Ex Parte Shanahan et al

Patent Trial and Appeal Board

Nov 13, 2017

13083492 (P.T.A.B. Nov. 13, 2017)

UNITED STATES PATENT AND TRADEMARK OFFICE
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
APPLICATION NO. FILING DATE FIRST NAMED INVENTOR ATTORNEY DOCKET NO. CONFIRMATION NO.
13/083,492 04/08/2011 Matthew R. SHANAHAN ARC.FIR 8277
82551 7590 11/14/2017
Mersenne Law
9600 S.W. Oak Street
Suite 500
Tigard, OR 97223
EXAMINER
JUNG, ALLEN J
ART UNIT PAPER NUMBER
OPQA
MAIL DATE DELIVERY MODE
11/14/2017 PAPER
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.
PTOL-90A (Rev. 04/07)

UNITED STATES PATENT AND TRADEMARK OFFICE
____________________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________________

Ex parte MATTHEW R. SHANAHAN, JENNIFER L. HINDS,
and MECHTHILD R. KELLAS-DICKS
____________________

Appeal 2016-002384
Application 13/083,492
Technology Center 0000
____________________

Before CARLA M. KRIVAK, JON M. JURGOVAN, and
AMBER L. HAGY, Administrative Patent Judges.

JURGOVAN, Administrative Patent Judge.

DECISION ON APPEAL

Appeal 2016-002384
Application 13/083,492

2
STATEMENT OF THE CASE
Appellants appeal under 35 U.S.C. § 134(a) from a rejection of claims
1 and 7–12. Claims 2–6 and 13–22 are canceled. We have jurisdiction
under 35 U.S.C. § 6(b).
We affirm.1

CLAIMED INVENTION
The claims are directed to adjusting pricing of a digital service to
determine revenue optimization opportunities for a service provider. Spec.
Title, Abstract. Claim 1, reproduced below, is illustrative of the claimed
subject matter:
1. A method for adjusting pricing of a digital service
comprising:
computing a revenue measure and an engagement
measure over a common period of time for each customer of a
plurality of customers, said engagement measure for each
customer being proportional to a temporal duration of service
access by the customer divided by a temporal duration of the
common period of time;
computing a revenue/engagement quotient for each
customer of the plurality of customers by dividing the revenue
measure for the customer by the engagement measure for the
customer;
separating the plurality of customers into three groups,
wherein each member of a first group has a higher

1 Our Decision refers to the Specification (“Spec.”) filed April 8, 2011, the
Non-Final Office Action (“2014 Non-Final Act.”) mailed January 29, 2014,
the Non-Final Office Action (“2015 Non-Final Act.”) mailed January 13,
2015, the Appeal Brief (“App. Br.”) filed July 10, 2015, the Examiner’s
Answer (“Ans.”) mailed October 21, 2015, and the Reply Brief (“Reply
Br.”) filed December 21, 2015.
Appeal 2016-002384
Application 13/083,492

3
revenue/engagement quotient than all members of a second
group and all members of a third group, and each member of
the third group has a lower revenue/engagement quotient than
all members of the first group and all members of the second
group; and
adjusting a price charged to a member of the first group
or the third group to cause the member’s revenue/engagement
quotient to fall in the second group, wherein
the computing, separating and adjusting operations are
performed by a computer processor.
App. Br. 12 – Claims App’x.

REJECTION
Claims 1 and 7–12 were rejected under 35 U.S.C. § 101 as directed to
patent-ineligible subject matter. 2015 Non-Final Act. 2; 2014 Non-Final
Act. 2–4.

ANALYSIS
Patent eligibility is a question of law that is reviewable de novo.
Dealertrack, Inc. v. Huber, 674 F.3d 1315, 1333 (Fed. Cir. 2012).
Patentable subject matter is defined by 35 U.S.C. § 101 as follows:
[w]hoever 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.
In interpreting this statute, the Supreme Court emphasizes that patent
protection should not preempt “the basic tools of scientific and technological
work.” Gottschalk v. Benson, 409 U.S. 63, 67 (1972); Mayo Collaborative
Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 71 (2012); Alice Corp. Pty.
Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 2354 (2014). The rationale is that
Appeal 2016-002384
Application 13/083,492

4
patents directed to basic building blocks of technology would not “promote
the progress of science” under the U.S. Constitution, Article I, Section 8,
Clause 8, but instead would impede it. Accordingly, laws of nature, natural
phenomena, and abstract ideas are not patent-eligible subject matter. Thales
Visionix Inc. v. U.S., 850 F.3d 1343, 1346 (Fed. Cir. 2017) (citing Alice, 134
S. Ct. at 2354).
The Supreme Court set forth a two-part test for subject matter
eligibility in Alice. 134 S. Ct. at 2355. The first step is to determine
whether the claim is directed to a patent-ineligible concept. Id. (citing
Mayo, 566 U.S. at 76–77). If so, then the eligibility analysis proceeds to the
second step of the Alice/Mayo test, in which we “examine the elements of
the claim to determine whether it contains an ‘inventive concept’ sufficient
to ‘transform’ the claimed abstract idea into a patent-eligible application.”
Alice, 134 S. Ct. at 2357 (quoting Mayo, 566 U.S. at 72, 79). The “inventive
concept” may be embodied in one or more of the individual claim
limitations or in the ordered combination of the limitations. Alice, 134 S. Ct.
at 2355. The “inventive concept” must be significantly more than the
abstract idea itself, and cannot be simply an instruction to implement or
apply the abstract idea on a computer. Alice, 134 S. Ct. at 2358. “‘[W]ell-
understood, routine, [and] conventional activit[ies]’ previously known to the
industry” are insufficient to transform an abstract idea into patent-eligible
subject matter. Alice, 134 S. Ct. at 2359 (citing Mayo, 566 U.S. at 73).
The Examiner finds the claims are directed to the abstract idea of
computing, separating, and adjusting numerical data (claim 1), as well as
producing a scatter plot of computed numerical data (claims 7–12). 2014
Non-Final Act. 3; Ans. 4. The Examiner finds this abstract idea falls under
Appeal 2016-002384
Application 13/083,492

5
the particular categories of fundamental economic practices, certain methods
of organizing human activity, and mathematical relationships/formulas. Ans.
6. The Examiner further finds the features that Appellants rely on to
establish the claim is “significantly more” than the judicial exception are
actually details about the abstract idea rather than adding “something more”
to the abstract idea. Ans. 7–8.
Step One of the Alice/Mayo Test
Appellants argue the Examiner’s characterization of the abstract idea
is not coextensive with the claim. App. Br. 7. The Examiner responds that
the claim is directed to a judicial exception when a law of nature, natural
phenomenon, or an abstract idea is recited (i.e., set forth or described) in the
claim. Ans. 3 citing 2014 Interim Guidance on Patent Subject Matter
Eligibility, 79 Fed. Reg. 74618, 74622 (Dec. 16, 2014). We agree with the
Examiner. We are aware of no requirement in the law that holds the abstract
idea must be coextensive with the claimed invention in step one of the
Alice/Mayo test. The requirement is merely to indicate whether the claim is
directed to a judicial exception such as an abstract idea, which the Examiner
has done. If Appellants’ argument were correct, there would be no need to
determine whether the claim recites “significantly more” in the second step
of the Alice/Mayo test. We do not interpret the decisions of our reviewing
courts in this way, and we are not persuaded of error in the Examiner’s
determinations.
Appellants argue the Examiner did not name the abstract idea so it
cannot be determined whether the abstract idea falls within the categories of
fundamental economic practices, certain methods of organizing human
activities, or mathematical relationships/formulas, as set forth in the 2014
Appeal 2016-002384
Application 13/083,492

6
Interim Guidance. App. Br. 8. However, as stated, the Examiner finds that
the claims are directed to the abstract ideas of computing, separating, and
adjusting numerical data (claim 1), as well as producing a scatter plot of
computed numerical data (claims 7–12). Although the numerical data
recited pertains to a particular kind of data—that is, revenue measure and
engagement measure used to compute a revenue/engagement quotient for
separating customers into groups and adjusting the price charged to certain
of the groups—the Examiner is nevertheless correct that the claims, at their
core, are directed to the abstract ideas of computing, separating, and
adjusting numerical data (claim 1), and producing a scatter plot of computed
numerical data (claims 7–12). Thus, we are not persuaded of error in the
Examiner’s determination.
We are also guided by our reviewing court, which has recognized
similar claims to be patent-ineligible. For example, this case has substantial
similarities with Versata Development Group, Inc. v. SAP America, Inc., 793
F.3d 1306 (Fed. Cir. 2015), which held claims that were directed to the
abstract idea of determining a price using organizational and product group
hierarchies were ineligible under § 101. Similarly, OIP Technologies, Inc. v.
Amazon.com, Inc., 788 F.3d 1359 (Fed. Cir. 2015), recognized offer-based
price-optimization to be a patent-ineligible abstract idea. The claims
presented on appeal in this case also embody “fundamental economic
concepts”—namely, determining price adjustments based on revenue and
engagement measures; thus, they are similar to the claims directed to price-
setting that were held to be abstract by our reviewing court. E.g., id. at
1362–63.
Appeal 2016-002384
Application 13/083,492

7
We also note that, although the claims at issue here are performed by
a computer, the steps or functions recited in the claims can also be carried
out mentally with pencil and paper, without the aid of a computer. Under
such circumstances, our reviewing court has found such claims to be
directed to abstract ideas. Gottschalk v. Benson, 409 U.S. 63 (1972);
Cybersource Corp. v. Retail Decisions, Inc., 654 F.3d 1366 (Fed. Cir. 2011).
The purpose or result of the claims is to adjust prices charged to
customers, causing them to fall into a particular group on a revenue versus
engagement plot, for achieving a business objective. This does not amount
to a technical solution to a technical problem. Under similar circumstances
as presented here, our reviewing court has held that such claims are directed
to an abstract idea. In re TLI Communications LLC Patent Litigation, 823
F.3d 607, 613 (citing Diamond v. Diehr, 450 U.S. 175 (1981)); Affinity Labs
of Texas, LLC v. DIRECTV, LLC, 838 F.3d 1253, 1265 (Fed. Cir. 2016).
Accordingly, we agree with the Examiner the claims are directed to
the abstract idea of computing, separating, and adjusting numerical data
(claim 1), as well as producing a scatter plot of computed numerical data
(claims 7–12).
Step Two of the Alice/Mayo Test
Appellants argue the “something more” that transforms the abstract
idea recited in claim 1 into patent-eligible subject matter is selection of
revenue measures and engagement measures, use of division to compute a
revenue/engagement quotient, separating customers into three groups, and
adjusting prices charged to first or third group to cause the member’s
revenue/engagement quotient to fall in the second group. App. Br. 9.
Certainly, revenue measures, engagement measures, use of mathematical
Appeal 2016-002384
Application 13/083,492

8
division, separating customers into groups, and adjusting prices to achieve
business objectives, are “well-understood, routine and conventional”
activities per Alice. We assume, for purposes of our analysis, that the
particular revenue/engagement quotient and adjusting prices to cause
customers to move from the first or third group into the second group, as
shown below in Figures 3 and 4 of the Specification, may be features that
are not known in the industry.

Figures 3 and 4 of the Specification show scatter plots of revenue versus
engagement for customers to a digital service. Lines 360 and 370 divide
Figure 3 into three groups. Price adjustments cause customers to move from
first and third groups to second group in Figure 4 in order to optimize profit.

Appellants do not argue the functioning of the computer is improved
by implementing the abstract idea of computing revenue measures,
engagement measures, and revenue/engagement quotients, separating
customers into groups on a revenue versus engagement graph, and adjusting
prices for the customers in certain groups to cause them to move to another
group on the graph. Appellants likewise do not argue that the ability to use a
revenue/engagement quotient to adjust prices to move customers to a certain
group on a revenue versus engagement graph is improved by
Appeal 2016-002384
Application 13/083,492

9
implementation on a computer beyond those capabilities that computers are
well-known to provide, such as computational speed. Under similar
circumstances, our reviewing court has held that the computer is merely a
tool or environment in which the abstract idea being carried out. See TLI at
614 (stating that “the telephone unit simply provides the environment in
which the abstract idea of classifying and storing digital images in an
organized manner is carried out.”). Here, Appellants do not persuade us that
the recited computer components do anything more than carry out the
abstract idea of computing, separating, and adjusting of numerical data.
Accordingly, we are not persuaded the claim recites “something more” that
transforms the claim into patent-eligible subject matter.
Moreover, we note that the potential preemption that could be caused
by claim 1 is not insignificant. Adjusting prices to affect customer behavior
is a fundamental aspect of a market economy. Although the claim is limited
to computing a revenue/engagement quotient and using it to adjust prices to
move customers from one group to another in a revenue versus engagement
graph, adjusting prices based on revenue and engagement to affect consumer
behavior are certainly well-known to the industry, and the corresponding
data would reflect similar information when graphed. In any case, “the
absence of complete preemption does not demonstrate patent eligibility.”
Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir.
2015).
Appellants argue claim 7 on the same basis as claim 1, but add that
claim 7 also has “something more” that goes beyond the abstract idea of
producing a scatter plot of computed numerical data. App. Br. 10.
Specifically, Appellants argue claim 7 recites that the claimed scatter plot is
Appeal 2016-002384
Application 13/083,492

10
of two specific values reflecting real-world customer activity, and the
scatterplot is augmented by superimposing two curves, separating its area
into three-sub-areas corresponding to specific groupings of customers. Id.
Appellants argue claim 7 does not preempt the use of graphs or scatter plots.
Id.
Nonetheless, the preemption posed by claim 7 is not insignificant.
Producing a scatter plot of revenue and engagement measures for customers
is well-known to the industry. Also, in the claim, the two curves
superimposed are virtually unlimited in what they may be (as long as they
produce customer groupings with the recited differences in
revenue/engagement quotients). There are only so many ways to express the
relationship between revenue and engagement, and a quotient is one of them.
Thus, although the claim does not completely preempt the abstract idea, it
does represent significant preemption, per Ariosa.
In the Reply Brief, Appellants argue the Examiner’s alleged element-
by-element analysis fails to consider the claim as a whole in determining the
claims are directed to abstract ideas. Reply Br. 1. Appellants also argue the
Examiner errs in determining the abstract ideas are exactly coextensive with
the claim, that the abstract idea is a list of the general steps of the method,
and that the Examiner fails to provide a single, succinct abstract idea. Id. at
1–2. However, Appellants do not cite to where in the record the Examiner
made these alleged errors. As explained, the Examiner clearly sets forth the
abstract idea embodied in claims 1 and 7, and we see no error in the
Examiner’s determinations.
No separate arguments are presented for the dependent claims 8–12,
which fall with independent claim 7. 37 C.F.R. § 41.37(c)(1)(iv).
Appeal 2016-002384
Application 13/083,492

11

DECISION
We affirm the Examiner’s decision rejecting claims 1 and 7–12 under
35 U.S.C. § 101.
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