International Business Machines Corporation

Patent Trials and Appeals Board

Oct 30, 2020

15450966 - (D) (P.T.A.B. Oct. 30, 2020)

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.
15/450,966 03/06/2017 Thomas T. Hanis SVL920160244US1 9574
45725 7590 10/30/2020
Walder Intellectual Property Law PC
445 Crestover Circle
Richardson, TX 75080
EXAMINER
AKINTOLA, OLABODE
ART UNIT PAPER NUMBER
3691
MAIL DATE DELIVERY MODE
10/30/2020 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 THOMAS T. HANIS, EUGENE I. KELTON, YI-HUI MA,
MECHANICSBURG, WILLIE R. PATTEN JR., and HURDLE MILLS
____________

Appeal 2020-003087
Application 15/450,966
Technology Center 3600
____________

Before MURRIEL E. CRAWFORD, JAMES P. CALVE, and
BRUCE T. WIEDER, Administrative Patent Judges.

CRAWFORD, Administrative Patent Judge.

DECISION ON APPEAL
STATEMENT OF THE CASE
Appellant seeks our review under 35 U.S.C. § 134 of the Examiner’s
final rejection of claims 1−20. We have jurisdiction under 35 U.S.C. § 6(b).
SUMMARY OF DECISION
We AFFIRM.
THE INVENTION
Appellant claims a method and more specifically a mechanism for
dynamically evaluating fraud risk. (Spec. ¶ 1, Title).
Claim 1 is representative of the subject matter on appeal.
1. A method, in a data processing system, for dynamically evaluating
fraud risk, the method comprising:
responsive to receiving a notification associated with a
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transaction from an individual, identifying a set of profile indicators
utilizing an entity type factor, an activity type factor, a timeframe
factor, and a transaction measurement factor;
utilizing the set of profile indicators, performing statistical
object profiling through pattern modeling of data in a data structure
associated with an enterprise associated with the transaction to
generate a second order profile indicators, peer groups of objects, and
object profile statistics;
generating a list of key risk indicators (KRI) using the second
order profile indicators, the peer groups of objects, and the object
profile statistics;
generating categorized groupings of key risks (KRG) using the
list of key risk indicators (KRI);
determining a combined assessment based on the categorized
groupings of key risks (KRG);
comparing the combined assessment to one or more thresholds
in a set of thresholds; and
responsive to the combined assessment meeting a standard
associated with a selected threshold in the set of thresholds,
performing an action associated with the standard associated
with the selected threshold.

THE REJECTION
Claims 1−20 are rejected under 35 U.S.C. § 101 as directed to a
judicial exception without significantly more.

ANALYSIS
35 U.S.C. § 101 REJECTION
We will sustain the rejection of claims 1–20 under 35 U.S.C. § 101.
The Supreme Court
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, . . . determine
whether the claims at issue are directed to one of
those patent-ineligible concepts. . . . If so, . . . then
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ask, “[w]hat else is there in the claims before us?”
. . . To answer that question, . . . 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. . . . [The
Court] 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 than a patent upon
the [ineligible concept] itself.”
Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208, 217-218 (citing Mayo
Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 72–73 (2012))
(citations omitted).
To perform this test, we must first determine whether the claims at
issue are directed to a patent-ineligible concept. The Federal Circuit has
explained that “the ‘directed to’ inquiry applies a stage-one filter to claims,
considered in light of the [S]pecification, based on whether ‘their character
as a whole is directed to excluded subject matter.’” See Enfish, LLC v.
Microsoft Corp., 822 F.3d 1327, 1335 (Fed. Cir. 2016) (quoting Internet
Patents Corp. v. Active Network, Inc., 790 F.3d 1343, 1346 (Fed. Cir.
2015)). It asks whether the focus of the claims is on a specific improvement
in relevant technology or on a process that itself qualifies as an “abstract
idea” for which computers are invoked merely as a tool. See id. at 1335–36.
In so doing we apply a “directed to” two prong test: 1) evaluate
whether the claim recites a judicial exception, and 2) if the claim recites a
judicial exception, evaluate whether the judicial exception is integrated into
a practical application. 2019 Revised Patent Subject Matter Eligibility
Guidance, 84 FR 50, pp 50–57 (Jan. 7, 2019) (“Guidance”).
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The Examiner determines that the claims are directed to determining
fraud risk associated with an event using statistical modeling based on
certain indicators. The Examiner determines that the limitations in the
claims are directed to a certain method of organizing human activity (Final
Act. 3). The Examiner also determines that the claims recite collecting
information, analyzing it and displaying certain results and that the claimed
invention may be carried out manually by humans using pen and paper.
(Ans. 4). The Examiner finds that the processor is recited at a high level of
generality as a generic processor performing a generic computer function of
processing data and does not integrate the abstract idea into a practical
application or provide an inventive concept. (Final Act. 3−4).
The Specification discloses that fraud is a civil wrong that if
perpetrated may cause an enterprise to lose a significant amount of assets.
(Spec. 2−3). The Specification further discloses that the invention is a
method of automatically analyzing a set of indicators associated with a focal
object to form a combined assessment of fraud risk. (Spec. ¶ 5).
Determining fraud risk is a multi-step process, generally involving some
type of scoring based analysis followed by a determination of a risk category
that the scoring relates to. (Spec. ¶ 15). The process of the invention begins
with a fraud risk evaluation mechanism receiving a notification such as a
transaction request. The process then identifies a set of profile indicators
that are required for detection of fraud. (Spec. ¶ 40). A dynamic profiling
engine analyzes this indicator data and other data to arrive at a risk score.
(Spec. ¶ 40−45). This disclosure supports the Examiner’s determination that
the claims are directed to determining fraud risk associated with an event
using statistical modeling based on certain indicators.
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Consistent with this disclosure, claim 1 recites “responsive to
receiving a notification associated with a transaction,” “identifying a set of
profile indicators,” “generating a list of key risk indicators,” “generating
categorized groupings of key risks,” “determining a combined assessment
based on the categorized groupings of key risks,” and “comparing the
combined assessment.”
We thus agree with the Examiner’s determination that the claims are
directed to determining fraud risk associated with an event using statistical
modeling based on certain indicators. Because determining fraud risk relates
to commercial interactions and business relations, the claimed process
recites a method of organizing the behavior of persons concerning detecting
fraud. Therefore, we agree that the claims recite the judicial exception of a
certain method of organizing human activity in the form of a fundamental
economic practice. Guidance, 84 Fed. Reg. 52.
Also, we find the steps of claim 1, for example, constitute “analyzing
information by steps people go through in their minds, or by mathematical
algorithms, without more, as essentially mental processes within the
abstract-idea category.” See Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d
1350, 1354 (Fed. Cir. 2016); see also buySAFE, Inc. v. Google, Inc., 765
F.3d 1350, 1355 (Fed. Cir. 2014) (claims directed to certain arrangements
involving contractual relations are directed to abstract ideas). Thus, we
determine that claim 1 recites the judicial exception of a method of
organizing human activity and in the alternative, a mental process.
Turning to the second prong of the “directed to test”, claim 1 requires
a “data processing system.” The Specification indicates that the data
processing system may take the form of any number of different data
processing systems including a client computing device, a server computing
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device, a tablet computer, a laptop computer, a telephone or other
communication device. (Spec. ¶ 38). As such, the data processing system
recited in claim 1 may be many different types of computers. This recitation
does not impose “a meaningful limit on the judicial exception, such that the
claim is more than a drafting effort designed to monopolize the judicial
exception.” Guidance, 84 Fed. Reg. at 53. We find no indication in the
Specification, nor does Appellant directs us to any indication, that the
operations recited in independent claim 1 invoke any inventive
programming, require any specialized computer hardware or other inventive
computer components, i.e., a particular machine, or that the claimed
invention is implemented using other than generic computer components to
perform generic computer functions. See DDR Holdings, LLC v.
Hotels.com, L.P., 773 F.3d 1245, 1256 (Fed. Cir. 2014) (“[A]fter Alice, there
can remain no doubt: recitation of generic computer limitations does not
make an otherwise ineligible claim patent-eligible.”).
We also find no indication in the Specification that the claimed
invention effects a transformation or reduction of a particular article to a
different state or thing. Nor do we find anything of record, short of attorney
argument, that attributes any improvement in computer technology and/or
functionality to the claimed invention or that otherwise indicates that the
claimed invention integrates the abstract idea into a “practical application,”
as that phrase is used in the revised Guidance. See Guidance, 84 Fed. Reg.
at 55.1

1 “A claim that integrates a judicial exception into a practical application
will apply, rely on, or use the judicial exception in a manner that imposes a
meaningful limit on the judicial exception, such that the claim is more than a
drafting effort designed to monopolize the judicial exception.” Guidance, 84
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In this regard, the recitation does not affect an improvement in the
functioning of the data processing system or other technology, does not
recite a particular machine or manufacture that is integral to the claims, and
does not transform or reduce a particular article to a different state or thing.
Id. Thus, claim 1 is directed to judicial exceptions that are not integrated
into a practical application and thus is directed to “abstract ideas.”
Turning to the second step of the Alice analysis, because we find that
the claims are directed to abstract ideas, claim 1 must include an “inventive
concept” in order to be patent-eligible, i.e., there must be an element or
combination of elements that is sufficient to ensure that the claim in practice
amounts to significantly more than the abstract idea itself. See Alice, 573
U.S. at 217-18.
The introduction of a data processing system into the claim 1 does not
alter the analysis at Alice step two:
[T]he mere recitation of a generic computer cannot
transform a patent-ineligible abstract idea into a
patent-eligible invention. Stating an abstract idea
“while adding the words ‘apply it’” is not enough
for patent eligibility. Nor is limiting the use of an
abstract idea “‘to a particular technological
environment.’” Stating an abstract idea while
adding the words “apply it with a computer”
simply combines those two steps, with the same
deficient result. Thus, if a patent’s recitation of a
computer amounts to a mere instruction to
“implemen[t]” an abstract idea “on . . . a
computer,” that addition cannot impart patent
eligibility. This conclusion accords with the
preemption concern that undergirds our § 101
jurisprudence. Given the ubiquity of computers,
wholly generic computer implementation is not

Fed. Reg. at 54.
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generally the sort of “additional featur[e]” that
provides any “practical assurance that the process
is more than a drafting effort designed to
monopolize the [abstract idea] itself.”
Alice, 573 U.S. at 223 (alterations in original) (citations omitted).
Instead, “the relevant question is whether claim 1 here does more than
simply instruct the practitioner to implement the abstract idea . . . on a
generic computer.” Id. at 225. It does not.
Taking the claim elements separately, the function performed by the
data processing system at each step of the process is purely conventional.
Using a computer to retrieve, select, and apply decision criteria to data and
modify the data as a result amounts to electronic data query and retrieval—
one of the most basic functions of a computer. All of these computer
functions are well-understood, routine, conventional activities previously
known to the trading industry. See Elec. Power Grp., 830 F.3d at 1354; see
also In re Katz Interactive Call Processing Patent Litig., 639 F.3d 1303,
1316 (Fed. Cir. 2011) (“Absent a possible narrower construction of the terms
‘processing,’ ‘receiving,’ and ‘storing,’ . . . those functions can be achieved
by any general purpose computer without special programming”). In short,
each step does no more than require a generic computer to perform generic
computer functions performed by a data processing system that is well-
understood, routine and conventional. As to the data operated upon, “even if
a process of collecting and analyzing information is ‘limited to particular
content’ or a particular ‘source,’ that limitation does not make the collection
and analysis other than abstract.” SAP Am. Inc. v. InvestPic, LLC, 890 F.3d
1016, 1022 (Fed. Cir. 2018).
Considered as an ordered combination, the data processing system of
claim 1 adds nothing that is not already present when the steps are
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considered separately. The sequence of data reception-analysis-
access/display is equally generic and conventional or otherwise held to be
abstract. See Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 715 (Fed. Cir.
2014) (sequence of receiving, selecting, offering for exchange, display,
allowing access, and receiving payment recited an abstraction), Inventor
Holdings, LLC v. Bed Bath & Beyond, Inc., 876 F.3d 1372, 1378 (Fed. Cir.
2017) (holding that sequence of data retrieval, analysis, modification,
generation, display, and transmission was abstract), Two-Way Media Ltd. v.
Comcast Cable Commc’ns, LLC, 874 F.3d 1329, 1339 (Fed. Cir. 2017)
(holding sequence of processing, routing, controlling, and monitoring was
abstract). The ordering of the steps is, therefore, ordinary and conventional.
Claim 1 does not, for example, purport to improve the functioning of
the data processing system itself. As we stated above, claim 1 does not
affect an improvement in any other technology or technical field. The
Specification spells out different generic equipment and parameters that
might be applied using this concept and the particular steps such
conventional processing would entail based on the concept of information
access under different scenarios. (See, e.g., Spec. ¶¶ 32-33). Thus, claim 1
amounts to nothing significantly more than instructions to apply the abstract
idea of information access using some unspecified, generic computer.
Under our precedents, that is not enough to transform an abstract idea into a
patent-eligible invention. See Alice, 573 U.S. at 226.
We have reviewed all the arguments (Appeal Br. 4−22; Reply Br.
2−8) Appellant has submitted concerning the patent eligibility of the claims
before us that stand rejected under 35 U.S.C. § 101. We find that our
analysis above substantially covers the substance of all the arguments, which
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have been made. But, for purposes of emphasis, we will address various
arguments in order to make individual rebuttals of same.
Appellant argues that all prior art rejections have been overcome and
thus the claims recite an inventive concept. (Appeal Br. 4−5). To the extent
Appellant maintains that the limitations of claim 1 necessarily amount to
“significantly more” than an abstract idea because the claimed apparatus is
allegedly patentable over the prior art, Appellant misapprehends the
controlling precedent. Although the second step in the Alice/Mayo
framework is termed a search for an “inventive concept,” the analysis is not
an evaluation of novelty or non-obviousness, but rather, a search for “‘an
element or combination of elements that is sufficient to ensure that the
patent in practice amounts to significantly more than a patent upon the
[ineligible concept] itself.”’ Alice, 573 U.S. at 217–18 (alteration in
original) (quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566
U.S. 66, 72–73 (2012)). A novel and nonobvious claim directed to a purely
abstract idea is, nonetheless, patent-ineligible. See Mayo, 566 U.S. at 90.
We are not persuaded of error on the part of the Examiner by
Appellant’s arguments that the claims are not directed to a certain method of
organizing humans because the operations of the invention are performed by
a data processing system and the Examiner has not identified any human
activity and therefore the claims do not recite an abstract idea. (Appeal Br.
7).
We find that fraud risk assessment is a fundamental business practice
long prevalent in our system of commerce, like the risk hedging in Bilski
(see Bilski v. Kappos, 561 U.S. 593 (2010)), the intermediated settlement in
Alice (see Alice, 573 U.S. at 219–20), verifying credit card transactions in
CyberSource (see CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d
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1366, 1370 (Fed. Cir. 2011)), collecting and analyzing information to detect
and notify of misuses in FairWarning (see FairWarning IP, LLC v. Iatric
Sys., Inc., 839 F.3d 1089, 1093-94 (Fed. Cir. 2016)), and guaranteeing
transactions (see buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1354 (Fed.
Cir. 2014)). Assessing fraud risk is also a building block of a market
economy. Thus, fraud risk detection, like risk hedging and intermediated
settlement, is an “abstract idea” beyond the scope of § 101. See Alice 573
U.S. 219–20. As we stated above, the fact that the process is performed by a
general purpose data processing system does not alter the analysis.
We are not persuaded of error on the part of the Examiner by
Appellant’s argument that the Examiner’s characterizations of the claimed
invention are merely conclusions built upon an erroneous oversimplification
and generalization of the claimed method. (Appeal. Br. 5). Appellant’s
characterization of the claimed invention is found on pages 6 to 7 of the
Appeal Brief and includes most of the recitations in claim 1.
Appellant’s argument is not persuasive at least because there is no
requirement that the Examiner’s formulation of the abstract idea copy the
claim language as Appellant has done. The Examiner’s characterization
here, moreover, is fully consistent with the Specification, as discussed
above. That independent claim 1 includes more words than the phrase the
Examiner used to articulate the abstract idea to which the claim is directed is
an insufficient basis to persuasively argue that the claim language has been
mischaracterized or that the Examiner has otherwise failed to consider all of
the limitations of the claim. See Apple, Inc. v. Ameranth, Inc., 842 F.3d
1229, 1240 (Fed. Cir. 2016):
An abstract idea can generally be described at different
levels of abstraction. As the Board has done, the claimed
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abstract idea could be described as generating menus on a
computer, or generating a second menu from a first menu and
sending the second menu to another location. It could be
described in other ways, including, as indicated in the
specification, taking orders from restaurant customers on a
computer.

We are not persuaded of error on the part of the Examiner by
Appellant’s argument that the invention involves operations that a
data processing system does, not operations that a human does.
(Appeal Br. 8). As we discussed above, in the first step of our patent
eligibility analysis, we determine whether the claim recites a judicial
exception. In this case, we have determined that claim 1 recites the
judicial exception of determining fraud risk associated with an event.
The analysis then turns to whether the recited data processing system
integrates the judicial exception of determining fraud risk associated
with an event into a practical application and then whether the claim
recites significantly more than the abstract idea. As claim 1 recites no
improvement to the data processing system, does not transform an
article to a separate state or thing, and does not recite a particular
machine, claim 1 neither integrates the judicial exception into a
practical application nor amounts to significantly more than the
abstract idea.
We are not persuaded that claim 1 recites an improved
computer tool. (Appeal Br. 9). We agree with the Examiner that the
focus of the claimed invention is not on improvement in computers as
tools, but on certain abstract ideas that use computers as tools. (Ans.
5). As we made clear above, claim 1 is directed to the use of
conventional or generic technology in a well-known environment
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without anything that reflects an inventive solution to any computer
specific problem. (Ans. 5).
We are not persuaded of error on the part of the Examiner by
Appellant’s argument that the Examiner failed to present any evidence
that anything in the claims is a fundamental principle or practice.
(Appeal Br. 8). As for the Appellant’s assertion that evidence is
required, we agree that while, at times, an examiner should provide
evidentiary support before a conclusion is made that a claim is
directed to an abstract idea, the need for such a showing is evaluated
on a case-by-case basis. Although, at times, evidence may be helpful,
e.g., where facts are in dispute, we are unpersuaded that there is a
categorical rule that it is always needed. See Mortgage Grader, Inc. v.
First Choice Loan Services, Inc., 811 F.3d 1314, 1325–26 (Fed. Cir.
2016) (“[I]t is also possible, as numerous cases have recognized, that
a § 101 analysis may sometimes be undertaken without resolving fact
issues.”). To that end, we are not persuaded that evidence is needed
here as the claims clearly recite a method of determining fraud risk
and this is squarely within the categories of judicial exceptions found
in the Guidance.
Appellant argues that the Examiner’s rejection does not satisfy
the requirement of Berkheimer v. HP Inc., 881 F.3d 1360 (Fed. Cir.
2018) because the Examiner only did the analysis in regard to the data
processing system. Specifically, Appellant argues that the data
processing system is not the only additional elements recited in claim
16. (Appeal Br. 21). We agree with the Examiner that the only
recitation that is not part of the abstract ideas of determining fraud risk
associated with an event and/or collecting information, analyzing it
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and displaying certain results is the data processing system. As we
discussed above, we find that the data processing system, which is
implemented with a generic computer/computers, would have been
well-understood, routine and conventional.
We are lastly not persuaded of error on the part of the Examiner by
Appellant’s argument that the method could not be practically performed in
the human mind because the human mind does not go through the process
recited when dynamically evaluating fraud risk. (Reply Br. 4). “[T]he
inability for the human mind to perform each claim step does not alone
confer eligibility. . . . ‘[T]he fact that the required calculations could be
performed more efficiently via a computer does not materially alter the
patent eligibility of the claimed subject matter.’” FairWarning IP, LLC v.
Iatric Sys., Inc., 839 F.3d 1089, 1098 (Fed. Cir. 2016) (quoting Bancorp
Servs., L.L.C. v. Sun Life Assur. Co. of Canada (U.S.), 687 F.3d 1266, 1278
(Fed. Cir. 2012)). If a claim, under its broadest reasonable interpretation,
covers performance in the mind but for the recitation of generic computer
components, then it is still encompassed by the mental processes category
unless the claim cannot practically be performed in the mind. See
Intellectual Ventures, 838 F.3d at 1318 (“[W]ith the exception of generic
computer-implemented steps, there is nothing in the claims themselves that
foreclose them from being performed by a human, mentally or with pen and
paper.”); Mortg. Grader, Inc. v. First Choice Loan Servs. Inc., 811 F.3d.
1314, 1324 (Fed. Cir. 2016) (Holding that computer-implemented method
for “anonymous loan shopping” was an abstract idea because it could be
“performed by humans without a computer.”); Versata Dev. Grp. v. SAP
Am., Inc., 793 F.3d 1306, 1335 (Fed. Cir. 2015) (“Courts have examined
claims that required the use of a computer and still found that the
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underlying, patent-ineligible invention could be performed via pen and paper
or in a person's mind.”); CyberSource Corp. v. Retail Decisions, Inc., 654
F.3d 1366, 1375, 1372−73 (Fed. Cir. 2011) (Holding that the incidental use
of “computer” or “computer readable medium” does not make a claim
otherwise directed to a process that “can be performed in the human mind,
or by a human using a pen and paper” patent eligible.). In our view,
Appellant has not shown that steps recited in claim 1 could not be done in a
human mind with the aid of a pen and paper.
In view of the foregoing, we will sustain the Examiner’s rejection of
claim 1. We will also sustain the rejection as it is directed to the remaining
claims because the Appellant does not argue the separate eligibility of these
claims.

CONCLUSIONS OF LAW
We conclude the Examiner did not err in rejecting claims 1–20 under
35 U.S.C. § 101.
DECISION
In Summary:
Claims
Rejected
35 U.S.C.
§
Reference(s)/Basis Affirmed Reversed
1–20 101 1−20
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