MasterCard International Incorporated

Patent Trials and Appeals BoardDec 7, 2021

2021001577 (P.T.A.B. Dec. 7, 2021)

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. 15/621,477 06/13/2017 Sandeep Malhotra P03544-US- UTIL (M01.462) 8071 125619 7590 12/07/2021 Mastercard International Incorporated c/o Buckley, Maschoff & Talwalkar LLC 50 Locust Avenue New Canaan, CT 06840 EXAMINER MAGUIRE, LINDSAY M ART UNIT PAPER NUMBER 3693 NOTIFICATION DATE DELIVERY MODE 12/07/2021 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): colabella@bmtpatent.com martin@bmtpatent.com szpara@bmtpatent.com PTOL-90A (Rev. 04/07) UNITED STATES PATENT AND TRADEMARK OFFICE BEFORE THE PATENT TRIAL AND APPEAL BOARD Ex parte SANDEEP MALHOTRA, SHANTHAN SUBRAMANIAM, VITORINO JOSE PEREIRA LOPES, and DANA LORBERG Appeal 2021-001577 Application 15/621,477 Technology Center 3600 Before DEBORAH KATZ, JOHN G. NEW, and ROBERT A. POLLOCK, Administrative Patent Judges. POLLOCK, Administrative Patent Judge. DECISION ON APPEAL This appeal under 35 U.S.C. § 134(a) involves claims to a method of facilitating a purchase transaction with a merchant via electronic funds transfer (“EFT”). See Abstr. Appellant1 seeks our review of the Examiner’s decision to reject the claims as drawn to patent ineligible subject matter and anticipated by the prior art. 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 Mastercard International Incorporated. Br. 2. Appeal 2021-001577 Application 15/621,477 2 STATEMENT OF THE CASE According to the Specification, it is difficult to electronically transfer payments directly from a person’s bank account to a merchant’s bank account (“P2M” payment) because there is a “lack of acceptance points to enable EFT payment network transactions to be accepted by merchants.” Spec. 1:5–10. Conventional payment cards for performing credit transactions “use account numbers and routing information which requires that they be routed through a bank card network, and do not allow direct access to a user’s bank account.” Id. at 1:18–19. Although payment authorization occurs “at the time of the purchase transaction . . . the actual transfer of funds from the consumer’s bank to the merchant’s bank is implemented via a subsequent batch clearing process.” Id. at 15:17–20. To address this problem, the Specification describes a method of paying for a P2M transaction by executing an EFT from a customer’s deposit account. Id. at 2:33–34. “Such an arrangement brings card payment network acceptance together with an EFT system to bridge an existing gap relative to P2M payments.” Id. at 3:1–2. This EFT transaction—initiated from merchant acceptance points (point of service terminals)—may be excluded from the card network clearing process. Id. at 3:4–6. Specifically, the EFT transaction may be flagged to omit the transaction from clearing, “because the EFT transaction has itself provided the necessary transfer of funds to the merchant or the merchant’s account or for the merchant’s benefit.” Id. at 16:8–14. Claim 1 is independent and reproduced below: 1. A method of operating a payment card account transaction acquirer computer, the method comprising: Appeal 2021-001577 Application 15/621,477 3 receiving, at the payment card account transaction acquirer computer, a transaction request message from a merchant, the transaction request message representing a purchase transaction accepted by the merchant, the transaction request message in a format required by a payment card account system, the transaction request message including an indication that funds corresponding to the purchase transaction are to be transferred to a bank account to benefit the merchant via an EFT (electronic funds transfer) system; detecting said indication by the payment card account transaction acquirer computer; storing, by the payment card account transaction acquirer computer, a record of the purchase transaction, said storing including, in response to said detecting step, setting a flag in said record, said flag indicating that the payment card account transaction acquirer computer is not to submit said record for clearing in the payment card account system. Br. 11. The Examiner rejects claims 1–5 as drawn to unpatentable subject matter pursuant to 35 U.S.C. § 101. Final Act. 2–5. The Examiner further rejects claims 1–5 under 35 U.S.C. § 102 as anticipated by O’Leary.2 Final Act. 5–7. REJECTION UNDER 35 U.S.C. § 101 Principles of Law Section 101 An invention is patent-eligible if it claims a “new and useful process, machine, manufacture, or composition of matter.” 35 U.S.C. § 101. But the Supreme Court has long interpreted 35 U.S.C. § 101 to include implicit 2 O’Leary et al., US 2013/0191278 A1, publ. July 25, 2013. Appeal 2021-001577 Application 15/621,477 4 exceptions: “[l]aws of nature, natural phenomena, and abstract ideas” are not patentable. E.g., Alice Corp. v. CLS Bank Int’l, 573 U.S. 208, 216 (2014). In determining whether a claim falls within an excluded category, we are guided by the Supreme Court’s two-step framework, described in Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66 (2012), and Alice 573 U.S. at 217–18 (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 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, 69 (1972)). 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 (quotation marks omitted). “A claim that recites an abstract idea must include ‘additional features’ to ensure ‘that the [claim] is more than a drafting effort designed to monopolize the [abstract idea].’” Id. (quoting Mayo, 566 U.S. at 77). Appeal 2021-001577 Application 15/621,477 5 “[M]erely requir[ing] generic computer implementation[] fail[s] to transform that abstract idea into a patent-eligible invention.” Id. USPTO Section 101 Guidance The United States Patent and Trademark Office (“USPTO” or “the Office”) published revised guidance on the application of § 101. USPTO’s January 7, 2019 Memorandum, 2019 Revised Patent Subject Matter Eligibility Guidance (“Memorandum” or “Office Guidance”).3 Under that guidance, we first look to whether the claim recites the following: (1) any judicial exceptions, including certain groupings of abstract ideas (i.e., mathematical concepts, certain methods of organizing human interactions such as a fundamental economic practice, or mental processes); and (2) additional elements that integrate the judicial exception into a practical application (see MPEP § 2106.05(a)–(c), (e)–(h)).4 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 3 Available at https://www.govinfo.gov/content/pkg/FR-2019-01- 07/pdf/2018-28282.pdf. 4 We acknowledge that some of these considerations may be evaluated properly under Step 2 of Alice (Step 2B of the Office Guidance). Solely for purposes of maintaining consistent treatment within the Office, we evaluate this inquiry under Step 1 of Alice (Step 2A of the Office Guidance). Appeal 2021-001577 Application 15/621,477 6 (4) simply appends well-understood, routine, conventional activities previously known to the industry, specified at a high level of generality, to the judicial exception. Analysis The Examiner rejects all pending claims as directed to ineligible subject matter under 35 U.S.C. § 101. Final Act. 2–5. The Examiner finds that the claims recite an abstract idea, specifically, performing a payment transaction which is a fundamental economic practice. See id. at 3. The Examiner finds that the recited “flagging” limitation recites a long held practice of marking or highlighting something to bring attention to it, including in the field of fundamental economic practices. Ans. 4–5. Having identified the judicial exceptions (abstract ideas) in the claims, the Examiner finds that the additional elements—apart from the patent- ineligible judicial exceptions—amount to no more than mere instructions to apply the judicial exceptions using generic computer components. Final Act. 4. Therefore, the Examiner finds that the judicial exceptions are not integrated into a practical application. Id. Finally, the Examiner finds that the additional elements do not amount to significantly more than the judicial exceptions because mere instructions to apply an exception using generic computer components cannot provide an inventive concept. Id. (citing Spec. ¶¶ 15, 19, 30, 43). Appellant argues that the Examiner does not address individual claim limitations when determining that the claims recite an abstract idea. Br. 8. Specifically, Appellant argues that the step of “setting a flag” is not directed to a fundamental economic practice, but rather to managing a data store in a bank computer to prevent errors in a transaction clearing process. Id. Appeal 2021-001577 Application 15/621,477 7 Appellant argues that the step of “setting a flag” is directed to “a manner of operating financial services data processing equipment.” Id. We are not persuaded by Appellant’s argument because we agree with the Examiner that the claims recite a fundamental economic practice. Specifically, the claims recite fundamental economic processes in the steps of receiving a transaction request message representing a purchase transaction, detecting an indication that funds are to be transferred, and storing a record of the purchase transaction. These steps recite the performance of certain financial transactions, which involve abstract ideas. See Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat. Ass’n, 776 F.3d 1343, 1347 (Fed. Cir. 2014). The additional step of flagging these transactions recites data processing associated with the transaction, which itself is an abstract idea. See Credit Acceptance Corp. v. Westlake Servs., 859 F.3d 1044, 1056 (Fed. Cir. 2017) (finding that data processing to facilitate financing is a patent-ineligible abstract concept). Adding one abstract idea to another abstract idea does not render the claim non-abstract. RecogniCorp, LLC v. Nintendo Co., 855 F.3d 1322, 1327 (Fed. Cir. 2017). Appellant argues that even if the claim recites a judicial exception, “claim 1 imposes meaningful limits on this abstract idea and would not monopolize” the abstract idea. Br. 7. Appellant argues that detecting an EFT transfer to be made to the merchant’s account limits the claim by excluding transactions that require clearing settlement and do not employ EFT transfers to merchants. Id. Appellant further argues that setting a flag, so that the transaction is not submitted for clearing, limits the claims by excluding transactions that do not set similar flags. Id. Appeal 2021-001577 Application 15/621,477 8 We are not persuaded by Appellant’s argument because the argument does not address the additional elements of the claims. Once the judicial exception is identified, the claims must include “additional elements . . . beyond the judicial exception” that apply the judicial exception “in some other meaningful way beyond . . . such that the claim as a whole is more than a drafting effort designed to monopolize the exception.” 84 Fed. Reg. at 54–55. Appellant cites to the judicial exceptions in the claim, e.g., the type of financial transaction and the data processing associated with the transaction, as meaningful limitations. However, as correctly identified by the Examiner, the additional elements of the claim include a computer and an electronic fund transfer system, both of which are recited at a high-level of generality. See Final Act. 3–4. Neither of these “additional elements” apply or use the judicial exception in a meaningful way beyond generally linking the exceptions to a particular technological environment. 84 Fed. Reg. at 55. These additional elements are merely means to apply the judicial exception using generic computer components and are, thus, insufficient to integrate the judicial exception into a practical application as set forth in our Office Guidance. Accordingly, we do not agree that claim 1 imposes meaningful limits on the claimed abstract idea. Appellant argues that the Examiner failed to “properly apply Step 2B” of the Guidance because: (1) the Examiner did not provide evidence that the additional elements are well-understood, routine, and conventional, and (2) (2) the Examiner did not consider the claim as an ordered combination. Br. 7. Appellant argues that “[c]onsidering claim 1 as an ordered combination, the claim goes beyond the basic concept of operating a Appeal 2021-001577 Application 15/621,477 9 transaction acquirer so as to also encompass maintaining computerized transaction records in a way that prevents erroneous clearing for transactions settled by EFT.” Id. We are not persuaded by either of Appellant’s arguments for evaluating whether the claims include an inventive concept. Appellant does not argue that the additional elements of the claims, i.e., the computer and EFT system, provide significantly more than the judicial exception. See Affinity Labs of Texas, LLC v. DIRECTV, LLC, 838 F.3d 1253, 1262 (Fed. Cir. 2016) (“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.”). Rather, the Specification describes a transaction payment method that “builds on the wide array of acceptance points that have secure interfaces and are offered in the card payment network acceptance point population and card payment network infrastructure.” Spec. 3:1–4. Likewise, the Specification describes the computer components for performing the claimed method on the preexisting infrastructure as entirely generic and conventional. See Spec. 9:9–10:30 (“system component computer 502 may, in its hardware aspects, resemble a typical server computer and/or mainframe computer”). Appellant also does not argue that the “additional elements” provide an inventive concept as part of an ordered combination of elements. Rather, Appellant’s argument focuses the abstract idea itself, i.e., data processing to distinguish one set of transactions from another, as applied using pre- existing infrastructure. Our reviewing court has held that “[a]n inventive concept that transforms the abstract idea into a patent-eligible invention must be significantly more than the abstract idea itself, and cannot simply be Appeal 2021-001577 Application 15/621,477 10 an instruction to implement or apply the abstract idea on a computer.” Bascom Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1349 (Fed. Cir. 2016). Appellant’s claimed ordered combination simply instructs implementing the abstract idea on an existing computerized infrastructure. Accordingly, the limitations considered as an ordered combination are not more than routine additional steps involving generic computer components which interact in well-known ways to accomplish the abstract idea of facilitating EFT payments from a person to a merchant. See id. Accordingly, we affirm the Examiner’s rejection of claim 1. Claims 2–5, which are not separately argued, fall with claim 1. 37 C.F.R. § 41.37(c)(1)(iv). REJECTION UNDER 35 U.S.C. § 102 The Examiner rejects claims 1–5 under 35 U.S.C. § 102(a)(1) as anticipated by O’Leary. Final Act. 5–7. In determining that O’Leary anticipates claims 1–5, the Examiner finds that O’Leary discloses: “Any items that do not match are flagged by the Account Reporter 240 as exceptions for review. The merchant Account Reporter 240 further provides for identification (ID) and password security, offering varying levels of access authority to the users[.]” (paragraph [0069]). Additionally, paragraph [0077] sets forth that the flagged transactions set for review can be declined, e.g. not submitted for clearing. Id. at 8. Appellant argues that the claims relate to a “hybrid” payment system in which merchants may receive EFT payment or payment via Appeal 2021-001577 Application 15/621,477 11 clearing/settlement operation. Br. 9. Appellant argues that claim 1 recites a hybrid system by “detecting an indication that a merchant is to be paid for a transaction via EFT, and setting a flag in a transaction record to indicate that the record in question is not to be submitted for clearing in the payment card account system.” Id. Appellant argues that O’Leary’s payment system conducts all payments by EFT and therefore does not require flagging payments to prevent submission to a clearing system. See id. As to the Examiner’s findings, Appellant argues that O’Leary’s paragraph 69 describes flagging items when purchase requests do not match purchase confirmations. Id. Appellant argues that O’Leary’s flagging of items is not performed in response to detecting that the transaction was paid to the merchant via EFT. Id. We are persuaded by Appellant’s argument that O’Leary’s paragraph 69 does not expressly disclose the claimed flagging step. Although O’Leary does describe flagging transactions, O’Leary does not disclose the same flagging process as claimed. Rather, O’Leary’s process flags non-matching transactions for review (paragraph 69) and allows for a user to decline a purchase (paragraph 77). Although we agree with the Examiner that declining a flagged transaction would preclude submitting the transaction for clearing, the claims recite a “purchase transaction” that has been accepted by both customer and merchant with the funds transferred via an EFT. See Br. 11. Accordingly, rejecting a flagged transaction prior to clearing the transaction does not disclose the limitations of the claim arranged in the same way. [U]nless a [prior art] reference discloses within the four corners of the document not only all of the limitations claimed but also all of the limitations arranged or combined in the same way as Appeal 2021-001577 Application 15/621,477 12 recited in the claim, it cannot be said to prove prior invention of the thing claimed and, thus, cannot anticipate under 35 U.S.C. § 102.” Net MoneyIN, Inc. v. VeriSign, Inc., 545 F.3d 1359, 1371 (Fed. Cir. 2008). Although it may have been obvious in view of O’Leary to distinguish between EFT transactions and credit card transactions during the settlement process (see O’Leary paragraphs 51, 62, 79–85), the claims were only rejected as anticipated and we are constrained by the record before us. Because O’Leary does not disclose the limitations arranged or combined in the same way as recited in the claims, we determine that the Examiner erred in rejecting the claims under 35 U.S.C. § 102(a)(1) and reverse the rejection. CONCLUSION Claims Rejected 35 U.S.C. § Reference(s)/Basis Affirmed Reversed 1–5 101 Eligibility 1–5 1–5 102 O’Leary 1–5 Overall Outcome 1–5 TIME PERIOD FOR 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). See 37 C.F.R. § 1.136(a)(1)(iv). AFFIRMED