Ex Parte Jakobsson

Board of Patent Appeals and Interferences

Apr 16, 2007

09969833 (B.P.A.I. Apr. 16, 2007)

The opinion in support of the decision being entered today
is not binding precedent of the Board.

UNITED STATES PATENT AND TRADEMARK OFFICE

_________________

BEFORE THE BOARD OF PATENT APPEALS
AND INTERFERENCES

_________________

Ex parte BJORN MARKUS JAKOBSSON

_________________

Appeal 2006-2107
Application 09/969,833
Technology Center 2100

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Decided: April 16, 2007
_________________

Before JOSEPH F. RUGGIERO, LANCE LEONARD BARRY, and
ALLEN R. MacDONALD, Administrative Patent Judges.
MacDONALD, Administrative Patent Judge.

DECISION ON APPEAL

AFFIRMED
Appeal 2006-2107
Application 09/969,833
I. STATEMENT OF CASE
Appellant appeals under 35 U.S.C. § 134 from the Final Rejection
entered May 4, 2005. We have jurisdiction under 35 U.S.C. § 6(b).
The appeal contains claims 1-22. Claims 1, 20, 21, and 22 are
independent claims. Claims 1 and 20 are representative of the claimed
invention and are reproduced as follows:
1. A method for generating one or more output values of a
one-way chain in a processing device comprising a processor
coupled to a memory, the one-way chain having at least one
starting point and at least one endpoint, the method comprising
the steps of:
computing in the processor a given one of the output
values at a current position in the one-way chain utilizing a first
helper value previously stored in the memory for another
position in the one-way chain between the current position and
the endpoint of the chain; and
computing in the processor at least a second helper value
for a new position in the chain between the current position and
the endpoint of the chain, the second helper value being stored
in the memory and utilizable to facilitate subsequent
computation of another one of the output values in the
processor.
20. An apparatus for generating one or more output values of
a one-way chain, the one-way chain having at least one starting
point and at least one endpoint, the apparatus comprising:
a memory; and
a processor coupled to the memory;
the processor being operative to compute a given one of
the output values at a current position in the one-way chain
utilizing a first helper value previously stored in the memory
for another position in the one-way chain between the current
position and the endpoint of the chain; and to compute at least a
second helper value for a new position in the chain between the
current position and the endpoint of the chain, the second helper
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value being stored in the memory and utilizable to facilitate
subsequent computation of another one of the output values.
The Examiner rejected claims 1-22 under 35 U.S.C. § 101 because the
claimed invention is directed to non-statutory subject matter.
The Examiner entered a Final Rejection on May 4, 2005.
Appellant appealed from the Final Rejection. An Appeal Brief (the
Brief) was filed on November 8, 2005.
The Examiner entered an Examiner’s Answer (the Answer) on
January 26, 2006.
Appellant did not file a Reply Brief.
We affirm.

II. ISSUE

The sole issue before us is whether Appellant has established that the
Examiner erred in rejecting claims 1-22 under 35 U.S.C. § 101 as being
directed to non-statutory subject matter.

III. FINDINGS OF FACT
The following findings of fact are supported by a preponderance of
the evidence.
1. Appellant invented a method, apparatus, and machine readable
medium (storing one or more programs) for generating one or more output
values of a one-way chain. (Specification 4).
2. One-way chains are used in processor based cryptographic
applications such as encryption, decryption, digital signatures, message
authentication, user and device authentication, micro-payments, etc.
(Specification 1:13-15 and 4:1-7).
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3. A one-way function is a function f for which one can compute
the value y=f(x) given the value x, but for which it is computationally
infeasible to compute the value x given y, unless a so-called “trap door” is
known, where only particular one-way functions have trap doors. In the
above context, the value x is called the pre-image of y, and the value y is
called the image of x, both relative to the function f. (Specification 1:18-22).
4. The term “one-way function” as used by Appellant is intended
to include, by way of example and without limitation, any function for
which it is substantially more efficient to compute images from pre-images,
than it is to compute pre-images from images, e.g., a function for which
inversion is computationally expensive, infeasible or otherwise difficult to
achieve. (Specification 6:11-14).
5. The term “chain” as used by Appellant is intended to be
construed generally so as to include not only linear sequences of values, but
also tree or graph structures having multiple branches, each of which may
itself correspond to a linear sequence of values. (Specification 6:15-17).
6. The term “one-way chain” refers to a chain in which at least
one pair of values are related to one another via a one-way function.
(Specification 6:18-19).
7. A so-called one-way chain is a sequence of values v1 . . . vs such
that vi-1=f(vi). More generally, vi-1=f(g(vi)), where g is a function that maps
input of the size of the output of a hash chain or other one-way function h to
the size of the input of the function h. In particular, g could be a truncation
of information to the right length, a padding of information to the right
length, or other similar mapping function, as is well known to those skilled
in the art. It is also known that if h is a function that accepts input of
arbitrary length, as hash functions do, then there is no need to use the
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function g. Alternatively, one could say that g in such a situation is the
identity function. (Specification 1:27-2:3).
8. A one-way chain of the type described above can be computed
by starting with value vs and from that value computing vs-1 by application of
the one-way function to vs, then computing vs-2 by application of the one-
way function to vs-1, and so on. This is a general case of computation of the
above value y=f(x), since the value y is used as input to the one-way
function, in the next “link” of the chain. One important reason for using
such chains is to represent time. For example, if a one-way chain v1 . . . vs is
computed by a first party from an endpoint value vs, and the value v1 of the
chain is given to a second party, then the first party can “increment time” by
showing consecutive pre-images v2, v3, etc. to the second party. Note that
the second party cannot compute these consecutive pre-images from v1 on its
own. However, given a pre-image v2, the second party can verify the
correctness of that pre-image by checking if v1=f(v2). For v3, this
verification would have two steps, a first in which v2 is computed, and a
second in which v1 is computed and compared to the known value v1.
(Specification 2:11-22).
9. In accordance with the invention, so-called helper values are
positioned and utilized in a manner which substantially reduces the storage-
computation product associated with generating chain values. (Specification
7:9-11).
10. Helper values are also generally referred by Appellant as
“pegs.” Each peg may therefore be viewed as having a single helper value
associated therewith, the helper value being the value vi of the chain at the
peg position. (Specification 8:16-19).
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11. As filed, the application contained claims 1-22 including
representative originally filed claim 1 which is reproduced below:
1. A method for generating one or more output values
of a one-way chain, the one-way chain having at least one
starting point and at least one endpoint, the method comprising
the steps of:
computing a given one of the output values at a current
position in the one-way chain utilizing a first helper value
previously stored for another position in the one-way chain
between the current position and the endpoint of the chain; and
computing at least a second helper value for a new
position in the chain between the current position and the
endpoint of the chain, the second helper value being utilizable
to facilitate subsequent computation of another one of the
output values.
12. On October 5, 2004, the Examiner entered a Non-Final Office
Action.
13. Claims 1-22 were rejected under 35 U.S.C. § 101 essentially
because claims 1-22 were directed to an abstract idea, and claims 1-22 failed
to produce a useful, concrete, and tangible result.
14. Claims 1-5, 7-13, 18, and 20-22, were also rejected under
35 U.S.C. § 102(b) as being unpatentable over Chaum, U.S. Patent
5,434,919.
15. Chaum is prior art under 35 U.S.C. § 102(b).
16. On January 10, 2005, Appellant filed an Amendment (“the
Amendment”) responding to the Examiner's First Office Action.
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17. The Amendment similarly amended claims 1, 21, and 22.
Claim 1 as amended is reproduced below (matter underlined added by the
Amendment):
1. A method for generating one or more output values
of a one-way chain in a processing device comprising a
processor coupled to a memory, the one-way chain having at
least one starting point and at least one endpoint, the method
comprising the steps of:
computing in the processor a given one of the output
values at a current position in the one-way chain utilizing a first
helper value previously stored in the memory for another
position in the one-way chain between the current position and
the endpoint of the chain; and
computing in the processor at least a second helper value
for a new position in the chain between the current position and
the endpoint of the chain, the second helper value being stored
in the memory and utilizable to facilitate subsequent
computation of another one of the output values in the
processor.
18. After entry of the Amendment, the application claims were 1-
22.
19. On May 4, 2005, the Examiner entered a Final Rejection.
20. Claims 1-22 were finally rejected under 35 U.S.C. § 101
essentially because claims 1-22 were directed to an abstract idea, and claims
1-22 failed to produce a useful, concrete, and tangible result.
21. Appellant appeals under 35 U.S.C. § 134 from the Final
Rejection.
22. A copy of the claims 1-22 under appeal is set forth in the Claim
Appendix of Appellant’s Brief.
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23. Appellant’s method claims are not limited to any particular art
or technology, to any particular apparatus or machinery, or to any particular
end use.
24. Appellant’s method claims cover any use of the claimed
method in a processor coupled to a memory, i.e., a general-purpose digital
computer of any type.

IV. ANALYSIS – EXAMINER’S REJECTIONS
A. Whether Appellant has established that the Examiner erred in
rejecting claims 1-22 under 35 U.S.C. § 101?
(1)
Introduction - 35 U.S.C. § 101
Four categories of patentable subject matter are enumerated in
35 U.S.C. § 101:
Whoever invents or discovers any new and useful
process, machine, manufacture, or composition of
matter, or any new and useful improvement
thereof, may obtain a patent therefor, subject to the
conditions and requirements of this title.

(2)
Examiner’s Prima Facie Case
The Examiner prima facie case is set forth at pages 4-9 of the Answer.

(3)
Appellant’s Arguments in the Brief
With respect to independent method claim 1, Appellant argues
“Claim 1 . . . recites steps which do not involve use of any particular abstract
idea or mathematical algorithm.” (Br. 5). Further, Appellant argues “there
is no particular mathematical algorithm involved [in the claimed method]”
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and “[the method of claim 1] does not implicate any particular mathematical
algorithm(s).” (Br. 6).
Additionally with respect to claim 1, Appellant admits “[l]ike the
statutory claim at issue in State Street, claim 1 does involve computations.”
(Br. 6). Appellant then argues “output values of one-way chains . . . are in
and of themselves useful, concrete and tangible results in the field of
cryptography” because “such values, in and of themselves, can be used as
passwords.” (Br. 6).
With respect to dependent method claim 6, Appellant argues the
recited limitation on the complexity of the storage-computation product “is a
useful, concrete and tangible result because it allows one-way chains to be
implemented in lightweight devices [, i.e., devices having limited memory
and processor resources].” (Br. 7).
With respect to dependent method claim 13, Appellant argues “the
recited limitation on the computational budget associated with generation of
an output value and relocation of pegs is itself a useful, concrete and
tangible result” because “it allows a given one-way chain to be implemented
in a lightweight device having limited memory and processor resources.”
(Br. 8).
With respect to dependent method claim 19, Appellant repeats the
argument of claim 13. Appellant again argues “the recited limitation on the
computational budget associated with generation of an output value and
relocation of pegs is itself a useful, concrete and tangible result” because “it
allows a given one-way chain to be implemented in a lightweight device
having limited memory and processor resources.” (Br. 8).
With respect to independent apparatus claim 20, Appellant argues
“[t]he claim at issue is directed to a machine, one of the statutory categories
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explicitly recited in § 101.” (Br. 9). Appellant also repeats the second
argument of claim 1. Appellant argues “useful, concrete and tangible results
are indeed produced” which are “in the form of one or more output values of
a one-way chain” and “[which] may be used as passwords.” (Br. 9).
With respect to independent machine-readable medium claim 21,
Appellant repeats the two arguments of claim 20. First, Appellant argues the
claim at issue is directed to “a type of manufacture, one of the statutory
categories explicitly recited in § 101.” (Br. 9). Second, Appellant argues
“useful, concrete and tangible results are indeed produced” which are “in the
form of one or more output values of a one-way chain” and “[which] may be
used as passwords.” (Br. 9).
Finally with respect to independent method claim 22, Appellant
repeats the second argument of claims 20 and 21. Appellant argues “useful,
concrete and tangible results are indeed produced” which are “in the form of
one or more output values of a one-way chain” and “[which] may be used as
passwords.” (Br. 10).

(4)
Reading the Supreme Court’s and Federal Circuit’s Precedents Together,
A Section 101 “Process” Has Always Transformed Subject Matter,
Whether Tangible or Intangible, Or Has Been a Process
That Involved The Other Three Statutory Categories
The scope of patentable subject matter under section 101 is broad, but
not infinitely broad. “Congress included in patentable subject matter only
those things that qualify as ‘any … process, machine, manufacture, or
composition of matter, or any … improvement thereof….’” In re
Warmerdam, 33 F.3d 1354, 1358, 31 USPQ2d 1754, 1757 (Fed. Cir. 1994)
(quoting 35 U.S.C. § 101) (emphasis added). Thus, “[d]espite the oft-quoted
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statement in the legislative history of the 1952 Patent Act that Congress
intended that statutory subject matter ‘include anything under the sun that is
made by man,’[citation omitted], Congress did not so mandate.” Id.
In the case where a claim is nominally for a process (i.e., a series of
steps), as opposed to a product, “[t]he line between a patentable ‘process’
and an unpatentable ‘principle’ is not always clear. Both are ‘conception[s]
of the mind, seen only by [their] effects when being executed or performed.”
Parker v. Flook, 437 U.S. 584, 589, 198 USPQ 193, 198 (1978) (quoting
Tilghman v. Proctor, 102 U.S. 707, 728 (1880)). “The holding that the
discovery of [Benson’s] method could not be patented as a ‘process’
forecloses a purely literal reading of § 101.” Flook, 437 U.S. at 589, 198
USPQ at 197. The Supreme Court has recognized only two instances in
which a method may qualify as a section 101 process: when the process
“either [1] was tied to a particular apparatus or [2] operated to change
materials to a ‘different state or thing.’” Id. at 588 n.9, 198 USPQ at 196 n.9
(quoting Cochrane v. Deener, 94 U.S. 780, 787-88 (1876) (“A process is...an
act, or a series of acts, performed upon the subject-matter to be transformed
and reduced to a different state or thing”)). “[W]hen a claim containing [an
abstract idea] implements or applies that [idea] in a structure or process
which, when considered as a whole, is performing a function which the
patent laws were designed to protect (e.g., transforming or reducing an
article to a different state or thing), then the claim satisfies the requirements
of § 101.” Diamond v. Diehr, 450 U.S. 175, 192, 209 USPQ 1, 10 (1981);
see also Gottschalk v. Benson, 409 U.S. 64, 70, 175 USPQ 673, 676 (1972)
(“Transformation and reduction of an article ‘to a different state or thing’ is
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the clue to the patentability of a process claim that does not include
particular machines.”).1
The Supreme Court, however, presumably concerned about barring
patents for future, unforeseeable technologies, declined to rule on whether
its precedent foreclosed any other possible avenues for a method claim to
qualify as a section 101 process: “It is argued that a process patent must
either be tied to a particular machine or apparatus or must operate to change
articles or materials to a ‘different state or thing.’ We do not hold that no
process patent could ever qualify if it did not meet the requirements of our
prior precedents.” Benson, 409 U.S. at 71, 175 USPQ 676. Rather than rule
on this question in Benson and Flook, the Supreme Court decided those
cases based on the abstract idea exception to patentability. Benson, 409 U.S.
at 71-72, 175 USPQ at 676-77; Flook, 437 U.S. at 594-95, 198 USPQ at
199-200.
Since Diehr, the Federal Circuit has reviewed several computer
technology cases, and in acknowledgment of the innovations occurring in
this technological field, identified a third category of method claims that
qualify as a “process.” Extrapolating from the Supreme Court’s
“transformation and reduction of an article” test, the Federal Circuit has held

1 The principal exception to this rule, as explained infra, is when the
machine-implemented method merely manipulates abstractions. See
Benson, 409 U.S. at 71-72, 175 USPQ at 676-77. In addition, merely
attaching a machine to an otherwise ineligible method may not be sufficient
and would depend on how the machine actually implemented the recited
steps. For example, if a nonstatutory claim were amended so that a recited
step of registering a customer was performed by entering data into a
computer rather than using a sign-up sheet, it is hard to imagine how that
alone would satisfy the requirements of § 101 and convert an otherwise
ineligible claim into an eligible one.
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that transformation of intangible subject matter (i.e., data or signals) may
also qualify as a § 101 process. See, e.g., State Street Bank & Trust Co. v.
Signature Fin. Group, Inc., 149 F.3d 1368, 1373, 47 USPQ2d 1596, 1601
(Fed. Cir. 1998). Responding to the argument that process claims must
recite a “physical transformation,” the Federal Circuit in AT&T ruled that
“physical transformation” “is not an invariable requirement, but merely one
example of how a mathematical algorithm may bring about a useful
application.” AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352,
1358, 50 USPQ2d 1447, 1452 (Fed. Cir. 1999). Quoting the Supreme
Court’s language, “e.g., transforming or reducing an article to a different
state or thing” from Diehr, the AT&T court noted the usage of “e.g.”
“denotes an example, not an exclusive requirement.” Id. at 1359, 50
USPQ2d at 1452. AT&T went on to cite the transformation of intangible
data signals in the method claim of Arrhythmia Research Technology Inc. v.
Corazonix Corp., 958 F.2d 1053, 1059, 22 USPQ2d 1033, 1038 (Fed. Cir.
1992), as an example that qualifies as a § 101 “process” in addition to the
Supreme Court’s test. See id. at 1359, 50 USPQ2d at 1452.
Accordingly, the Federal Circuit has consistently used its own “data
transformation” test in assessing the eligibility of various machine-
implemented claims. In Alappat, the court held that “data, transformed by a
machine” “to produce a smooth waveform display” “constituted a practical
application of an abstract idea.” State Street, 149 F.3d at 1373, 47 USPQ2d
at 1601. Specifically, the court in Alappat stated that the claimed invention
as a whole was directed to a machine for “converting discrete waveform data
samples into anti-aliased pixel illumination intensity data to be displayed on
a display means.” 33 F.3d 1526, 1544, 31 USPQ2d 1545, 1557 (Fed. Cir.
1994) (en banc). In Arrhythmia, the court held “the transformation of
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electrocardiograph signals” “by a machine” “constituted a practical
application of an abstract idea.” State Street, 149 F.3d at 1373, 47 USPQ2d
at 1601. Specifically, the court in Arrhythmia stated “the number obtained is
not a mathematical abstraction; it is a measure in microvolts of a specified
heart activity, an indicator of the risk of ventricular tachycardia.” 958 F.2d at
1062, 22 USPQ2d at 1039. Likewise, in State Street, the court held that “the
transformation of data” “by a machine” “into a final share price, constitutes
a practical application of a mathematical algorithm” because “a final share
price [is] momentarily fixed for recording and reporting purposes and even
accepted and relied upon by regulatory authorities and in subsequent trades.”
149 F.3d at 1373, 47 USPQ2d at 1601. Thus, while Diehr involved the
transformation of a tangible object – curing synthetic rubber – Federal
Circuit also regards the transformation of intangible subject matter to
similarly be eligible, so long as data or signals represent some real world
activity.
The Federal Circuit has never held or indicated that a non-machine
implemented process involving no transformation can qualify as a “process”
under § 101. In fact, confronted with such claims, it has rejected them
consistently. See In re Schrader, 22 F.3d 290, 294-295, 30 USPQ2d 1455,
1458 (Fed. Cir. 1994); In re Grams, 888 F.2d 835, 837, 12 USPQ2d 1824,
1826 (Fed. Cir. 1989) (rejecting claims to method of evaluating a system
that incorporated a mathematical algorithm, where the only physical step
was a data gathering step that was not tied to the algorithm); In re Maucorps,
609 F.2d 481, 484, 203 USPQ 812, 815 (CCPA 1979); In re Meyer, 688
F.2d 789, 796, 215 USPQ 193, 198 (CCPA 1982); see also In re Alappat, 33
F.3d at 1543, 31 USPQ2d at 1556 (“Maucorps dealt with a business
methodology for deciding how salesmen should best handle respective
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customers and Meyer involved a ‘system’ for aiding a neurologist in
diagnosing patients. Clearly, neither of the alleged ‘inventions’ in those
cases falls within any § 101 category.”).2
In Schrader, the court affirmed the 101 rejection of a method of
competitively bidding on a plurality of related items, relying in part on the
Freeman-Walter-Abele (“FWA”) test. However, consistent with
Arrhythmia, Alappat, State Street, and AT&T, the court also inquired into
whether Schrader’s non-machine implemented method claim performed any
kind of transformation. Schrader, 22 F.3d at 294, 30 USPQ2d at 1458 (“we
do not find in the claim any kind of data transformation.”). The court then
distinguished Schrader’s claim from the statutorily eligible claims in
Arrhythmia, In re Abele, 684 F.2d 902, 214 USPQ 682 (CCPA 1982), and In
re Taner, 681 F.2d 787, 214 USPQ 678 (CCPA 1982), pointing out that in
these cases, “[t]hese claims all involved the transformation or conversion of
subject matter representative of or constituting physical activity or objects.
Id. (emphasis in original). Schrader expressly concludes that “a process
claim [in] compliance with Section 101 requires some kind of
transformation or reduction of subject matter.”3 Id. at 295, 30 USPQ2d at

2 But see State Street, 149 F.3d at 1376 n.14, 47 USPQ2d at 1603 n.14
(observing that “[Maucorp and Meyer] were subject to the Benson era
Freeman-Walter-Abele test – in other words, analysis as it existed before
Diehr and Alappat,” without addressing the fact that it was the Alappat
decision itself that made the observation that these inventions were “clearly”
nonstatutory).

3 Although the FWA test is no longer considered particularly probative
in the context of computer-implemented process inventions in view of Diehr
(see, e.g., State Street, 149 F.3d at 1374, 47 USPQ2d at 1601), the erosion of
FWA provides no support for the position that a non-machine implemented
process, not involving any transformation, might be patentable. The answer
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1459. In sum, the Federal Circuit has never ruled that methods without any
transformation or machine implementation are eligible, and appears in
Schrader to have rejected that proposition.
We believe that “process” should not be broadened so as to include
any method that may be deemed useful only in a general sense. The
Supreme Court’s and Federal Circuit’s articulated eligibility tests keep the
interpretation of “process” in pari materia with the other three categories of
inventions – manufacture, machine, and composition of matter. 4 In other

to that question is still provided by Schrader, and that answer, so far, is
negative. While AT&T indicated that Schrader is “unhelpful” because it did
not reach the question whether a “useful, concrete, and tangible result”
occurred, the reason that case did not need to reach that question was
because it found that Schrader’s method claims were unpatentable for lack
of any transformation. In addition, Schrader’s claims did not require
machine-implementation, unlike AT&T’s claims. See AT&T, 172 F.3d at
1358, 50 USPQ2d at 1452 (“AT&T’s claimed process” uses “switching and
recording mechanisms to create a signal useful for billing purposes.”).
Moreover, it is axiomatic that dicta in one Federal Circuit panel decision
cannot overrule the holding of an earlier panel decision. George E. Warren
Corp. v. United States, 341 F.3d 1348, 1351 (Fed. Cir. 2003) (“We cannot
simply overrule [a prior panel] decision, even if we were persuaded . . . that
it is appropriate; to overrule a precedent, the court must rule en banc” (citing
Newell Cos. v. Kenney Mfg. Co., 864 F.2d 757, 765, 9 USPQ2d 1417, 1423
(Fed.Cir.1988)).

4 “A machine is a concrete thing, consisting of parts, or of certain
devices and combination of devices.” Burr v. Duryee, 68 U.S. 531, 570
(1863). The term “manufacture” refers to “‘the production of articles for use
from raw or prepared materials by giving to these materials new forms,
qualities, properties, or combinations, whether by hand-labor or by
machinery.’” Diamond v. Chakrabarty, 447 U.S. 303, 308, 206 USPQ 193,
196-97 (1980) (quoting American Fruit Growers, Inc. v. Brogdex Co., 283
U.S. 1, 11, 8 USPQ 131, 133 (1931)). A “composition of matter” by its own
terms requires matter. Chakrabarty, 447 U.S. at 308, 206 USPQ at 196-97.
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words, interpreting “process” as either transforming subject matter or
implemented by one of the other three categories of inventions is rationally
consistent with and proportional to the types of inventions patented under
the other categories.5 See Tilghman v. Proctor, 102 U.S. 707, 722 (1880)
(“where the result or effect is produced by chemical action, by the operation
or application of some element or power of nature, or of one substance to
another, such modes, methods, or operations are called processes.”); see also
AT&T, 172 F.3d at 1356, 50 USPQ2d at 1450 (“any step-by-step process, be
it electronic, chemical, or mechanical, involves an ‘algorithm’ in the broad
sense of the term.”). Accordingly, we do not believe that the boundaries of
“process” should be so expansive as to accommodate all “useful” methods.

(5)
Appellant’s Method Claims Are Nominally a Process
Appellant’s claims recite a method that employs computations to
transform data in a processor coupled to a memory. Accordingly, the claims
are nominally a process. See 35 U.S.C. § 100:
(“The term “process” means process, art or method, and includes a
new use of a known process, machine, manufacture, composition of
matter, or material.”)
However, no matter which of the four statutory categories a claim nominally
fall within, we must still determine whether the claim is truly within the

5 We do not propose in this decision a comprehensive rule for defining
patentable subject matter in all circumstances. Rather, this decision looks to
whether Appellant’s claims fall outside the currently existing tests for
eligibility and sees no reason to expand the existing tests should this prove to
be the case.
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meaning of the statute. We do so by determining whether the claimed
invention:
(i) Produces a “useful, concrete and tangible result.” State
Street, 149 F.3d at 1373, 47 USPQ2d at 1600-1601; and
(ii) Is directed to one of the three categories of unpatentable
subject matter: “laws of nature, natural phenomena, and abstract
ideas.” Diehr, 450 U.S. at 185, 209 USPQ at 7.

(6)
Appellant’s Method Claims Do Not Produce
“Useful, Concrete, and Tangible Result”
As discussed above, the development of the Federal Circuit’s data
transformation test was in response to a series of cases concerning the
eligibility of machines and machine-implemented methods employing a
mathematical algorithm. In assessing the eligibility of these specific types
of claims, the court adopted a rule requiring such claims to produce a
“useful, concrete and tangible result.” State Street, 149 F.3d at 1373, 47
USPQ2d at 1600-1601.
The “useful, concrete, and tangible result” test first appeared in
Alappat, which states: “This [claimed invention] is not a disembodied
mathematical concept which may be characterized as an ‘abstract idea,’ but
rather a specific machine to produce a useful, concrete, and tangible result.”
Alappat, 33 F.3d at 1544, 31 USPQ2d at 1557. The court in Alappat thus
devised a standard to partition patentable inventions using mathematical
algorithms from claims for disembodied mathematical concepts. State Street
also involved claims to a machine employing a mathematical algorithm, but
in this instance for managing a mutual fund investment portfolio. Finding
the claim to be valid under § 101, State Street held that “transformation of
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data … by a machine through a series of mathematical calculations into a
final share price, constitutes a practical application of a mathematical
algorithm, formula, or calculation, because it produces ‘a useful, concrete
and tangible result.’” State Street at 1373, 47 USPQ2d at 1601. Likewise,
AT&T also ties this test to applications of mathematical algorithms:
“Because the claimed process applies the Boolean principle to produce a
useful, concrete, and tangible result without pre-empting other uses of the
mathematical principle, on its face the claimed process comfortably falls
within the scope of § 101.” AT&T, 172 F.3d at 1358, 50 USPQ2d at 1452;
see also id. at 1361, 50 USPQ2d at 1453 (concluding that “the focus is
understood to be not on whether there is a mathematical algorithm at work,
but on whether the algorithm-containing invention, as a whole, produces a
tangible, useful result.”).
Accordingly, our understanding of the precedents at present is: Any
computer program claimed as a machine implementing the program
(Alappat, State Street) or as a method of a machine implementing the
program (AT&T), is patentable if it transforms data and achieves a useful,
concrete and tangible result (State Street, AT&T). Exceptions occur when
the invention in actuality pre-empts an abstract idea, as in a mathematical
algorithm (Benson, 409 U.S. at 71-72, 175 USPQ at 676-677).
We see the question before us to be, whether Appellant’s claimed
“one or more values of a one-way chain”, is a useful, tangible, and concrete
result? As discussed supra, the Federal Circuit regards the transformation of
intangible subject matter to be such a useful, tangible, and concrete result, so
long as data or signals represent some real world activity. However, we do
not find data or signals in Appellant’s method claims which represent a real
world activity such as found in Arrhythmia, Alappat, or State Street.
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Appellant argues “output values of one-way chains . . . are in and of
themselves useful, concrete and tangible results in the field of cryptography”
because “such values, in and of themselves, can be used as passwords.” (Br.
6). We disagree. Contrary to Appellant’s arguments, the claims before us do
not recite either an intended use of “cryptography” or a result where the
output values are “passwords.” Further, even if both of these limitations
alone were added to the claims, without additional limitations there would
still be nothing in the claims that would meet the requirement of data or
signals which represent some real world activity.
Also with respect to claims 6, 13, and 19, Appellant argues the recited
limitation on the complexity or computational budget associated with
generation of an output value and relocation of pegs is itself a useful,
concrete and tangible result because it allows a given one-way chain to be
implemented in a lightweight device having limited memory and processor
resources. We disagree. Limiting the complexity or computational budget
does not change the result of the method. Rather than adding to the “result”
of the method as a whole, claims 6, 13, and 19, merely limit their results to a
subset of the results of the claims from which they depend. As above, we do
not find data or signals in these method claims which represent a real world
activity.

(7)
Appellant’s Method Claims Run Afoul of the “Abstract Idea” Exception
The Supreme Court has held that “[e]xcluded from such patent
protection are laws of nature, natural phenomena, and abstract ideas.”
Diehr, 450 U.S. at 185, 209 USPQ at 7. “An idea of itself is not patentable.’”
Diehr, 450 U.S. at 185, 209 USPQ at 7 (quoting Rubber-Tip Pencil Co. v.
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Howard, 20 Wall. 498, 507, 22 L.Ed. 410 (1874); Benson, 409 U.S. at 67,
175 USPQ at 675 (“[M]ental processes, and abstract intellectual concepts are
not patentable.”); see also id. at 71, 175 USPQ at 676 (“It is conceded that
one may not patent an idea.”). In contrast, “[i]t is now commonplace that an
application of a law of nature or mathematical formula [or abstract idea] to a
known structure or process may well be deserving of patent protection.”
Diehr, 450 U.S. at 187, 209 USPQ at 8 (emphasis in original).
Clever claim drafting cannot circumvent these principles. That is,
even when a claim appears to apply an idea or concept as part of a seemingly
patentable process, one must ensure that it does not in reality seek patent
protection for that idea in the abstract. Diehr, 450 U.S. at 191, 209 USPQ at
10. Similarly, one cannot patent a process that comprises “every substantial
practical application” of an abstract idea, because such a patent “in practical
effect would be a patent on the [abstract idea] itself.” Benson, 409 U.S. at
71-72, 175 USPQ 676.6 Such limitations on process patents are important
because without them, “a competent draftsman [could] evade the recognized
limitations on the type of subject matter eligible for patent protection.”
Diehr, 450 U.S. at 192, 209 USPQ at 10.
Appellant has asked this Board to find that the Examiner erred
because the claims do not involve a “particular” mathematical algorithm. In
essence, Appellant has asked this Board to conclude that even when a claim
pre-empting a “particular” mathematical algorithm would not be statutory

6 The observation in State Street that “[w]hether the patent’s claims are
too broad to be patentable is not to be judged under § 101, but rather under
§§ 102, 103, and 112” did not, nor could it, overrule the Supreme Court’s
pre-emption doctrine. See State Street, 149 F.3d at 1377, 47 USPQ2d at
1604.

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subject-matter, the claim would be statutory subject-matter if it instead pre-
empted an “entire class” of mathematical algorithms. We do not agree.
The mere fact that the claims do not involve a “particular”
mathematical algorithm is not by itself sufficient to show that the Examiner
erred. Pre-empting an “entire class” of mathematical algorithms inherently
includes pre-empting all “particular” mathematical algorithms included
within that class.
Appellant’s method claims are directed to “generating one or more
output values of a one-way chain.” That a “one-way chain” is a class of
mathematical algorithms is readily apparent from Findings of Fact 3-10.
Specifically, as shown in Finding of Fact 7, a so-called one-way chain is a
sequence of values v1 . . . vs such that vi-1=f(vi).
Further, Appellant’s method claims were not limited to any particular
art or technology, to any particular apparatus or machinery, or to any
particular end use. Rather, Appellant’s method claims cover any use of the
claimed method in a processor coupled to a memory, i.e., a general-purpose
computer of any type. Because Appellant’s claimed “generating one or
more output values of a one-way chain” has no substantial practical
application except in applications (see Finding of Fact 2) performed by a
computer (processor coupled to a memory), the method claims would
“wholly pre-empt” all substantial applications of the claimed mathematical
algorithm and in practical effect would be a patent on the algorithm itself.
See Benson, 409 U.S. at 68-72, 175 USPQ at 675-677; see also Alappat, 33
F.3d at 1544, 31 USPQ2d at 1558 (quoting Benson).
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(8)
Appellant’s Method Claims Fall Outside The Scope Of 35 U.S.C. § 101
Therefore, we conclude Appellant’s method claims are unpatentable
under section 101 because, while they nominally fall into a statutory
category, (i) they do not satisfy the “useful, concrete, and tangible result”
test, and (ii) they seek to patent an abstract idea. Thus, claims 1-19 and 22
fall outside the scope of § 101.

(9)
Apparatus claim 20 Falls Outside The Scope Of 35 U.S.C. § 101
Appellant’s apparatus claim is nominally a machine; however, for the
same reasons discussed supra with respect to claim 1, we conclude the
apparatus of claim 20 does not apply its abstract idea to produce a useful,
concrete, and tangible result. Thus, the claimed apparatus falls outside the
scope of § 101.
Additionally, for the same reasons discussed supra with respect to
claim 1, we conclude the apparatus of claim 20 covers (“preempts”) every
substantial practical application of the abstract idea. We conclude that the
claim is so broad that it is directed to the “abstract idea” itself, rather than a
practical implementation of the concept.

(10)
Medium claim 21 Falls Outside The Scope Of 35 U.S.C. § 101
Appellant’s apparatus claim is nominally a manufacture; however, for
the same reasons discussed supra with respect to claim 1, we conclude the
medium of claim 21 does not apply its abstract idea to produce a useful,
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concrete, and tangible result. Thus, the claimed medium falls outside the
scope of § 101.
Additionally, for the same reasons discussed supra with respect to
claim 1, we conclude the medium of claim 21 covers (“preempts”) every
substantial practical application of the abstract idea. We conclude that the
claim is so broad that it is directed to the “abstract idea” itself, rather than a
practical implementation of the concept.

V. CONCLUSIONS OF LAW
Appellant has failed to establish that the Examiner erred in rejecting
claims 1-22 under 35 U.S.C. § 101.
Claims 1-22 are not patentable.

VI. DECISION
The decision of the Examiner, rejecting claims 1-22 under
35 U.S.C. § 101, is affirmed.
No time period for taking any subsequent action in connection with
this appeal may be extended under 37 C.F.R. § 1.136(a)(1)(iv).

AFFIRMED

rwk

Ryan, Mason & Lewis, LLP
90 Forest Avenue
Locust Valley, NY 11560
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