Ex Parte NegronDownload PDFPatent Trial and Appeal BoardAug 10, 201812567315 (P.T.A.B. Aug. 10, 2018) Copy Citation 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 2 Appeal2017-003720 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, 3 Appeal2017-003720 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 4 Appeal2017-003720 Application 12/567 ,315 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). 5 Appeal2017-003720 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 6 Appeal2017-003720 Application 12/567 ,315 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 7 Appeal2017-003720 Application 12/567 ,315 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. 8 Appeal2017-003720 Application 12/567 ,315 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 9 Appeal2017-003720 Application 12/567 ,315 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 10 Copy with citationCopy as parenthetical citation