E-Loan, Inc.v.IMX, Inc.

Patent Trial and Appeal Board

Feb 16, 2016

08928559 (P.T.A.B. Feb. 16, 2016)

Trials@uspto.gov Paper No. 19
571-272-7822 Entered: February 16, 2016

UNITED STATES PATENT AND TRADEMARK OFFICE
_____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

E-LOAN, INC.,
Petitioner,

v.

IMX, INC.,
Patent Owner.
____________

Case CBM2015-00012
Patent 5,995,947
____________

Before JAMES P. CALVE, MATTHEW R. CLEMENTS,
and BRIAN P. MURPHY, Administrative Patent Judges.

CALVE, Administrative Patent Judge.

FINAL WRITTEN DECISION
35 U.S.C. § 328(a) and 37 C.F.R. § 42.73

CBM2015-00012
Patent 5,995,947

2

I. BACKGROUND
Petitioner E-Loan, Inc. (“E-Loan”) filed a Petition (Paper 1, “Pet.”)
seeking a covered business method patent review of claims 7, 8, 26, and 27
of U.S. Patent No. 5,995,947 (Ex. 1001, “the ’947 patent”). Patent Owner
IMX, Inc. (“IMX”) filed a Preliminary Response. Paper 6 (“Prelim. Resp.”).
We have jurisdiction under 35 U.S.C. § 324. Based on these submissions,
we instituted trial as to claims 7, 8, 26, and 27 of the ’947 patent. Paper 7
(“Dec. to Inst.”). IMX filed a Response. Paper 11 (“PO Resp.”). E-Loan
then filed a Reply. Paper 12 (“Pet. Reply”).
Oral argument was presented on January 5, 2016. A transcript of the
argument is entered in the record. Paper 18 (“Tr.”).
We have jurisdiction under 35 U.S.C. § 6(c). This Final Written
Decision is entered pursuant to 35 U.S.C. § 328(a).
A. The ’947 Patent (Ex. 1001)
The ’947 patent describes a method and system for making loans such
as mortgages. System 100 includes transaction server 110, broker stations
120, lender stations 130, administration client 150, system monitor stations
160, web server 170, and communication network 140. Ex. 1001, 3:12–16.
Brokers use broker stations 120 to transmit loan profiles to transaction server
110, thereby entering those loan profiles into system 100 for processing, to
review the status of loan profiles as they are processed by system 100, to
receive and review bids by lenders on loan profiles, and to accept or decline
bids. Id. at 6:34–36. Lenders use lender stations 130 to search database 111
for desired types of loans, to sort selected loans by particular desired criteria,
bid on loan applications, and to receive notice when their bids are accepted.
Id. at 7:24–27.
CBM2015-00012
Patent 5,995,947

3

System 100 includes transaction server 110 that comprises trading
system database 111, geographic database 112, and external interfaces 113.
Id. at 3:28–30. Transaction server 110 enters loan profiles into trading
system database 111 in response to requests from broker stations 120,
searches the trading system database in response to requests from lender
stations 130, and modifies trading system database 111 in response to
changes in status of loan profiles stored therein. Id. at 3:30–36. Figure 1,
reproduced below, illustrates system 100.

Figure 1 shows a block diagram of an interactive mortgage and loan
information and real-time trading system 100. Id. at 3:10–11. Transaction
server 110 comprises a general purpose processor such as a Sun UltraSparc
processor operating under control of a Solaris operating system. Id. at 3:18–
CBM2015-00012
Patent 5,995,947

4

27. Broker station 120 comprises a general purpose processor such as a PC
workstation with Intel® Pentium® processor operating under the control of
Microsoft® Windows® 95 operating system and broker client software. Id. at
6:5–19. Lender station 130 comprises a general purpose processor such as a
PC workstation with Intel® Pentium® processor operating under control of
Microsoft® Windows® 95 operating system and lender client software. Id. at
7:5–15.
B. Illustrative Claims
Claims 7 and 8 depend from claim 1. Claims 26 and 27 depend from
claim 19. Claims 1, 7, and 8 are illustrative and reproduced below.
1. A method for processing loan applications, said method
including the steps of maintaining a database of pending loan
applications and their statuses at a database server, wherein
each party to a loan can search and modify that database
consistent with their role in the transaction by requests to said
server from a client device identified with their role.
7. A method as in claim 1, wherein
said roles include a lender and said client device includes a
lender station associated with at least one said lender; and
said lender can search the database for particular desired
types of loans, and can bid on loan applications.
8. A method as in claim 7, wherein said lender is notified
when its bid is accepted.

C. Covered Business Method Patent
A “covered business method patent” is a patent that claims a method
or a corresponding apparatus for performing data processing or other
operations used in the practice, administration, or management of a financial
product or service, except the term does not include patents for technological
inventions. AIA § 18(d)(1); 37 C.F.R. § 42.301(a).
CBM2015-00012
Patent 5,995,947

5

To determine whether a patent is eligible for a covered business
method patent review, the focus is on the claims. See Transitional Program
for Covered Business Method Patents—Definitions of Covered Business
Method Patent and Technological Invention, 77 Fed. Reg. 48734, 48736
(Aug. 14, 2012). A patent need have only one claim directed to a covered
business method to be eligible for review. Id.
1. Financial Product or Service
E-Loan argues that the ’947 patent is a covered business method
patent. Pet. 19–23. E-Loan contends that the limitation “processing loan
applications,” as recited in claim 1, describes a financial service or, at least,
a process incidental to a financial product, namely, a loan. Id. at 22. E-Loan
also contends that “maintaining a database of pending loan applications” and
“search and modify that database” relate to management of financial data,
which is, at a minimum, an ancillary activity related to the loan processing
service or loan product. Id. Regarding claim 7, E-Loan argues that bidding
on loan applications is the practice of a financial product or service because
it relates to monetary matters. Id. at 23.
We are persuaded that claims 1 and 7 meet the first part of the covered
business method requirement because they cover a method of processing
loan applications and data processing used in the practice, administration, or
management of a financial product or service. Loans are financial products
because they are agreements between two parties stipulating the movement
of money or other consideration. See id. at 20 (citing 157 Cong. Rec. S5432
(daily ed. Sept. 8, 2011) (statement of Sen. Schumer regarding a financial
product) (Ex. 1009)). The legislative history of the AIA includes “servicing
loans” and “financial data processing” among the financial products and
CBM2015-00012
Patent 5,995,947

6

services that fall within covered business method review. See id. (citing 157
Cong. Rec. S5432 (daily ed. Sept. 8, 2011) (statement of Sen. Schumer
listing specific types of “financial products or services” mentioned in the
legislative history) (Ex. 1009)).
Claims 1 and 7 recite methods of processing loan applications and
thus cover a service for the practice, administration, or management of a
financial product or service, i.e., a loan. The claims recite a database server
that maintains loan applications and their statuses for parties to search and
modify, and a lender station that a lender can use to search for desired types
of loans. Ex. 1001, 14:66–15:5, 22–27. Such method steps are sufficient to
satisfy the “financial product or service” requirement of Section 18. See 37
C.F.R. § 42.301(a); see also MeridianLink, Inc. v. DH Holdings, LLC, Case
CBM2013-00008, 12 (PTAB June 24, 2013) (Paper 20) (Ex. 1005) (system
and method claims for collecting and disseminating loan information over a
network satisfies the definition of covered business method in § 42.301(a));
Westlake Servs., LLC v. Credit Acceptance Corp., Case CBM2014-00176, 9
(PTAB Feb. 9, 2015) (Paper 15) (claims to method of providing financing
for purchased products was a covered business method patent).
2. Technological Invention
The definition of a “covered business method patent” in § 18(d)(1) of
the AIA excludes patents for “technological inventions.” When determining
whether a patent is for a technological invention, we consider “whether the
claimed subject matter as a whole recites a technological feature that is
novel and unobvious over the prior art; and solves a technical problem using
a technical solution.” 37 C.F.R. § 42.301(b). The following claim drafting
techniques typically do not render a patent a “technological invention”:
CBM2015-00012
Patent 5,995,947

7

(a) Mere recitation of known technologies, such as computer
hardware, communication or computer networks, software,
memory, computer-readable storage medium, scanners, display
devices or databases, or specialized machines, such as an ATM
or point of sale device.
(b) Reciting the use of known prior art technology to accomplish
a process or method, even if that process or method is novel and
non-obvious.
(c) Combining prior art structures to achieve the normal,
expected, or predictable result of that combination.
Office Patent Trial Practice Guide, 77 Fed. Reg. at 48763–64.
E-Loan contends persuasively that the challenged claims solve a
commercial or business problem of making loan processing less expensive,
rather than a technical problem and do so with known technologies. Pet. 28–
29. E-loan cites IMX’s Opening Brief on Claim Construction in a related
district court proceeding, which states that the purpose of the ’947 patent
was to “eliminate this paper-intensive process through automation.” Id. at
29. The ’947 patent discloses that conventional loans are expensive, due to
the large amount of information that must be collected by hand, transmitted
using paper applications, and compared and evaluated by human beings, and
disseminated. Ex. 1001, 1:10–48. The ’947 patent automates this process to
provide widespread dissemination of loan applications and lending program
information for automatic comparison in real time. Id. at 1:49–2:15.
Such automation using known computer technologies does not result
in a technical solution to a technical problem. Searching a database for a
desired type of loan merely automates the practice of brokers sending loan
applications to lenders who review and evaluate the applications before
deciding to make a bid. See Ex. 1001, 1:22–45; Westlake Servs., LLC v.
Credit Acceptance Corp., Case CBM2014-00176, 9 (PTAB Feb. 9, 2015)
CBM2015-00012
Patent 5,995,947

8

(Paper 15) (claims merely describe steps performed in method of providing a
financing source); DealerSocket, Inc. v. AutoAlert, LLC, Case CBM2014-
00203, 9–12 (PTAB Apr. 2, 2015) (Paper 11) (claims relating to managing
auto financing, alerting auto dealers, and generating sales leads were at least
complementary to financial activity of purchase or lease of an automobile
and implementation on generic computer did not involve any disclosed
advancements in computer hardware or software technology).
The challenged claims recite the use of known computer hardware and
software technologies such as a “database,” “database server,” “transaction
server,” and “client device/lender station” to accomplish loan processing.
Pet. 24–25. As E-Loan argues, the ’947 patent discloses a “lender station”
as a PC work station such as an Intel® Pentium® Processor operating under
control of the Microsoft® Windows® 95 operating system and a “transaction
server” as a Sun UltraSparc processor operating under control of the Solaris
operating system. Id. at 27 (citing Ex. 1001, 7:9–13 and 3:23–27).1 The
claimed use of such known prior art technology to accomplish a method is
not sufficient to constitute a “technological invention” regardless of whether
the method is novel or non-obvious. Id. at 26–27 (quoting Office Patent
Trial Practice Guide, 77 Fed. Reg. at 48763–64). Claims 1 and 7 also recite
known, obvious computer functionality like database maintenance, searching
and updating computer records, and transmitting information such as bids.

1The ’947 patent discloses that network 140 can be a wide area network such
as an Advantis network or the internet, intranet, telephone lines, leased lines,
or combinations thereof. Ex. 1001, 9:12–21. Trading system database 111
comprises an Oracle database or another type of relational database such as
Sybase or an object-oriented or other type of database. Id. at 3:37–45.
CBM2015-00012
Patent 5,995,947

9

IMX does not oppose E-Loan’s contentions that the claims lack a
technological invention. PO Resp. 7–20. Thus, we consider the facts
asserted by Petitioner (Pet. 24–27) to be admitted. See 37 C.F.R. § 42.23(a).
We determine that claims 1 and 7 do not recite a technological invention.
Therefore, the ’947 patent is eligible for covered business method patent
review.
3. Constitutionality of Covered Business Method Review
IMX challenges the covered business method patent review as being
unconstitutional. PO Resp. 14–16. IMX argues that issued patents are no
longer under the jurisdiction of the U.S. Patent and Trademark Office
(“USPTO”) and may be set aside, annulled, or corrected only by the courts
of the United States, not by the USPTO or PTAB. Id. at 14–15. IMX argues
that post-grant proceedings to invalidate patents deprive patent owners of
due process and invade the province of Article III courts. Id. at 16.
IMX’s arguments are not persuasive in view of the recent decision of
the United States Court of Appeals for the Federal Circuit in MCM Portfolio
LLC v. Hewlett-Packard Co., No. 2015-1091, 2015 WL 7755665 (Fed. Cir.
Dec. 2, 2015), which held that Congress can grant authority to the USPTO to
correct or cancel issued patents. MCM Portfolio, 2015 WL 7755665, at *5.
Congress has done so by creating inter partes reexamination proceedings, ex
parte reexamination proceedings, inter partes review, post-grant review, and
covered business method patent review. Id. (citations omitted). As stated
with regard to the inter partes review provisions at issue in MCM Portfolio,
“Supreme Court precedent demonstrates that these statutes, and particularly
the inter partes review provisions, do not violate Article III.” Id.

CBM2015-00012
Patent 5,995,947

10

II. ANALYSIS
A. Claim Interpretation
Claims in an unexpired patent are given their broadest reasonable
construction in light of the specification in covered business method patent
reviews. 37 C.F.R. § 42.300(b); In re Cuozzo Speed Tech., LLC, 793 F.3d
1268, 1278–79 (Fed. Cir. 2015), cert. granted sub nom. Cuozzo Speed
Techs. LLC v. Lee, 84 U.S.L.W. 3218 (Jan. 15, 2016) (No. 15-446); see
Office Patent Trial Practice Guide, 77 Fed. Reg. 48756, 48766 (Aug. 14,
2012). Claim terms are given their ordinary, customary meaning as would
be understood by a skilled artisan in the context of the entire disclosure.
In re Translogic Tech., Inc., 504 F.3d 1249, 1257 (Fed. Cir. 2007).
1. “can bid on loan applications”(claim 7)
“capable of submitting bids on loan applications” (claim 26)
E-Loan asserts a “bid” is “an offer to make a loan.” Pet. 33. IMX
argues that the limitation “can bid on loan applications” in claim 7 means
“can provide offers to make loans on and in response to existing loan
applications.” PO Resp. 3. IMX argues that the limitation “submitting bids
on loan applications” in claim 26, means “submitting offers to make loans
on and in response to existing loan applications.” Id. at 3–4.
We interpret “can bid on loan applications” in claim 7 and “capable of
submitting bids on loan applications” in claim 26 as “can offer to make loans
on loan applications that are pending in the database.” This interpretation is
consistent with the claims. Claim 1 recites a method for processing loan
applications including “maintaining a database of pending loan applications
and their statuses at a database server.” Dependent claim 7 recites “said
lender can search the database for particular desired types of loans, and can
bid on loan applications.” Ex. 1001, 15:26–27 (emphasis added).
CBM2015-00012
Patent 5,995,947

11

Claim 19 recites a system for processing applications that includes “a
database of pending loan applications.” Claim 26 recites “said lender station
is capable of requesting said transaction server to search said database for
particular desired types of loans, and is capable of submitting bids on loan
applications to said transaction server.” Id. at 16:25–29 (emphasis added).
The transaction server to which bids are submitted is “responsive in
real time to requests from parties to said pending loan applications” (claim
19), which reinforces that lender bids are made on loan applications pending
in the database. Thus, the lender in claim 7 “can search the database” of
pending loan applications of claim 1 and the lender station of claim 26 can
request the transaction server “to search said database” of pending loan
applications of claim 19 for particular desired types of loans and can bid on
the pending loan applications in the database recited in claims 1 and 19.
This interpretation is consistent with the ’947 patent, which discloses
that transaction server 110 enters validated loan profiles (loan application
information (id. at 3:47–50)) into trading system database 111 in response to
requests of broker stations 120. Id. at 3:30–35, 10:47–55, 11:1–4. Lenders
can use remote lender stations 130 to query system database 111 through
transaction server 110 to (i) search for and access selected categories of loan
profiles submitted to transaction server 110 from broker stations 120 and,
(ii) bid on the loan profiles stored in the system database. Id. at 10:28–46,
11:16–51, 12:7–10 (“lender station 130 transmits a database query to the
transaction server, requesting loan profiles”), 13:4–7 (“[L]ender station 130
transmits a bid on one of the loan profiles. The transaction server 110 enters
the bid in the loan profile.”). Thus, lenders bid on pending loan applications
that are submitted by brokers and stored in the system database.
CBM2015-00012
Patent 5,995,947

12

The ’947 patent also discloses that a loan profile of a loan application
is maintained in trading system database 111 and includes “a set of bids,
each of which comprises an offer to make the loan from a particular lender.”
Id. at 3:47–51. The ’947 patent discloses a preferred embodiment in which
“[l]enders at a lender station can search the database for particular desired
types of loans, can sort selected loans by particular desired criteria, can bid
on loan applications, and [can be] notified when their bids are accepted.” Id.
at 2:24–28; 7:24–27, 11:26–45. Again, the ’947 patent makes clear that bids
of lenders are made on loan applications that are maintained in the database
of pending loan applications and accessed via the transaction server.
Our interpretation also is consistent with the ’947 patent prosecution
history. During prosecution of the application that issued as the ’947 patent,
IMX distinguished the claims over the prior art by arguing that the prior art
did not disclose an automated loan application and bidding process in which
each party to the bidding transaction has access to a database and lenders can
search for loan applications that meet the lenders’ criteria and bid on the
loan applications in the database. See Ex. 1016, 9 (IMX Opening Brief on
Claim Construction, filed in IMX, Inc. v. E-Loan, Inc., Case No. 09-20965-
CIV-MARTINEZ-BROWN (S.D. Fla.) on Sept. 21, 2009). Thus, IMX
views the claims as directed to pending loan applications in a database.
IMX’s interpretation of “can bid on loan applications” in claim 7 and
“capable of submitting bids on loan applications” in claim 26 requires the
bids to be made “on and in response to existing loan applications,” which
might “imply a review (albeit brief) of the received loan application before
the lender responds with an offer to make a loan.” Pet. Reply 5. Such a
limitation does not appear in the claims, which require only that bids are
CBM2015-00012
Patent 5,995,947

13

made “on” loan applications, not “on and in response to” loan applications.
The ’947 patent, moreover, discloses that lenders can bid on loan
applications in the database without necessarily reviewing or “responding”
to those loan applications. Ex. 1001, 12:66–13:3 (“At a step 248, the lender
at the lender station 130 selects a loan profile for bid and optionally requests
details of that selected loan profile.” (emphasis added)). Therefore, we
decline to adopt the claim construction proposed by Patent Owner IMX.
Because the meaning of these limitations is clear from the intrinsic
record, we need not consider IMX’s extrinsic evidence (i.e., articles in trade
publications). PO Resp. 4–6 (citing Exs. 2004–2010); On-Line Techs., Inc.
v. Bodenseewerk Perkin-Elmer GmbH, 386 F.3d 1133, 1139 (Fed. Cir. 2004)
(“Extrinsic evidence, however, cannot be used to alter a claim construction
dictated by a proper analysis of the intrinsic evidence.”).
B. Unpatentability of Claims 7, 8, 26, and 27 under 35 U.S.C. § 101
1. Overview
We instituted a covered business method patent review of claims 7, 8,
26, and 27 of the ’947 patent under 35 U.S.C. § 101. Dec. to Inst. 18. This
was the sole ground of unpatentability asserted by E-Loan. Pet. 12–14.
2. Patentability Under 35 U.S.C. § 101
The Supreme Court has long held that “[l]aws of nature, natural
phenomena, and abstract ideas are not patentable.” Alice Corp. Pty. Ltd. v.
CLS Bank Int’l, 134 S. Ct. 2347, 2354 (2014) (quoting Assoc. for Molecular
Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2116 (2013) (internal
quotation marks omitted)). The “abstract ideas” category embodies the
longstanding rule that an idea, by itself, is not patentable. Alice Corp., 134
S. Ct. at 2355 (quoting Gottschalk v. Benson, 409 U.S. 63, 67 (1972).
CBM2015-00012
Patent 5,995,947

14

In Alice Corp., the Supreme Court emphasized the importance of the
so-called “Mayo framework” that provides “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.” Id.
(citing Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132
S. Ct. 1289, 1296–1297 (2012)). Under the Mayo framework, “[w]e must
first determine whether the claims at issue are directed to a patent-ineligible
concept.” Id. Next, “we 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.” Id. (citing Mayo, 132 S. Ct. at 1297).
3. Claims 7, 8, 26, and 27 Are Directed To An Abstract Idea
E-Loan argues the challenged claims are directed to the abstract idea
of managing a loan application process by maintaining loan applications,
searching and modifying loan applications, and bidding on loan applications.
Pet. 40. E-Loan argues that all limitations of the challenged claims can be
and have been performed for years by humans using pen and paper, e.g., by
placing a stack of loan applications in a drawer, searching and modifying the
applications, sorting loan applications by lenders who bid on applications,
and providing notice of bids. Id. at 38. E-Loan asserts that the ’947 patent
describes this conventional loan process performed by hand and describes
the invention as automating this process with computers. Id. at 41–42.
Regarding claim 1, E-Loan argues that loan processors maintained
databases of pending applications for decades, and using a database server
for electronic record keeping is a basic function of a computer. Pet. 43. E-
Loan also argues that parties to a traditional loan process have been able to
CBM2015-00012
Patent 5,995,947

15

search and modify applications. Id. at 44. E-Loan argues that lenders
managing a conventional loan process can search pending applications and
bid on applications by offering to make the loans, as recited in claim 7. Id.
at 40–41, 44. E-Loan argues that conventional loan processes notify a
lender of acceptance of a loan offer, as recited in claim 8, so a loan may be
completed. Id. at 44–45.
E-Loan cites the Background of the Invention of the ’947 patent as
evidence of these conventional practices. Id. at 41–42 (citing Ex. 1001, 1:9–
45). E-Loan cites IMX’s statements in related litigation that the invention is
to “eliminate this paper-intensive process through automation.” Id. at 29. E-
Loan also argues that IMX described the ’947 patent during related litigation
as a traditional loan process performed with the aid of computer processing.
Id. at 42 (citing Ex. 1016, 1). E-Loan also asserts that limiting this abstract
concept to computers does not alter the fact that the claims describe the basic
concept of loan processing, which is a fundamental economic, commercial
practice long prevalent in our system of commerce. Id. at 42–43.
IMX argues that the challenged claims do not recite a mathematical
algorithm or a fundamental economic or longstanding commercial practice.
PO Resp. 7–8. IMX argues that the known practices, at the time of the ’947
patent, did not include searching a database for desired types of loans and
bidding on loan applications, as recited in claim 7. Id. at 8. IMX argues that
lenders instead sent rate sheets with current lending rates and programs to
brokers who could bid for a specific loan, and a lender would accept or
decline the offer. Id. at 8–9. IMX also argues that an online auction
platform for brokers to solicit lender bids was revolutionary and a reverse
process of rate sheets. Id. at 10–11.
CBM2015-00012
Patent 5,995,947

16

E-Loan has established, by a preponderance of evidence, that each of
the challenged claims is directed to a fundamental economic or longstanding
commercial practice of loan processing. The ’947 patent describes the
conventional loan processes as involving large amounts of information that
must be collected, compared, evaluated, and disseminated among parties to a
transaction so lenders can offer loans at competitive rates. Ex. 1001, 1:9–17.
Parties include lenders, borrowers, mortgage brokers, appraisers, regulatory
agencies, and mortgage insurance companies. Id. at 1:17–21. Conventional
processes required parties to collect nearly all loan application information
by hand, transmit it on paper applications, and compare loan information by
hand, according to each party’s role of loan evaluation, property appraisal,
financial market evaluation, and setting lending rates with rate sheets. Id. at
1:22–27. Thus, parties to a conventional loan transaction monitor loan status
and search and modify information in loan applications and loan processes.
Claim 1 automates this known method and system of processing loan
applications by maintaining a database of pending loan applications and
their statuses at a database server where each party to a loan can search and
modify that database consistent with their role in the transaction by requests
to the server from client devices. Claim 19 recites a system for processing
loan applications with a database of pending loan applications including
status information and a transaction server for responding to requests of
parties to the loan applications to search and modify the database consistent
with their roles in the transaction. Whereas conventional loan processing
required human beings to collect, compare, evaluate, and disseminate loan
applications and loan information by hand, claims 1 and 19 recite the use of
a database and transaction server to maintain loan applications so parties can
CBM2015-00012
Patent 5,995,947

17

search and modify the loan applications using those computer components
instead of using pen and paper to perform these processes.
The Specification further discloses that conventional loan application
processing involved lenders setting lending programs and rates and then
periodically posting rate sheets to multiple brokers to inform the brokers of
those lending programs and lending rates. Ex. 1001, 1:35–43. Mortgage
brokers who wanted to obtain a loan for a borrower could interview a client,
consult rate sheets that were received from multiple lenders to determine
lending programs that would be appropriate for that client, submit multiple
loan applications (possibly on multiple different forms) to selected lenders,
and await lenders’ actions on those applications before advising that client of
loans that may be available. See id. at 1:28–35. Lenders could search and
evaluate loan applications that they received for creditworthiness and other
desired matters before offering a loan, i.e., bidding. See id. at 1:43–46.
Thus, in the conventional loan process, lenders advertise loan rates
(id. at 1:10–15) by sending rate sheets with lending programs and rates to
brokers (id. at 1:35–43). Brokers can apply for loans with multiple lenders
by submitting loan applications to selected lenders and await each lender’s
action on the applications before advising a client of lenders’ actions (id. at
1:28–35), i.e., whether any lenders offered of a loan. Id. Lenders evaluate
loan applications for desired creditworthiness. See id. at 1:43–46. Clients
can accept any loan offers that are made by lenders.
Claims 7 and 8 implement this known method on general purpose
computers with a lender station that allows lenders to search a database of
loan applications for desired types of loans, bid on selected applications, and
receive notices of bid acceptances. Claims 19, 26, and 27 recite generic
CBM2015-00012
Patent 5,995,947

18

computer components that perform the abstract methods of claims 1, 7, and
8 using conventional computer functions. Pet. 45–47. For example, claim 1
recites that each party to a loan can search and modify a database of pending
loan applications consistent with their role in the transaction by requests to a
database server. Claim 19 recites a transaction server that responds to
requests from parties to search and modify the database. Id. at 45–46.
Claims 7 and 26 recite a lender station used for searching the database.
The Specification itself discloses the invention as an advantageous
method and system for automating loan applications. Ex. 1001, 1:66–67.
The Specification discloses that “known” loan transactions require extensive
collecting, disseminating, and processing of loan applications and large
amounts of related information by hand and human beings, and this process
is relatively expensive and limits parties’ flexibility in a transaction. See id.
at 1:10–65. The ’947 patent discloses that some forms of automation are
known, but “there are no known systems in the field of mortgage lending for
providing relatively automatic and widespread dissemination of loan
application information or lending program information for automated
comparison in real time.” Id. at 1:49–55. The ’947 patent also discloses that
the conventional performance of these operations by hand, rather than with
the aid of computer processing, limits the flexibility of the parties to the
transaction. Id. at 1:55–58. The ’947 patent automates this conventional
loan process to save time and expenses. Id. at 1:47–2:4.
In related district court litigation, IMX asserted that the ’947 patent
automated the paper-intensive, inefficient, conventional manual process.
IMX sought to eliminate this paper-intensive, inefficient
process through automation. As a result, its innovative and
commercially successful solution revolutionized the manner in
CBM2015-00012
Patent 5,995,947

19

which the loan process is conducted today. This solution made
possible the relatively automatic and widespread dissemination
of loan application information, or lending program
information, for automated comparison in real time.

Ex. 1016, 1 (emphasis added).
In Alice, a method of exchanging financial obligations between parties
using a third-party intermediary to mitigate settlement risk and to permit
transactions when the parties have sufficient resources was held to be a
fundamental economic practice. Alice, 134 S. Ct. at 2356. Similarly, here
the challenged claims effectively recite an intermediary database of loan
applications that parties can search, update, and bid on using a lender station.
The Federal Circuit recently held that the use of generic computer
functions to automate a price optimization process was a fundamental
economic practice and abstract idea. See OIP Techs., Inc. v. Amazon.com,
Inc., 788 F.3d 1359, 1363 (Fed. Cir. 2015) (the claims recite the automation
of a fundamental economic concept of offer-based price optimization using
generic computer functions, and the prosecution history and specification
emphasize the key feature as automating traditional methods to make them
more efficient). Similarly, here the’947 patent automates conventional loan
processes so borrowers can obtain more competitive loan rates and lenders
can select more lending categories. Ex. 1001, 1:9–15, 1:47–67. Claims to
the collection, manipulation, and processing of data for commercial and
financial services and transactions using clearinghouses and other means to
exchange the information and form legal obligations are abstract ideas. See
Mortgage Grader, Inc. v. First Choice Loan Svcs. Inc., No. 2015-1415, 2016
WL 362415, at *7 (Fed. Cir. Jan. 20, 2016) (the claims were directed to the
abstract idea of anonymous loan shopping as they recited nothing more than
CBM2015-00012
Patent 5,995,947

20

collecting loan information to generate credit grading and loan pricing
information); Content Extraction and Transmission LLC v. Wells Fargo
Bank, Nat’l Ass’n., 776 F.3d 1343, 1347 (Fed. Cir. 2014) (claims were
directed to an abstract idea of collecting data, recognizing certain data within
the collected data set, and storing recognized data in memory); Accenture
Global Servs., GmbH v. Guidewire Software, Inc., 728 F.3d 1336, 1343–44
(Fed. Cir. 2013) (system and method claims recited minor differences in
terminology and required performance of the same basic process – the
abstract idea of handling insurance-related information by generating tasks
based on rules to be completed on occurrence of an event); Dealertrack, Inc.
v. Huber, 674 F.3d 1315, 1333 (Fed. Cir. 2012) (claims to processing loan
information through a clearinghouse were drawn to an abstract idea);
CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1371–72 (Fed.
Cir. 2011) (where all method steps could be performed in the human mind or
using pen and paper, the claims were directed to a mental process, which is a
subcategory of abstract ideas, and a fundamental principle); Fort Properties,
Inc. v. Am. Master Lease LLC, 671 F.3d 1317, 1323 (Fed. Cir. 2012) (claims
to methods of creating a real estate investment tool for tax-free exchanges of
property was an abstract concept even though the claims related to the
physical world through deeds, contracts, and real property). The challenged
claims of the ’947 patent recite methods and systems for processing loan
applications that fall squarely within the realm of an abstract idea.
4. Claims 7, 8, 26, and 27 Do No Recite a Patent-Eligible Application
Having determined that the challenged claims are directed to the
abstract idea of loan processing, we next determine whether the challenged
claims contain an “inventive concept” sufficient to transform the claimed
CBM2015-00012
Patent 5,995,947

21

abstract idea into a patent-eligible application. Alice, 134 S. Ct. at 2357
(citing Mayo, 132 S. Ct. at 1294, 1298). We consider the elements of each
claim individually, and as an ordered combination, to determine if the
additional elements transform each claim into a patent-eligible application.
Id. at 2355 (citing Mayo, 132 S. Ct. at 1297, 1298).
E-Loan argues that claim 1 recites the step of maintaining a database
of pending loan applications and their statuses at a database server and such
maintenance of a database using a database server amounts to no more than
electronic record keeping. Pet. 48–49. E-Loan argues that claim 1 recites
nothing more than using a computer to search and modify a database, which
are conventional functions of a computer. Id. at 49. E-Loan argues that the
lender station of claim 7 is a generic computer that performs conventional
functions of searching a database and bidding. Id. at 50. E-Loan argues that
claim 8 recites a wholly generic computer notifying a lender when a bid is
accepted and such automatic notification is purely conventional. Id.
E-Loan argues that claim 19 simply links the method of claim 1 to a
particular technology environment of computer implementation. Id. at 51.
E-Loan asserts that claim 19 recites a database of pending loan applications
with status information of the loan applications. Id. E-Loan also argues that
claim 1 recites that each party to the loan can search and modify a database
of pending loan applications, and claim 19 recites a transaction server that
does so in response to requests from parties. Id. at 51–52.
E-Loan argues that claim 19 recites generic computers that implement
the abstract idea of claim 1. Id. at 52. E-Loan argues that claim 26 recites
generic computer components that perform the abstract idea of claim 7, and
that claim 27 fails for the same reasons as claim 8. Id. at 52–53.
CBM2015-00012
Patent 5,995,947

22

IMX argues that the challenged claims do not preempt the concept of
managing a loan process, and the Petition does not allege that “search[ing]
the database for particular desired types of loans” is a purely conventional
function. PO Resp. 12–13. IMX argues that claim 7 does not preempt the
concept of managing a loan process because it requires lenders to search a
database for desired types of loans and bid on applications. Id. at 13.
IMX’s arguments are not persuasive. The mere existence of a non-
preempted use of an abstract idea does not prove that a claim recites patent-
eligible subject matter. Vehicle Intelligence and Safety LLC v. Mercedes-
Benz USA, LLC, No. 2015-1411, 2015 WL 9461707, at *3 (Fed. Cir. Dec.
28, 2015) (non-precedential) (otherwise a patentee could avoid a § 101
challenge simply by citing a single prior art reference in the specification
and stating that its invention improves on that reference); Pet. Reply 18–19
(citing Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379
(Fed. Cir. 2015)).
Second, searching a database of pending loans and bidding on loan
applications as recited in claim 7 is conventional. Pet. 50. In conventional
loan processes, lenders sent rate sheets to brokers to solicit applications for
desired loans. Ex. 1001, 1:28–46. Conventional loan processes involved
collecting, comparing, evaluating, and disseminating information to include
lenders evaluating creditworthiness of borrowers and property. Id. at 1:9–
21, 1:43–46. Thus, lenders could search for and through loan applications
and bid on those applications that met their desired criteria.
Claiming a database server of pending loan applications that parties
can search and modify, a transaction server, and a lender station does not
transform this abstract idea into patent-eligible subject matter. The claimed
CBM2015-00012
Patent 5,995,947

23

computers merely automate conventional loan processes performed by hand
using pen and paper forms, as discussed above. Id. at 1:10–65.
The ’947 patent also discloses lender stations 130 and broker stations
120 as “a general purpose processor operating under control of operating
system and application software.” Id. at 6:5–8, 7:5–8. They comprise “a PC
workstation such as in Intel Pentium processor operating under control of the
Microsoft Windows 95 operating system” with a keyboard, mouse, monitor,
printer, and lender or broker software that interacts with transaction server
110 and network 140. Id. at 6:9–19, 7:9–20.
Transaction server 110 also is a general purpose processor operating
under control of an operating system and application software, and can
comprise a Unix server, such as a Sun UltraSparc processor, operating under
control of the Solaris operating system. Id. at 3:18–27. Trading system
database 111 is a relational database such as an Oracle or a Sybase database,
an object-oriented database, or other database. Id. at 3:28–45. The “mere
recitation of a generic computer cannot transform a patent-ineligible abstract
idea into a patent-eligible invention.” Alice Corp., 134 S. Ct. at 2358. “[I]f
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.” Id. (quoting Mayo, 132 S. Ct. at 1301). “[W]holly
generic computer implementation is not generally the sort of ‘additional
feature[e]’ that provides any ‘practical assurance that the process is more
than a drafting effort designed to monopolize the [abstract idea].” Id.
(quoting Mayo, 132 S. Ct. at 1297). The “use of a computer to create
electronic records, track multiple transactions, and issue simultaneous
instructions” is not an inventive concept. Id. at 2359.
CBM2015-00012
Patent 5,995,947

24

The challenged claims recite the use of these computers to create
electronic records (loan applications in database server), track transactions
(search and modify database to include status information in database), and
issue instructions (search for desired loans, bid on loan applications, notify
when bid is accepted via lender station). Thus, the challenged claims use
general purpose computers to perform conventional computer functions. See
Alice, 134 S. Ct. at 2359 (the functions performed by the computer at each
step of the process is purely conventional). The method claims recite the
abstract idea implemented on generic computers; the system claims recite
generic computer components that implement the same idea. Id. at 2360.
The challenged claims recite computers and databases that perform
basic functions such as conveying information over a network, performing
repetitive “calculations” by comparing lender search criteria to pending loan
applications, and allowing lenders to submit bids. These computer functions
do not transform the abstract idea into patent-eligible subject matter. See
Bancorp Servs., L.L.C. v. Sun Life Assur. Co. of Canada (U.S.), 687 F.3d
1266, 1278 (Fed. Cir. 2012); see also buySAFE, Inc. v. Google, Inc., 765
F.3d 1350, 1355 (Fed. Cir. 2014) (claims to computers add no inventive
concept where computer functionality is generic and limited to transmitting
an offer of guarantee in response to a request for a guarantee where the
particular online transaction environment is insufficient to save a claim);
Accenture Global Servs., 728 F.3d at 1344–45 (implementing an abstract
concept on a computer within a particular industry without meaningful
limitations to that concept does not transform a patent-ineligible claim into a
patent-eligible one, particularly where claims recited a database of tasks,
means to allow a client to access those tasks, and asset of rules applied to a
CBM2015-00012
Patent 5,995,947

25

task on a given event on generalized software components even when the
specification contained detailed software implementation guidelines).
Unlike the factual circumstances in DDR Holdings, the claimed system and
method of the ’947 patent do not overcome a problem unique in the realm of
computers or networks. DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d
1245, 1257 (Fed. Cir. 2014). They use conventional computers to perform
conventional functions like searching a database and communicating.
Like the computer-aided method of managing a credit card application
in Dealertrack, the challenged claims in the ’947 patent recite a database
that serves as an intermediary / clearinghouse that receives loan applications
from remote client devices, allows parties to search and modify the loan
information in the database, allows lenders to search the loan application
information and submit bids on such applications, and sends notice of bid
acceptance to lenders. Dealertrack, 674 F.3d at 1333 (the claimed process
included the steps of receiving data from a source, selectively forwarding the
data, and forwarding reply data to the first source; computers must play a
significant part in the method, rather than functioning solely as obvious
mechanisms for permitting a solution to be achieved more quickly). The
claims do not recite any features of “particular desired types of loans” or a
manner in which a lender “can bid on loan applications” that distinguish
over known processes. The perceived benefits of the challenged claims
appear to result from the automation of conventional processes on generic
computers. See Ex. 1001, 1:10–65; Ex. 1016, 1.
Third, IMX’s arguments that the challenged claims reverse the rate
sheet technique of conventional loans by allowing brokers to solicit lenders
to bid for borrowers’ mortgages (PO Resp. 9–11, 13) is not persuasive. In
CBM2015-00012
Patent 5,995,947

26

conventional processes, lenders bid on loan applications they received from
brokers. The challenged claims recite lenders bidding on loan applications.2
Even so, merely combining an abstract idea like a reverse auction with
conventional loan processing does not create an inventive step by itself. See
Bilski v. Kappos, 130 S. Ct. 3218, 3231 (2010) (limiting the fundamental
economic practice of hedging to the energy and commodities market did not
make that concept patentable).
Taking the features of each of the challenged claims individually, we
determine that these features recite conventional loan application processes,
implemented on general purposes computers, as discussed above. Taking
these features as an ordered combination, we determine that they recite
conventional loan application processes that were previously performed by
hand, and automate those processes on general purpose computers. Claims 1
and 19 involve data gathering and processing, conventional processes that
were done by hand. A database server adds little of practical significance to
the abstract idea. CyberSource, 654 F.3d at 1370 (mere data-gathering steps
cannot make an otherwise non-statutory claim statutory). Updating status
information and searching a transaction server are basic computer functions.
Claim 19’s responsiveness in “real time” adds nothing significant. It
is an attempt to capture the general nature of computer processing. The ’947
patent discloses “real-time” processing involving receipt of “real time quotes

2 Dependent claim 3 recites “said database can be modified by entering bids
on a loan application from one of a plurality of potential lenders.” Claim 22
depends from claim 19 and recites “said transaction server responds to a new
bid from one of a plurality of potential lenders.” The challenged claims do
not require multiple lenders to bid on a pending loan application.
CBM2015-00012
Patent 5,995,947

27

for 10 year Treasury notes, 30 year Treasury bonds, DJIA (Dow Jones
Industrial Average), and NSDQ (National Securities Dealers Quotes).” Id.
at 4:46–50. Other market information can be viewed as real time market
data. Id. at 9:67–67, 11:56–58. Trading system database 111 includes loan
profile data, computed data from loan profiles, and data needed to support
“real-time trading” (id. at 5:56–60), but claim 19 recites only that transaction
server responds in real time to requests to search and modify the database.
The challenged claims do not recite any “real-time trading” at the database.
The challenged claims implement the abstract idea of loan processing
with routine, conventional activities and general purpose computers, which
does not transform the abstract idea into a patent-eligible subject matter.
Alice, 132 S. Ct. at 1298. Even if some steps or features were not employed
in the art, which we do not believe to be the case, those few steps or features,
by themselves, would not confer patent eligibility on the challenged claims.
Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 716 (Fed. Cir. 2014); Ass’n
for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2117
(2013) (“[g]roundbreaking, innovative, or even brilliant discovery does not
by itself satisfy the § 101 inquiry”); Ariosa, 788 F.3d at 1379–80.
IMX’s evidence that its commercial auction platform was viewed as
revolutionary (PO Resp. 10–12 (discussing Exhibits 2004–2006 and 2008–
2010)) does not persuade us that the challenged claims recite an inventive
concept sufficient to transform the abstract idea into a patent-eligible
application. As discussed above, conventional processes allowed brokers to
solicit bids from multiple lenders. See Ex. 1001, 1:22–45. The challenged
claims do not recite a method or system where brokers solicit bids from
multiple lenders. Rather, “said lender” at a lender station “can search” a
CBM2015-00012
Patent 5,995,947

28

database of loan applications and bids on loan applications in claim 7. “Said
lender station” ‘is capable of submitting bids on loan applications” in claim
26. This practice is indistinguishable from conventional practices of lenders
receiving loan applications from a broker, evaluating the applications, and
responding to brokers with an offer of a loan or not so brokers can solicit
multiple offers of a loan from more than one lender. See id. at 1:10–46.
IMX’s argument that the IMX exchange was a revolutionary, Internet-
based business-to-business network for mortgage brokers and lenders (PO
Resp. 10–11) does not establish an inventive concept, because the claims do
not recite such an Internet-based method or system. Moreover, claiming the
use of the Internet to implement a fundamental economic or longstanding
commercial practice does not add an inventive concept. Mayo, 132 S. Ct. at
1297 (implementing an abstract idea on the Internet is not sufficient to
provide any “practical assurance that the process is more than a drafting
effort designed to monopolize the [abstract idea] itself.”); Ultramercial, 772
F.3d at 716 (“The claims’ invocation of the Internet also adds no inventive
concept. As we have held, the use of the Internet is not sufficient to save
otherwise abstract claims from ineligibility under § 101.”); CyberSource,
654 F.3d at 1370 (verifying credit card transaction on the Internet does not
meaningfully add to the abstract idea of verifying a transaction).
The articles describe IMX as automating loan processing on the
Internet to make the process more efficient. Ex. 2004, 7 (the Steve Fraser
Visionary Award, named for an inventor of the ’947 patent, is a “tribute to a
man who enthusiastically embraced the Internet and championed the
potential to infuse e-commerce in mortgage lending at a time when the
industry largely eschewed such exotic concepts.”); Ex. 2008, 1 (describing
CBM2015-00012
Patent 5,995,947

29

IMX as “taking the Internet and using it to create a more efficient market for
mortgages” and “It’s just changing the process a little bit.”); Ex. 2009, 2
(mortgage brokers save paper with IMX by keying information once and not
accepting faxed rate sheets); Ex. 2006, 1 (mortgage brokers wait for lender
rate sheets each day and “IMX eliminates this paper chase by moving the
entire process into an anonymous electronic trading environment”).
Initially, IMX implemented its automated loan process on the IBM
Global Network, which is a private network. Ex. 2006, 2. Thus, the loan
information was not publicly accessible via the Internet. Ex. 1001, 9:12–21
(the network 140 can be an IBM Advantis network, the internet, intranet,
dial-up telephone lines, or lease communication lines). The ’947 patent also
discloses that “selected lenders are allowed to access selected categories of
loan profiles depending on the nature of their membership or privileges
granted to them when signing up for using the system 100.” Id. at 11:16–19.
Loan information was accessible only to lenders with access to the network.
Thus, we are persuaded, by a preponderance of the evidence, that the
challenged claims do not recite an inventive concept and therefore the claims
are drawn to a patent ineligible abstract idea.
C. 35 U.S.C. § 101 as a Ground of Unpatentability
For Covered Business Method Patent Reviews
IMX argues that §101 is not a ground of unpatentability that can be
asserted in a covered business method patent review. PO Resp. 17. This
argument is not persuasive in view of Versata Development Group, Inc. v.
SAP America, Inc., 793 F.3d 1306, 1330 (Fed. Cir. 2015), which held that
covered business method patent reviews may consider challenges under
§ 101, as IMX acknowledges (id. n.1). The Federal Circuit held that § 101
CBM2015-00012
Patent 5,995,947

30

has long been recognized as a basis for patentability and validity challenges
to United States patents. Versata, 793 F.3d at 1330. Thus, the PTAB may
consider § 101 challenges among the grounds of patentability raised in post-
grant reviews under AIA § 18. Id. at 1329–30.

IV. ORDER
Accordingly, it is hereby:
ORDERED that Petitioner has demonstrated, by a preponderance of
evidence, that claims 7, 8, 26, and 27 of U.S. Patent No. 5,995,947 are
unpatentable; and
FURTHER ORDERED that because this is a final written decision,
parties to the proceeding seeking judicial review of the decision must
comply with the notice and service requirements of 37 C.F.R. § 90.2.
CBM2015-00012
Patent 5,995,947

31

PETITIONER:

Rafael A. Perez-Pineiro
rperez@feldmangale.com

James A. Gale
jgale@feldmangale.com

Elizabeth M. Burke
elizabeth.burke@jonesrobb.com

PATENT OWNER:

Michael R. Casey
imx-cbm@dbjg.com

Wayne M. Helge
whelge@dbjg.com