Gary M. Katz et al.

Patent Trials and Appeals Board

Nov 20, 2019

14075773 - (D) (P.T.A.B. Nov. 20, 2019)

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.
14/075,773 11/08/2013 Gary M. Katz 097016-0441 9031
1923 7590 11/20/2019
MCDERMOTT, WILL & EMERY LLP
The McDermott Building
500 North Capitol Street, N.W.
Washington, DC 20001
EXAMINER
GARTLAND, SCOTT D
ART UNIT PAPER NUMBER
3622
NOTIFICATION DATE DELIVERY MODE
11/20/2019 ELECTRONIC
Please find below and/or attached an Office communication concerning this application or proceeding.
The time period for reply, if any, is set in the attached communication.
Notice of the Office communication was sent electronically on above-indicated "Notification Date" to the
following e-mail address(es):
mweipdocket@mwe.com
PTOL-90A (Rev. 04/07)

UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte GARY M. KATZ, RYAN CARR, and
ANGELA CLEMENS KIMES
Appeal 2018-004611
Application 14/075,773
Technology Center 3600
Before JENNIFER S. BISK, LARRY J. HUME, and
JULIET MITCHELL DIRBA, Administrative Patent Judges.
HUME, Administrative Patent Judge.
DECISION ON APPEAL
Pursuant to 35 U.S.C. § 134(a), Appellant,1 Catalina Marketing
Corporation, appeals from the Examiner’s decision rejecting claims 1, 3–10,
12, 13, 15–22, 24, and 25, which are all claims pending in the application.
Appellant has canceled claims 2, 11, 14, and 23. Final Act. 2. We have
jurisdiction under 35 U.S.C. § 6(b).
We AFFIRM.

1 We use the word “Appellant” to refer to “applicant” as defined in 37
C.F.R. § 1.42(a). Appellant identifies the real party in interest as Catalina
Marketing Corporation by way of the assignment recorded at Reel 033438,
Frame 0539. Br. 3.
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STATEMENT OF THE CASE2
The Invention
The claims are directed to a system and method for providing relative
price point incentives based upon prior customer purchase behavior. See
Spec. 1 (Title). In particular, Appellant’s disclosed embodiments and
claimed invention relate to marketing, specifically, to the marketing of
consumer goods. Spec. ¶ 2.
Exemplary Claim
Claim 1, reproduced below, is representative of the subject matter on
appeal (emphasis added to contested prior-art limitations):
1. A computer-implemented method of generating
price point based incentives to induce customers to purchase
certain products, the method being implemented by a computer
having one or more physical processors programmed with
computer program instructions that, when executed, perform
the method, the method comprising:
obtaining, by the computer, transaction data associated
with a customer, wherein the transaction data comprises data
acquired at one or more Point-of-Sale (POS) computer systems
of one or more retailers, and indicates a plurality of items
purchased by the customer within a product category;
identifying, by the computer, based on the transaction
data, (i) a dominant competitive brand of a product in the

2 Our decision relies upon Appellant’s Appeal Brief (“Br.,” filed
Aug. 24, 2017); Examiner’s Answer (“Ans.,” mailed Dec. 21, 2017); Final
Office Action (“Final Act.,” mailed Apr. 12, 2017); and the original
Specification (“Spec.,” filed Nov. 8, 2013) (claiming benefit of
PCT/US02/06861 filed Mar. 7, 2002). Appellant did not file a Reply Brief in
response to the factual findings and legal conclusions in the Examiner’s
Answer.
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product category, and (ii) a client brand of the product,
wherein the dominant competitive brand is a brand of product,
other than the client brand, with the largest number of items
purchased by the customer or the largest number of dollars of
purchases by the customer according to the transaction data;
determining, by the computer, a category specific price
point associated with the dominant competitive brand and the
client brand, wherein the category specific price point is a
difference in price between the dominant competitive brand and
the client brand at which the customer is equally likely to
purchase the dominant competitive brand or the client brand;
generating, by the computer, an incentive for said client
brand based upon said category specific price point; and
transmitting, by the computer, the incentive for said
client brand to the customer.
Prior Art
The Examiner relies upon the following prior art as evidence in
rejecting the claims on appeal:
Swartz et al. (“Swartz”) US 2003/0132298 A1 July 17, 2003
Rejections on Appeal
R1. Claims 1, 3–10, 12–13, 15–22, and 24–25 stand rejected under
35 U.S.C. § 101 because the claimed invention is directed to a judicial
exception (i.e., a law of nature, a natural phenomenon, or an abstract idea)
without significantly more. Final Act. 3.
R2. Claims 1, 3–10, 12–13, 15–22, and 24–25 stand rejected under
35 U.S.C. § 102(b) as being anticipated by Swartz. Final Act. 15.
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CLAIM GROUPING
Based on Appellant’s arguments (Br. 9–23) and our discretion under
37 C.F.R. § 41.37(c)(1)(iv), we decide the appeal of patent-ineligible subject
matter Rejection R1 of claims 1, 3–10, 12–13, 15–22, and 24–25 on the
basis of representative claim 1; and we also decide the appeal of anticipation
Rejection R2 of claims 1, 3–10, 12–13, 15–22, and 24–25 on the basis of
representative claim 1.3
ISSUES AND ANALYSIS
In reaching this decision, we consider all evidence presented and all
arguments actually made by Appellant. To the extent Appellant has not
advanced separate, substantive arguments for particular claims, or other
issues, such arguments are waived. 37 C.F.R. § 41.37(c)(1)(iv).
We disagree with Appellant’s arguments with respect to claim 1 and,
unless otherwise noted, we incorporate by reference herein and adopt as our
own: (1) the findings and reasons set forth by the Examiner in the action
from which this appeal is taken, and (2) the reasons and rebuttals set forth in
the Examiner’s Answer in response to Appellant’s arguments. We highlight
and address specific findings and arguments regarding claim 1 for emphasis
as follows.

3 “Notwithstanding any other provision of this paragraph, the failure of
appellant to separately argue claims which appellant has grouped together
shall constitute a waiver of any argument that the Board must consider the
patentability of any grouped claim separately.” 37 C.F.R. § 41.37(c)(1)(iv).
In addition, when Appellant does not separately argue the patentability of
dependent claims, the claims stand or fall with the claims from which they
depend. In re King, 801 F.2d 1324, 1325 (Fed. Cir. 1986).
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1. § 101 Rejection R1 of Claims 1, 3–10, 12, 13, 15–22, 24, and 25
Issue 1
Appellant argues (Br. 9–20) the Examiner’s rejection of claim 1 under
35 U.S.C. § 101 as being directed to patent-ineligible subject matter is in
error. These contentions present us with the following issue:
Under the USPTO’s Revised Guidance, informed by our governing
case law concerning 35 U.S.C. § 101, is claim 1 patent-ineligible under
§ 101?
Principles of Law
A. 35 U.S.C. § 101
An invention is patent-eligible if it is a “new and useful process,
machine, manufacture, or composition of matter.” 35 U.S.C. § 101.4
However, the Supreme Court has long interpreted 35 U.S.C. § 101 to include
implicit exceptions: “[l]aws of nature, natural phenomena, and abstract
ideas” are not patentable. Mayo Collaborative Servs. v. Prometheus Labs.,
Inc., 566 U.S. 66, 70 (2012) (brackets in original) (citing Diamond v. Diehr,
450 U.S. 175, 185 (1981)).
In determining whether a claim falls within an excluded category, we
are guided by the Supreme Court’s two-step framework, described in Mayo
and Alice. Alice Corp. v. CLS Bank Int’l, 573 U.S. 208, 217–18 (2014)
(citing Mayo, 566 U.S. at 75–77). In accordance with that framework, we

4 This threshold analysis of whether a claim is directed to one of the four
statutory categories of invention, i.e., a process, machine, manufacture, or
composition of matter, is referred to as “Step 1” in the USPTO’s patent-
eligibility analysis under § 101. MPEP § 2106.
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first determine what concept the claim is “directed to.” See Alice, 573 U.S.
at 219 (“On their face, the claims before us are drawn to the concept of
intermediated settlement, i.e., the use of a third party to mitigate settlement
risk.”); see also Bilski v. Kappos, 561 U.S. 593, 611 (2010) (“Claims 1 and 4
in petitioners’ application explain the basic concept of hedging, or protecting
against risk . . . .”).
Concepts determined to be abstract ideas, and thus patent ineligible,
include certain methods of organizing human activity, such as fundamental
economic practices (Alice, 573 U.S. at 219–20; Bilski, 561 U.S. at 611);
mathematical formulas (Parker v. Flook, 437 U.S. 584, 594–95 (1978)); and
mental processes (Gottschalk v. Benson, 409 U.S. 63, 67 (1972)). Concepts
determined to be patent eligible include physical and chemical processes,
such as “molding rubber products” (Diehr, 450 U.S. at 191); “tanning,
dyeing, making water-proof cloth, vulcanizing India rubber, smelting ores”
(id. at 182 n.7 (quoting Corning v. Burden, 56 U.S. 252, 267–68 (1853)));
and manufacturing flour (Benson, 409 U.S. at 69 (citing Cochrane v.
Deener, 94 U.S. 780, 785 (1876))).
In Diehr, the claim at issue recited a mathematical formula, but the
Supreme Court held “[a] claim drawn to subject matter otherwise statutory
does not become nonstatutory simply because it uses a mathematical
formula.” Diehr, 450 U.S. at 187; see also id. at 191 (“We view
respondents’ claims as nothing more than a process for molding rubber
products and not as an attempt to patent a mathematical formula.”). Having
said that, the Supreme Court also indicated that a claim “seeking patent
protection for that formula in the abstract . . . is not accorded the protection
of our patent laws, and this principle cannot be circumvented by attempting
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to limit the use of the formula to a particular technological environment.”
Id. (citation omitted) (citing Benson and Flook); see, e.g., id. at 187 (“It is
now commonplace that an application of a law of nature or mathematical
formula to a known structure or process may well be deserving of patent
protection.”).
Abstract ideas may include, but are not limited to, fundamental
economic practices, methods of organizing human activities, and
mathematical formulas or relationships. Alice, 573 U.S. at 217–21. Under
this guidance, we must therefore ensure at step one that we articulate what
the claims are directed to with enough specificity to ensure the step one
inquiry is meaningful. Id. at 217 (“[W]e tread carefully in construing this
exclusionary principle lest it swallow all of patent law.”).
If the claim is “directed to” an abstract idea, we turn to the second
step of the Alice and Mayo framework, where “we must 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, 573 U.S. at 221 (citation omitted). “A claim
that recites an abstract idea must include ‘additional features’ to ensure ‘that
the [claim] is more than a drafting effort designed to monopolize the
[abstract idea].’” Id. (alterations in original) (quoting Mayo, 566 U.S. at 77).
“[M]erely requir[ing] generic computer implementation[] fail[s] to transform
that abstract idea into a patent-eligible invention.” Id.
B. USPTO Revised Guidance
The PTO recently published revised guidance in the Federal Register
concerning the application of § 101. 2019 Revised Patent Subject Matter
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Eligibility Guidance, 84 Fed. Reg. 50 (January 7, 2019) (hereinafter
“Revised Guidance”) (https://www.govinfo.gov/content/pkg/FR-2019-01-
07/pdf/2018-28282.pdf).
Under the Revised Guidance, we first look to whether the claim
recites:
(1) any judicial exceptions, including certain groupings
of abstract ideas (i.e., mathematical concepts, certain methods
of organizing human activity such as a fundamental economic
practice, or mental processes);5 and
(2) additional elements that integrate the judicial
exception into a practical application (see Manual for Patent
Examining Procedure (“MPEP”) §§ 2106.05(a)–(c), (e)–(h)).6
See Revised Guidance 52–53.
Only if a claim (1) recites a judicial exception and (2) does not
integrate that exception into a practical application, do we then look to
whether the claim:
(3) adds a specific limitation beyond the judicial
exception that is not “well-understood, routine, conventional”
in the field (see MPEP § 2106.05(d)); or
(4) simply appends well-understood, routine,
conventional activities previously known to the industry,
specified at a high level of generality, to the judicial exception.7
See Revised Guidance 56.

5 Referred to as “Revised Step 2A, Prong 1” in the Revised Guidance
(hereinafter “Step 2A(i)”).
6 Referred to as “Revised Step 2A, Prong 2” in the Revised Guidance
(hereinafter “Step 2A(ii)”).
7 Items (3) and (4) continue to be collectively referred to as “Step 2B” of the
Supreme Court’s two-step framework, described in Mayo and Alice.
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Step 2A(i) – Abstract Idea
Informed by our judicial precedent, the Revised Guidance extracts and
synthesizes key concepts identified by the courts as abstract ideas to explain
that the abstract idea exception includes the following groupings of subject
matter, when recited as such in a claim limitation:
(a) Mathematical concepts—mathematical relationships,
mathematical formulas or equations, mathematical calculations;
(b) Certain methods of organizing human activity —
fundamental economic principles or practices (including
hedging, insurance, mitigating risk); commercial or legal
interactions (including agreements in the form of contracts;
legal obligations; advertising, marketing or sales activities or
behaviors; business relations); managing personal behavior or
relationships or interactions between people (including social
activities, teaching, and following rules or instructions); and
(c) Mental processes—concepts performed in the human
mind (including an observation, evaluation, judgment, opinion).
Revised Guidance 52 (footnotes omitted).
Under the Revised Guidance, if the claim does not recite a judicial
exception (a law of nature, natural phenomenon, or subject matter within the
enumerated groupings of abstract ideas above), then the claim is patent-
eligible at Step 2A(i). This determination concludes the eligibility analysis,
except in situations identified in the Revised Guidance.8

8 In the rare circumstance in which an examiner believes a claim limitation
that does not fall within the enumerated groupings of abstract ideas should
nonetheless be treated as reciting an abstract idea, the procedure described in
of the Guidance for analyzing the claim should be followed. See Revised
Guidance, Section III.C.
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However, if the claim recites a judicial exception (i.e., an abstract idea
enumerated above, a law of nature, or a natural phenomenon), the claim
requires further analysis for a practical application of the judicial exception
in Step 2A(ii).
Step 2A(ii) – Practical Application
If a claim recites a judicial exception in Step 2A(i), we determine
whether the recited judicial exception is integrated into a practical
application of that exception in Step 2A(ii) by: (a) identifying whether there
are any additional elements recited in the claim beyond the judicial
exception(s); and (b) evaluating those additional elements individually and
in combination to determine whether they integrate the exception into a
practical application.
The seven identified “practical application” sections of the MPEP,9
cited in the Revised Guidance under Step 2A(ii), are:
(1) MPEP § 2106.05(a) Improvements to the Functioning of
a Computer or To Any Other Technology or Technical
Field
(2) MPEP § 2106.05(b) Particular Machine
(3) MPEP § 2106.05(c) Particular Transformation
(4) MPEP § 2106.05(e) Other Meaningful Limitations
(5) MPEP § 2106.05(f) Mere Instructions To Apply An
Exception

9 See MPEP §§ 2106.05(a)–(c), (e)–(h). Citations to the MPEP herein refer
to revision [R-08.2017]. Sections 2106.05(a), (b), (c), and (e) are indicative
of integration into a practical application, while §§ 2106.05(f), (g), and (h)
relate to limitations that are not indicative of integration into a practical
application.
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(6) MPEP § 2106.05(g) Insignificant Extra-Solution Activity
(7) MPEP § 2106.05(h) Field of Use and Technological
Environment
See Revised Guidance 55.
If the recited judicial exception is integrated into a practical
application as determined under one or more of the MPEP sections cited
above, then the claim is not directed to the judicial exception, and the patent-
eligibility inquiry ends. See Revised Guidance 54. If not, then analysis
proceeds to Step 2B.
Step 2B – “Inventive Concept” or “Significantly More”
Under our reviewing courts’ precedent, it is possible that a claim that
does not “integrate” a recited judicial exception under Step 2A(ii) is
nonetheless patent eligible. For example, the claim may recite additional
elements that render the claim patent eligible even though one or more claim
elements may recite a judicial exception.10 The Federal Circuit has held
claims eligible at the second step of the Alice/Mayo test (USPTO Step 2B)
because the additional elements recited in the claims provided “significantly
more” than the recited judicial exception (e.g., because the additional
elements were unconventional in combination).11 Therefore, if a claim has
been determined to be directed to a judicial exception under Revised Step
2A, we must also evaluate the additional elements individually and in
combination under Step 2B to determine whether they provide an inventive

10 See, e.g., Diehr, 450 U.S. at 187.
11 See, e.g., Amdocs (Israel), Ltd. v. Openet Telecom, Inc., 841 F.3d 1288,
1300, 1304 (Fed. Cir. 2016); BASCOM Global Internet Services, Inc. v.
AT&T Mobility LLC, 827 F.3d 1341, 1349–52 (Fed. Cir. 2016); DDR
Holdings v. Hotels.com, L.P., 773 F.3d 1245, 1257–59 (Fed. Cir. 2014).
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concept (i.e., whether the additional elements amount to significantly more
than the exception itself).12
Under the Revised Guidance, we must consider in Step 2B whether an
additional element or combination of elements: (1) “Adds a specific
limitation or combination of limitations that are not well-understood,
routine, conventional activity in the field, which is indicative that an
inventive concept may be present;” or (2) “simply appends well-understood,
routine, conventional activities previously known to the industry, specified
at a high level of generality, to the judicial exception, which is indicative
that an inventive concept may not be present.” See Revised Guidance,
Section III.B.13
In the Step 2B analysis, an additional element (or combination of
elements) is not well-understood, routine or conventional unless the

12 The patent eligibility inquiry may contain underlying issues of fact.
Mortg. Grader, Inc. v. First Choice Loan Servs. Inc., 811 F.3d 1314, 1325
(Fed. Cir. 2016). In particular, “[t]he question of whether a claim element or
combination of elements is well-understood, routine and conventional to a
skilled artisan in the relevant field is a question of fact.” Berkheimer v. HP
Inc., 881 F.3d 1360, 1368 (Fed. Cir. 2018).
13 In accordance with existing Step 2B guidance, an Examiner’s finding that
an additional element (or combination of elements) is well understood,
routine, conventional activity must be supported with at least one of the four
specific types of evidence required by the USPTO Berkheimer
Memorandum, as shown above. For more information concerning evaluation
of well-understood, routine, conventional activity, see MPEP § 2106.05(d),
as modified by the USPTO Berkheimer Memorandum (USPTO
Commissioner for Patents Memorandum dated Apr. 19, 2018, “Changes in
Examination Procedure Pertaining to Subject Matter Eligibility, Recent
Subject Matter Eligibility Decision (Berkheimer v. HP, Inc.)” (hereinafter
“Berkheimer Memo”).
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examiner finds an evidentiary basis, and expressly supports a rejection in
writing with, one or more of the following:
1. A citation to an express statement in the
specification or to a statement made by an applicant during
prosecution that demonstrates the well-understood, routine,
conventional nature of the additional element(s). . . .
2. A citation to one or more of the court decisions
discussed in MPEP § 2106.05(d)(II) as noting the well-
understood, routine, conventional nature of the additional
element(s).
3. A citation to a publication that demonstrates the
well-understood, routine, conventional nature of the additional
element(s). . . .
4. A statement that the examiner is taking official
notice of the well-understood, routine, conventional nature of
the additional element(s). . . .
See Berkheimer Memo 3–4.
If the Examiner or the Board determines under Step 2B that the
element (or combination of elements) amounts to significantly more than the
exception itself, the claim is eligible, thereby concluding the eligibility
analysis.
However, if a determination is made that the element and combination
of elements do not amount to significantly more than the exception itself, the
claim is ineligible under Step 2B, and the claim should be rejected for lack of
subject matter eligibility.
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Analysis
Step 1 – Statutory Category
Claim 1, as a method (process) claim, recites one of the enumerated
categories of eligible subject matter in 35 U.S.C. § 101. Therefore, the issue
before us is whether it is directed to a judicial exception without
significantly more.
Step 2A(i): Does the Claim Recite a Judicial Exception?
The Examiner determined that claim 1 is directed to “[d]iscounting
based on competitor brand pricing [which] is ‘An Idea “Of Itself’
(previously indicated by ‘steps can be performed mentally’) and/or one of
‘Certain Methods of Organizing Human Activity’ (previously indicated by
reference to ‘Freddie Mac’), and thus the claims are directed to an abstract
idea.” Final Act. 3.
We conclude claim 1 does not recite the judicial exceptions of either
natural phenomena or laws of nature. We evaluate, de novo, whether
claim 1 recites an abstract idea based upon the Revised Guidance.
With respect to this phase of the analysis, Appellant argues:
[T]he Office Action fails to identify any similar abstract idea
that has been held patent ineligible. See May 19, 2016 Memo
Re Subject Matter Eligibility (“when determining whether a
claim is directed to an abstract idea, it is appropriate to compare
the claim to claims already found to be directed to an abstract
idea in a previous court decision.”); May 2016 Update:
Memorandum — Formulating a Subject Matter Eligibility
Rejection and Evaluating the Applicant’s Response to a Subject
Matter Eligibility Rejection (“the rejection should explain why
[the alleged abstract idea] corresponds to a concept that the
courts have identified as an abstract idea . . . .” The Office
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Action identifies the subject matter of Electric Power, Affinity
Labs, and the non-precedential Freddie Mac as a similar
concept to the claims. Office Action, p.3. Appellant respectfully
disagree[s].
Br. 15–16. Appellant further argues, unlike the three decisions cited by the
Examiner in the Final Action (3), “Appellant[’s claims] recite[] ‘generating,
by the computer, an incentive for said client brand based upon said category
specific price point’. Appellant respectfully submit[s] that Appellant’[s]
claims, which include ‘generating, by the computer, an incentive for said
client brand based upon said category specific price point’, are not directed
to a similar abstract idea as any of the claims of the decisions referenced
above.” Br. 17.
First, we look to the Specification to provide context as to what the
claimed invention is directed to. In this case, the Specification discloses that
the invention “relates to the field of marketing. More specifically, this
invention relates to the field of marketing consumer goods.” Spec. ¶ 2.
Also, “[t]he present inventors recognize that the data stored in some [point-
of-sale] POS computer systems can beneficially be used to determine
purchase incentives that would induce customers to purchase certain
products.” Spec. ¶ 5.
Appellant’s Abstract describes the invention as follows:
The invention provides a system, computer program, and
method for generating price point based incentives comprising
determining a category specific price point (620) associated
with a dominant competitive brand and a client brand; and
generating an incentive (630) for said client brand based upon
said price point and an anticipated price differential (640).
Spec. 15 (Abstract).
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In TABLE 1 below, we identify in italics the specific claim
limitations that we conclude recite an abstract idea. We additionally identify
in bold the additional (non-abstract) claim limitations that we find to be
generic computer components and techniques, and underline limitations we
conclude represent extra-solution activity:
TABLE 1
Independent Claim 1 Revised Guidance
A computer-implemented
method of generating price
point based incentives to
induce customers to purchase
certain products, the method
being implemented by a
computer having one or
more physical processors
programmed with computer
program instructions that,
when executed, perform the
method, the method
comprising:
A process (method) is a statutory subject
matter class. See 35 U.S.C. § 101.
[1] obtaining, by the
computer, transaction data
associated with a customer,
wherein the transaction data
comprises data acquired at one
or more Point-of-Sale (POS)
computer systems of one or
more retailers, and indicates a
plurality of items purchased
by the customer within a
product category;
Receiving or obtaining information, i.e.,
data gathering or acquisition, is merely
insignificant extra-solution activity that
does not add significantly more to the
abstract idea to render the claimed
invention patent-eligible. Revised
Guidance 55, n.31; see In re Bilski, 545
F.3d 943, 962 (Fed. Cir. 2008) (en
banc), aff’d on other grounds, 561 U.S.
593 (2010) (“[T]he involvement of the
machine or transformation in the
claimed process must not merely be
insignificant extra-solution activity”).
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Independent Claim 1 Revised Guidance
[2] identifying, by the
computer, based on the
transaction data, (i) a
dominant competitive brand of
a product in the product
category, and (ii) a client
brand of the product, wherein
the dominant competitive
brand is a brand of product,
other than the client brand,
with the largest number of
items purchased by the
customer or the largest
number of dollars of purchases
by the customer according to
the transaction data;
“Identifying” is an abstract idea, i.e., an
“observation, evaluation, judgment,
opinion” which could be performed as a
mental process. See Revised Guidance
52.
[3] determining, by the
computer, a category specific
price point associated with the
dominant competitive brand
and the client brand, wherein
the category specific price
point is a difference in price
between the dominant
competitive brand and the
client brand at which the
customer is equally likely to
purchase the dominant
competitive brand or the client
brand;
“Determining” is an abstract idea, i.e.,
an “observation, evaluation, judgment,
opinion” which could be performed as a
mental process. See Revised Guidance
52.
[4] generating, by the
computer, an incentive for
said client brand based upon
said category specific price
point; and
Generating an incentive based upon
previously determined information is
insignificant extra-solution activity.
Revised Guidance 55, n.31.
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Independent Claim 1 Revised Guidance
[5] transmitting, by the
computer, the incentive for
said client brand to the
customer.
Communicating or transmitting
information is insignificant post-solution
activity. Revised Guidance 55, n.31; see
also MPEP § 2106.05(g); and see
buySAFE, Inc. v. Google, Inc., 765 F.3d
1350, 1355 (Fed. Cir. 2014) (computer
receives and sends information over a
network).
Claims App.
Under the broadest reasonable interpretation standard,14 we conclude
limitations [1] through [5] recite steps that would ordinarily occur when
generating price point based incentives to induce customers to purchase
certain products. See Final Act. 3 et seq. For example, obtaining transaction
data and associating the transaction data with a customer, and then
determining price points pertaining to a dominant competitive brand and the
client’s brand are steps that would ordinarily be carried out when
ascertaining incentives for a client brand to be presented to the customer,
whether initiated person-to-person, on paper, or using a computer.

14 During prosecution, claims must be given their broadest reasonable
interpretation when reading claim language in light of the specification as it
would be interpreted by one of ordinary skill in the art. In re Am. Acad. of
Sci. Tech. Ctr., 367 F.3d 1359, 1364 (Fed. Cir. 2004). Under this standard,
we interpret claim terms using “the broadest reasonable meaning of the
words in their ordinary usage as they would be understood by one of
ordinary skill in the art, taking into account whatever enlightenment by way
of definitions or otherwise that may be afforded by the written description
contained in the applicant’s specification.” In re Morris, 127 F.3d 1048,
1054 (Fed. Cir. 1997).
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We determine that claim 1, overall, recites certain methods of
organizing human activity in the form of a commercial interaction, including
marketing or sales behaviors that may also be performed by pen and paper.
This type of activity, i.e., generating price point based incentives, as recited
in claim 1, for example, and aside from any computer-related aspects,
includes longstanding conduct that existed well before the advent of
computers and the Internet, and could be carried out by a human with pen
and paper. See CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366,
1375 (Fed. Cir. 2011).15
Thus, under Step 2A(i), we agree with the Examiner that claim 1’s
“method of generating price point based incentives to induce customers to
purchase certain products” recites a judicial exception. We conclude
claim 1, under our Revised Guidance, recites a judicial exception of
generating price point based incentives, i.e., certain methods of organizing
human activity in the form of a commercial interaction, including marketing
or sales behaviors, and thus is an abstract idea.

15 Our reviewing court recognizes that “[a]n abstract idea can generally be
described at different levels of abstraction.” Apple, Inc. v. Ameranth, Inc.,
842 F.3d 1229, 1240 (Fed. Cir. 2016). That need not and, in this case does
not, “impact the patentability analysis.” Id. at 1241. Further, “[t]he Board’s
slight revision of its abstract idea analysis does not impact the patentability
analysis.” Id. Moreover, merely combining several abstract ideas does not
render the combination any less abstract. RecogniCorp, LLC v. Nintendo
Co., 855 F.3d 1322, 1327 (Fed. Cir. 2017) (“Adding one abstract idea (math)
to another abstract idea . . . does not render the claim non-abstract.”); see
also FairWarning IP, LLC v. Iatric Sys., Inc., 839 F.3d 1089, 1093–94 (Fed.
Cir. 2016) (determining the pending claims were directed to a combination
of abstract ideas).
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Step 2A(ii): Judicial Exception Integrated into a Practical Application?
If the claims are directed to a judicial exception, as we conclude
above, we proceed to the “practical application” Step 2A(ii) in which we
determine whether the recited judicial exception is integrated into a practical
application of that exception by: (a) identifying whether there are any
additional elements recited in the claim beyond the judicial exception(s); and
(b) evaluating those additional elements individually and in combination to
determine whether they integrate the exception into a practical application.
As to the specific limitations, we find limitations [1] (“obtaining . . .
data”), [4] (“generating . . . an incentive”) and [5] (“transmitting . . . the
incentive”) recite insignificant extra solution activity. The Supreme Court
guides that the “prohibition against patenting abstract ideas ‘cannot be
circumvented’ [by] adding ‘insignificant postsolution activity.’” Bilski, 561
U.S. at 610–11 (quoting Diehr, 450 U.S. at 191–92). On this record, we are
of the view that Appellant’s claims do not operate the recited generic
computer components in an unconventional manner to achieve an
improvement in computer functionality. See MPEP § 2106.05(a).
In addition to the abstract steps recited in limitations [2] (“identifying
. . . a dominant competitive brand of a product . . . [and] a client brand of the
product”), and [3] (“determining . . . a category specific price point
associated with the dominant competitive brand and the client brand”)
identified in Step 2A(i), supra, and the extra and post-solution activity
recited by limitations [1], [4], and [5], we conclude claim 1 does not further
recite limitations that integrate the judicial exception of generating price
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point based incentives into a practical application as determined under one
or more of the MPEP sections cited above.
Under analogous circumstances, the Federal Circuit has held that
“[t]his is a quintessential ‘do it on a computer’ patent: it acknowledges that
[such] data . . . was previously collected, analyzed, manipulated, and
displayed manually, and it simply proposes doing so with a computer. We
have held such claims are directed to abstract ideas.” Univ. of Fla. Research
Found., Inc. v. Gen. Elec. Co., 916 F.3d 1363, 1367 (Fed. Cir. 2019); see
also Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1351 (Fed. Cir.
2016) (“Though lengthy and numerous, the claims do not go beyond
requiring the collection, analysis, and display of available information in a
particular field, stating those functions in general terms, without limiting
them to technical means for performing the functions that are arguably an
advance over conventional computer and network technology.”).
Therefore, the claim as a whole merely uses instructions to implement
the abstract idea on a computer or, alternatively, merely uses a computer as a
tool to perform the abstract idea. Thus, on this record, Appellant has not
shown an improvement or practical application under the guidance of MPEP
section 2106.05(a) (“Improvements to the Functioning of a Computer or to
Any Other Technology or Technical Field”) or section 2106.05(e)(“Other
Meaningful Limitations”). Nor does Appellant advance any arguments in
the Brief(s) that are directed to the Bilski machine-or-transformation test,
which would only be applicable to the method (process) claims on appeal.
See MPEP §§ 2106.05(b) (Particular Machine) and 2106.05(c) (Particular
Transformation).
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Therefore, we conclude the abstract idea is not integrated into a
practical application, and thus the claim is directed to the judicial exception.
Step 2B – “Inventive Concept” or “Significantly More”
If the claims are directed to a judicial exception, and not integrated
into a practical application, as we conclude above, we proceed to the
“inventive concept” step. For Step 2B we must “look with more specificity
at what the claim elements add, in order to determine ‘whether they identify
an “inventive concept” in the application of the ineligible subject matter’ to
which the claim is directed.” Affinity Labs, 838 F.3d at 1258.
In applying step two of the Alice analysis, our reviewing court guides
we must “determine whether the claims do significantly more than simply
describe [the] abstract method” and thus transform the abstract idea into
patentable subject matter. Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709,
715 (Fed. Cir. 2014). We look to see whether there are any “additional
features” in the claims that constitute an “inventive concept,” thereby
rendering the claims eligible for patenting even if they are directed to an
abstract idea. Alice, 573 U.S. at 221. Those “additional features” must be
more than “well-understood, routine, conventional activity.” Mayo, 566
U.S. at 79.
Limitations referenced in Alice that are not enough to qualify as
“significantly more” when recited in a claim with an abstract idea include, as
non-limiting or non-exclusive examples: adding the words “apply it” (or an
equivalent) with an abstract idea16; mere instructions to implement an

16 Alice, 573 U.S. at 221–23.
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abstract idea on a computer17; or requiring no more than a generic computer
to perform generic computer functions that are well-understood, routine and
conventional activities previously known to the industry.18
With respect to this step of the analysis,19 Appellant argues, “[c]laim 1
recites additional elements that amount to significantly more than the
judicial exception. . . . [because] the pending claims do not preempt all uses
of the alleged abstract idea.” Br. 17. Appellant further argues:
[E]xample Claim 1 relates to a genus for “generating price point
based incentives to induce customers to purchase certain
products”, and the incorporation of at least the limitation of
"generating, by the computer, an incentive for said client brand
based upon said category specific price point", improves any
existing process for “generating price point based incentives to
induce customers to purchase certain products” and does not
preempt all techniques for "generating price point based
incentives to induce customers to purchase certain products"
that use different techniques. The specific limitations of
exemplary independent Claim 1 would prevent broad
preemption of all methods for “generating price point based
incentives to induce customers to purchase certain products”.
Br. 19.
Regarding preemption, “[w]hile preemption may signal patent
ineligible subject matter, the absence of complete preemption does not
demonstrate patent eligibility. . . . Where a patent’s claims are deemed only

17 Alice, 573 U.S. at 222–23, e.g., simply implementing a mathematical
principle on a physical machine, namely a computer.
18 Alice, 573 U.S. at 225 (explaining using a computer to obtain data, adjust
account balances, and issue automated instructions involves computer
functions that are well-understood, routine, conventional activities).
19 Typically, we see arguments pertaining to lack of preemption applied to
analysis under Alice Step 2A.
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to disclose patent ineligible subject matter under the Mayo framework, as
they are in this case, preemption concerns are fully addressed and made
moot.” Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379
(Fed. Cir. 2015); see also OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d
1359, 1362–63 (Fed. Cir. 2015) (“that the claims do not preempt all price
optimization or may be limited to price optimization in the e-commerce
setting do not make them any less abstract”). Thus, we do not find
Appellant’s argument concerning lack of preemption to be persuasive of
subject matter eligibility.
Evaluating representative claim 1 under step 2 of the Alice analysis,
we conclude it lacks an inventive concept that transforms the abstract idea of
generating price point based incentives into a patent-eligible application of
that abstract idea.
The patent eligibility inquiry may contain underlying issues of fact.
Mortg. Grader, 811 F.3d at 1325. In particular, “[t]he question of whether a
claim element or combination of elements is well-understood, routine and
conventional to a skilled artisan in the relevant field is a question of fact.”
Berkheimer, 881 F.3d at 1368.
As evidence of the conventional nature of the recited “computer
having one or more physical processors programmed with computer
program instructions” and “Point-of-Sale (POS) computer systems” in
method claim 1, the Specification discloses:
POS systems typically include a database management system
including a product price look-up table which is accessed by the
POS terminal during a transaction. POS systems retrieve to the
POS terminal data defining the prices of items for which a
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consumer requests purchase. POS systems total the costs for all
of those items. POS systems log the purchase of the items.
Some POS systems log the purchase of items in transaction
records also including a unique customer identification (CID)
associating that CID with the items purchased, the price of the
items purchased, and the quantity of each product item
purchased, the date of purchase, and the lane (POS terminal
identification) in which the purchase occurred.
Spec. ¶4. In addition, the Specification discloses, “[e]ach of the
aforementioned computer systems preferably includes at least one digital
processor and hardware for inputting and outputting data and inputting
control signals.” Spec. ¶ 20.
Thus, because the Specification describes the additional elements in
general terms, without describing the particulars, we conclude the claim
limitations may be broadly but reasonably construed as reciting conventional
computer components and techniques, particularly in light of Appellant’s
Specification, as quoted above.20
The MPEP, based upon our precedential guidance, provides additional
considerations with respect to analysis of the well-understood, routine, and
conventional nature of the recited computer-related components.
Another consideration when determining whether a claim
recites significantly more than a judicial exception is whether
the additional elements amount to more than a recitation of the
words “apply it” (or an equivalent) or are more than mere
instructions to implement an abstract idea or other exception on
a computer. As explained by the Supreme Court, in order to
transform a judicial exception into a patent-eligible application,

20 Claim terms are to be given their broadest reasonable interpretation, as
understood by those of ordinary skill in the art and taking into account
whatever enlightenment may be had from the Specification. In re Morris,
127 F.3d 1048, 1054 (Fed. Cir. 1997).
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the additional element or combination of elements must do
“‘more than simply stat[e] the [judicial exception] while adding
the words ‘apply it’”. Alice Corp. v. CLS Bank, 573 U.S. __,
134 S. Ct. 2347, 2357, 110 USPQ2d 1976, 1982-83 (2014)
(quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc.,
566 U.S. 66, 72, 101 USPQ2d 1961, 1965). Thus, for example,
claims that amount to nothing more than an instruction to apply
the abstract idea using a generic computer do not render an
abstract idea eligible. Alice Corp., 134 S. Ct. at 2358, 110
USPQ2d at 1983. See also 134 S. Ct. at 2389, 110 USPQ2d at
1984 (warning against a § 101 analysis that turns on “the
draftsman’s art”) . . . .
In Alice Corp., the claim recited the concept of
intermediated settlement as performed by a generic computer.
The Court found that the recitation of the computer in the claim
amounted to mere instructions to apply the abstract idea on a
generic computer. 134 S. Ct. at 2359-60, 110 USPQ2d at 1984.
The Supreme Court also discussed this concept in an earlier
case, Gottschalk v. Benson, 409 U.S. 63, 70, 175 USPQ 673,
676 (1972), where the claim recited a process for converting
binary-coded decimal (BCD) numerals into pure binary
numbers. The Court found that the claimed process had no
substantial practical application except in connection with a
computer. Benson, 409 U.S. at 71-72, 175 USPQ at 676. The
claim simply stated a judicial exception (e.g., law of nature or
abstract idea) while effectively adding words that “apply it” in a
computer. Id.
MPEP § 2106.05(f) (“Mere Instructions To Apply An Exception”).
With respect to the Step 2B analysis, we conclude, similar to Alice, the
recitation of a “computer-implemented method of generating price point
based incentives to induce customers to purchase certain products” that
includes “a computer having one or more physical processors programmed
with computer program instructions” and “Point-of-Sale (POS) computer
systems” (claim 1), is simply not enough to transform the patent-ineligible
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abstract idea here into a patent-eligible invention under Step 2B. See Alice,
573 U.S. at 221 (“[C]laims, which merely require generic computer
implementation, fail to transform [an] abstract idea into a patent-eligible
invention.”).
Therefore, in light of the foregoing, we conclude, under the Revised
Guidance, that Appellant’s claim 1, considered as a whole, is directed to a
patent-ineligible abstract idea that is not integrated into a practical
application and does not include an inventive concept. Accordingly, we
sustain the Examiner’s § 101 rejection of independent claim 1, and grouped
claims 3–10, 12, 13, 15–22, 24, and 25 which fall therewith. See Claim
Grouping, supra.
2. § 102(b) Rejection R2 of Claims 1, 3–10, 12, 13, 15–22, 24, and 25
Issue 2
Appellant argues (Br. 21–23) the Examiner’s rejection of claim 1
under 35 U.S.C. § 102(b) as being anticipated by Schwarz is in error. These
contentions present us with the following issue:
Did the Examiner err in finding the cited prior art discloses “[a]
computer-implemented method of generating price point based incentives to
induce customers to purchase certain products, the method being
implemented by a computer having one or more physical processors
programmed with computer program instructions that, when executed,
perform the method,” wherein the method includes the steps of, inter alia, “
identifying . . . based on the transaction data, (i) a
dominant competitive brand of a product in the product
category, and (ii) a client brand of the product, wherein the
dominant competitive brand is a brand of product, other than
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the client brand, with the largest number of items purchased by
the customer or the largest number of dollars of purchases by
the customer according to the transaction data;
determining, by the computer, a category specific price
point associated with the dominant competitive brand and the
client brand, wherein the category specific price point is a
difference in price between the dominant competitive brand and
the client brand at which the customer is equally likely to
purchase the dominant competitive brand or the client brand[,]
as recited in claim 1?
Analysis
Appellant generally contends “Swartz does not teach or suggest at
least the above-referenced limitations of the independent claims.” Br. 22.
Appellant further argues:
Swartz is directed to “a consumer interactive shopping and
marketing system” . . . . In brief, Swartz discloses “records in [a
customer profile] database may include products that are
“linked” to other products”, “a product price sensitivity factor
[that] relates to whether the customer has purchased the product
at full price or at a discount”, “maintain[ing] information about
the circumstances of a particular customer purchasing products
on a specific date”, and “us[ing] a rules based algorithm that
utilizes prior shopping history to target specific messages to
specific customers”. Swartz does not, however, teach or suggest
the [contested] limitations of independent Claim 1.
Br. 22.
“identifying” Limitation
The Examiner cites Swartz for disclosing the contested “identifying”
limitation by the teaching of “brand and discount sensitivity.” Final
Act. 16–17 (citing Swartz ¶¶ 79–81).
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In the Brief, Appellant reproduces a summary of the disclosure of
Swartz (cited above), and then merely quotes the claim language, without
offering further distinction. Br. 23.
Such statements are not considered to be arguments. 37 C.F.R.
§ 41.37(c)(1)(iv) (“A statement which merely points out what a claim recites
will not be considered an argument for separate patentability of the claim.”);
In re Lovin, 652 F.3d 1349, 1357 (Fed. Cir. 2011) (“[W]e hold that the
Board reasonably interpreted Rule 41.37 to require more substantive
arguments in an appeal brief than a mere recitation of the claim elements and
a naked assertion that the corresponding elements were not found in the
prior art.”). Thus, we do not find Appellant’s arguments to be persuasive.
Nonetheless, the Examiner responds in the Answer by finding:
So the issue is whether Swartz discloses identifying a dominant
competitive brand and a client brand, and determines a category
specific price point as a difference in price between the
competitive and client brands. A “client brand” is any brand
associated with an incentive program (see Appellant ¶ 0051),
where a/the “dominant competitive brand” is any other brand
“with the largest number of items purchased . . . or the largest
number of dollars of purchases”, per the claims (see also
Appellant ¶ 0055). Swartz discloses a series of databases and
entries reflecting products and customers, including the product
type, characteristics, price, promotions, competitive
alternatives, etc. (see Swartz Figs. 16, 17, and 18) and customer
transaction histories and analysis (see Swartz Figs. 19, 20, and
21). The customer transaction data is tracked with granularity to
the brand level, such as, e.g., “purchasing a certain brand rye
bread each time”, “always buys a certain brand of aspirin”,
“only buy a certain brand of cola when it is on sale” (Swartz at
0079), and “‘learn’ what products or types of products a
customer typically purchases” (Swartz at 0191), which indicates
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tracking the dominant brand in a category for a customer as
claimed.
Ans. 12. We agree with the Examiner’s analysis under the broadest
reasonable interpretation standard.21 We further note Appellant does not
rebut the Examiner’s findings by filing a Reply Brief.
Therefore, we agree with the Examiner’s finding that Swartz discloses
the contested “identifying” limitation, as recited in claim 1.
“determining” Limitation
The Examiner cites Swartz for disclosing the contested “determining”
limitation by the teaching of “utilizing prior history to target specific
messages, and 0193, ‘the system may offer a big discount on brand Y to
entice the customer to switch brands’.” Final Act. 17 (citing Swartz ¶¶ 79,
81, 189–197, emphasizing ¶¶ 191 and 193).
In the Brief, Appellant again merely provides a summary of Swartz’s
asserted teachings and quotes the claim language, without offering further
distinction. Br. 23.
Similar to the contested “identifying” limitation above, we do not find
such generalized assertions to be persuasive. See Lovin, 652 F.3d at 1357.

21 During prosecution, claims must be given their broadest reasonable
interpretation when reading claim language in light of the specification as it
would be interpreted by one of ordinary skill in the art. In re Am. Acad. of
Sci. Tech. Ctr., 367 F.3d 1359, 1364 (Fed. Cir. 2004). Under this standard,
we interpret claim terms using “the broadest reasonable meaning of the
words in their ordinary usage as they would be understood by one of
ordinary skill in the art, taking into account whatever enlightenment by way
of definitions or otherwise that may be afforded by the written description
contained in the applicant’s specification.” In re Morris, 127 F.3d 1048,
1054 (Fed. Cir. 1997).
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Therefore, based upon the findings above, on this record, we are not
persuaded of error in the Examiner’s reliance on the cited prior art to
disclose the disputed limitations of claim 1, nor do we find error in the
Examiner’s resulting finding of anticipation.
Accordingly, we sustain the Examiner’s anticipation rejection of
independent claim 1, and grouped claims 3–10, 12, 13, 15–22, 24, and 25
which fall therewith. See Claim Grouping, supra.
CONCLUSIONS
(1) Under our Revised Guidance, governed by relevant case law,
claims 1, 3–10, 12, 13, 15–22, 24, 25 are patent-ineligible under 35 U.S.C.
§ 101, and we sustain the rejection.
(2) The Examiner did not err with respect to anticipation Rejection
R2 of claims 1, 3–10, 12, 13, 15–22, 24, 25 under 35 U.S.C. § 102(b), and
we sustain the rejection.
DECISION SUMMARY
Claims
Rejected
35 U.S.C.
§
Basis /
Reference
Affirmed Reversed
1, 3–10, 12, 13,
15–22, 24, 25
101 Subject
Matter
Eligibility
1, 3–10, 12,
13, 15–22,
24, 25

1, 3–10, 12, 13,
15–22, 24, 25
102(b) Anticipation /
Schwarz
1, 3–10, 12,
13, 15–22,
24, 25

Overall
Outcome
1, 3–10, 12,
13, 15–22,
24, 25

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FINALITY AND RESPONSE
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). See 37
C.F.R. § 41.50(f).
AFFIRMED