Ex Parte Haworth et al

Board of Patent Appeals and Interferences

Jul 30, 2009

09795120 (B.P.A.I. Jul. 30, 2009)

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UNITED STATES PATENT AND TRADEMARK OFFICE 1
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BEFORE THE BOARD OF PATENT APPEALS 4
AND INTERFERENCES 5
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Ex parte JAMES HAWORTH, ROBERT FINNEGAN, and DEREK 8
MOHAR 9
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Appeal 2009-000350 12
Application 09/795,120 13
Technology Center 3600 14
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Decided:1 July 30, 2009 17
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Before MURRIEL E. CRAWFORD, ANTON W. FETTING, and JOSEPH 20
A. FISCHETTI, Administrative Patent Judges. 21
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FETTING, Administrative Patent Judge. 23
DECISION ON APPEAL24

1 The two month time period for filing an appeal or commencing a civil
action, as recited in 37 CFR § 1.304, begins to run from the decided date
shown on this page of the decision. The time period does not run from the
Mail Date (paper delivery) or Notification Date (electronic delivery).

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STATEMENT OF THE CASE 1
James Haworth, Robert Finnegan, and Derek Mohar (Appellants) seek review 2
under 35 U.S.C. § 134 of a final rejection of claims 1-26, the only claims pending 3
in the application on appeal. 4
We have jurisdiction over the appeal pursuant to 35 U.S.C. § 6(b) (2002). 5
6
7
SUMMARY OF DECISION 8
9
We AFFIRM IN PART and ENTER A NEW GROUND OF REJECTION 10
UNDER 37 C.F.R. § 41.50(b). 11
THE INVENTION 12
13
The Appellants invented a way for debt recovery where partnered companies 14
simultaneously work to recover debts owed by customers (Specification 2:7-9). 15
An understanding of the invention can be derived from a reading of exemplary 16
claims 1 and 10, which are reproduced below [bracketed matter and some 17
paragraphing added]. 18
1. A method for attempting to collect payments from customers 19
having delinquent accounts concurrently with a partner that 20
owns the delinquent accounts, comprising: 21
[1] extending an offer for a debt recovery product to a customer 22
with a delinquent account; 23
[2] receiving an acceptance to the offer from the customer; and 24
[3] paying, 25
[3a] for each customer that accepts the offer, 26
[3b] a commission to the partner for a corresponding delinquent 27
account, 28
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[3c] wherein the partner 1
ceases attempts to collect payments on each delinquent account 2
corresponding to an accepted offer and 3
continues attempts to collect payments on delinquent accounts 4
not corresponding to an accepted offer. 5
6
10. A method for synchronizing accounts in debt recovery, 7
comprising: 8
[1] receiving an update from a partner reporting a payment 9
collected from a customer having a delinquent account; 10
[2] determining whether the delinquent account has been 11
booked as a debt recovery credit card account; 12
[3] determining whether the payment was made before a debt 13
recovery credit card application for the debt recovery credit 14
card account was received; and 15
[4] modifying debt recovery credit card account information 16
based on a determination that the payment was made to the 17
partner before the debt recovery credit card application was 18
received. 19
This appeal arises from the Examiner’s Final Rejection, mailed September 4, 20
2007. The Appellants filed an Appeal Brief in support of the appeal on February 9, 21
2008. An Examiner’s Answer to the Appeal Brief was mailed on May 29, 2008. 22
A Reply Brief was filed on June 30, 2008. 23
PRIOR ART 24
The Examiner relies upon the following prior art: 25
Brown US 6,532,450 B1 Mar. 11, 2003
REJECTION 26
Claims 1-26 stand rejected under 35 U.S.C. § 102(e) as anticipated by Brown. 27
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ISSUES 1
The issue of whether the Appellants have sustained their burden of showing 2
that the Examiner erred in rejecting claims 1-26 under 35 U.S.C. § 102(e) as 3
anticipated by Brown turns on whether Brown describes selectively continuing or 4
ceasing collection efforts, a debt recovery credit card, and payment of 5
commissions. 6
FACTS PERTINENT TO THE ISSUES 7
The following enumerated Findings of Fact (FF) are believed to be supported 8
by a preponderance of the evidence. 9
Brown 10
01. Brown is directed to, “full business function support within a financial 11
management system for the third-party offset of payments against 12
delinquent debts.” Brown 3:35-37. 13
02. Brown describes a process that essentially matches payments to be 14
made with debts owed and offsets any debts with such payments. Brown 15
4:23-25. 16
PRINCIPLES OF LAW 17
Anticipation 18
"A claim is anticipated only if each and every element as set forth in the claim 19
is found, either expressly or inherently described, in a single prior art reference." 20
Verdegaal Bros. v. Union Oil Co. of California, 814 F.2d 628, 631 (Fed. Cir. 21
1987). "When a claim covers several structures or compositions, either generically 22
or as alternatives, the claim is deemed anticipated if any of the structures or 23
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compositions within the scope of the claim is known in the prior art." Brown v. 1
3M, 265 F.3d 1349, 1351 (Fed. Cir. 2001). "The identical invention must be 2
shown in as complete detail as is contained in the patent claim." Richardson v. 3
Suzuki Motor Co., 868 F.2d 1226, 1236 (Fed. Cir. 1989). The elements must be 4
arranged as required by the claim, but “this is not an ipsissimis verbis test,” i.e., 5
identity of terminology is not required. In re Bond, 910 F.2d 831, 832 (Fed. Cir. 6
1990). 7
ANALYSIS 8
Claims 1-26 rejected under 35 U.S.C. § 102(e) as anticipated by Brown. 9
Claims 1, 10, 16, 20, 21, and 23-26 are independent claims. Of these, claims 1, 10
16, 20, 21, and 23-25 contain the limitations of ceasing attempts to collect 11
payments on each delinquent account corresponding to an accepted offer and 12
continuing attempts to collect payments on delinquent accounts not corresponding 13
to an accepted offer. Of these, claims 1, 16, 20, and 23 are method claims, and 14
claim 21 is a system claim, whose body recites a partner and a service and the steps 15
the system may be performed by each. Claims 24 and 25 are systems claims 16
reciting limitations expressed as means plus function. Claim 23 is not expressed as 17
a machine, apparatus, or article of manufacture. It recites no structure, since 18
neither a partner nor a service are physical structural elements of a machine or 19
article of manufacture, but instead recites steps that the system is operable to 20
perform by each of two parties. Accordingly, we find that claim 23 is drafted 21
toward a system process rather than a system apparatus. 22
The Appellants argue that Brown fails to describe these limitations (App. Br. 23
15 and 17). The Examiner found that Brown described these at co1.4, lines10-58; 24
co1.5 line 45 to co1.6, line 15; and co1.7, line 37 to co1.8, line 45. Ans. 3. The 25
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Examiner further cites col.8, lines 45-55 and co1.11, lines 30-45, explaining that 1
once the customer begins paying and continues to pay, the system automatically 2
updates the customer account until the balance is zero. Ans. 7. 3
We agree with the Appellants as to method claims 1, 16, 20, 21, and 23. The 4
portions cited by the Examiner describe an account offset process which essentially 5
matches payments to be made with debts owed and offsets any debts with such 6
payments. FF 02. The Examiner’s explanation that once the customer begins 7
paying and continues to pay, the system automatically updates the customer 8
account until the balance is zero describes this offset process further, but does not 9
describe the claimed step of ceasing or continuing collection efforts as argued. As 10
to the system apparatus claims 24 and 25, we do not agree with the Appellants, 11
because this limitation describes how the apparatus is used rather than the structure 12
of the apparatus. A claim containing a “recitation with respect to the manner in 13
which a claimed apparatus is intended to be employed does not differentiate the 14
claimed apparatus from a prior art apparatus” if the prior art apparatus teaches all 15
the structural limitations of the claim. Ex parte Masham, 2 USPQ2d 1647 (Bd. Pat. 16
App. & Inter. 1987). 17
The Appellants additionally argue, as to claim 24, that Brown does not describe 18
paying a commission to a partner (App. Br. 16). Here we must agree with the 19
Appellants. The Examiner cites Brown 7:60 – 8:40 which describes adding 20
penalties, interest, and other administrative charges to the customer balance. Each 21
of these transactions is between the customer and the account holder. None of 22
these transactions include a third party partner to whom a commission would be 23
paid. Thus, Brown does not describe the capacity to provide such a transaction. 24
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The Appellants additionally argue, as to claim 25, that Brown fails to describe 1
transferring a balance (App. Br. 18). In claim 25, apart from the limitations 2
regarding how the system is to be used with respect to continuing or ceasing 3
collection efforts, the only remaining limitation is that of a means for receiving an 4
indication that a delinquent account has been transferred. The Appellants cite 5
Spec. 9:18 – 10:9, as describing the structure for this means (App. Br. 10). The 6
structures described are those of a wired or wireless network, a PSTN telephone 7
network, electronic mail, or regular mail. An equivalent structure is shown in 8
Brown, Fig. 2., which shows a network fully capable of wired or wireless 9
transmission and electronic mail. Thus, Brown describes the structure equivalent 10
to that in claim 25, which is capable of receiving any message, and so is capable of 11
receiving a message regarding whether an account balance is transferred. 12
The limitation regarding continuing or ceasing collection efforts is not in 13
independent claims 10 or 26. The Appellants’ argument as to those claims, is that 14
Brown fails to describe a partner or a debt recovery credit card account. The 15
Appellants rely on the purported failure to describe such an account to contend that 16
limitations [2], [3], and [4] are not described by Brown. App. Br. 22-23. The issue 17
is then the construction of a debt recovery credit card account. By its plain 18
meaning, it must be an account associated with a debt recovery credit card. The 19
Specification, at page 9, on lines 13-15, describes such an account as having the 20
property that the account has an amount assigned to it expressing how much the 21
customer can purchase with the card. The Examiner does not cite any portion of 22
Brown describing such a debt recovery credit card, nor are we able to discern one. 23
The Examiner refers only to an account (Ans. 9) and does not make any findings as 24
to a debt recovery credit card. Thus, we must agree with the Appellants. 25
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All dependent claims depend from claims that the Appellants were persuasive 1
as to error by the Examiner, and accordingly we are equally persuaded of error as 2
to the dependent claims for the same reasons. 3
CONCLUSIONS OF LAW 4
The Appellants have sustained their burden of showing that the Examiner erred 5
in rejecting claims 1-24 and 26 under 35 U.S.C. § 102(e) as anticipated by Brown. 6
The Appellants have not sustained their burden of showing that the Examiner 7
erred in rejecting claim 25 under 35 U.S.C. § 102(e) as anticipated by Brown. 8
NEW GROUND OF REJECTION 9
The following new ground of rejection is entered pursuant to 10
37 C.F.R. § 41.50(b). Claims 1-23 are rejected as being not drawn to patent-11
eligible subject matter under 35 U.S.C. § 101. 12
PRINCIPLES OF LAW 13
The law in the area of patent-eligible subject matter for process claims has 14
recently been clarified by the Federal Circuit in In re Bilski, 545 F.3d 943 (Fed. 15
Cir. 2008) (en banc), cert. granted, 129 S.Ct. 2735, U.S. Jun. 1, 2009) (No. 08-16
964). 17
The en banc court in Bilski held that “the machine-or-transformation test, 18
properly applied, is the governing test for determining patent eligibility of a 19
process under § 101.” Id. at 956. The court in Bilski further held that “the ‘useful, 20
concrete and tangible result’ inquiry is inadequate [to determine whether a claim is 21
patent-eligible under § 101.]” Id. at 959-60. 22
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The court explained the machine-or-transformation test as follows: “A claimed 1
process is surely patent-eligible under § 101 if: (1) it is tied to a particular machine 2
or apparatus, or (2) it transforms a particular article into a different state or thing.” 3
Id. at 954 (citations omitted). The court explained that “the use of a specific 4
machine or transformation of an article must impose meaningful limits on the 5
claim’s scope to impart patent-eligibility” and “the involvement of the machine or 6
transformation in the claimed process must not merely be insignificant extra-7
solution activity.” Id. at 961-62 (citations omitted). As to the transformation 8
branch of the inquiry, the court explained that transformation of a particular article 9
into a different state or thing “must be central to the purpose of the claimed 10
process.” Id. at 962. 11
ANALYSIS 12
Method claims 1-232 fail to meet requirements of the machine-or-13
transformation test for patent-eligible subject matter, because the claimed methods 14
are neither tied to a particular machine or apparatus, nor do they transform a 15
particular article into a different state or thing. 16
Method claim 1 recites a series of process steps for “attempting to collect 17
payments from customers having delinquent accounts concurrently with a partner 18
that owns the delinquent accounts.” See Appeal Brief. The claim does not invoke 19
any particular machine or apparatus in the method steps and thus is not tied to any 20
particular machine or apparatus. The wording of claim 1 is broad in that it refers 21
generally to extending an offer, receiving an acceptance, and paying a commission. 22
The claim does not recite any particular machine or apparatus for conducting these 23

2 See our analysis supra as to why system claim 23 is taken to be a system method
rather than a system apparatus claim.
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steps. The claim does not limit the method to implementation using any particular 1
machine or apparatus. 2
Claims 2-7, 9-15, 18, 19, and 26 refer to a debt recovery credit card. The fact 3
that the claims inferentially refer to a debt recovery credit card is not sufficient to 4
tie the method to a particular machine or apparatus. The references in the claims to 5
a debt recovery credit card do not impose any meaningful limits on the claimed 6
methods because the methods are directed to account collection and reconciliation 7
efforts whose steps make no use of such a card and thus the debt recovery credit 8
card does not even rise to presenting “insignificant extra-solution activity.” Bilski, 9
545 F.3d at 961-62. 10
The remaining claims fail to mention any physical item. As such, the claims 11
fail the first prong of the machine-or-transformation test. 12
The steps of method claim 1, also fail the second prong of the machine-or-13
transformation test because the method does not transform any article to a different 14
state or thing. The method steps entail attempting collection. The claims are 15
similar to the claims that were before the court in Bilski. In Bilski , the pending 16
claims call for performing method steps that involve transformations or 17
manipulations of relationships. 18
This type of manipulation of relationships between partners is the very type of 19
abstraction that the court in Bilski found cannot meet the second prong of the 20
machine-or-transformation test. Bilski , 545 F.3d at 963 (“Purported 21
transformations or manipulations simply of public or private legal obligations or 22
relationships, business risks, or other such abstractions cannot meet the test 23
because they are not physical objects or substances, and they are not representative 24
of physical objects or substances.”). For example, even the step of paying a 25
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commission does not specify the nature of the commission, or how it is physically 1
presented. Thus, such recited payment encompasses intangibles such as account 2
balances or even memoranda of obligations. The remaining claims also provide no 3
transformation of an article to a different state or thing. 4
The methods, as claimed, do not involve the transformation of any physical 5
object or substance, and given that the claim also is not tied to a particular machine 6
or apparatus, the claim entirely fails the machine-or-transformation test and is not 7
drawn to patent-eligible subject matter under 35 U.S.C. § 101. 8
DECISION 9
To summarize, our decision is as follows: 10
• The rejection of claims 1-24 and 26 under 35 U.S.C. § 102(e) as anticipated 11
by Brown is not sustained. 12
• The rejection of claim 25 under 35 U.S.C. § 102(e) as anticipated by Brown 13
is sustained. 14
• The following new ground of rejection is entered pursuant to 15
37 C.F.R. § 41.50(b). 16
o Claims 1-23 are rejected as being not drawn to patent-eligible subject 17
matter under 35 U.S.C. § 101. 18
No time period for taking any subsequent action in connection with this appeal 19
may be extended under 37 C.F.R. § 1.136(a)(1)(iv). 20
AFFIRMED IN PART 21
41.50(b) 22
mev 23
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