Ex Parte Kron et al

Board of Patent Appeals and Interferences

Sep 9, 2009

09850783 (B.P.A.I. Sep. 9, 2009)

UNITED STATES PATENT AND TRADEMARK OFFICE 1
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3
BEFORE THE BOARD OF PATENT APPEALS 4
AND INTERFERENCES 5
___________ 6
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Ex parte ROBERT KRON, WALTER VEGHTE, ROSEANNE BASSIN, EILEEN 8
RUSSO, and STEVE MONICAL 9
___________ 10
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Appeal 2009-010804 12
Application 09/850,783 13
Technology Center 3600 14
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Decided: September 9, 2009 17
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Before HUBERT C. LORIN, ANTON W. FETTING, and BIBHU R. MOHANTY, 20
Administrative Patent Judges. 21
FETTING, Administrative Patent Judge. 22
DECISION ON APPEAL 23
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STATEMENT OF THE CASE 1
Robert Kron, et al. (Appellants) seek review under 35 U.S.C. § 134 (2002) of a 2
final rejection of claims 1-14, the only claims pending in the application on appeal. 3
We have jurisdiction over the appeal pursuant to 35 U.S.C. § 6(b) (2002). 4
SUMMARY OF DECISION1 5
We AFFIRM-IN-PART. 6
THE INVENTION 7
The Appellants invented machine-executable techniques for performing 8
financial calculations related to long-term health care expenses (Specification 1:4-9
5). 10
An understanding of the invention can be derived from a reading of exemplary 11
claim 1, which is reproduced below [bracketed matter and some paragraphing 12
added]. 13
1. A computer-executable method for financial retirement planning 14
that provides a comparative evaluation of a plurality of health 15
care funding alternatives, 16
so as to enable an individual to select one or more funding 17
alternatives appropriate to their particular set of circumstances; 18

1 Our decision will make reference to the Appellants’ Appeal Brief (“App. Br.,”
filed September 4, 2007) and Reply Brief (“Reply Br.,” filed December 24, 2008),
and the Examiner’s Answer (“Ans.,” mailed December 24, 2008).
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the method comprising the steps of: 1
(a) calculating an overall retirement cash flow 2
for an individual, a couple, and/or a family 3
representing funds available during retirement; 4
(b) determining an amount 5
representing an affordable long-term health care 6
insurance premium, 7
based upon the retirement cash flow calculated in 8
step (a); and 9
(c) generating a comparison of projected retirement 10
finances 11
on at least one of a visual display and a hard-copy 12
printout. 13
THE REJECTIONS 14
The Examiner relies upon the following prior art: 15
Van Remortel US 5,136,502 Aug. 4, 1992
Smallwood et al., Questioning the Adequacy of Long Term Care IRAs, Health 16
Affairs. Vol. 6, Iss. 2. p. 132. Summer 1987.2 17
Claims 1-7 stand rejected under 35 U.S.C. § 101 as directed to non-statutory 18
subject matter. 19
Claims 1-14 stand rejected under 35 U.S.C. § 103(a) as unpatentable over Van 20
Remortel and Smallwood. 21

2 The Examiner place only the abstract in the record. The text of the article is
available at http://content.healthaffairs.org/cgi/reprint/6/2/132.
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ARGUMENTS 1
Claims 1-7 rejected under 35 U.S.C. § 101 as directed to non-statutory subject 2
matter. 3
The Appellants contend that the processes are tied to a particular machine. The 4
Appellants argue that each claim recites a computer-executable method along with 5
a visual display and hard-copy printout. They further argue that the computer 6
recited in the preamble is necessary to give life and meaning to the display and 7
printout. The Appellants also argue that the use of such display and printout avoid 8
preemption, as well. Reply Br. 6. The Appellants then argue that the computer 9
performs more than insignificant post solution activity by generating a comparison 10
of projected retirement finances. Reply Br. 7. 11
Claims 1-14 rejected under 35 U.S.C. § 103(a) as unpatentable over Van Remortel 12
and Smallwood. 13
The Appellants contend that Van Remortel makes calculations for a group 14
rather than an individual, and that it determines how to fund that group’s health 15
care benefits rather than determining the amount of an affordable long-term health 16
care insurance premium. App. Br. 13-15. 17
ISSUES 18
The issue of whether the Appellants have sustained their burden of showing 19
that the Examiner erred in rejecting claims 1-7 under 35 U.S.C. § 101 as directed 20
to non-statutory subject matter turns on whether the claimed subject matter is 21
directed to a statutory process. 22
The issue, of whether the Appellants have sustained their burden of showing 23
that the Examiner erred in rejecting claims 1-14 under 35 U.S.C. § 103(a) as 24
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unpatentable over Van Remortel and Smallwood, turns on whether it was 1
predictable to one of ordinary skill in the art, to make a determination of affordable 2
long-term health care insurance premiums for an individual. Additionally, there 3
are subordinate issues related to, whether it was predictable to add the limitations 4
in the dependent claims. 5
FACTS PERTINENT TO THE ISSUES 6
The following enumerated Findings of Fact (FF) are believed to be supported 7
by a preponderance of the evidence. 8
Facts Related to the Prior Art 9
Van Remortel 10
01. Van Remortel is directed to a health care benefits system funding 11
present and future health care liabilities that projects, invests, tracks and 12
reports on the performance of the funding system. VR 1:6-10. 13
02. Van Remortel determines annual costs and liabilities for the number 14
of retirees, based on the average remaining working lifetime and the 15
medical costs trend rate. Van Remortel also calculates an expected 16
present value and an annual expected cost of the medical benefits. Cash 17
flow is forecast from the yearly projections, which indicates, by year, the 18
annual retiree medical expense. The projections include an annual retiree 19
medical expense, which is based on the first year actual expense, the 20
medical cost trend rate assumption and the projected retiree/spouse-21
beneficiary population. VR 9:13-48. 22
23
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Smallwood 1
03. Smallwood is directed to determining how well long term car 2
individual retirement accounts would have performed. Smallwood 3
performs financial analysis to see how many days of long term health 4
care coverage could have been afforded. Smallwood explicitly suggests 5
adding insurance to the IRA. Smallwood Abstract. 6
Facts Related To The Level Of Skill In The Art 7
04. Neither the Examiner nor the Appellants have addressed the level of 8
ordinary skill in the pertinent arts of systems analysis and programming, 9
financial planning, financial retirement analysis, and health insurance 10
planning. We will, therefore, consider the cited prior art as representative 11
of the level of ordinary skill in the art. See Okajima v. Bourdeau, 261 12
F.3d 1350, 1355 (Fed. Cir. 2001) (“[T]he absence of specific findings on 13
the level of skill in the art does not give rise to reversible error ‘where 14
the prior art itself reflects an appropriate level and a need for testimony 15
is not shown’”) (quoting Litton Indus. Prods., Inc. v. Solid State Sys. 16
Corp., 755 F.2d 158, 163. (Fed. Cir. 1985). 17
Facts Related To Secondary Considerations 18
05. There is no evidence on record of secondary considerations of non-19
obviousness for our consideration. 20
PRINCIPLES OF LAW 21
Statutory Subject Matter 22
The law in the area of patent-eligible subject matter for process claims has 23
recently been clarified by the Federal Circuit in In re Bilski, 545 F.3d 943 (Fed. 24
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Cir. 2008) (en banc), cert. granted, 129 S.Ct. 2735, U.S. Jun. 1, 2009) (No. 08-1
964). 2
The en banc court in Bilski held that “the machine-or-transformation test, 3
properly applied, is the governing test for determining patent eligibility of a 4
process under § 101.” Id. at 956. The court in Bilski further held that “the ‘useful, 5
concrete and tangible result’ inquiry is inadequate [to determine whether a claim is 6
patent-eligible under § 101.]” Id. at 959-60. 7
The court explained the machine-or-transformation test as follows: “A claimed 8
process is surely patent-eligible under § 101 if: (1) it is tied to a particular machine 9
or apparatus, or (2) it transforms a particular article into a different state or thing.” 10
Id. at 954 (citations omitted). The court explained that “the use of a specific 11
machine or transformation of an article must impose meaningful limits on the 12
claim’s scope to impart patent-eligibility” and “the involvement of the machine or 13
transformation in the claimed process must not merely be insignificant extra-14
solution activity.” Id. at 961-62 (citations omitted). As to the transformation 15
branch of the inquiry, the court explained that transformation of a particular article 16
into a different state or thing “must be central to the purpose of the claimed 17
process.” Id. at 962. 18
Obviousness 19
A claimed invention is unpatentable if the differences between it and the 20
prior art are “such that the subject matter as a whole would have been obvious at 21
the time the invention was made to a person having ordinary skill in the art.” 35 22
U.S.C. § 103(a) (2000). KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 406 (2007). 23
Graham v. John Deere Co., 383 U.S. 1, 13-14 (1966). 24
In Graham, the Court held that that the obviousness analysis is bottomed on 25
several basic factual inquiries: “[(1)] the scope and content of the prior art are to be 26
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determined; [(2)] differences between the prior art and the claims at issue are to be 1
ascertained; and [(3)] the level of ordinary skill in the pertinent art resolved.” 383 2
U.S. at 17. See also KSR, 550 U.S. at 406. “The combination of familiar elements 3
according to known methods is likely to be obvious when it does no more than 4
yield predictable results.” Id. at 416. 5
ANALYSIS 6
Claims 1-7 rejected under 35 U.S.C. § 101 as directed to non-statutory subject 7
matter. 8
Method claim 1 fails to meet requirements of the machine-or-transformation 9
test for patent-eligible subject matter, because the claimed method is neither tied to 10
a particular machine or apparatus, nor does it transform a particular article into a 11
different state or thing. 12
Method claim 1 recites a series of process steps “that provides a comparative 13
evaluation of a plurality of health care funding alternatives.” The claim does not 14
invoke any particular machine or apparatus in the method steps and thus is not tied 15
to any particular machine or apparatus. The preamble does state, that the method 16
is “computer executable.” We find that none of the steps recite any operation 17
referring to actual execution on a computer. In fact, none of the steps recite any 18
implementation details, but instead recite a function to result from each step. Thus, 19
the scope of the claim covers all implementations and no particular 20
implementation, however broad. That is, the scope covers implementations 21
amenable to programming, without requiring actual execution on a computer. 22
As to the visual display or hard copy printout in step (c), neither requires a 23
computer, but rather just some way of displaying writing. A writing pad is within 24
the scope of both these limitations. 25
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As to the transformation part of the test, none of the steps transform anything. 1
Step (a) calculates an intangible hypothetical cash flow. Step (b) determines an 2
amount, it does not even recite a calculation. Step (c) displays an analysis. None 3
of these steps involve transforming anything, physical or data representing 4
something physical. The remaining claims fall with claim 1 as the Appellants did 5
not argue them separately. 6
Claims 1-14 rejected under 35 U.S.C. § 103(a) as unpatentable over Van Remortel 7
and Smallwood. 8
Claim 1 is a method consisting of three steps. First, a cash flow projection is 9
made. From that projection, an amount that can be afforded within that flow is 10
determined. Plural finance projections are presented for comparison on some 11
display apparatus. The projection, in the first step, is recited as being for an 12
individual or family. The amount, in the second step, is recited as representing a 13
health card premium. 14
Absent the limitation, in the second step of a health care premium, these steps 15
are no more than conventional financial planning. The Examiner found a prior art 16
reference that describes how such financial planning would unfold. Van Remortel 17
computes a cash flow projection, and determines how much medical expense 18
would be covered by the revenues coming in, to fund those expenses. FF 02. The 19
Appellants are correct that Van Remortel computes these numbers for a group 20
rather than an individual or family, and that Van Remortel does not explicitly state 21
that the amounts it budgets are for health care premiums. Indeed, Van Remortel 22
states that it is funding health care liabilities rather than insurance premiums. FF 23
02. So, from Van Remortel alone, the issue would be whether one of ordinary skill 24
would have found it predictable to apply conventional financial planning 25
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techniques to funding health care costs for a group of individuals in Van Remortel, 1
to funding an individual’s health insurance premiums. 2
To answer that question, the Examiner has also applied Smallwood. 3
Smallwood determines how well an individual retirement account set up for long 4
term health care would have met an individual’s needs. Smallwood also suggests 5
adding an insurance component to the IRA. FF 03. So, Smallwood shows the 6
application of financial analysis to analyzing an individual’s health care costs and 7
suggests use of health care insurance. The issue is thus narrowed to whether it was 8
predictable that the amounts that a financial analysis would show were affordable 9
might represent insurance premiums. Smallwood’s suggestion of adding health 10
care insurance to the funding mix, as well as, everyday experience in needing 11
health care insurance, leads to the conclusion that health care insurance premiums 12
would be a type of cost that financial analysis projections would be used to 13
determine affordability. 14
The Appellant also argues that Van Remortel and Smallwood are non 15
analogous art. App. Br. 17. Both are directed to financial analysis of health care 16
funding, as is the claimed subject matter. 17
Claim 2 18
Claim 2 further requires determining three financial projections, under the 19
assumptions: that no health care is required; that it is required and insurance is 20
carried; that it is required and insurance is not carried. The Appellants argue that 21
the art fails to describe this. App. Br. 18. The Examiner responds that Van 22
Remortel describes this in column 9, lines 42-50. Ans. 13-14. Here, we must 23
agree with the Appellants. Van Remortel describes different projections, but all 24
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are absent health insurance. FF 02. Claims 3-7 depend from claim 2 and 1
incorporate the limitations from claim 2. 2
The Appellants rely on their arguments in support of claim 1 for claim 8 and so 3
their arguments are unpersuasive for the same reasons. The Appellants argue that 4
the remaining claims, parallel claims 2-7, which we agree with and so the rejection 5
of those claims falls with claim 2. 6
CONCLUSIONS OF LAW 7
The Appellants have not sustained their burden of showing that the Examiner 8
erred in rejecting claims 1-7 under 35 U.S.C. § 101 as directed to non-statutory 9
subject matter. 10
The Appellants have not sustained their burden of showing that the Examiner 11
erred in rejecting claims 1 and 8 under 35 U.S.C. § 103(a) as unpatentable over 12
Van Remortel and Smallwood. 13
The Appellants have sustained their burden of showing that the Examiner erred 14
in rejecting claims 2-7 and 9-14 under 35 U.S.C. § 103(a) as unpatentable over 15
Van Remortel and Smallwood. 16
DECISION 17
To summarize, our decision is as follows. 18
• The rejection of claims 1-7 under 35 U.S.C. § 101 as directed to non-19
statutory subject matter is sustained. 20
• The rejection of claims 1and 8 under 35 U.S.C. § 103(a) as unpatentable 21
over Van Remortel and Smallwood is sustained. 22
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• The rejection of claims 2-7 and 9-14 under 35 U.S.C. § 103(a) as 1
unpatentable over Van Remortel and Smallwood is not sustained. 2
No time period for taking any subsequent action in connection with this appeal 3
may be extended under 37 C.F.R. § 1.136(a)(1)(iv). 4
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AFFIRMED-IN-PART 6
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