Ex Parte Shealy

Board of Patent Appeals and Interferences

Apr 23, 2007

09828579 (B.P.A.I. Apr. 23, 2007)

The opinion in support of the decision being entered today
is not binding precedent of the Board.

UNITED STATES PATENT AND TRADEMARK OFFICE

_________________

BEFORE THE BOARD OF PATENT APPEALS
AND INTERFERENCES

_________________

Ex parte ALAN R. SHEALY
_________________

Appeal No. 2006-1601
Application 09/828,579
Technology Center 3600

_________________

Decided: April 23, 2007
_________________

Before MICHAEL R. FLEMING, Chief Administrative Patent Judge, JENNIFER
D. BAHR, ALLEN R. MacDONALD, LINDA E. HORNER, and ANTON W.
FETTING, Administrative Patent Judges.
MacDONALD, Administrative Patent Judge.

DECISION ON APPEAL

AFFIRMED
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I. STATEMENT OF CASE
Appellant appeals under 35 U.S.C. § 134 from the Final Rejection entered
February 10, 2004. We have jurisdiction under 35 U.S.C. § 6(b).
Appellant invented a method and system for providing a business support
and control system (Specification 1:13-14). More specifically, Appellant invented
a method, system, and computer readable medium for providing for future rate
changes in a billing system (Specification 2:22-23). The invention implements a
future rate change to change a rate plan (tariff model) (Specification 2:12-14).
The appeal contains claims 1-20. Claims 1, 6, 11, and 16 are independent
claims. Claims 6-9 and 11 are representative of the claimed invention and are
reproduced as follows:
6. A method for providing for future rate changes in a billing
system, said method comprising the steps of:
identifying that a future rate plan is to be changed;
selecting the future rate plan desired; and
implementing the future rate change.
7. The method of claim 6, further comprising the step of:
determining if the future rate change is a single plan change.
8. The method of claim 7, further comprising the step of:
verifying that the future rate plan is consistent with an old rate
plan if the future rate change is the single plan change.
9. The method of claim 6, further comprising the step of:
selecting the effective date of the future rate plan.
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11. A computer readable medium for providing for future rate
changes in a billing system, comprising:
logic for identifying that a future rate plan is to be changed;
logic for selecting the future rate plan desired; and
logic for implementing the future rate change.

The Examiner entered a Final Rejection on February 10, 2004.
The Examiner rejected claims 1, 6, 9, 11, 14, 16, and 19 under
35 U.S.C. § 102(e) as being anticipated by Ehlers et al. (Ehlers), U.S. Patent
5,924,486, issued July 20, 1999, based on an application filed October 29, 1997.
The Examiner rejected claims 2-5, 7-8, 10, 12-13, 15, 17-18, and 20 under
35 U.S.C. § 103(a) as being unpatentable over Ehlers.
Appellant appealed from the Final Rejection and filed an Appeal Brief (the
Brief) on January 10, 2005.
The Examiner entered an Examiner’s Answer (the Answer) on October 20,
2005.
Appellant filed a Reply Brief (the Reply) on December 19, 2005.
We affirm. We also use our authority under 37 C.F.R. § 41.50(b) to enter a
first new ground of rejection of claims 6-20 and a second new ground of rejection
of claims 11-15.

II. ISSUES
The principal issues before the Board are whether Appellant has established
(1) the Examiner erred in rejecting claims 1, 6, 9, 11, 14, 16, and 19 based on
anticipation and (2) the Examiner erred in rejecting claims 2-5, 7-8, 10, 12-13, 15,
17-18, and 20 based on obviousness.
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III. FINDINGS OF FACT
Findings of fact, as necessary, appear in the Analysis infra.

IV. ANALYSIS – EXAMINER’S REJECTIONS
A. Claims 1, 6, 9, 11, 14, 16, and 19 - Whether Appellant has established
that the Examiner erred in rejecting claims 1, 6, 9, 11, 14, 16, and 19
under 35 U.S.C. § 102?
(1)
Introduction
It is axiomatic that anticipation of a claim under § 102 can be found only if
the prior art reference discloses every element of the claim. See In re King, 801
F.2d 1324, 1326, 231 USPQ 136, 138 (Fed. Cir. 1986) and Lindemann
Maschinenfabrik GMBH v. American Hoist & Derrick Co., 730 F.2d 1452, 1458,
221 USPQ 481, 485 (Fed. Cir. 1984).

(2)
Examiner’s Prima Facie Case
The Examiner’s prima facie case is set forth at pages 3-4 of the Answer.

(3)
Appellant’s Response and Argument in the Brief
Appellant argues at page 16 of the Brief that Ehlers does not disclose “a
billing system as is the subject of each and every claim.”
Further, Appellant argues at page 17 of the Brief that Ehlers’s use of the
word “future” relates to future energy usage rather than future rate changes.
Appellant argues, at page 18, that “[t]he processor in Ehlers et al. does look at rate
tables of energy suppliers but those are current rate tables” and “there is no
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disclosure of a mechanism, plan, arrangement or any scheme for ‘providing for
future rate changes in a billing system’ as Applicant is claiming.”
With respect to the “effective date” limitation of claims 9, 14, and 19,
Appellant argues at pages 18-19 of the Brief, that the “user” in Ehlers is limited to
a customer that “clearly has no prior knowledge of what plans the energy suppliers
have with respect to rates they plan to charge in the future.” Appellant goes on to
argue “[s]uch user also does not have any prior knowledge of when these rates are
to become effective, as such is a function of management decisions of the energy
suppliers.” Appellant then argues Ehlers’s system merely communicates with
various energy suppliers, determines their existing rates and then selects a supplier
based on those rates and other criteria established by the user of Ehlers’s system.
Finally, Appellant argues he “is concerned with the supplier side and the
ability to program a billing system for ease of establishing rate changes at a future
date.”

(4)
The Examiner’s Response in the Answer
With respect to the billing system of the claims, the Examiner responds at
page 8 of the Answer that Ehlers teaches such at column 23, lines 24-28.
With respect to “future rate changes” and their “effective date,” the
Examiner responds at page 8 of the Answer that Ehlers teaches such because the
energy supplier can communicate to the customer that a price change has occurred,
causing the individual premises to re-compute their economic models. (Ehlers at
col. 23, ll. 28-38). Furthermore, Ehlers teaches that the rates and start time for
each rate are entered by the user (col. 27, l. 66 – col. 28, l. 2).
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With respect to Appellant’s “the supplier side” argument, the Examiner
responds at pages 8-9 of the Answer that such a limitation is not claimed.

(5)
Appellant’s Rebuttal in the Reply
Appellant rebuts the Examiner’s response at pages 2-4 of the Reply.
With respect to the billing system of the claims, Appellant points out
“[t]here simply is no disclosure in Ehlers that he sends out a ‘bill’ in any
conventional sense of the word.”
With respect to future rate changes and their effective date, Appellant points
out:
Respectfully, the passage quoted by the Examiner only indicates that
purchasers are informed that “for upcoming time periods that a price
change has occurred . . .” Appellants [sic] urge that this concept is
completely different from the specifically claimed concept of
identifying that a future rate plan is to be changed, as opposed to “has
occurred.” Moreover, the claimed concept of “selecting the future
rate plan” at least suggests that there is more than one possibility from
which to “select.” The portion of Ehler [sic] cited by the Examiner
reflects only that the potential purchaser is informed of the single
price plan structure and that is [sic] “has occurred.”
With respect to Appellant’s earlier “the supplier side” argument in the Brief,
Appellant’s Reply does not address the Examiner’s rebuttal of this argument.

(6)
Representative claims 6 and 9
We select claim 6 as representative of claims 1, 6, 11, and 16 for the
purposes of our decision, and we select claim 9 as representative of claims 9, 14,
and 19 for purposes of our decision.
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(7)
The Board’s Claim Construction
To determine whether Ehlers anticipates claims 6 and 9, we must first
determine the scope of the claims. Our reviewing court stated in Phillips v. AWH
Corp., 415 F.3d 1303, 1315, 75 USPQ2d 1321, 1327 (Fed. Cir. 2005), cert. denied,
sub nom. AWH Corp. v Phillips, 126 S. Ct. 1332 (2006):
The claims, of course, do not stand alone. Rather, they are part of “a
fully integrated written instrument,” Markman, 52 F.3d at 978,
consisting principally of a specification that concludes with the
claims. For that reason, claims “must be read in view of the
specification, of which they are a part.” Id. at 979. As we stated in
Vitronics, the specification “is always highly relevant to the claim
construction analysis. Usually, it is dispositive; it is the single best
guide to the meaning of a disputed term.” 90 F.3d at 1582.
Upon our review of Appellant’s claim 6 in light of Appellant’s
Specification, we conclude the following:
(a) Preamble – The “future rate changes” of the preamble is not limited
solely to rate changes that occur at some time after the present.
Rather, Appellant’s Specification specifically states that the “future
rate changes system 50” has “the ability to provide for a change in
rate plan to become effective immediately, at some preselected time,
or on the next billing cycle run.” (Specification 10:4-6). Thus
Appellant has defined “future rate changes” broadly to include any
time starting immediately.
Also, the “billing system” of the preamble is not limited solely
to systems which send out bills in the conventional sense. Rather,
Appellant’s Specification specifically states “[t]he billing system 30
includes an accounting 31, reporting 32, billing 33, record collection
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34 and a service and tariffs 35 modules.” (Specification 9:22 -10:1).
Thus, we conclude Appellant has exemplified “billing system” as a
combination of one or more of the five disclosed modules numbered
31-35.
Additionally, the “system” of the preamble is not limited solely
to the modules of Appellant’s Specification. Appellant states that his
invention is limited only by the scope of claim language. Specifically
Appellant states:
While the invention will be described in connection with
these drawings, there is no intent to limit it to the
embodiment or embodiments disclosed therein. On the
contrary, the intent is to cover all alternatives,
modifications, and equivalents included within the spirit
and scope of the invention as defined by the appended
claims.
(Specification 4:11-15).
The foregoing description has been presented for
purposes of illustration and description. It is not intended
to be exhaustive or to limit the invention to the precise
forms disclosed.
(Specification 11:17-19).
The embodiment or embodiments discussed were chosen
and described to provide the best illustration of the
principles of the invention and its practical application to
thereby enable one of ordinary skill in the art to utilize
the invention in various embodiments and with various
modifications as are suited to the particular use
contemplated. All such modifications and variations are
within the scope of the invention as determined by the
appended claims when interpreted in accordance with the
breadth to which they are fairly and legally entitled.
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(Specification 11:21-12:3). We conclude that a “system” is inclusive
of any group of mechanical components, any group of electrical
components, any economic organization1 (group of people), and
combinations thereof for carrying out the method of claim 6.
Appellant’s preferred “system” is a combination of electrical
components and people, e.g., telephones, computers, networks,
(Specification 4:16-24) and “user to select” (Abstract, ll. 4-5).
However, Appellant’s claim is not limited solely to the preferred
embodiment.
(b) Step of “identifying that a future rate plan is to be changed” –
A rate plan or tariff model is a “schedule of prices or fees,” 2
i.e., merely an abstraction in the form of information about prices or
fees.
The “is to be changed” language does not limit this step to only
rate changes that have not yet occurred as to the supplier. Rather, as
Appellant states at page 4 of the Brief, this claimed step is
exemplified by block3 63 in Appellant’s Figure 4. Block 63 occurs
after the rate change has occurred as to the supplier (block 61) but
before the rate change has occurred as to the customer.
No limitation is placed on this claimed step as to the supplier
side or customer side. No limitation is placed on how this claimed
step is to be carried out.

1 The American Heritage Dictionary 1234 (2nd College Ed. 1982).
2 Id. at 1244.
3 Appellant uses the terms block, box, and step interchangeably in the Brief and
Specification. We follow Appellant’s usage when referring to the Brief or
Specification.
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Thus, we conclude the identifying step merely requires that
anyone or anything identify in any way that a rate change is to occur
as to the customer either immediately or at some later time.
(c) Step of “selecting the future rate plan desired” –
As above, no limitation is placed on this step as to the supplier
side or customer side. No limitation is placed on how this claimed
step is to be carried out.
The language “the future rate plan” does not limit this step to
sequentially following the “identifying step.” Rather, as Appellant
states at page 4 of the Brief, this claimed step is exemplified by box
53 in Appellant’s Figure 4, and box 53 occurs before block 63 (the
identifying step). Further, nothing in this step requires selecting
among more than one possible rate plan. Appellant’s box 53
specifically states “INPUT NEW CUSTOMER RATE PLAN” in the
singular. We find no disclosure in Appellant’s Specification of a
requirement of “more than one” possible rate plan with respect to this
step.
Thus, we conclude the selecting step merely requires that
anyone or anything select in any way a desired rate plan.
(d) Step of “implementing the future rate change” –
As above, no limitation is placed on this step as to the supplier
side or customer side. No limitation is placed on how this step is to be
carried out.
The language “implementing the future rate change” does not
limit this step to only tangible implementations. Rather, as Appellant
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states at page 4 of the Brief, this claimed step is exemplified by box
56 in Appellant’s Figure 4. Appellant’s box 56 specifically states
“INPUT CURRENT DATE AS EFFECTIVE CONTRACT
CHANGE DATE AND CHANGE RATE PLAN”. The key word
here is “contract.” We find no disclosure in Appellant’s Specification
that implementing requires anything more than the parties agreeing to
a contract change.
Thus, we conclude the implementing step merely requires that
anyone or anything tangibly or intangibly agree in any way with
respect to a rate change to occur as to the customer either immediately
or at some later time.
Upon our review of Appellant’s claim 9 in light of Appellant’s
Specification, we conclude the following:
(e) Step of “selecting the effective date of the future rate plan” –
As above, no limitation is placed on this step as to the supplier
side or customer side. No limitation is placed on when this step
occurs in relation to the steps of claim 6. No limitation is placed on
how this step is to be carried out.
As Appellant states at page 5 of the Brief, this claimed step is
exemplified by box 57 in Appellant’s Figure 4. Appellant’s box 57
specifically states “INPUT EFFECTIVE CONTRACT CHANGE
DATE”. Again, the key word here is “contract.” We find no
disclosure in Appellant’s Specification that selecting requires
anything more than the parties agreeing to the date of a contract
change.
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Consistent with our construction of claim 6 above, we conclude
that this selecting step merely requires that anyone or anything at any
time selects a specific effective date of the rate change.

(8)
The Board’s analysis of Appellant’s Arguments with respect to claims 6 and 9
As discussed above, Appellant argues Ehlers does not teach a billing system
as claimed. We disagree. As we have already noted, a billing system is broader
than a system that sends out bills. By Appellant’s own example a billing system
includes accounting, reporting, billing, record collection, and/or service and tariffs
modules (Specification 9:22-10:1). As pointed out by the Examiner, such is
described in Ehlers at column 23, lines 24-28.
Appellant also argues that Ehlers fails to provide for future rate changes at
some effective date. We disagree for two reasons. First, by Appellant’s own
definition “future” includes immediately (Specification 10:4-6). Also, Ehlers
explicitly describes “future rate changes” in the more limited sense of at some later
time as follows (emphasis added):
column 3, lines 59-61 (“projected energy unit prices”);
column 6, lines 15-16 (“schedule of projected energy unit prices”):
column 7, lines 52-55 (“future energy unit price schedules”);
column 20, lines 37-40 (“energy supplier asking prices for energy units to
select the energy supplier offering the lowest possible price from the
available energy suppliers for current and future time periods”);
column 23, lines 31-37 (“[a]n energy price increase may result in a
communication to all potential purchasers of the energy units for
upcoming time periods that a price change has occurred, causing
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the individual premise systems to re-compute their economic models
and either remain committed to the provider and the new price per
energy unit, curtail usage or switch to another energy unit provider”);
and
column 27, line 67 through column 28, line 2 (“the user will be prompted for
supplier ID, rates, start time for each rate, length of time the rate is
valid”).
Looking to lines 31-37 of column 23 in particular, the price change for
upcoming time periods (future rate change) has occurred as to the provider in that
they have decided to change prices, but has not as to customer as they have yet to
commit to the provider’s new price. Therefore, we conclude that Ehlers explicitly
teaches “future rate changes” that have not yet occurred as to the customer.
Additionally, we conclude that Ehlers teaches that the future rate changes will have
an effective date (start time).
Further, Appellant argues that his claim is concerned with the supplier side.
We disagree. As we have already noted, we find no such limitation in claim 6.
Therefore, for the reasons above, we will sustain the Examiner’s rejection of
independent claims 1, 6, 9, 11, 14, 16, and 19 under 35 U.S.C. § 102.

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B. Whether Appellant has established that the Examiner erred in
rejecting dependent claims 2-5, 7-8, 10, 12-13, 15, 17-18, and 20
under 35 U.S.C. § 103?
(1)
Introduction
Claims 2-5 depend from claim 1; claims 7-8 and 10 depend from claim 6;
claims 12-13 and 15 depend from claim 11; and claims 17-18 and 20 depend from
claim 16.
In rejecting claims under 35 U.S.C. § 103, the Examiner bears the initial
burden of establishing a prima facie case of obviousness. In re Oetiker, 977 F.2d
1443, 1445, 24 USPQ2d 1443, 1444 (Fed. Cir. 1992). See also In re Piasecki, 745
F.2d 1468, 1472, 223 USPQ 785, 788 (Fed. Cir. 1984). The Examiner can satisfy
this burden by showing that some objective teaching in the prior art or knowledge
generally available to one of ordinary skill in the art suggests the claimed subject
matter. In re Fine, 837 F.2d 1071, 1074, 5 USPQ2d 1596, 1598 (Fed. Cir. 1988).
Only if this initial burden is met does the burden of coming forward with evidence
or argument shift to the Appellants. Oetiker, 977 F.2d at 1445, 24 USPQ2d at
1444. See also Piasecki, 745 F.2d at 1472, 223 USPQ at 788.
An obviousness analysis commences with a review and consideration of all
the pertinent evidence and arguments. “In reviewing the [E]xaminer’s decision on
appeal, the Board must necessarily weigh all of the evidence and argument.”
Oetiker, 977 F.2d at 1445, 24 USPQ2d at 1444. “[T]he Board must not only assure
that the requisite findings are made, based on evidence of record, but must also
explain the reasoning by which the findings are deemed to support the agency’s
conclusion.” In re Lee, 277 F.3d 1338, 1344, 61 USPQ2d 1430, 1434 (Fed. Cir.
2002).
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(2)
Examiner’s Prima Facie Case
The Examiner’s prima facie case is set forth at pages 5-7 of the Answer.

(3)
Appellant’s Response and Argument in the Brief
Appellant argues at page 23 of the Brief that “the Examiner has failed to
provide the supporting documentary proof requested by Applicant” with respect to
the taking of Official Notice in “the February 10, 2004 Office Action.”
Despite a general allegation of lack of motivation and hindsight (Br. 21),
Appellant makes no further specific arguments in the Brief. We do not deem
Appellant’s general allegation to be an argument.

(4)
The Examiner’s Response in the Answer
With respect to Appellant’s request for documentary proof, the Examiner
responds at pages 5-7 of the Answer with specific examples.
Although we do not deem it necessary to respond to Appellant’s general
allegation of lack of motivation and hindsight, the Examiner does respond at page
8 of the Answer. The Examiner rebuts the allegation by pointing to Ehlers at
column 21, lines 14-15, which states a motivation of obtaining the maximum
benefit for the occupant or utility bill payer.
(5)
Appellant’s Rebuttal in the Reply
Appellant rebuts the Examiner’s response at pages 4-5 of the Reply.
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With respect to Appellant’s earlier request for documentary proof,
Appellant’s Reply Brief does not address or comment on the specific examples
provided in the Examiner’s Answer. Therefore, we deem this request to be fully
satisfied.
With respect to the Examiner’s rebuttal of lack of motivation and hindsight,
Appellant points out that while the cited column may provide “some small
suggestion” it does not suggest the specifically claimed features of “determining
whether the future rate change is a single plan change” (claims 2, 7, 12, and 17)
and “verifying consistency of a future rate plan with an old rate plan” (claims 3, 8,
13, and 18).

(6)
Representative claims 7 and 8
We select claim 7 as representative of claims 2, 7, 12, and 17 for purposes of
our decision, and we select claim 8 as representative of claims 3, 4, 8, 13, and 18
for purposes of our decision. We then address claims 5, 10, 15, and 20 jointly.

(7)
The Board’s Claim Construction
Upon our review of Appellant’s claim 7 in light of Appellant’s
Specification, we conclude the following:
(a) Step of “determining if the future rate change is a single plan change” –
As above, no limitation is placed on this step as to the supplier
side or customer side. No limitation is placed on when this step
occurs in relation to the steps of claim 6. No limitation is placed on
how this step is to be carried out.
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Consistent with our construction of claim 6 above, we conclude
that this determining step merely requires that anyone or anything at
any time determines whether there is more than a single rate change.
Upon our review of Appellant’s claim 8 in light of Appellant’s
Specification, we conclude the following:
(b) Step of “verifying that the future rate plan is consistent . . .” –
As above, no limitation is placed on this step as to the supplier
side or customer side. While this step must follow the step of claim 7,
no limitation is placed on when this step occurs in relation to the steps
of claim 6. No limitation is placed on how this step is to be carried
out.
Consistent with our construction of claim 6 above, we conclude
that this verifying step merely requires that anyone or anything at any
time verifies in any form the consistency of the future rate plan with
an old rate plan.

(8)
The Board’s analysis of Appellant’s Arguments with respect to claims 7 and 8
With respect to Appellant’s request for documentary proof, we deem this
issue to be moot in view of the specific examples provided in the Examiner’s
Answer which were not challenged in the Appellant’s Reply.
As discussed above, Appellant also argues lack of motivation in Ehlers’s
“determining whether the future rate change is a single plan change” and
“verifying consistency of a future rate plan with an old rate plan.” We disagree.
As to the first feature, we agree with the Examiner that the motivation of
obtaining maximum benefit to the customer suggests that it would be desirable in
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the system of Ehlers to handle energy price increases (Ehlers, col. 23, ll. 24-28)
from plural suppliers. Such would necessarily entail determining if there is more
than a single rate change so that each could be processed in the system of Ehlers.
As to the second feature, we again agree with the Examiner as this feature is
the whole basis for the Ehlers system. At column 31, lines 36-39, Ehlers explicitly
describes using “criteria for the system to use to select acceptable suppliers” and
that the criteria includes “price.” Thus, future rate changes are verified against the
criteria to determine consistency of the rate change with the criteria.

(9)
The Board’s analysis with respect to claims 5, 10, 15, and 20
As previously noted, Appellant argues at page 23 of the Brief that “the
Examiner has failed to provide the supporting documentary proof requested by
Applicant with respect to the taking of Official Notice in the February 10, 2004
Office Action.” This was Appellant’s only specific point or argument with respect
to claims 5, 10, 15, and 20. In response to Appellant’s request, the Examiner
provided a specific example (Answer 5-6). Appellant’s Reply Brief does not
further address or comment on the specific example provided in the Examiner’s
Answer. Therefore, we deem Appellant’s request to be fully satisfied and the
rejection of these claims is sustained.

(10)
Summary
Therefore, for the reasons above, we will sustain the Examiner’s rejection of
independent claims 2-5, 7-8, 10, 12-13, 15, 17-18, and 20 under 35 U.S.C. § 103.

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V. ANALYSIS - NEW GROUND OF REJECTION

A. Background

We use our authority under 37 C.F.R. § 41.50(b) to enter a first new ground
of rejection of claims 6-20 and a second new ground of rejection of claims 11-15.
The basis for each is set forth in detail below.

B. New Ground Of Rejection Under 35 U.S.C. § 101
(1)
Introduction
On February 10, 2004, the Examiner rejected claims 6-10 under
35 U.S.C. § 101 because the “claimed steps . . . are abstract ideas, which can be
performed mentally without interaction of a physical structure.” That is, the result
of claims 6-10 of “providing for future rate changes” is not considered to define a
useful, concrete and tangible result. 35 U.S.C. § 101 provides:
Whoever 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 response, Appellant’s argued at page 12 of the Brief that the claims were
directed to a practical application because “the method, as claimed, produces a
concrete, tangible and useful result.” Appellant goes on to argue at page 13 that
“[i]mplementation of rate changes in customer care and billing centers are an
important feature for customers.” Appellant then argues at page 14 that the
subject method provides “versatility and does so in an efficient and fast manner of
execution.” Appellant then concludes that “the steps set forth in claims 6-10 do
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produce a concrete, tangible and useful result, and are thus statutory in accordance
with 35 USC § 101.”
In turn, the Examiner concluded that the arguments overcame the rejection
under 35 U.S.C. § 101. The rejection was withdrawn at page 7 of the Answer. We
disagree with the Examiner’s conclusion for the reasons discussed infra, and we
apply the rejection of claims 6-10 anew. Additionally, we reject claims 11-20 on
the same ground.

(2)
Rejection of claims 6-10 under 35 U.S.C. § 101

Claims 6-10 are rejected under 35 U.S.C. § 101 because the claimed
invention is directed to non-statutory subject matter. Claim 6, reproduced supra, is
representative.
Under a broadest reasonable interpretation, Appellant’s claims do not
require computer-implementation. See Section IV supra. The issue is whether
Appellant’s claims 6-10, which cover methods of providing future rate changes
involving no transformation and no process involving the other three statutory
categories (machine, manufacture, or composition of matter), 4 are patentable
subject matter under 35 U.S.C. § 101. So construed, Appellant’s claims are

4 “A machine is a concrete thing, consisting of parts, or of certain devices and
combination of devices.” Burr v. Duryee, 68 U.S. 531, 570 (1863). The term
“manufacture” refers to “‘the production of articles for use from raw or prepared
materials by giving to these materials new forms, qualities, properties, or
combinations, whether by hand-labor or by machinery.’” Diamond v.
Chakrabarty, 447 U.S. 303, 308, 206 USPQ 193, 196-97 (1980) (quoting
American Fruit Growers, Inc. v. Brogdex Co., 283 U.S. 1, 11, 8 USPQ 131, 133
(1931)). A “composition of matter” by its own terms requires matter.
Chakrabarty, 447 U.S. at 308, 206 USPQ at 196-97.
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unpatentable under section 101 because (i) they do not qualify as a “process” under
section 101, as that term has been interpreted by case law, (ii) they seek to patent
an abstract idea, and (iii) the “useful, concrete, and tangible result” test does not
apply here, but the claims nevertheless do not meet that test.
Method claim 6 differs from traditional process claims in several respects.
For example, the claim does not recite any particular way of implementing the
steps, nor does it require any machine or apparatus to perform the steps. In
addition, the method claim does not recite any electrical, chemical, or mechanical
acts or results, which are typical in traditional process claims. Finally, the claim
does not call for any physical transformation of an article to a different state or
thing, nor does it require any transformation of data or signals. The question of
whether any of these distinctions takes claim 6 outside the realm of patent-eligible
subject matter has never been squarely addressed by the Federal Circuit.
Appellant’s claims are not the type of method that the Supreme Court or Federal
Circuit has ever found patentable under section 101.

(a)
Reading the Supreme Court’s and Federal Circuit’s Precedents Together,
A Section 101 “Process” Has Always Transformed Subject Matter,
Whether Tangible or Intangible, Or Has Been a Process
That Involved The Other Three Statutory Categories

The scope of patentable subject matter under section 101 is broad, but not
infinitely broad. “Congress included in patentable subject matter only those things
that qualify as ‘any … process, machine, manufacture, or composition of matter, or
any … improvement thereof….’” In re Warmerdam, 33 F.3d 1354, 1358, 31
USPQ2d 1754, 1757 (Fed. Cir. 1994) (quoting 35 U.S.C. § 101) (emphasis added).
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Thus, “[d]espite the oft-quoted statement in the legislative history of the 1952
Patent Act that Congress intended that statutory subject matter ‘include anything
under the sun that is made by man,’[citation omitted], Congress did not so
mandate.” Id.
In the case where a claim is for a process, as opposed to a product, “[t]he
line between a patentable ‘process’ and an unpatentable ‘principle’ is not always
clear. Both are ‘conception[s] of the mind, seen only by [their] effects when being
executed or performed.” Parker v. Flook, 437 U.S. 584, 589, 198 USPQ 193, 198
(1978) (quoting Tilghman v. Proctor, 102 U.S. 707, 728 (1880)). “The holding
that the discovery of [Benson’s] method could not be patented as a ‘process’
forecloses a purely literal reading of § 101.” Flook, 437 U.S. at 589, 198 USPQ at
197. “[W]hen a claim containing [an abstract idea] implements or applies that
[idea] in a structure or process which, when considered as a whole, is performing a
function which the patent laws were designed to protect (e.g., transforming or
reducing an article to a different state or thing), then the claim satisfies the
requirements of § 101.” Diamond v. Diehr, 450 U.S. 175, 192, 209 USPQ 1, 10
(1981); see also Gottschalk v. Benson, 409 U.S. 64, 70, 175 USPQ 673, 676 (1972)
(“Transformation and reduction of an article ‘to a different state or thing’ is the
clue to the patentability of a process claim that does not include particular
machines.”).5

5 The principal exception to this rule, as explained infra, is when the machine-
implemented method merely manipulates abstractions. See Benson, 409 U.S. at
71-72, 175 USPQ at 676-77. In addition, merely attaching a machine to an
otherwise ineligible method may not be sufficient and would depend on how the
machine actually implemented the recited steps. For example, if a nonstatutory
claim were amended so that a recited step of registering a customer was performed
by entering data into a computer rather than using a sign-up sheet, it is hard to
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The Supreme Court, however, presumably concerned about barring patents
for future, unforeseeable technologies, declined to rule on whether its precedent
foreclosed any other possible avenues for a method claim to qualify as a section
101 process: “It is argued that a process patent must either be tied to a particular
machine or apparatus or must operate to change articles or materials to a ‘different
state or thing.’ We do not hold that no process patent could ever qualify if it did
not meet the requirements of our prior precedents.” Benson, 409 U.S. at 71, 175
USPQ 676. Rather than rule on this question in Benson and Flook, the Supreme
Court decided those cases based on the abstract idea exception to patentability.
Benson, 409 U.S. at 71-72, 175 USPQ at 676-77; Flook, 437 U.S. at 594-95, 198
USPQ at 199-200.
Since Diehr, the Federal Circuit has reviewed several computer technology
cases, and in acknowledgment of the innovations occurring in this technological
field, identified a third category of method claims that qualify as a “process.”
Extrapolating from the Supreme Court’s “transformation and reduction of an
article” test, the Federal Circuit has held that transformation of intangible subject
matter (i.e., data or signals) may also qualify as a § 101 process. See, e.g., State
St. Bank & Trust Co. v. Signature Fin. Group, Inc., 149 F.3d 1368, 1373, 47
USPQ2d 1596, 1601 (Fed. Cir. 1998). Responding to the argument that process
claims must recite a “physical transformation,” the Federal Circuit in AT&T ruled
that “physical transformation” “is not an invariable requirement, but merely one
example of how a mathematical algorithm may bring about a useful application.”
AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352, 1358, 50 USPQ2d
1447, 1452 (Fed. Cir. 1999). Quoting the Supreme Court’s language, “e.g.,

imagine how that alone would satisfy the requirements of § 101 and convert an
otherwise ineligible claim into an eligible one.
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transforming or reducing an article to a different state or thing” from Diehr, the
AT&T court noted the usage of “e.g.” “denotes an example, not an exclusive
requirement.” Id. at 1359, 50 USPQ2d at 1452. AT&T went on to cite the
transformation of intangible data signals in the method claim of Arrhythmia
Research Technology Inc. v. Corazonix Corp., 958 F.2d 1053, 1059, 22 USPQ2d
1033, 1038 (Fed. Cir. 1992), as an example that qualifies as a § 101 “process” in
addition to the Supreme Court’s test. See id. at 1359, 50 USPQ2d at 1452.
Accordingly, the Federal Circuit has consistently used its own “data
transformation” test in assessing the eligibility of various machine-implemented
claims. In Alappat, the court held that “data, transformed by a machine” “to
produce a smooth waveform display” “constituted a practical application of an
abstract idea.” State Street, 149 F.3d at 1373, 47 USPQ2d at 1601. Specifically,
the court in Alappat stated that the claimed invention as a whole was directed to a
machine for “converting discrete waveform data samples into anti-aliased pixel
illumination intensity data to be displayed on a display means.” 33 F.3d 1526,
1544, 31 USPQ2d 1545, 1557 (Fed. Cir. 1994) (en banc). In Arrhythmia, the court
held “the transformation of electrocardiograph signals” “by a machine”
“constituted a practical application of an abstract idea.” State Street, 149 F.3d at
1373, 47 USPQ2d at 1601. Specifically, the court in Arrhythmia stated “the
number obtained is not a mathematical abstraction; it is a measure in microvolts of
a specified heart activity, an indicator of the risk of ventricular tachycardia.” 958
F.2d at 1062, 22 USPQ2d at 1039. Likewise, in State Street, the court held that
“the transformation of data” “by a machine” “into a final share price, constitutes a
practical application of a mathematical algorithm” because “a final share price [is]
momentarily fixed for recording and reporting purposes and even accepted and
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relied upon by regulatory authorities and in subsequent trades.” 149 F.3d at 1373,
47 USPQ2d at 1601. Thus, while Diehr involved the transformation of a tangible
object – curing synthetic rubber – Federal Circuit also regards the transformation
of intangible subject matter to similarly be eligible, so long as data or signals
represent some real world activity.
The Federal Circuit has never held or indicated that a process involving no
transformation can qualify as a “process” under § 101. In fact, confronted with
such claims, it has rejected them consistently. See In re Schrader, 22 F.3d 290,
294-295, 30 USPQ2d 1455, 1458 (Fed. Cir. 1994); In re Grams, 888 F.2d 835,
837, 12 USPQ2d 1824, 1826 (Fed. Cir. 1989) (rejecting claims to method of
evaluating a system that incorporated a mathematical algorithm, where the only
physical step was a data gathering step that was not tied to the algorithm); In re
Maucorps, 609 F.2d 481, 484, 203 USPQ 812, 815 (CCPA 1979); In re Meyer,
688 F.2d 789, 796, 215 USPQ 193, 198 (CCPA 1982); see also In re Alappat, 33
F.3d at 1543, 31 USPQ2d at 1556 (“Maucorps dealt with a business methodology
for deciding how salesmen should best handle respective customers and Meyer
involved a ‘system’ for aiding a neurologist in diagnosing patients. Clearly,
neither of the alleged ‘inventions’ in those cases falls within any § 101
category.”).6
In Schrader, the court affirmed the 101 rejection of a method of
competitively bidding on a plurality of related items, relying in part on the

6 But see State Street, 149 F.3d at 1376 n.14, 47 USPQ2d at 1603 n.14
(observing that “[Maucorp and Meyer] were subject to the Benson era Freeman-
Walter-Abele test – in other words, analysis as it existed before Diehr and
Alappat,” without addressing the fact that it was the Alappat decision itself that
made the observation that these inventions were “clearly” nonstatutory).

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Freeman-Walter-Abele (“FWA”) test. However, consistent with Arrhythmia,
Alappat, State Street, and AT&T, the court also inquired into whether Schrader’s
method claim performed any kind of transformation. Schrader, 22 F.3d at 294, 30
USPQ2d at 1458 (“we do not find in the claim any kind of data transformation.”).
The court then distinguished Schrader’s claim from the statutorily eligible claims
in Arrhythmia, In re Abele, 684 F.2d 902, 214 USPQ 682 (CCPA 1982), and In re
Taner, 681 F.2d 787, 214 USPQ 678 (CCPA 1982), pointing out that in these
cases, “[t]hese claims all involved the transformation or conversion of subject
matter representative of or constituting physical activity or objects. Id. (emphasis
in original). Schrader expressly concludes that “a process claim [in] compliance
with Section 101 requires some kind of transformation or reduction of subject
matter.”7 Id. at 295, 30 USPQ2d at 1459. In sum, the Federal Circuit has never

7 Although the FWA test is no longer considered particularly probative in the
context of computer-implemented process inventions in view of Diehr (see, e.g.,
State Street, 149 F.3d at 1374, 47 USPQ2d at 1601 ), the erosion of FWA provides
no support for the position that a non-machine implemented process, not involving
any transformation, might be patentable. The answer to that question is still
provided by Schrader, and that answer, so far, is negative. While AT&T indicated
that Schrader is “unhelpful” because it did not reach the question whether a
“useful, concrete, and tangible result” occurred, the reason that case did not need to
reach that question was because it found that Schrader’s method claims were
unpatentable for lack of any transformation. In addition, Schrader’s claims did not
require machine-implementation, unlike AT&T’s claims. See AT&T, 172 F.3d at
1358, 50 USPQ2d at 1452 (“AT&T’s claimed process” uses “switching and
recording mechanisms to create a signal useful for billing purposes.”). Moreover,
it is axiomatic that dicta in one Federal Circuit panel decision cannot overrule the
holding of an earlier panel decision. George E. Warren Corp. v. United States, 341
F.3d 1348, 1351 (Fed. Cir. 2003) (“We cannot simply overrule [a prior panel]
decision, even if we were persuaded . . . that it is appropriate; to overrule a
precedent, the court must rule en banc” (citing Newell Cos. v. Kenney Mfg. Co.,
864 F.2d 757, 765, 9 USPQ2d 1417, 1423 (Fed.Cir.1988)).
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ruled that methods without any transformation are eligible, and appears in
Schrader to have rejected that proposition.
We believe that “process” should not be broadened so as to include any
method that may be deemed useful, such as Appellant’s future rate change claims.
The Supreme Court’s and Federal Circuit’s articulated eligibility tests keep the
interpretation of “process” in pari materia with the other three categories of
inventions – manufacture, machine, and composition of matter. In other words,
interpreting “process” as either transforming subject matter or implemented by one
of the other three categories of inventions is rationally consistent with and
proportional to the types of inventions patented under the other categories.8 See
Tilghman v. Proctor, 102 U.S. 707, 722 (1880) (“where the result or effect is
produced by chemical action, by the operation or application of some element or
power of nature, or of one substance to another, such modes, methods, or
operations are called processes.”); see also AT&T, 172 F.3d at 1356, 50 USPQ2d at
1450 (“any step-by-step process, be it electronic, chemical, or mechanical,
involves an ‘algorithm’ in the broad sense of the term.”). Accordingly, we do not
believe that the boundaries of “process” should be so expansive as to accommodate
all “useful” methods.
Following Schrader, Appellant’s claims are unpatentable under section 101.
The claims are similar to those rejected in Schrader, while distinguishable from
Arrhythmia, Alappat, State Street, and AT&T. The claims do not transform any
article to a different state or thing. The future rate change produced by the claims,

8 We do not propose in this decision a comprehensive rule for defining
patentable subject matter in all circumstances. Rather, this decision illustrates that
Appellant’s claims fall outside the currently existing tests for eligibility and sees
no reason to expand the existing tests to cover Appellant’s claims.
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while perhaps “useful” in one sense, is simply not the product of any
transformation as understood in the case law. Further, the claims do not recite a
process that employs the other statutory categories. Accordingly, the claims fail to
meet any of the conditions set forth in the case law of either the Supreme Court or
Federal Circuit.

(b)
Appellant’s Claims Run Afoul of the “Abstract Idea” Exception

The Supreme Court has held that “[e]xcluded from such patent protection
are laws of nature, natural phenomena, and abstract ideas.” Diehr, 450 U.S. at 185,
209 USPQ at 7. “An idea of itself is not patentable.’” Diehr, 450 U.S. at 185, 209
USPQ at 7 (quoting Rubber-Tip Pencil Co. v. Howard, 20 Wall. 498, 507, 22 L.Ed.
410 (1874); Benson, 409 U.S. at 67, 175 USPQ at 675 (“[M]ental processes, and
abstract intellectual concepts are not patentable.”); see also id. at 71, 175 USPQ at
676 (“It is conceded that one may not patent an idea.”). In contrast, “[i]t is now
commonplace that an application of a law of nature or mathematical formula [or
abstract idea] to a known structure or process may well be deserving of patent
protection.” Diehr, 450 U.S. at 187, 209 USPQ at 8 (emphasis in original).
Clever claim drafting cannot circumvent these principles. That is, even
when a claim appears to apply an idea or concept as part of a seemingly patentable
process, one must ensure that it does not in reality seek patent protection for that
idea in the abstract. Diehr, 450 U.S. at 191, 209 USPQ at 10. Similarly, one
cannot patent a process that comprises “every substantial practical application” of
an abstract idea, because such a patent “in practical effect would be a patent on the
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[abstract idea] itself.” Benson, 409 U.S. at 71-72, 175 USPQ 676.9 Such
limitations on process patents are important because without them, “a competent
draftsman [could] evade the recognized limitations on the type of subject matter
eligible for patent protection.” Diehr, 450 U.S. at 192, 209 USPQ at 10.
Because Appellant’s claim 6 is completely untethered from any sort of
structure or physical step, it is directed to a disembodied concept. In other words,
the claim is nothing but a disembodied abstract idea until it is instantiated in some
physical way so as to be limited to a practical application of the idea. For example,
the claim does not specify whether the “billing system” is a computer, a human, or
something else. Nor does the claim recite who or what is performing the step of
“identifying” that a future rate plan is to be changed, the step of “selecting” the
future rate plan desired, or the step of “implementing” the future rate change.
Instead, those limitations merely describe steps or goals of the concept. Just as the
concept of “identifying that a future rate plan is to be changed” is an abstract idea,
so too is the notion of “selecting the future rate plan desired” and the notion of
“implementing the future rate change.” Accordingly, the claim is so broad that it is
directed to the abstract idea itself, rather than a practical implementation of the
concept. In addition, the claims are “so abstract and sweeping” that they would
“wholly pre-empt” all applications of the notion of future rate changes in a billing

9 The observation in State Street that “[w]hether the patent’s claims are too
broad to be patentable is not to be judged under § 101, but rather under §§ 102,
103, and 112” did not, nor could it, overrule the Supreme Court’s pre-emption
doctrine. See State Street, 149 F.3d at 1377, 47 USPQ2d at 1604. Rather, pre-
emption was not at issue in State Street since the claim in that case was particularly
confined to a machine implementation, and did not suffer from the same defect as
Appellant’s claim.

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system.10 See Benson, 409 U.S. at 68-72, 175 USPQ at 675-677; see also Alappat,
33 F.3d at 1544, 31 USPQ2d at 1558 (quoting Benson).
It is true that process claims are not necessarily required to recite the means
or structure for performing the claimed steps. See, e.g., AT&T, 172 F.3d at 1359,
50 USPQ2d at 1452. But process claims that do not require any machine
implementation, and are thus intrinsically more abstract than product claims or
method claims reciting structure, will often need to recite some sort of
transformation act in order to clearly show that the method claim is for some
specific application of the idea and represents something more than just a concept.
See, e.g., id. at 1358, 50 USPQ2d at 1452 (noting that “AT&T’s claimed process”
uses “switching and recording mechanisms to create a signal useful for billing
purposes.”). Here, Appellant’s claim lacks the “particularly claimed combination
of elements” recited in Alappat’s claim, the transformation of data by a machine
recited in State Street’s claim, the transformation of electrical signals in
Arrhythmia’s method claim, or the transformation of data useful for billing
purposes in AT&T’s method claim, and therefore lacks those characteristics that
separate a practical application of an idea from just the idea itself.

10 Indeed, the scope of the claim is so sweeping as to encompass the prior art
utility rate change method described in Ehlers et al. (See Section IV of this
decision).
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(c)
The Federal Circuit’s “Useful, Concrete, and Tangible Result” Test
Has Never Been Applied to This Type of Claim;
Nor Would Appellant’s Claims Satisfy That Test If Applied

(i)
State Street’s “Useful, Concrete, and Tangible Result” Test
Is Limited to Machines and Machine-Implemented
Methods That Transform Data

As discussed above, the development of the Federal Circuit’s data
transformation test was in response to a series of cases concerning the eligibility of
machines and machine-implemented methods employing a mathematical
algorithm. In assessing the eligibility of these specific types of claims, the court
adopted a rule requiring such claims to produce a “useful, concrete and tangible
result.” State Street, 149 F.3d at 1373, 47 USPQ2d at 1600-1601. Based on
inferences drawn from the apparent sweep of the useful, concrete, and tangible
result test in combination with State Street’s repudiation of any business method
exception to patentability, applicants have been filing claims for “processes” that
are not traditional industrial processes, which contain no physical limitations and
do not require any transformation. But this new brand of claims is beyond the
purview of the Federal Circuit’s holdings. The cases applying the useful, concrete,
and tangible result test have all been confined to machine implementation of
mathematical algorithms. Thus, the Federal Circuit has never stated that this is the
general test for patent eligibility. In other words, any claim that might arguably
yield a “useful, concrete, and tangible result” is not necessarily statutory subject
matter.
Specifically, the “useful, concrete, and tangible result” test first appeared in
Alappat, which states: “This [claimed invention] is not a disembodied
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mathematical concept which may be characterized as an ‘abstract idea,’ but rather
a specific machine to produce a useful, concrete, and tangible result.” Alappat, 33
F.3d at 1544, 31 USPQ2d at 1557. The court in Alappat thus devised a standard to
partition patentable inventions using mathematical algorithms from claims for
disembodied mathematical concepts. State Street also involved claims to a
machine employing a mathematical algorithm, but in this instance for managing a
mutual fund investment portfolio. Finding the claim to be valid under § 101, State
Street held that “transformation of data … by a machine through a series of
mathematical calculations into a final share price, constitutes a practical
application of a mathematical algorithm, formula, or calculation, because it
produces ‘a useful, concrete and tangible result.’” State Street at 1373, 47
USPQ2d at 1601. Likewise, AT&T also ties this test to applications of
mathematical algorithms: “Because the claimed process applies the Boolean
principle to produce a useful, concrete, and tangible result without pre-empting
other uses of the mathematical principle, on its face the claimed process
comfortably falls within the scope of § 101.” AT&T, 172 F.3d at 1358, 50
USPQ2d at 1452; see also id. at 1361, 50 USPQ2d at 1453 (concluding that “the
focus is understood to be not on whether there is a mathematical algorithm at work,
but on whether the algorithm-containing invention, as a whole, produces a
tangible, useful result.”).
However, the Federal Circuit has never suggested that its “useful, concrete,
and tangible result” test was applicable outside the context of data transformation
using a mathematical algorithm. Rather, the Federal Circuit has consistently and
specifically linked this test to inventions that perform “a series of mathematical
calculations” to transform data. Indeed, the Federal Circuit recently noted that the
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test was specifically devised to handle eligibility issues for claims encompassing
mathematical algorithms, thereby suggesting that it is not a general test for
eligibility. See NTP, Inc. v. Research In Motion, Ltd., 418 F.3d 1282, 1324, 75
USPQ2d 1763, 1795 (Fed. Cir. 2005) (“The requirement that a process transform
data and produce a ‘tangible result’ was a standard devised to prevent patenting of
mathematical abstractions” (citing AT&T, 172 F.3d at 1359, 50 USPQ2d at 1452)
(emphasis added)). Furthermore, the “useful, concrete, and tangible result” test
fails to resolve the tension between State Street and Schrader.
In LabCorp the dissent suggested that, if applied as a general criterion, the
“useful, concrete, and tangible result” test would conflict with prior Supreme Court
decisions. Lab. Corp. of Am. Holdings v. Metabolite Labs., Inc., 126 S. Ct. 2921,
2928, 79 USPQ2d 1065, 1070 (2006) (Breyer, J., dissent from dismissal as
improvidently granted) (observing that the Federal Circuit’s statement that “a
process is patentable if it produces a ‘useful, concrete, and tangible result’ . . . , if
taken literally, . . . would cover instances where this Court has held the contrary”).
Accordingly, the best reading of the precedent may limit that test to machines and
machine-implemented methods using mathematical algorithms to transform data,
rather than embracing it as a general test for eligibility.
Accordingly, our understanding of the precedents at present is: Any
computer program claimed as a machine implementing the program (Alappat, State
Street) or as a method of a machine implementing the program (AT&T), is
patentable if it transforms data and achieves a useful, concrete and tangible result
(State Street, AT&T). Exceptions occur when the invention in actuality pre-empts
an abstract idea, as in a mathematical algorithm (Benson, 409 U.S. at 71-72, 175
USPQ at 676-677). Because Appellant’s claims do not require a machine
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implementing a mathematical formula to transform data, the “useful, concrete, and
tangible result” test is irrelevant to considering the eligibility of Appellant’s
claims.
While State Street put the “ill-conceived” business method exception to
patentability “to rest,” 149 F.3d at 1375, 47 USPQ2d at 1602, it did not suggest
that any and all types of “useful” methods for doing business are statutory subject
matter. In accordance with the Supreme Court’s and Federal Circuit’s precedent,
business method claims, like any method claim, must either be machine-
implemented or transform subject matter into a different state or thing. Thus,
while a process for transforming data to assist in differential billing for telephone
users is eligible (AT&T), a method for promoting sales using a “buy one, get one
free” scheme does not qualify as a “process,” regardless of any useful or tangible
result it produces.

(ii)
Appellant’s Claims Do Not Produce a
Useful, Concrete, and Tangible Result

Even if we accept as a given Appellant’s position that he has established the
“importance” (i.e. utility) of the invention by his argument, this does not
automatically establish that the result is also tangible and concrete.
The identifying and selecting steps of claim 6 are performed on “rate plans”
per se which are merely abstractions in the form of pricing information. Therefore,
even if the results of the identifying and selecting steps were relevant to
establishing a tangible result for the claim as a whole, these steps operate on
abstractions and simply can not produce a tangible result.
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Also, as already discussed in Section IV.A.(7), our review of the claims
finds they produce an “agreement” by the parties. To reiterate, Appellant’s
Specification at page 4, lines 11-15, states “[w]hile the invention will be described
in connection with these drawings, there is no intent to limit it to the embodiment
or embodiments disclosed therein” and “[o]n the contrary, the intent is to cover all
alternatives, modifications, and equivalents included within the spirit and scope of
the invention as defined by the appended claims.” See also Section IV.A.(7)(a).
Since the language of claim 6 does not preclude implementing by mere
“agreement,” then based on Appellant’s statements we must conclude that claim 6
is intended to include implementing by mere “agreement” as the result of the
claimed process.
We see the question before us to be, whether an agreement by the parties, is
a useful, tangible, and concrete result? As discussed supra, the Federal Circuit
regards the transformation of intangible subject matter to be such a useful,
tangible, and concrete result, so long as data or signals represent some real world
activity. However, we do not find data or signals in claim 6 which represent a real
world activity such as found in Arrhythmia, Alappat, or State Street.
Therefore, we conclude that Appellant’s claims 6-10, which produce an
agreement by the parties, fail to apply their abstract ideas to produce a useful and
concrete and tangible result. Thus claims 6-10 fall outside the scope of § 101.

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(3)
Rejection of claims 11-15 under 35 U.S.C. § 101

Claims 11-15 are rejected under 35 U.S.C. § 101 because the claimed
invention is directed to non-statutory subject matter.

(a)
Rejection of claims 11-15 under 35 U.S.C. § 101

Claim 11 is directed to “[a] computer readable medium” and Appellant
explicitly states “the computer-readable medium could even be paper”
(Specification 9:10). Therefore, we conclude the “medium” of claim 11 merely
requires information printed on paper. We have before us the classic “printed
matter” situation.
Additionally, with respect to the “logic” printed on the medium, Appellant
argues (Br. 10):
With respect to the term “logic” as used in claims 11-15, the “Modern
Dictionary of Electronics,” 6th Ed., 1984 defines logic as follows:
“Logic: . . . (3) In computers and information-
processing networks, the systematic method that governs
the operations performed on the information, usually
with each step influencing the one that follows.”
The use of the term “logic” in claims 11-15 is not contrary to the
above accepted meaning in the art for the term “logic”.
However, nothing in the claim precludes us from using an even broader definition
of “logic” where the logic is “a system of reasoning” that is not limited to a
computer or information processing network.11 A system of reasoning is merely a
systematic method that governs the reasoning performed on information, usually
with each step influencing the one that follows where the operations. Further,

11 The American Heritage Dictionary, 2nd College Edition, 1982, page 740.
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nothing in the claim precludes the systematic method that governs the reasoning
from being textual instructions about the reasoning to be performed by a person.
For purposes of this rejection we adopt this broader definition of “logic.”
Thus, we conclude that claim 11 merely requires a paper with (1) printed
textual instructions for a person to follow to identify that a future rate plan is to be
changed, (2) printed textual instructions for a person to follow to select the future
rate plan desired, and (3) printed textual instructions for a person to follow to
implement the future rate change, so as to provide information for use in future rate
changes in a billing system.
We conclude that the “logic” of claim 11 does not require a computer
program that implements functions on a computer system or a data structure that
modifies a function of the computer system. Rather, the “logic” may be merely
textual instructions that do not impart any functionality to a computer system, i.e.,
the “logic” is merely non-functional descriptive material. See Interim Guidelines
for Examination of Patent Applications for Patent Subject Matter Eligibility
(Interim Guidelines), 1300 Off. Gaz. Pat. Office 142, 151 (Nov. 22, 2005).
(“‘[F]unctional descriptive material’ consists of data structures and computer
programs which impart functionality when employed as a computer component.
. . . ‘Non-functional descriptive material’ includes but is not limited to music,
literary works and a compilation or mere arrangement of data.”).
When nonfunctional descriptive material is recorded on some
computer-readable medium, in a computer or on an electromagnetic
carrier signal, it is not statutory since no requisite functionality is
present to satisfy the practical application requirement. Merely
claiming nonfunctional descriptive material, i.e., abstract ideas, stored
in a computer-readable medium, in a computer, on an electromagnetic
carrier signal does not make it statutory. See Diehr, 450 U.S. at 185-
86, 209 USPQ at 8 (noting that the claims for an algorithm in Benson
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were unpatentable as abstract ideas because "[t]he sole practical
application of the algorithm was in connection with the programming
of a general purpose computer."). Such a result would exalt form over
substance. In re Sarkar, 588 F.2d 1330, 1333, 200 USPQ 132, 137
(CCPA 1978) ("[E]ach invention must be evaluated as claimed; yet
semantogenic considerations preclude a determination based solely on
words appearing in the claims. In the final analysis under Sec. 101,
the claimed invention, as a whole, must be evaluated for what it is.")
quoted with approval in Abele, 684 F.2d at 907, 214 USPQ at 687).
See also In re Johnson, 589 F.2d 1070, 1077, 200 USPQ 199, 206
(CCPA 1978) ("form of the claim is often an exercise in drafting").
Thus, nonstatutory music is not a computer component and it does not
become statutory by merely recording it on a compact disk. Protection
for this type of work is provided under the copyright law.
Id. For the reasons supra, we conclude that claim 11 is directed to non-statutory
subject matter.
Claims 12-15 each recite a “medium” and “logic” for performing a function.
The “medium” and “logic” of these claims share the same interpretations as
discussed supra for “medium” and “logic” in claim 11. For the reasons supra, we
conclude that claims 12-15 are also directed to non-statutory subject matter.

(b)
Alternative Theory of the § 101 Rejection of claims 11-15

Even if we were to adopt Appellant’s narrower definition of “logic” (Br. 10)
in construing claims 11-15, we reach the same ultimate conclusion. Appellant’s
“medium” includes paper, and a paper with printed logic in the form of computer
instructions is still a paper printed with nonfunctional descriptive material.
Appellant’s Specification supports this because at least three separate steps
(scanning, compiling, and interpreting) are required before the descriptive material
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can be employed as a computer component in the computer memory thus
becoming functional descriptive material (Specification 9:10-14).
The “medium” before us differs from the “memory” comprising a “data
structure” found in Lowry. In re Lowry, 32 F.3d 1579, 1583-84, 32 USPQ2d 1031,
1035 (Fed. Cir. 1994). In Lowry, the court stated, “More than mere abstraction, the
data structures are specific electrical or magnetic structural elements in a memory.”
The court concluded, “Lowry’s data structures are physical entities that provide
increased efficiency in computer operation” and “[t]hey are not analogous to
printed matter.” Id. “In sum, the [data structures in memory] perform a function.”
Id.
Despite Appellant’s explanation that the printed matter will eventually be
converted (by scanning, compiling, and interpreting) into a functional computer
component, the claim before us does not contain that component, nor are these
three steps functions performed by the claimed “medium.” Rather, we merely find
printed matter (Specification 9:10).
We conclude that even using Appellant’s definition of logic, claims 11-15
are directed to a mere abstraction and do not perform a function. Thus, they fall
outside the scope of § 101.

(4)
Rejection of claims 16-20 under 35 U.S.C. § 101

Claims 16-20 are rejected under 35 U.S.C. § 101 because the claimed
invention is directed to non-statutory subject matter.
For the same reasons discussed supra with respect to claim 6, we conclude
the system of claim 16 covers (“preempts”) every substantial practical application
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of the abstract idea. We conclude that the claim is so broad that it is directed to the
“abstract idea” itself, rather than a practical implementation of the concept. Thus,
the claimed process falls outside the scope of § 101.
Additionally, for the same reasons discussed supra with respect to claim 6,
we conclude the system of claim 16 does not apply its abstract idea to produce a
useful, concrete, tangible result.
Similarly, claims 17-20 merely require that anyone or anything determine if
the change is a single change, validate consistency (in some form) of the plan, or
select a specific effective date. For the same reasons discussed supra with respect
to claims 6 and 16, we conclude the systems of claims 17-20 fall outside the scope
of § 101.

C. New Ground Of Rejection Under 35 U.S.C. § 103(a)
(1)
Introduction
Claims 11-15 are rejected under 35 U.S.C. § 103(a) as being unpatentable
over Sloan et al. (Sloan), U.S. Patent 5,146,067, issued September 8, 1992.12

(2)
Rejection of claims 11-15 under 35 U.S.C. § 103(a)

With respect to this rejection under 35 U.S.C. § 103(a), as we discussed
above in Section V. B.(3)(a), we have before us the classic “printed matter”
situation. We reiterate that the storage “medium” of claims 11-15 merely requires
being printed on paper (Specification 9:10). Also, we reiterate that the “logic” of
claims 11-15 merely requires textual information in the form of plural “systems of

12 Previously cited by the Examiner and provided to Appellant.
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reasoning” for a person. As discussed supra, this “logic” is nonfunctional
descriptive material because it does not impart functionality when employed as a
computer component. Interim Guidelines, 1300 O.G. at 151.
The Sloan patent (the physical document itself) is a printed storage medium
upon which is recorded (i.e., printed) nonfunctional descriptive material in the
form of information about Sloan’s invention. Sloan does not teach nonfunctional
descriptive material in the form of “logic.” However, nonfunctional descriptive
material cannot render nonobvious an invention that would have otherwise been
obvious. In re Ngai, 367 F.3d 1336, 1339, 70 USPQ2d 1862, 1864 (Fed. Cir.
2004). Cf. In re Gulack, 703 F.2d 1381, 1385, 217 USPQ 401, 404 (Fed. Cir.
1983) (when descriptive material is not functionally related to the substrate, the
descriptive material will not distinguish the invention from the prior art in terms of
patentability).

(3)
Alternative Theory of the § 103(a) Rejection of claims 11-15

Even if we were to adopt Appellant’s narrower definition of “logic” (Br. 10),
we reach the same conclusion.
Claims 11-15 include paper with printed logic in the form of computer
instructions, i.e., a paper printed with nonfunctional descriptive material. See our
discussion at Section V.B.(3)(b). As such, we conclude the “logic” (printed
computer instructions) of claims 11-15 lacks any new and nonobvious functional
relationship with the “medium” (paper). See In re Lowry, 32 F.3d at 1584, 32
USPQ2d at 1035.
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We conclude that even using Appellant’s definition of logic, the subject
matter of claims 11-15 is not patentable over the Sloan patent document for the
reasons discussed in Section V.C.(2) supra.

VI. CONCLUSIONS OF LAW
Appellant has failed to establish that the Examiner erred in rejecting claims
1, 6, 9, 11, 14, 16, and 19 under 35 U.S.C. § 102(e) as being anticipated by Ehlers.
Appellant has failed to establish that the Examiner erred in rejecting claims
2-5, 7-8, 10, 12-13, 15, 17-18, and 20 as being unpatentable under
35 U.S.C. § 103(a) over Ehlers.
Claims 1-20 are not patentable.

VII. DECISION
The decision of the Examiner rejecting claims 1, 6, 9, 11, 14, 16, and 19
under 35 U.S.C. § 102 is affirmed, and the decision of the Examiner rejecting
claims 2-5, 7-8, 10, 12-13, 15, 17-18, and 20 under 35 U.S.C. § 103 is affirmed.
We have entered a new ground of rejection against claims 6-20 under
37 C.F.R. § 41.50(b).
37 C.F.R. § 41.50(b) provides that, “[a] new ground of rejection pursuant to
this paragraph shall not be considered final for judicial review.”
37 C.F.R. § 41.50(b) also provides that the Appellant, WITHIN TWO
MONTHS FROM THE DATE OF THE DECISION, must exercise one of the
following two options with respect to the new grounds of rejection to avoid
termination of proceedings as to the rejected claims:
(1) Submit an appropriate amendment of the claims so rejected or new
evidence relating to the claims so rejected, or both, and have the matter
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reconsidered by the examiner, in which event the proceeding will be
remanded to the examiner …

(2) Request that the proceeding be reheard under 37 C.F.R. § 41.52 by the
Board upon the same record …
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
37 C.F.R. § 41.50(b)

KIS

DORITY & MANNING, P.A.
POST OFFICE BOX 1449
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