Ex Parte Negron

Patent Trial and Appeal Board

Aug 10, 2018

12567315 (P.T.A.B. Aug. 10, 2018)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE FIRST NAMED INVENTOR
12/567,315 09/25/2009 Richard J. Negron
143177 7590 08/14/2018
Shook, Hardy & Bacon L.L.P.
(United Parcel Service, Inc.)
2555 Grand Blvd.
Kansas City, MO 64108-2613
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.
056182/379490 4056
EXAMINER
REFAI, RAMSEY
ART UNIT PAPER NUMBER
3627
NOTIFICATION DATE DELIVERY MODE
08/14/2018 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):
IPDOCKET@SHB.COM
IPRCDKT@SHB.COM
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte RICHARD J. NEGRON
Appeal2017-003720
Application 12/567 ,315 1
Technology Center 3600
Before JASON V. MORGAN, NABEEL U. KHAN, and
SHARON PENICK, Administrative Patent Judges.
KHAN, Administrative Patent Judge.
DECISION ON APPEAL
Appellant appeals under 35 U.S.C. § 134(a) from the Non-Final
Rejection of claims 1-14. We have jurisdiction under 35 U.S.C. § 6(b).
We affirm.
1 Appellant identifies United Parcel Service of America, Inc. as the real
party in interest. App. Br. 3.
Appeal2017-003720
Application 12/567 ,315
BACKGROUND
THE INVENTION
According to Appellant, the invention relates to "the use of supply
chain management system, and in particular, supply chain management
systems for high-risk inventory goods that are prone to damage, depreciation
in value and obsolescence." Spec. ,r 2.
Exemplary independent claim 1 is reproduced below.
1. A supply chain and inventory risk management system
for supplying inventory manufactured by a manufacturing
entity to a plurality of customers, said management system
compnsmg:
a plurality of preexisting customer agreements between
the manufacturer and the customers, said plurality of
preexisting customer agreements requiring distribution of the
inventory to the customers in agreed-upon amounts in exchange
for agreed-upon payments, wherein the plurality of preexisting
customer agreements are in the form of electronic files;
an owner entity having an owner entity computer system,
wherein the owner entity is a separate entity from the
manufacturer and the customers, and wherein the owner entity
is formed subsequent to establishment of the plurality of
preexisting customer agreements between the manufacturer and
the customers,
the owner entity computer system configured to:
receive the plurality of preexisting customer
agreements;
forecast amounts of the inventory needed to supply
the customers based upon and using the agreed-upon
amounts defined in the plurality of preexisting customer
agreements;
facilitate distribution of the agreed-upon amounts
of inventory to the customers in accordance with the
plurality of preexisting customer agreements; and
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Application 12/567 ,315
receive and process the agreed-upon payments
from the customers in exchange for the inventory based
upon a transfer of the plurality of preexisting customer
agreements that facilitates purchase of the agreed-upon
amounts of inventory by the customers at the agreed-
upon payment,
wherein:
upon formation of the owner entity, the owner entity
purchases and receives, via the owner entity computer system,
title to the forecasted amounts of inventory from the
manufacturer in relation to the transferred and received plurality
of preexisting customer agreements; and
upon formation of the owner entity, the owner entity
takes physical possession to the inventory purchased from the
manufacturer concurrent with taking title to the inventory.
REFERENCES AND REJECTIONS
1. Claims 1-14 stand rejected under 35 U.S.C. § 101 as directed to
a judicial exception to statutory subject matter. Final Act. 5-6.
2. Claims 1-14 stand rejected under 35 U.S.C. § I02(e) as
anticipated over Farias (US 7,711,612 Bl published May 4, 2010). Final
Act. 6-9.
DISCUSSION
REJECTION UNDER 35 U.S.C. § 101
Under 35 U.S.C. § 101, a patent may be obtained for "any new and
useful process, machine, manufacture, or composition of matter, or any new
and useful improvement thereof." The Supreme Court has "long held that
this provision contains an important implicit exception: Laws of nature,
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Application 12/567 ,315
natural phenomena, and abstract ideas are not patentable." Alice Corp. Pty.
v. CLS Bankint'l, 134 S. Ct. 2347, 2354 (2014) (quotingAss'nfor
Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 589 (2013)).
The Supreme Court in Alice reiterated the two-step framework previously
set forth in Mayo Collaborative Services v. Prometheus Labs., Inc., 566 U.S.
66 (2012), "for distinguishing patents that claim laws of nature, natural
phenomena, and abstract ideas from those that claim patent-eligible
applications of those concepts." Alice, 134 S. Ct. at 2355. The first step in
that analysis is to "determine whether the claims at issue are directed to one
of those patent-ineligible concepts," such as an abstract idea. Id. The Court
acknowledged in Mayo that "all inventions at some level embody, use,
reflect, rest upon, or apply laws of nature, natural phenomena, or abstract
ideas." Mayo, 566 U.S. at 71. We, therefore, look to whether the claims
focus on a specific means or method that improves the relevant technology
or are instead directed to a result or effect that itself is the abstract idea and
merely invoke generic processes and machinery. See Enfish, LLC v.
Microsoft Corp., 822 F.3d 1327, 1335-36 (Fed. Cir. 2016). If the claims are
not directed to an abstract idea, the inquiry ends. Otherwise, the inquiry
proceeds to the second step where the elements of the claims are considered
"individually and 'as an ordered combination,' to determine whether the
additional elements 'transform the nature of the claim' into a patent-eligible
application." Alice, 134 S. Ct. at 2355 (quoting Mayo, 566 U.S. at 78-79).
Under the first step of the Alice/Mayo framework, the Examiner finds
the claims are directed to "the concept of supply chain and inventory risk
management, which is considered a fundamental economic practice and a
method of organizing human activities, therefore the claims are drawn to
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an abstract idea." Final Act. 5. Under the second step of the Alice/Mayo
framework, the Examiner finds that claims do not recite limitations that are
significantly more because "the claims do not recite an improvement to
another technology or technical field, an improvement to the functioning of
the computer itself, or meaningful limitations beyond generally linking the
use of an abstract idea to a particular technological environment." Final Act.
5---6.
Appellant argues the Examiner "oversimplif[ied] the claimed concept
to something much broader (i.e., supply chain and inventory risk
management), which arguably is not even the nexus of the claimed
configuration's inventiveness." App. Br. 15. Appellant further argues that
the claims are not directed to an abstract idea, or that they recite something
significantly more than the abstract idea because the claims are
directed to a highly computer-specific system that not only
establishes, via a management system, customer agreements ( as
between a manufacturer and customers) prior to establishment of
a separate and distinct owner entity, but which does so such that
forecast amounts of inventory needed are determined and made
available based upon the preexisting customer agreements.
Based further upon the determined forecast amounts of inventory
and via the highly computer-specific system claimed, the owner
entity is established/formed in a near real-time fashion to take,
via a separate and distinct owner entity computer system, not
only title ( e.g., legal title) to the forecasted amounts of inventory,
but also physical possession thereof. In this manner, the
preexisting customer agreements facilitate a seamless and near
real-time process that avoids delay oftentimes encountered in
conventional systems where one or both of title and/or
possession may require further processing prior to transfer of
inventory.
App. Br. 21; see also App. Br. 25-27 (arguing the highly computer specific
claims are necessarily rooted in computer technology).
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Application 12/567 ,315
Appellant argues "regardless of whether the pending claims herein are
directed to an abstract idea, as Applicant has outlined above these claims
recite significantly more than an abstract idea in the particular application
thereof so as not to pre-empt the abstract idea itself such that others cannot
practice it." App. Br. 26. Appellant also argues "that the highly specifically
configured system in which the claimed configuration operates is not so
well-known and understood." App. Br. 32.
We are unpersuaded by Appellant's arguments. We first tum to the
Examiner's determination that the claims are directed to an abstract idea.
"The 'abstract idea' step of the inquiry calls upon us to look at the 'focus of
the claimed advance over the prior art' to determine if the claim's 'character
as a whole' is directed to excluded subject matter."' Affinity Labs of Texas
v. DirectTV, LLC, 838 F.3d 1253, 1257 (Fed. Cir. 2016) (quoting Elec.
Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1353 (Fed. Cir. 2016)); see
also Enfish, 822 F.3d at 1335 ("[T]he 'directed to' inquiry applies a stage-
one filter to claims, considered in light of the specification, based on
whether 'their character as a whole is directed to excluded subject matter."'
( citation omitted)).
In this regard, the Specification explains that manufacturers often
carry excess inventory that either remains unsold or is stockpiled due to
anticipated future demand. Spec. ,r 3. This excess inventory tends to tie up
valuable capital and is expensive to store and manage and can also have a
negative effect on a company's balance sheet. Id. Further the inventory
may be subject to risks of obsolescence and damage as the inventory ages.
Id. Appellant's claimed invention has the advantages of allowing for the
removal of high-risk inventory such as goods prone to obsolescence or
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damage from the balance sheet of a manufacturer. Spec. ,r 9. The invention
achieves these advantages through a system and method for supply chain
inventory risk management. Spec ,r 10. The Specification further describes
this system as
includ[ing] an owner entity that is transferred customer
agreements requirements for the distribution of the inventory to
the customers in agreed-upon amounts in exchange for agreed-
upon payments. Transfer of the customer agreements allows the
owner entity to forecast the amount of inventory that will be
needed by the customers and increases the certainty that
inventory purchased by the owner will be sold to the customers.
The owner entity may also include a logistics agent that is
capable of providing customized shipping and handling services.
The combination of customer agreements and customized
logistics services maximizes the value of the inventory, and
particularly high-risk inventory such as electronic components,
that are non-fungible, fragile, environmentally sensitive and
prone to obsolescence, to both the owner entity and the
manufacturer.
Spec. ,r 10.
Consistent with this description, claim 1 is directed to a "supply chain
and inventory risk management system." The system includes an owner
entity that takes title and possession of the inventory. The system also
includes an owner entity computer system configured to: (1) receive the
purchase agreements; (2) forecast inventory needed; (3) facilitate
distribution of the inventory to customers; and ( 4) receive and process
payments.
Having reviewed the Specification and the claims, it is evident that the
claimed invention is directed to supply chain and inventory risk management
through the use of an intermediary owner entity capable of taking on the
risks of inventory management by taking title and possession of the
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inventory, forecasting inventory needs, distributing the inventory and
receiving and managing payments. Methods of mitigating risk have been
found to be directed to abstract ideas in previous cases. See e.g. Alice Corp.
Pty. v. CLS Bank Int 'l, 134 S. Ct. 2347 (2014); Bilski v. Kappas, 561 U.S.
593 (2010); In re Chorna, 656 Fed. Appx. 1016 (Fed. Cir. 2016). We
therefore agree with the Examiner that the claims are directed to an abstract
idea that can be considered a fundamental economic practice and a method
of organizing human activity.
Further, we agree with the Examiner that the claims do not recite
limitations that are significantly more than the abstract idea. Taking a look
at the limitations individually and as an ordered combination we note that
the only elements not directly related to supply chain and inventory risk
management are the recitation of an owner entity computer system and to
customer agreements "in the form of electronic files." However, these
limitations are insufficient to transform the claim to something significantly
more than the abstract idea. There is no indication that the claims improve
the recited computer system, nor is the fact that the customer agreements are
in electronic form significantly material to the claimed invention.
We do not agree with Appellant that the "highly computer-specific"
claims are rooted in computer technology. Though the claims recite a
computer system, and customer agreements in the form of electronic files,
the claims are not directed to improvements to these computer systems.
Rather we find here that the claims are directed to "a process that qualifies
as an 'abstract idea' for which the computers are invoked merely as a tool."
Enfzsh 822 F.3d at 1335-36.
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Accordingly, we sustain the Examiner's 35 U.S.C. § 101 rejection of
claims 1-14.
REJECTION UNDER 35 U.S.C. § 102(e)
The Examiner finds Farias discloses the limitations of the claim.
Final Act. 6-8. In doing so, the Examiner interprets claim limitations
reciting that the customer agreements be "preexisting" and limitations
reciting that the owner entity be "formed subsequent to establishment of the
plurality of preexisting customer agreements" as directed to non-functional
descriptive material. Final Act. 7.
Appellant argues Farias does not disclose "pre-existing" agreements
(App. Br. 10) and that the limitations requiring that the owner entity be
formed after the establishment of the customer agreements are not non-
functional descriptive material but rather provide functionality and benefits
of seamless transfer of legal title and possession of the inventory (App. Br.
13).
We agree with Appellant. The claims explicitly require "pre-existing
customer agreements" and that "the owner entity is formed subsequent to
establishment of the plurality of preexisting customer agreements between
the manufacturer and the customers." The claims also require that "upon
formation of the owner entity" the owner entity takes title and possession of
the inventory. If the customer agreements did not exist at the time the owner
entity was formed, the owner entity would likely not be able to take title and
possession of the inventory because the price and quantity of such inventory
would not yet be specified. Thus, we agree with Appellant that the "pre-
existing" nature of the customer agreements has a functional relationship
with other limitations in the claim requiring the owner entity to take title and
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possession of the inventory "upon formation" and therefore should not be
construed as non-functional descriptive material.
Because the Examiner has not made findings showing that Farias
discloses pre-existing customer agreements we do not we do not sustain the
Examiner's rejection of claim 1 under 35 U.S.C. § 102(e). Similarly, we do
not sustain the Examiner's rejection of claims 2-14 which depend from
claim 1.
DECISION
The Examiner's rejection of claims 1-14 under 35 U.S.C. § 101 is
affirmed.
The Examiner's rejection of claims 1-14 under 35 U.S.C. § 102(e) is
reversed.
Because we have affirmed at least one ground of rejection with
respect to each claim on appeal, the Examiner's decision is affirmed. See
37 C.F.R. § 4I.50(a)(l).
No time period for taking any subsequent action in connection with
this appeal may be extended. See 37 C.F.R. § 1.136(a)(l )(iv).
AFFIRMED
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