Ex Parte Smith et al

Patent Trials and Appeals Board

Oct 31, 2014

12912410 - (D) (P.T.A.B. Oct. 31, 2014)

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.
12/912,410 10/26/2010 Ray Smith 321.010US1 1998
97462 7590 12/05/2014
Mark A. Litman & Associates, P.A.
7001 Cahill Road, Ste. 15A
Edina, MN 55439
EXAMINER
LAYNO, BENJAMIN
ART UNIT PAPER NUMBER
3711
MAIL DATE DELIVERY MODE
12/05/2014 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 RAY SMITH and AMANDA TEARS SMITH
____________________

Appeal 2012-009025
Application 12/912,410
Technology Center 3700
____________________

Before: CHARLES N. GREENHUT, JILL D. HILL, and
BRANDON J. WARNER, Administrative Patent Judges.

GREENHUT, Administrative Patent Judge.

DECISION ON APPEAL

STATEMENT OF CASE
Appellants appeal under 35 U.S.C. § 134 from a rejection of claims
1–18. App. Br. 5. We have jurisdiction under 35 U.S.C. § 6(b). An oral
hearing was held on November 4, 2014.
We affirm and designate this affirmance as a NEW GROUND OF
REJECTION.

The claims are directed to a blackjack variation. Claim 1, reproduced
below, is illustrative of the claimed subject matter:
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1. A method of conducting a wagering game comprising:
i) a dealer providing at least one deck of i) physical
playing cards and shuffling the physical playing cards to form a
random set of physical playing cards;
j) the dealer accepting at least one first wager from each
participating player on a player game hand against a
banker’s/dealer’s hand;
k) the dealer dealing only two cards from the random set
of physical playing cards to each designated player and two
cards to the banker/dealer such that the designated player and
the banker/dealer receive the same number of exactly two
random physical playing cards;
l) the dealer examining respective hands to determine in
any hand has a Natural 0 count from totaling count from cards,
defined as the first two random physical playing cards in a hand
being a pair of 5’s, 10’s, jacks, queens or kings;
m) the dealer resolving any player versus dealer wagers
between each individual player hand that has a Natural 0 count
and between the dealer hand and all player hands where a
Natural 0 is present in the dealer hand, while the dealer exposes
only a single card to the players;
n) as between each player and the dealer where neither
hand has a Natural 0, thc dealer allowing each player to elect to
take a maximum of one additional card or standing pat on the
initial two card player hand, while still having seen only one
dealer card;
o) the dealer/banker remaining pat within a first certain
predetermined total counts and being required to take a single
hit within a second predetermined total counts, where the first
total counts range does not overlap the second total counts
range;
p) after all possible additional random physical playing
cards have been dealt, the dealer comparing a value of each
designated player’s hand to a final value of the
banker’s/dealer’s hand wherein said value of the designated
player’s hand and the banker’s/dealer’s hand is in a range of
zero to nine points based on a pre-established scoring system
wherein aces count as one point, tens and face cards count as
zero points and all other cards count as their face value and
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wherein a two-digit hand total is deemed to have a value
corresponding to the one’s digit of the two-digit total;
q) the dealer resolving the wagers based on whether the
designated player’s hand or the banker’s/dealer’s hand is
nearest to a value of 0.

REJECTION
Claims 1–18 are rejected under 35 U.S.C. § 101 as being directed to
non-statutory subject matter. Ans. 5.

OPINION
I. Claim grouping
Appellants argue all claims as a group. We select claim 1 as the
representative claim, and claims 2–18 stand or fall with claim 1. 37 C.F.R. §
41.37(c)(1)(vii).

II. The Examiner’s position and Appellants’ response
The Examiner first (Ans. 6–7) analyzed the claims under the
“machine-or-transformation test,” which is “a useful and important clue, an
investigative tool, for determining whether some claimed inventions are
processes under § 101.” Bilski v. Kappos, 130 S.Ct. 3218, 3227 (2010); see
Ans. 6–7. The Examiner determined that the claims do not contain
sufficient recitations to satisfy the machine prong of the test. Ans. 6.
Insofar as the machine prong is concerned, Appellants appear to concede
that claim 1 does not satisfy this prong, as the only mention of a machine
discussed by Appellants is of a “shuffling machine,” an element not required
by claim 1. See App. Br. 13–14; see also App. Br. 19 (arguing that the
claims pass the machine or transformation test even if machine factors are
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4
excluded). Appellants do not appear to contest the Examiner’s specific
determinations that the recitations of “physical playing cards,” or a deck of
such cards, are insufficient to satisfy the machine prong of the machine-or-
transformation test. As such, the Examiner’s position in this regard stands
uncontroverted and we adopt it as our own.
The Examiner went on to discuss the transformation prong of the
machine-or-transformation test and determined that the “dealing of cards
only move[s] the cards from one place to another, the cards remain the same
and do not transform into a different deck of cards.” Ans. 7. Appellants
take issue with the Examiner’s determination in this regard and argue that
the Examiner improperly focused on the cards as opposed to the deck. App.
Br. 15–16. Appellants contend that the “shuffling” step of claim 1
transforms the deck into a “random set of cards” and that random set of
cards is further transformed by being divided and distributed to the dealer
and players, i.e., “dealing” in claim 1. App. Br. 23. The Examiner disagrees
that the recitation of shuffling and dealing constitutes a transformation that
satisfies the transformation prong of the machine-or-transformation test
(Ans. 10–11) and this constitutes a major point of disagreement between
Appellants and the Examiner. Reply Br. 8–10.
The Examiner additionally determined that the claims are directed to
non-statutory subject matter because they constitute “an attempt to claim a
new set of rules for playing a card game” and that “a set of rules qualifies as
an abstract idea.” Ans. 7–8. The Examiner applied the Interim Guidance for
Determining Subject Matter Eligibility for Process Claims in View of Bilski
v. Kappos (Fed. Reg. Vol. 75, No. 143/Tuesday, July 27, 2010/Notices)
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(hereinafter “Interim Guidance”).1 Ans. 8. “Human behavior,”2 such as
“following rules or instructions,” is listed among the examples of
“statement[s] of a general concept” that the Interim Guidance categorizes as
weighing against eligibility. Interim Guidance at pp. 1–2. The Examiner
additionally cited the Manual of Patent Examining Procedure (“MPEP”)3
Section 2106, which has been subsequently (November 2013) revised to
expressly state that the Office considers “a game defined as a set of rules” as
not being directed to one of the statutory categories set forth in 35 U.S.C.
§ 101.
On October 30, 2014, Appellants faxed to the Board additional
arguments in light of Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S.Ct. 2347
(2014). As our rules do not provide for additional briefing in this manner
unless requested by the Board, we treated Appellants’ fax as a showing of
good cause to “rely on a new argument based upon a recent relevant decision
of either the Board or a Federal Court” under 37 C.F.R. § 41.47(e)(2) and
heard Appellants’ arguments regarding Alice, supra, at the oral hearing
conducted on November 4, 2014, at 9:00 a.m. See Order Granting Request
to Present New Arguments of October 31, 2014.
Appellants have not set forth any arguments, in the briefs or at the oral
hearing, disputing the Examiner’s determination that claim 1 is directed to a

1 Available at http://www.uspto.gov/patents/law/exam/bilski_guidance_
27jul2010.pdf.
2 See, e.g., Dyk, J., concurring, In re Bilski, 545 F. 3d 943, 970–76 (Fed. Cir.
2008); Sotomayor, J., concurring, Alice Corp. Pty. Ltd. v. CLS Bank Int’l,
134 S.Ct. 2347, 2360–61 (2014).
3 “While the MPEP does not have the force of law, it is entitled to judicial
notice as an official interpretation of statutes or regulations as long as it is
not in conflict therewith.” Molins PLC v. Textron, Inc., 48 F.3d 1172, 1180
n.10 (Fed. Cir. 1995).
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set of rules, or disputing that a set of rules constitutes a patent-ineligible
abstract idea. Rather, Appellants, applying the criteria discussed in the
Interim Guidance, maintain that the randomized shuffling of claim 1 is a
meaningful, particular, and observable transformation of the deck of cards,
which renders the subject matter of claim 1 patent eligible. App. Br. 14–17.

III. Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S.Ct. 2347 (2014)
The Interim Guidance applied by the Examiner was developed before
the Supreme Court issued its decision in Alice, supra, further explaining the
law in this area. The claims in Alice were directed to a “method of
exchanging obligations as between parties.” Alice, 134 S.Ct. at 2352 n.2. In
Alice, the Supreme Court discussed its decision in Mayo Collaborative
Services v. Prometheus Labs., Inc., 132 S.Ct. 1289 (2012) and explained:
In Mayo Collaborative Services v. Prometheus
Laboratories, Inc., 566 U.S. ––––, 132 S.Ct. 1289, 182
L.Ed.2d 321 (2012), we set forth a framework for
distinguishing patents that claim laws of nature, natural
phenomena, and abstract ideas from those that claim
patent-eligible applications of those concepts. First, we
determine whether the claims at issue are directed to one
of those patent-ineligible concepts. Id., at ––––, 132 S.
Ct., at 1296–1297. If so, we then ask, “[w]hat else is
there in the claims before us?” Id., at ––––, 132 S.Ct., at
1297. To answer that question, we consider the elements
of each claim both individually and “as an ordered
combination” to determine whether the additional
elements “transform the nature of the claim” into a
patent-eligible application. Id., at ––––, 132 S.Ct., at
1298, 1297. We have described step two of this analysis
as a search for an “‘inventive concept’”—i.e., an element
or combination of elements that is “sufficient to ensure
that the patent in practice amounts to significantly more
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than a patent upon the [ineligible concept] itself.” Id., at
––––, 132 S.Ct., at 1294.
Alice, 134 S.Ct. at 2355.4 According to the discussion above, it first must be
determined whether the claims at issue are directed to a patent-ineligible
concept (such as an abstract idea) and, if so, it then must be determined
whether there is something else in the claims that ensures that they are
directed to significantly more than a patent-ineligible concept.

III-A. Step one: Are the claims at issue are directed to a patent-
ineligible concept?
In Alice, the Supreme Court discussed its decision in Bilski v.
Kappos, 130 S.Ct. 3218 (2010), and stated:
It follows from our prior cases, and Bilski in particular,
that the claims at issue here are directed to an abstract
idea. Petitioner’s claims involve a method of exchanging
financial obligations between two parties using a third-
party intermediary to mitigate settlement risk.
Alice, 134 S.Ct. at 2356 (emphasis added).
A wagering game is, effectively, a method of exchanging and
resolving financial obligations based on probabilities created during the
distribution of the cards. Thus, the “method of conducting a wagering
game,” as recited in Appellants’ independent claim 1, is akin to the “method
of exchanging financial obligations” discussed in Alice. The recited rules
tell the players and the dealer what to do in response to a particular event or
set of events. Thus, these rules are similar to an instruction to follow a

4 In a memo dated June 25, 2014, the USPTO provided guidance to
examiners in applying Alice. See “Preliminary Examination Instructions in
view of the Supreme Court Decision in Alice Corporation Pty. Ltd. v. CLS
Bank International, et. al. available at http://www.uspto.gov/patents/
announce/alice_pec_25jun2014.pdf.
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formula or an algorithm to conduct the game and resolve the parties’
financial obligations. Like the presence of a formula or an algorithm,
Appellants’ recited rules do not render the claimed idea any less abstract.
See Alice, 134 S.Ct. at 2356–59 (discussing cases involving formulas and
algorithms). Physical cards may be used to help the players and the dealer
effectuate the rules, but any randomly-distributed tokens or other similar
items could do the same. Therefore, when read as a whole, we agree with
the Examiner that independent claim 1 is directed to a set of rules for
conducting a wagering game which, for the reasons discussed above,
constitutes a patent-ineligible abstract idea. As noted in section II above,
Appellants have not disputed the Examiner’s determination that the claim is
directed to a set of rules or that a set of rules constitutes a patent-ineligible
abstract idea.

III-B. Step two: Is there something else in the claims that ensures that they
are directed to significantly more than a patent-ineligible concept?
As we noted above, according to Alice, the question to be settled next
is whether claim 1 recites an element, or combination of elements, that is
enough to ensure that the claim is directed to significantly more than an
abstract idea. Essentially, Appellants’ contention that the “shuffling” and
“dealing” aspects of claim 1 satisfy the transformation prong of the machine-
or-transformation test amounts to a contention that those shuffling and
dealing recitations ensure that claim 1 is directed to significantly more than
an abstract idea. The debate between the Examiner and the Appellants as to
whether shuffling a deck and dealing the cards of that deck constitute patent-
eligible transformations is not one that needs to be resolved to decide this
appeal because it is not on point.
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Claim 1 is not directed to a method of shuffling or a method of
dealing. The claim is directed to a method of conducting a game. Even if
shuffling and dealing might, themselves, be considered statutory processes,
the machine-or-transformation test is not considered to be satisfied by the
recitation of even a statutory transformation, when that transformation
constitutes “insignificant [extra-]solution activity.” See In re Bilski, 545 F.
3d 943, 957 (citations and quotations omitted). Rather, the “transformation
must be central to the purpose of the claimed process.” Id at 962. The
purpose of the claimed process before us is not the shuffling and dealing of
cards; it is conducting the game. The Court’s decision in Alice is in accord
with these principles.
Appellants do not dispute that shuffling and dealing cards are
conventional in the gambling art. Oral Hearing Transcript at 7. Appellants’
contention that whether or not these are conventional steps is not relevant to
a determination under § 101 (id.) is contrary to established precedent. See
Alice, 134 S.Ct. at 2357–60. Simply appending conventional steps, specified
in general terms, like “shuffling,” or “dealing [a certain number of cards],”
which were known in the industry, is not enough to transform an abstract
idea into a patent-eligible invention. See id. These recitations are similar to
the recitation of a conventional “computer” discussed in Alice. The
shuffling and dealing of cards amounts to nothing significantly more than
instructions to a dealer and the players to apply the abstract idea of following
the rules of the wagering game. Shuffling, dealing cards, wagering, and
resolving wagers, as set forth in claim 1, taken individually or as an ordered
combination, are merely necessary and conventional steps in playing a
wagering card game. They constitute, pre- or post-, extra-solution activity,
and do not add enough to the claims to transform the recited methods into
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patent-eligible subject matter. Bilski v. Kappos, 130 S.Ct. at 3230–31.
Patent eligibility should not “depend simply on the draftsman’s art.” See
Alice, 134 S.Ct. at 2358–59 (quoting Parker v. Flook, 437 U.S. 584, 593
(1978)).

Conclusion
Although we have carefully considered all of Appellants’ arguments,
and the recent Supreme Court decision in Alice, we remain in agreement
with the Examiner that claim 1 is directed to non-statutory subject matter.
As we have modified the Examiner’s reasoning somewhat in reaching this
conclusion, we designate our affirmance of the Examiner’s rejection as a
new ground of rejection pursuant to 37 C.F.R. § 41.50(b) so as to afford
Appellants the procedural options associated therewith, and to ensure
Appellants have a fair opportunity to respond.

DECISION
The Examiner’s rejection is affirmed. We designate our affirmance as
entering a new ground of rejection pursuant to 37 C.F.R. § 41.50(b).
37 C.F.R. § 41.50(b) also provides that Appellants, 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 the appeal as to the rejected claims:
(1) Reopen prosecution. Submit an appropriate amendment of
the claims so rejected or new evidence relating to the claims so
rejected, or both, and have the matter reconsidered by the
Examiner, in which event the proceeding will be remanded to
the Examiner. . . .
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(2) Request rehearing. Request that the proceeding be reheard
under § 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). See 37 C.F.R.
§ 1.136(a)(1)(iv).

AFFIRMED; 37 C.F.R. § 41.50(b)

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