Jacob Herschler et al.

Patent Trials and Appeals Board

Nov 5, 2021

2021001584 (P.T.A.B. Nov. 5, 2021)

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.

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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.
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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;
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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).
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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
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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
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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
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“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.
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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
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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.
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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
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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.
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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