Ex Parte Monk

Patent Trials and Appeals Board

Jun 27, 2019

13888873 - (D) (P.T.A.B. Jun. 27, 2019)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE FIRST NAMED INVENTOR
13/888,873 05/07/2013 Justin T. Monk
66945 7590 07/01/2019
KILPATRICK TOWNSEND & STOCKTONLLP/VISA
Mailstop: IP Docketing - 22
1100 Peachtree Street
Suite 2800
Atlanta, GA 30309
UNITED STATES DEPARTMENT OF COMMERCE
United States Patent and Trademark Office
Address: COMMISSIONER FOR PATENTS
P.O. Box 1450
Alexandria, Virginia 22313-1450
www .uspto.gov
ATTORNEY DOCKET NO. CONFIRMATION NO.
79900-869609-02600USNP 1652
EXAMINER
SHARVIN, DAVID P
ART UNIT PAPER NUMBER
3692
NOTIFICATION DATE DELIVERY MODE
07/01/2019 ELECTRONIC
Please find below and/or attached an Office communication concerning this application or proceeding.
The time period for reply, if any, is set in the attached communication.
Notice of the Office communication was sent electronically on above-indicated "Notification Date" to the
following e-mail address(es):
ipefiling@kilpatricktownsend.com
KTSDocketing2@kilpatrick.foundationip.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte JUSTIN T. MONK
Appeal2018-000421
Application 13/888,873
Technology Center 3600
Before MAHSHID D. SAADAT, ST. JOHN COURTENAY III, and
LARRY J. HUME, Administrative Patent Judges.
SAADAT, Administrative Patent Judge.
DECISION ON APPEAL
Appellant1 appeals under 35 U.S.C. § 134(a) from the Examiner's
Final Rejection of claims 1, 2, 4--18, and 23-26. 2 We have jurisdiction
under 35 U.S.C. § 6(b ).
We reverse.
1 According to Appellant, the real party in interest is Visa International
Service Association. App. Br. 3.
2 Claims 3 and 19-22 have been canceled previously.
Appeal2018-000421
Application 13/888,873
STATEMENT OF THE CASE
Appellant's invention relates to a method and system that enables "a
recipient to use a gift card issued by a specific merchant to conveniently use
funds on the gift card at another merchant of the recipient's choice." Spec.
,r 7. Exemplary claim 1 under appeal reads as follows:
1. A method comprising:
receiving, at a payment processing server computer, an
authorization request message from a first merchant computer
operated by a first merchant that includes information
associated with a transaction being conducted by a consumer
using a prepaid device;
determining, by the payment processing server computer,
based on the information in the authorization request message,
that the prepaid device is associated with an entity other than
the first merchant;
determining, by the payment processing server computer,
that the prepaid device is associated with a closed loop system
operated by a second merchant, the first merchant being outside
of the closed loop system, the prepaid device having an account
balance maintained by the second merchant;
identifying, by the payment processing server computer,
one or more surcharge rules to be associated with transactions
that involve the first merchant and the second merchant;
adjusting, by the payment processing server computer, at
least a transaction amount of the authorization request in the
authorization request message based on the identified one or
more surcharge rules;
reformatting, by the payment processing server
computer, the authorization request message based on the
identified one or more surcharge rules, the authorization request
message reformatted from a first format used by the first
merchant to a second format used by the second merchant;
transmitting, by the payment processing server computer,
the authorization request message to a second merchant
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computer within the closed loop system operated by the second
merchant for the second merchant to determine whether to
approve the transaction being conducted by the consumer at the
first merchant using the prepaid device associated with the
second merchant, the second merchant determining whether to
approve the transaction based at least in part on the account
balance maintained by the second merchant computer and the
transaction amount of the authorization request;
receiving, at the payment processing server computer, an
authorization response message from the second merchant
computer that includes an indication that the transaction being
conducted by the consumer at the first merchant using the
prepaid device associated with the second merchant is
authorized or denied by the second merchant; and
sending, by the payment processing server computer, the
authorization response message received from the second
merchant, to the first merchant computer indicating that the
transaction being conducted by the consumer at the first
merchant using the prepaid device associated with the closed
loop system operated by the second merchant is authorized or
denied by the second merchant.
App. Br. 29--30 (Claims App'x).
REFERENCES and REJECTIONS
Claims 1, 2, 4--18, and 23-26 stand rejected under 35 U.S.C. § 101 for
being directed to patent-ineligible subject matter. See Final Act. 5-7.
Claims 1, 2, 4--18, and 23-26 stand rejected 35 U.S.C. § I03(a) as
being unpatentable over Im (US 2012/0290368 Al; pub. Nov. 15, 2012),
Dorf (US 6,000,608; iss. Dec. 14, 1999), and Cervenka (US 2010/0161405
Al; June 24, 2010). See Final Act. 7-22.
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Application 13/888,873
ANALYSIS
We have reviewed the Examiner's rejections in light of Appellant's
arguments that the Examiner errs. We are persuaded the Examiner erred in
rejecting the claims under 35 U.S.C. § 101 for being directed to patent-
ineligible subject matter. We are also persuaded the Examiner erred in
rejecting the claims under 35 U.S.C. § 103(a) as obvious in view of the cited
references.
REJECTION OF CLAIMS UNDER§ 101
Principles of Law
Section 101 of the Patent Act provides that "any new and useful
process, machine, manufacture, or composition of matter, or any new and
useful improvement thereof' is patent eligible. 35 U.S.C. § 101. But the
Supreme Court has long recognized an implicit exception to this section:
"Laws of nature, natural phenomena, and abstract ideas are not patentable."
Alice Corp. v. CLS Bankint'l, 573 U.S. 208,216 (2014) (quotingAss'nfor
Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 589 (2013)).
To determine whether a claim falls within one of these excluded categories,
the Court has set out a two-part framework. The framework requires us first
to consider whether the claim is "directed to one of those patent-ineligible
concepts." Alice, 573 U.S. at 217. If so, we then examine "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." Alice, 573 U.S. at 217 (quoting Mayo
Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 78, 79 (2012)).
That is, we examine the claims for an "inventive concept," "an element or
combination of elements that is 'sufficient to ensure that the patent in
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practice amounts to significantly more than a patent upon the [ineligible
concept] itself."' Alice, 573 U.S. at217-18 (alteration in original) (quoting
Mayo, 566 U.S. at 72-73).
In January 2019, the USPTO published revised guidance on the
application of§ 101. See 2019 Revised Patent Subject Matter Eligibility
Guidance, 84 Fed. Reg. 50 (Jan. 7, 2019) ("Guidance"). Under that
guidance, we first look to whether the claim recites:
(1) any judicial exceptions, including certain groupings of abstract
ideas (i.e., mathematical concepts, certain methods of organizing
human activities such as a fundamental economic practice, or mental
processes); and
(2) additional elements that integrate the judicial exception into a
practical application (see MANUAL OF PATENT EXAMINING PROCEDURE
(MPEP) §§ 2106.05(a}-(c), (e}-(h) (9th ed. Rev. 08.2017, Jan. 2018)).
Only if a claim ( 1) recites a judicial exception, and (2) does not integrate that
exception into a practical application, do we then look to whether the claim:
(3) adds a specific limitation beyond the judicial exception that is not
well-understood, routine, and conventional in the field (see MPEP
§ 2106.05(d)); or
(4) simply appends well-understood, routine, and conventional
activities previously known to the industry, specified at a high level of
generality, to the judicial exception.
See Guidance, 84 Fed. Reg. at 56.
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Arguments
Here, the Examiner concluded the claims are abstract because:
Claim(s) 1, 2, 4-18, and 23-26 are directed to directed to
receiving and sending authorization messages between two
merchants or transaction processing, which is similar to the
examples identified by the courts of a fundamental economic
practice of authorizing a transaction and processing information
through a clearinghouse (analogous to authorization requests,
see Alice), performance of a financial transaction, such as
creating a contractual agreement (method of organizing human
activity and a fundamental economic practice, see buySafe), and
processing loan information ( method of organizing human
activity, see Dealertrack).
Final Act. 5-6. The Examiner also determined:
The claims do not include additional elements that are sufficient
to amount to significantly more than the judicial exception
because the additional elements determining by the payment
processing server computer that the prepaid device is associated
with a closed loop system operated by a second merchant,
payment processing server computer, does not add significantly
more to the judicial exception because the server computer
determining the merchant associated to the request is a generic
computer function (reading/interpreting contents of a message)
that is well-understood, routine and conventional in the
industry.
Final Act. 6.
Appellant contends the Examiner erred because, given the specific
limitations in the claims relating to "a system that enables merchants that
maintain closed-loop payment systems to have their payment devices used
outside of the closed-loop payment system without the need for any changes
to that merchant's current system architecture." App. Br. 12. Based on this
description, Appellant also argues "even if the Examiner is correct in that the
claims are directed to 'receiving and sending authorization messages
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between two merchants or transaction processing,' the claims are directed to
a specific technique that is certainly not a fundamental economic practice
similar to the one found in Alice." Id. ( emphasis omitted). Appellant further
argues "the claims do not involve, at any level, directing or otherwise
organizing human activities" because "[ e Jach of the features of the claims
correspond to actions which are actually performed by computing devices in
the claims." App. Br. 13. Finally, Appellant argues, even if the claims
involve an abstract idea, they include additional elements that: amount to
significantly more than the abstract idea; are other than what is well-
understood, routine, and conventional in the field; and improve the technical
field of the disclosed invention related to closed loop prepaid devices. See
App. Br. 21-24.
Step 2A, Prong One - Recited Judicial Exception
Step 2A of the Guidance is a two-prong inquiry. In Prong One we
evaluate whether the claim recites a judicial exception. For abstract ideas,
Prong One represents a change as compared to prior guidance because we
here determine whether the claim recites mathematical concepts, certain
methods of organizing human activity, or mental processes.
We conclude at least the following limitation of claim 1 recites a
mental process that practically could be performed via pen and paper or in a
person's mind:
determining, ... based on the information in the authorization
request message, that the prepaid device is associated with an
entity other than the first merchant;
determining, ... that the prepaid device is associated with a
closed loop system operated by a second merchant, ...
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identifying, ... one or more surcharge rules to be associated
with transactions that involve the first merchant and the second
merchant;
adjusting, ... at least a transaction amount of the authorization
request .. .
App. Br. 29 (Claims App'x). Other than reciting "by the payment
processing server computer," the claim includes nothing that could not be
performed manually and in the human mind. Appellant's Specification
describes that the "authorization request message" includes data that is
relevant to the transaction and the payment amount associated with the
prepaid card. Spec. ,r 21, 27, 33. However, the Specification describes the
"server computer" as "a large mainframe, a minicomputer cluster, or a group
of servers functioning as a unit" and provides examples such as "a database
server coupled to a Web server and may host a merchant website." Spec.
Additionally, we conclude that claim 1 recites a fundamental
economic practice, such as "transmitting ... the authorization request
message to a second merchant" and sending the authorization message that
was received from the second merchant to the first merchant. App. Br. 29--
30 (Claims App'x). Thus, we conclude the claim recites a method of
managing interactions between merchants, which also falls within the
"certain methods of organizing human activity" category of abstract ideas
enumerated in the Guidance. See also Ans. 2-3 ( determining
"[p ]erformance of a financial transaction, including creating a contractual
agreement, is a fundamental economic practice."). Our reviewing court
recognizes that "[ a ]n abstract idea can generally be described at different
levels of abstraction." Apple, Inc. v. Ameranth, Inc., 842 F.3d 1229, 1240
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(Fed. Cir. 2016). That need not and, in this case does not, "impact the
patentability analysis." Id. at 1241. Further, "[t]he Board's slight revision of
its abstract idea analysis does not impact the patentability analysis." Id.
Moreover, merely combining several abstract ideas does not render the
combination any less abstract. RecogniCorp, LLC v. Nintendo Co., 855 F.3d
1322, 1327 (Fed. Cir. 2017) ("Adding one abstract idea (math) to another
abstract idea ... does not render the claim non-abstract."); see also
FairWarning IP, LLC v. Iatric Sys., Inc., 839 F.3d 1089, 1093-94 (Fed. Cir.
2016) ( determining the pending claims were directed to a combination of
abstract ideas).
Similar limitations are recited in claims 12 and 18 (reciting a server
computer including processor and executable instructions stored on a
computer readable medium for performing the functionalities address above)
and claim 13 ( reciting method steps similar to those in claim 1).
Because we conclude the independent claims recite an abstract idea,
the claims require further analysis for a practical application of the judicial
exception.
Step 2A, Prong Two -Practical Application
If a claim recites a judicial exception, in Prong Two we determine
whether the recited judicial exception is integrated into a practical
application of that exception by: (a) identifying whether there are any
additional elements recited in the claim beyond the judicial exception( s ); and
(b) evaluating those additional elements individually and in combination to
determine whether they integrate the exception into a practical application.
If the recited judicial exception is integrated into a practical application, the
claim is not directed to the judicial exception.
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Here, claim 1 recites the additional elements of "adjusting, by the
payment processing server computer, at least a transaction amount of the
authorization request in the authorization request message based on the
identified one or more surcharge rules" and "reformatting, by the payment
processing server computer, the authorization request message based on the
identified one or more surcharge rules, the authorization request message
reformatted from a first format used by the first merchant to a second format
used by the second merchant," which allow a transaction at the first
merchant using the prepaid device associated with the second merchant to be
conducted. Although we agree with the Examiner that the claims do not
specify the reformatting process (Ans. 5), Appellant's Specification
describes the steps taken by the payment processing network to identify the
merchants, the applicable surcharge based on a set of rules, and the amount
to be charged to the payment device of the first merchant such that the
transaction could be completed by the second merchant. Spec. ,r,r 57---64.
The disclosed process responds to the need for using "a credit card issued by
first merchant in a closed loop system, at a second merchant that is outside
of the closed loop system. Spec. ,r 45; See Spec. ,r 20 ("Closed loop devices
can typically only be redeemed by the issuing merchant.").
Considering claim 1 as a whole, the above-mentioned limitations and
the final "transmitting ... the authorization request message to a second
mechant computer within the closed loop system," "receiving ... an
authorization response message from the second merchant computer," and
"sending ... the authorization response message received from the second
merchant" steps do "integrate[] a judicial exception into a practical
application [in that they] apply, rely on, or use the judicial exception in a
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manner that imposes a meaningful limit[ ation] on the judicial exception,
such that the claim is more than a drafting effort designed to monopolize the
judicial exception." Guidance at 53. Specifically, the manner in which a
consumer is not limited to using a gift card issued by a first merchant in a
closed loop system only at the issuing merchant, but at a second merchant
that is outside of the closed loop system, amounts to more than the mere
manipulation of data. See MPEP 2106.05( c ). In fact, the recited "adjusting"
and "reformatting" steps are the types of functions more typical of computer
operations, as opposed to human activity. The human analogy equivalent
would be an individual performing all the calculations, contacting the first
merchant, acquiring authorizations, and completing the transaction, which is
plausible, but far-fetched given the technical nature of the claimed steps in
light of the Specification.
In summary, the above-discussed limitations result in a payment
device issued by the first merchant being honored by another merchant, and
amounts to more than the mere manipulation of data. See MPEP 2106.05( c)
("Particular Transformation"). Thus, we conclude that claim 1 recites
additional elements that integrate the abstract idea into a practical
application. Claims 12 and 18 similarly integrate the abstract idea into a
practical application. Because claims 1, 9, and 14 integrate the recited
judicial exception into a practical application, they are not "directed to" a
judicial exception and, therefore, our inquiry ends.
For these reasons, under the Guidance, we reverse the Examiner's
§ 101 rejection of independent claims 1, 12, 13, and 18, as well as the
Examiner's rejection of dependent claims 2, 4--11, 14--17, and 23-26, which
stand with the independent claims from which they depend.
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REJECTION OF CLAIMS UNDER§ 103
First, Appellant contends paragraph 7 of Im describes "a method and
an apparatus for operating a gift card network," which is different from
Appellant's claimed invention of a closed loop system. App. Br. 25-26.
Second, Appellant contends Dorf does not remedy this deficiency of Im
because the cited portions of Dorf also relate to a multifunction card that
allows associating a number of retailers with the payment card, which is not
the same as the closed loop described in the claims. App. Br. 26. Lastly,
Appellant contends Cervenka also describes accounts that correspond with a
consumer portable payment device, but has no discussion of a first merchant
prepaid payment device in a transaction associated with a closed loop system
operated by a different merchant. App. Br. 27.
The Examiner responds that, based on the broadest reasonable
interpretation of the claims, Cervenka teaches the recited reformatting
process. Ans. 8. According to the Examiner "[i]f the Appellant's invention
is truly the reformatting process in order to create compatible messages
between closed loop systems and open loop systems, then the Appellant
should have presented claims that specifically described the process and
included a description in the specification, both of which are not present."
Ans. 8-9. The Examiner further asserts "the claims do not require that the
card exclusively operate on a closed loop system operated by a second
merchant under the broadest reasonable interpretation and the plain reading
of the claim limitations." Ans. 9.
We do not agree with the Examiner's claim interpretation and
conclusion. As argued by Appellant (Reply Br. 12), the recited features of
claim 1 "provide[] a mechanism for enabling merchants that maintain
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closed-loop payment systems to have their payment devices used outside of
the closed-loop payment system without the need for any changes to that
merchant's current system architecture." In other words, the reformatting
step of the claim specifically relates to changing a format used by the first
merchant to one used by a second merchant based on identifying a
surcharge, obtaining authorization and approval from the merchants, and the
transaction amount and "enable gift cards issued by merchants, often using
their own proprietary formats, to be used at other merchants while requiring
little to no infrastructure changes on behalf of the merchants involved."
Reply Br. 13.
Therefore, we agree with Appellant that the reformatting of Cervenka
is not related to the changes required by the transaction with the second
merchant using a prepaid card issued by a first merchant. Reply Br. 14; see
also Cervenka ,r,r 29--30. Therefore, we do not sustain the rejection of claim
1, independent claims 12, 13, and 18, which recite similar features, or the
remaining claims dependent therefrom.
DECISION
We reverse the Examiner's decision rejecting claims 1, 2, 4--18, and
23-26 under 35 U.S.C. § 101.
We reverse the Examiner's decision rejecting claims 1, 2, 4--18, and
23-26 under 35 U.S.C. § 103(a).
REVERSED
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