are
therefore recitations of a method of organizing human activity.
The steps also relate to evaluation and judgment i.e. whether to
continue an auction and determining which bids are accepted and therefore
are steps that constitute “analyzing information by steps people go through
in their minds, or by mathematical algorithms, without more, as essentially
mental processes within the abstract-idea category.” Elec. Power Grp., LLC
v. Alstom S.A., 830 F.3d 1350, 1354 (Fed. Cir. 2016); see also buySAFE,
Inc. v. Google, Inc., 765 F.3d 1350, 1355 (Fed. Cir. 2014) (claims directed
to certain arrangements involving contractual relations are directed to
abstract ideas).
Turning to the second prong of the “directed to test,” claim 1 merely
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requires a “computer system.” The recitation of the words “computer
system” does not impose “a meaningful limit on the judicial exception, such
that the claim is more than a drafting effort designed to monopolize the
judicial exception.” Guidance, 84 Fed. Reg. at _53___. We find no
indication in the Specification, nor do Appellants direct us to any indication,
that the operations recited in independent claim 1 invoke any inventive
programming, require any specialized computer hardware or other inventive
computer components, i.e., a particular machine, or that the claimed
invention is implemented using other than generic computer components to
perform generic computer functions. See DDR Holdings, LLC v.
Hotels.com, L.P., 773 F.3d 1245, 1256 (Fed. Cir. 2014) (“[A]fter Alice, there
can remain no doubt: recitation of generic computer limitations does not
make an otherwise ineligible claim patent-eligible.”).
We also find no indication in the Specification that the claimed
invention effects a transformation or reduction of a particular article to a
different state or thing. Nor do we find anything of record, short of attorney
argument, that attributes any improvement in computer technology and/or
functionality to the claimed invention or that otherwise indicates that the
claimed invention integrates the abstract idea into a “practical application,”
as that phrase is used in the revised Guidance. See Guidance, 84 Fed. Reg.
at 55.
In this regard, the Specification discloses that the computer system
claimed may be any device that contains a processor and has the capability
of connecting to other processors via a communication system, including but
not limited to a smart phone, an iPhone, an iPad, an Android device, a
Windows device, a Blackberry, a PDA, or a facsimile machine. (Spec. ¶44).
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The network used, if any, can be any system capable of providing the
necessary communication to/from a Bidding Information Processor (BIP), a
Bidding Terminal (BT), and an Auctioneer’s Terminal (AT). The network
may be a local or wide area network such as, for example, Ethernet, token
ring, the Internet, the World Wide Web, the information superhighway, an
intranet or a virtual private network, or alternatively a telephone system,
either private or public, a facsimile system, an electronic mail system, or a
wireless communications system, or combinations of the foregoing. (Spec.
¶45). As such, the Specification supports the finding that the claims do not
include an improvement to the computer system or network used to practice
the steps of claim 1.
Thus, claim 1 recites judicial exceptions that are not integrated into a
practical application and thus claim 1 is directed to an “abstract idea.”
Turning to the second step of the Alice analysis, because we find that
the claims are directed to abstract ideas, the claims must include an
“inventive concept” in order to be patent-eligible, i.e., there must be an
element or combination of elements that is sufficient to ensure that the claim
in practice amounts to significantly more than the abstract idea itself. See
Alice, 134 S. Ct. at 2355 (alteration in original) (quoting Mayo Collaborative
Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 72–73 (2012)).
The introduction of a computer system into the claims does not alter
the analysis at Alice step two.
[T]he mere recitation of a generic computer cannot
transform a patent-ineligible abstract idea into a patent-
eligible invention. Stating an abstract idea “while adding
the words ‘apply it’” is not enough for patent eligibility.
Nor is limiting the use of an abstract idea “‘to a particular
technological environment.’” Stating an abstract idea
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while adding the words “apply it with a computer”
simply combines those two steps, with the same deficient
result. Thus, if a patent’s recitation of a computer
amounts to a mere instruction to “implemen[t]” an
abstract idea “on . . . a computer,” that addition cannot
impart patent eligibility. This conclusion accords with
the preemption concern that undergirds our § 101
jurisprudence. Given the ubiquity of computers, wholly
generic computer implementation is not generally the sort
of “additional featur[e]” that provides any “practical
assurance that the process is more than a drafting effort
designed to monopolize the [abstract idea] itself.”
Alice, 134 S. Ct. at 2358 (alterations in original) (citations omitted).
Instead, “the relevant question is whether the claims here do more
than simply instruct the practitioner to implement the abstract idea . . . on a
generic computer.” Id. at 2359. They do not.
Taking the claim elements separately, the function performed by the
computer at each step of the process is purely conventional. Using a
computer to retrieve, select, and apply decision criteria to data and modify
the data as a result amounts to electronic data query and retrieval—one of
the most basic functions of a computer. All of these computer functions are
well-understood, routine, conventional activities previously known to the
trading industry. See Elec. Power Grp., 830 F.3d at 1354; see also In re
Katz Interactive Call Processing Patent Litig., 639 F.3d 1303, 1316 (Fed.
Cir. 2011) (“Absent a possible narrower construction of the terms
‘processing,’ ‘receiving,’ and ‘storing,’ . . . those functions can be achieved
by any general purpose computer without special programming”). In short,
each step does no more than require a generic computer to perform generic
computer functions. As to the data operated upon, “even if a process of
collecting and analyzing information is ‘limited to particular content’ or a
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particular ‘source,’ that limitation does not make the collection and analysis
other than abstract.” SAP Am. Inc. v. InvestPic, LLC, 898 F.3d 1161, 1168
(Fed. Cir. 2018).
Considered as an ordered combination, the computer components of
Appellants’ claims add nothing that is not already present when the steps are
considered separately.
The claims do not, for example, purport to improve the functioning of
the computer itself. As we stated above, the claims do not effect an
improvement in any other technology or technical field. The Specification
spells out different generic equipment and parameters that might be applied
using this concept and the particular steps such conventional processing
would entail based on the concept of information access under different
scenarios. (See, e.g., Spec. ¶¶ 44, 45). Thus, the claims at issue amount to
nothing significantly more than instructions to apply the abstract idea using
some unspecified, generic computer. Under our precedents, that is not
enough to transform an abstract idea into a patent-eligible invention. See
Alice, 134 S. Ct. at 2360.
We have reviewed all the arguments (Appeal Br. 13–26; Reply Br. 3–
10). Appellants have submitted concerning the patent eligibility of the
claims before us that stand rejected under 35 U.S.C. § 101. We find that our
analysis above substantially covers the substance of all the arguments, which
have been made. But, for purposes of completeness, we will address various
arguments in order to make individual rebuttals of same.
We are not persuaded of error on the part of the Examiner by
Appellants’ argument that the claims are not directed to a long standing
fundamental economic practice because auctions for plural types of items
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are much more recent and novel. (Appeal Br. 10). In addition, Appellants
argue that the constraining means and the pricing means are novel and
enable an auction with a new feature. (Id. at 12). Appellants also argue that
the invention finds a novel way to circumvent the “missing bids” problem.
(Id.). To the extent Appellants maintain that the limitations of claim 1
necessarily amount to “significantly more” than an abstract idea because the
claimed apparatus is allegedly patentable over the prior art, 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, 134 S. Ct. at 2355. A novel and
nonobvious claim directed to a purely abstract idea is, nonetheless, patent-
ineligible. See Mayo, 132 S. Ct. at 1304.
To the extent that the Appellants are arguing that the steps of claim 1
related to plural types of items are a recitation of significantly more because
it was not known to conduct an auction of plural types of items, these
recitations are part of the abstract idea itself.
Appellants argue that claim 1 recites significantly more because,
according to the Ausubel I declaration, when 100 or more items are offered
for auction the number of possible packages of items may be astronomical
and winner determination using today’s optimization software has a practical
limit that cannot be solved in any practical length of time. (Appeal Br. 13).
This argument is not persuasive because it is not commensurate in scope
with the recitations of claim 1; claim 1 does not recite that 100 or more items
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are offered for sale but rather only recites that a plurality of types of items is
offered and thereby is broad enough to cover just two types of items and just
two items.
We are not persuaded of error on the part of the Examiner by
Appellants’ argument that the constraining means and the calculating a
winning value are not well-understood, routine or conventional because
these recitations are part of the abstract idea of conducting an auction for a
plurality of types of items. The determination of whether elements in
claim 1 are well-understood, routine and conventional relates to the recitions
that are in addition to the abstract idea. Guidance, 84 Fed. Reg. at 57.
We are not persuaded of error on the part of the Examiner by
Appellants’ argument made at oral argument that the rejection of the
Examiner is not supported by evidence as required by Berkheimer v. HP
Inc., 881 F.3d 1360 (Fed. Cir. 2018). As we discussed above, the
Specification at paragraphs 44–45 discloses that generic computer
components are used to perform the invention thereby providing intrinsic
evidence that the computer system recited is well-understood, conventional
and routine.
In view of the foregoing, we will sustain the Examiner’s rejection of
claim 1 under 35 U.S.C. § 101. We will also sustain the rejection as it is
directed to the remaining claims because Appellants have not argued the
separate eligibility of these claims.

REJECTION UNDER 35 U.S.C. § 103(a)
We will not sustain this rejection because we agree with Appellants that
Ausubel 2006 does not disclose calculating a guaranteed winning value.
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The portions of Ausubel relied on by the Examiner (paragraphs 36–45)
relate to calculating a quantity vector not a winning value.

CONCLUSIONS OF LAW
We conclude the Examiner did not err in rejecting claims 1–51 under
35 U.S.C. § 101.
We conclude the Examiner did err in rejecting claims 1, 10, and 19
under 35 U.S.C. ¶ 103(a).

DECISION
The decision of the Examiner to reject claims 1–51 under 35 U.S.C.
§ 101 is affirmed.
The decision of the Examiner to rejection claims 1, 10, and 19 under
35 U.S.C. § 103(a) is not 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). See 37 C.F.R.
§ 1.136(a)(1)(iv).
AFFIRMED