Jacob Herschler et al.Download PDFPatent Trials and Appeals BoardNov 5, 20212021001584 (P.T.A.B. Nov. 5, 2021) Copy Citation 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. 11/671,598 02/06/2007 Jacob M. Herschler 002328.0719 9283 5073 7590 11/05/2021 BAKER BOTTS L.L.P. 2001 Ross Avenue, Suite 900 Dallas, TX 75201 EXAMINER AKINTOLA, OLABODE ART UNIT PAPER NUMBER 3691 NOTIFICATION DATE DELIVERY MODE 11/05/2021 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): PTOmail1@bakerbotts.com PTOL-90A (Rev. 04/07) UNITED STATES PATENT AND TRADEMARK OFFICE ____________ BEFORE THE PATENT TRIAL AND APPEAL BOARD ____________ Ex parte JACOB M. HERSCHLER, DANIEL O. KANE, N. DAVID KUPERSTOCK, ROBERT FRANCIS O’DONNELL, STEVEN LEE PUTTERMAN, DAIN ERIC RUNESTAD, ROBERT J. SCHWARTZ, NICHOLAS BERARDIS, JR., JOHN L. GRUCZA, MICHAEL ALBERT GUIDO, and J. SCOTT DUNN ____________ Appeal 2021-001584 Application 11/671,598 Technology Center 3600 ____________ Before ELENI MANTIS MERCADER, CARL L. SILVERMAN, and JOHN D. HAMANN, Administrative Patent Judges. SILVERMAN, Administrative Patent Judge. DECISION ON APPEAL Appellant1 appeals under 35 U.S.C. § 134(a) from the Examiner’s Final Rejection of claims 100–102, 105–107, and 111–118, which constitute all pending claims. We have jurisdiction under 35 U.S.C. § 6(b). We reverse. 1 Throughout this Decision, we use the word “Appellant” to refer to “applicant” as defined in 37 C.F.R. § 1.42(a). Appellant identifies The Prudential Insurance Company of America as the real party in interest. Appeal Br. 2. Appeal 2021-001584 Application 11/671,598 2 STATEMENT OF THE CASE The invention relates to financial instruments, and particularly to managing assets including transferring assets from one investment to alternate investments based on triggering events. Abstr.; Spec. 1, Technical Field of the Invention, Figs. 6–9. Claim 100, reproduced below, is representative2 of the subject matter on appeal (emphases added): 100. A non-transitory computer-readable medium comprising software stored thereon, the software operable, when executed by one or more processors, to: receive, from a guarantee recipient, order data indicative of a request for a financial instrument and a payment corresponding to the financial instrument; process the payment by implementing one or more security provisions, the one or more security provisions including at least one of: a digital signature; a digital certificate; a password; or an encryption scheme; upon processing the payment for the financial instrument, generate an account comprising a plurality of assets allocated to one or more investments selected by the guarantee recipient, the account corresponding to the financial instrument; storing information corresponding to the account in a memory device; update a balance of the account based on market performance of the one or more investments selected by the guarantee recipient, wherein the account is subject to a first 2 Based on Appellant’s arguments and our discretion under 37 C.F.R. § 41.37(c)(1)(iv), we decide the appeal of obviousness rejection of claims 100–102, 105–107, and 111–118 on the basis of representative claim 100. Appeal Br. 1–40. Appeal 2021-001584 Application 11/671,598 3 guarantee of a protected value, a second guarantee entitling a beneficiary to receive a transfer of an amount of money, and an agreement to allow at least a portion of the account balance to be transferred in response to a triggering event; and using a minimum positive growth rate stored m one or more memory devices, calculate a protected value such that the calculated protected value is at least equal to an initial deposit into the account growing at the stored minimum positive growth rate, wherein: the minimum positive growth rate is a fixed rate between four percent and six percent; the minimum positive growth rate is based on a consumer price index; and the calculated protected value represents a guaranteed positive rate of return regardless of market performance of the one or more investments; detect an event trigger corresponding to one or more events selected from the group consisting of: a decrease in the balance of the account below a specified threshold; a decrease in the balance of the account at a rate greater than a specified threshold rate; a change in one or more credit ratings of one or more entities associated with one or more variable investments; and a change in a calculated risk associated with the account; in response to the detected event trigger, transfer at least a portion of the plurality of assets of the account from at least one of the one or more investments selected by the guarantee recipient to at least one alternative investment selected by a guarantor of the first and second guarantees, such that after the transfer the account comprises the portion of the plurality of assets transferred to the at least one alternative investment, the at least one alternative investment is negatively correlated with the at least one of the one or more investments selected by the guarantee recipient; Appeal 2021-001584 Application 11/671,598 4 calculate on a daily basis a periodic value as the greater of the account balance and the periodic value from a preceding period increased according to the minimum positive growth rate, wherein the calculated protected value is at least equal to a maximum of the calculated periodic values; and in response to determining that the balance of the account cannot be withdrawn, delete, from the memory device, the information regarding the account. Appeal. Br. 33–34 (Claims App.). THE REJECTION Claims 100–102, 105–107, and 111–118 are rejected under 35 U.S.C. § 101 because the claimed invention is directed to patent-ineligible subject matter. Final Act. 2–5. ANALYSIS PRINCIPLES OF LAW Patent-eligible subject matter is defined in 35 U.S.C. § 101 of the Patent Act, which recites: Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title. There are, however, three judicially created exceptions to the broad categories of patent-eligible subject matter in 35 U.S.C. § 101: “‘[l]aws of nature, natural phenomena, and abstract ideas.’” Alice Corp. v. CLS Bank Int’l, 573 U.S. 208, 216 (2014) (quotation marks and citation omitted); Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 70 (2012) (brackets in original). Appeal 2021-001584 Application 11/671,598 5 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. See Alice, 573 U.S. at 217–18 (citing Mayo, 566 U.S. at 75–77). In accordance with that framework, we first determine what concept the claim is “directed to.” See id. 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, 69 (1972)). Concepts determined to be patent eligible include physical and chemical processes, such as “molding rubber products” (Diamond v. Diehr, 450 U.S. 175, 191 (1981)); “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 (1854))); 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 that “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 Appeal 2021-001584 Application 11/671,598 6 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 to limit the use of the formula to a particular technological environment.” Id. (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.”). 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. The United States Patent and Trademark Office (“USPTO”) published guidance on the application of § 101. USPTO, 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. 50 (Jan. 7, 2019) (“Guidance”). “All USPTO personnel are, as a matter of internal agency management, expected to follow the guidance.” Id. at 51; see also October 2019 Update: Subject Matter Eligibility (“October 2019 Update”) at 1. Under this guidance, we first determine whether the claim recites: (1) any judicial exceptions, including certain groupings of abstract ideas (i.e., mathematical concepts, certain methods of Appeal 2021-001584 Application 11/671,598 7 organizing human activity such as a fundamental economic practice, or mental processes); and (2) additional elements that integrate the judicial exception into a practical application (see Manual of Patent Examining Procedure (“MPEP”) § 2106.05(a)–(c), (e)–(h) (9th Ed., Rev. 10.2019 (June 2020)). 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. See Guidance, 84 Fed. Reg. at 52–56. A claim that integrates a judicial exception into a practical application applies, relies on, or uses 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. See Guidance, 84 Fed. Reg. at 54. When the judicial exception is so integrated, then the claim is not directed to a judicial exception and is patent eligible under § 101. Id. The § 101 Rejection of Claims 100–102, 105–107, and 111–118 The Examiner rejected claims 100–102, 105–107, and 111–118 under 35 U.S.C. § 101 because the claimed invention is directed to a judicial exception (i.e., an abstract idea) without “significantly more.” Final Act. 2– 5. According to the Examiner, representative claim 100 (also referred to as Appeal 2021-001584 Application 11/671,598 8 “the claim”) describes a process for managing assets allocated to one or more investments that is transferrable to other investments based on triggers. Final Act. 2–3 (citing prior Board Decision (Appeal 2018-001035, mailed Apr. 25, 2019)). The Examiner determines the claim is directed to a “mental process” and “certain methods of organizing human activity,” and is not integrated into a practical application. Id. Regarding integration into a practical application, the Examiner determines: The claim recites additional limitations of using processor(s) to receiving information; processing payment with some authentication method; and generating an account corresponding to the financial instrument, storing information in a memory device (database); and deleting information from a memory device. These steps are recited at a high level of generality, and merely automates the generation of the account corresponding to the financial instrument after user's payment and authentication. Further, the memory device (database) performs only its basic function of storing and/or deleting information, which is common to all databases. Each of the additional limitations is no more than mere instructions to apply the exception using a generic computer component, and is considered mere extra-solution activity. Accordingly, these additional elements do not integrate the abstract idea into a practical application because they do not impose any meaningful limits on practicing the abstract idea. The claim is directed to the abstract idea (Step 2A2-No). Id. at 3. The Examiner determines the claim does not include limitations that individually, or as an ordered combination, ensure that the claim amounts to significantly more than the abstract idea, and determines the claim is not patent eligible. Id. Appeal 2021-001584 Application 11/671,598 9 Appellant argues, inter alia, the Examiner errs in determining the claims do not integrate the alleged abstract ideas into a practical application. Appeal Br. 11–13. Appellant argues the claim includes an automatic data removal feature (“in response to determining that the balance of the account cannot be withdrawn, delete from the memory device, the information regarding the account”). Id. at 12. According to Appellant, this feature is an improvement as storage space is automatically freed up, enabling reduced storage requirements and improves the performance of other computing resources, e.g., processors. Id. Appellant argues the Examiner errs regarding the automatic data removal feature. As the October 2019 Update to the 2019 Revised Patent Subject Matter Eligibility Guidance explains, in determining whether claims integrate an alleged abstract idea into a practical application, “the ‘improvements’ analysis in Step 2A determines whether the claim pertains to an improvement to the functioning of a computer or to another technology without reference to what is well-understood, routine, conventional activity. That is, the claimed invention may integrate the judicial exception into a practical application by demonstrating that it improves the relevant technology although it may not be an improvement over well-understood, routine, conventional activity.” October 2019 Update: Subject Matter Eligibility at p. 12–13. Accordingly, because the pending claims lead to a system with reduced storage needs, as compared with existing systems, the claims provide a technical improvement over existing systems and are patent eligible. Id. at 12. Appellant argues the automatic detection and asset transfer features of the claim add a meaningful limitation to any alleged abstract idea such that the claim is patent eligible. Id. at 12. According to Appellant, the claim is Appeal 2021-001584 Application 11/671,598 10 similar to patent eligible claim 2 of Example 46 of Appendix 1 to the October 2019 Update: Subject Matter Eligibility – Life Sciences & Data Processing Examples (“App. 1”). Id. at 13. Appellant argues claim 2 of Example 46 is directed to “a system used to monitor livestock, identify any aberrant behavior patterns, display the results, and automatically send a signal to a feed dispenser[,] when an aberrant behavior pattern is indicative of a particular issue.” Id. In particular, Appellant refers to the Example analysis stating that by “tak[ing] corrective action,” patent eligible claim 2 includes “an ‘other meaningful limitation’ that integrates the judicial exception into the overall livestock management scheme an[d] accordingly practically applies the exception, such that the claim is not directed to the judicial exception.” Id. (citing App. 1 at 37). Appellant argues representative claim 100 security features also constitutes a technological improvement. Id. at 14. According to Appellant: As a final example of a technological improvement, the pending claims improve the security of existing systems by providing software that, when executed, implements one or more security provisions. For example, as recited in the claims, the software is operable to process a payment for the financial instrument using at least one of a digital signature, a digital certificate, a password, or an encryption scheme. In this manner, the pending claims improve the security of asset purchases using internet technologies. See, e.g., Claim 100; Specification at 49:29–50:1. Id. In the Answer, the Examiner refers to the prior Board Decision and incorporates it by reference “as most of the features [have] already been addressed in the said . . . decision (including the ‘automatic event detection and asset transfer’ feature).” Ans. 3. Appeal 2021-001584 Application 11/671,598 11 Regarding the storing and deleting feature, the Examiner reiterates the memory device (database) merely performs the basic function of storing and/or removal of information, which is common to most databases. Id. at 5 (citing Final Act. 4). In the Reply Brief, Appellant argues the Examiner fails to address Appellant’s arguments, and does not address the applicable October 2019 Update and Examples. Reply Br. 2–6. According to Appellant, the prior Board Decision does not include limitations present in representative claim 100, and the prior Board Decision was rendered prior to the issuance of the applicable October 2019 Update. Id. Regarding the security and data removal features, Appellant reiterates that the Examiner errs because the revised October 2019 Update do not require an improvement over well understood, routine, conventional activity. Id. at 4–5. We are persuaded by Appellant’s arguments on the record before us because the Examiner does not address the applicable October 2019 Update and Examples as argued by Appellant. Although the October 2019 Update and Examples were issued subsequent to the prior Board Decision, the October 2019 Update and Examples are applicable to the current claims, and “[a]ll USPTO personnel are, as a matter of internal agency management, expected to follow the guidance.” Guidance, 84 Fed. Reg. at 51; see also October 2019 Update at 1. To determine whether the judicial exception is integrated into a practical application, we identify whether there are “any additional elements recited in the claim beyond the judicial exception(s)” and evaluate those elements to determine whether they integrate the judicial exception into a Appeal 2021-001584 Application 11/671,598 12 recognized practical application. 84 Fed. Reg. at 54–55 (emphasis added); see also MPEP § 2106.05(a)–(c), (e)–(h). Based on the record before us, the Examiner presents insufficient evidence that the additional limitations do not integrate the judicial exception into a practical application. More particularly, the Examiner presents insufficient evidence that the claim does not recite: (i) an improvement to the functionality of a computer or other technology or technical field (see MPEP § 2106.05(a)); (ii) use a “particular machine” to apply or use the judicial exception (see MPEP § 2106.05(b)); (iii) a particular transformation of an article to a different thing or state (see MPEP § 2106.05(c)); or (iv) any other meaningful limitation (see MPEP § 2106.05(e)). See also 84 Fed. Reg. at 55. Additionally, we note that, although the prior Board Decision is applicable to much of representative claim 100, representative claim 100 includes at least two additional features (security and storing/removing information) which are not recited in the claim before the prior Board Decision. Accordingly, the Examiner does not provide prima facie support for the rejection. “[T]he examiner bears the initial burden, on review of the prior art or on any other ground, of presenting a prima facie case of unpatentability.” In re Oetiker, 977 F.2d 1443, 1445 (Fed. Cir. 1992). In view of the above, on the record before us, we do not sustain the rejection of representative claim 100, independent claims 113 and 116 which are similar to claim 100, and dependent claims 101, 102, 105–107, 111, 112, 114, 115, 117, and 118. Appeal 2021-001584 Application 11/671,598 13 CONCLUSION We reverse the Examiner’s decision rejecting claims 100–102, 105– 107, and 111–118 under 35 U.S.C. § 101. DECISION SUMMARY Claim(s) Rejected 35 U.S.C. § Reference(s)/Basis Affirmed Reversed 100–102, 105–107, 111–118 101 Eligibility 100–102, 105–107, 111–118 REVERSED Copy with citationCopy as parenthetical citation