PayPal, Inc.

Patent Trials and Appeals Board

Jul 13, 2020

2019006199 (P.T.A.B. Jul. 13, 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.
14/579,606 12/22/2014 Kane Sweeney 7879-47501 6738
156785 7590 07/13/2020
KHMRG (PayPal, Inc.)
1120 S. Capital of Texas Hwy
Building 2, Suite 300
Austin, TX 78746
EXAMINER
CIRNU, ALEXANDRU
ART UNIT PAPER NUMBER
3681
NOTIFICATION DATE DELIVERY MODE
07/13/2020 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):
patent_docketing@intprop.com
PTOL-90A (Rev. 04/07)

UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

Ex parte KANE SWEENEY
____________

Appeal 2019-006199
Application 14/579,606
Technology Center 3600
____________

Before BIBHU R. MOHANTY, PHILIP J. HOFFMANN,
KENNETH G. SCHOPFER, Administrative Patent Judges.

MOHANTY, Administrative Patent Judge.

DECISION ON APPEAL
STATEMENT OF THE CASE
Pursuant to 35 U.S.C. § 134(a), Appellant1 appeals from the
Examiner’s decision to reject claims 1, 3–8, 10–15, and 17–20. We have
jurisdiction under 35 U.S.C. § 6(b).

SUMMARY OF THE DECISION
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 Pay Pal Inc. (App.
Br. 3).
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CLAIMED SUBJECT MATTER
The Appellants’ claimed invention relates to the management of
allocation of online resources (Spec. 2). Claim 8, reproduced below with the
italics added, is representative of the subject matter on appeal.

8. A computer-implemented method comprising:
for each particular advertisement of a first set of
advertisements, receiving a corresponding original bid for an online
resource space on an online retail platform of an online entity, each
particular advertisement of the first set of advertisements
corresponding to a different advertiser;
obtaining sales information related to historical sales of items
offered for sale on a website;
obtaining advertising information related to a second set of
advertisements that are displayed with the items offered for sale on
the website;
applying machine learning to the sales information and the
advertising information to determine an effect of the second set of
advertisements on the sales of the items offered for sale on the
website;
for each particular advertisement of the first set of
advertisements, determining, based on the machine learning applied to
the sales information and the advertising information, one or more
cannibalization factors selected from a group of cannibalization
factors consisting of:
a likelihood of users selecting the particular advertisement as
listed in the online resource space on the online retail platform over
selecting organic sales listings of the items on the online retail
platform and a likelihood of the users leaving the online retail
platform due to the particular advertisement;
for each particular advertisement of the first set of
advertisements, determining a corresponding handicap value
independent of the corresponding original bid and that is based on the
one or more cannibalization factors;
for each particular advertisement of the first set of
advertisements, determining, by a machine having a memory and at
least one processor, a corresponding effective bid for the online
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resource space based on the corresponding original bid and the
corresponding handicap value;
selecting a specific advertisement of the first set of
advertisements based on the effective bids of the first set of
advertisements;
assigning, in a database, the specific advertisement to the online
resource space such that the specific advertisement is allocated to the
online resource space; and
causing the specific advertisement to be displayed on a
computing device in response to a user-generated interrupt received
from the computing device.

THE REJECTION
The following rejections is before us for review:
Claims 1, 3–8, 10–15, and 17–20 are rejected under 35 U.S.C. § 101
as being directed to non-statutory subject matter.

FINDINGS OF FACT
We have determined that the findings of fact in the Analysis section
below are supported at least by a preponderance of the evidence.2

ANALYSIS
Rejection under 35 U.S.C. § 101
The Appellant argues that the rejection of claim 8 is improper because
the claim is not directed to an abstract idea (Appeal Br. 9–14). The
Appellants argue further that the claim is integrated into a practical
application (Appeal Br. 14–16). The Appellant argues further that the claim

2 See Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1427 (Fed. Cir. 1988)
(explaining the general evidentiary standard for proceedings before the
Patent Office).
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recites significantly more than an abstract idea (Appeal Br. 16, 17; Reply Br.
2–7).
In contrast, the Examiner has determined that the rejection of record is
proper (Final Action 2–8; Ans. 3–11).
We agree with the Examiner. An invention is patent eligible if it
claims a “new and useful process, machine, manufacture, or composition of
matter.” 35 U.S.C. § 101. 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. E.g., Alice Corp. v. CLS
Bank Int’l, 573 U.S. 208, 216 (2014).
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. Id. at 217–18 (citing Mayo Collaborative Servs. v. Prometheus
Labs., Inc., 566 U.S. 66, 75–77 (2012)). In accordance with that framework,
we 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, 69 (1972)). Concepts
determined to be patent eligible include physical and chemical processes,
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such as “molding rubber products” (Diamond v. Diehr, 450 U.S. 175, 192
(1981)); “tanning, dyeing, making waterproof 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
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. (internal 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.”).
In January 2019, the published revised guidance on the application of
§ 101. 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed.
Reg. 50 (Jan. 7, 2019) (“Guidance”). Under the 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); and
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(2) additional elements that integrate the judicial exception into
a practical application, i.e., evaluate whether the claim
“appl[ies], rel[ies] on, or use[s] 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; see also MPEP § 2106.05(a)–(c), (e)–(h)).
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.
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 Specification at paragraph 2 states that the invention generally
relates to the management of allocation of online resources. Here, the
Examiner has determined that the claim sets forth the effects of ads on item
sales, adjusting advertisement bids and the selection of advertisements based
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on adjusted bid values, which is an abstract concept of commercial
interaction in advertising activities and a method of organizing human
activities and abstract concept. (Final Act. 3, Ans. 3). We substantially
agree with the Examiner. We determine that the claim sets forth the subject
matter in italics above that: [1] “for each particular advertisement of a first
set of advertisements, receiving a corresponding original bid for an online
resource space”; [2] “obtaining sales information related to historical sales
of items”; [3] “obtaining advertising information related to a second set of
advertisements that are displayed with the items offered for sale . . .
determin[ing] an effect of the second set of advertisements on the sales of
the items offered for sale on the website”; [4] “for each particular
advertisement of the first set of advertisements, determining . . . one or more
cannibalization factors selected from a group of cannibalization factors
consisting of: [5] a likelihood of users selecting the particular . . .” [6] “for
each particular advertisement of the first set of advertisements, determining
a corresponding handicap value independent of the corresponding original
bid and that is based on the one or more cannibalization factors”; [7] “for
each particular advertisement of the first set of advertisements, determining,
. . . a corresponding effective bid for the online resource space based on the
corresponding original bid and the corresponding handicap value”; [8]
“selecting a specific advertisement of the first set of advertisements based on
the effective bids of the first set of advertisements”; [9] “assigning . . . the
specific advertisement . . .such that the specific advertisement is allocated to
the online resource space”; and [9] “causing the specific advertisement to be
displayed on a computing device in response to a user-generated interrupt”
which describes the concept the selection and assigning of advertisements
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based on historical data of items for sale and other displayed information,
which is a certain method of organizing human activity and a fundamental
economic practice, i.e. a judicial exception. See Electric Power Group, LLC
v. Alstom S.A., 830 F.3d 1350 (Fed. Cir. 2016) where collecting information,
analyzing it, and displaying results from certain results of the collection and
analysis was held to be an abstract idea. In Versata Development Group,
Inc. v. SAP America, Inc., (CAFC), 793 F. 3d 1306, 1333 it was held that
determining a price, using organizational and product group hierarchies was
held to be an abstract idea. A method, like the claimed method, “a process
that employs mathematical algorithms to manipulate existing information to
generate additional information is not patent eligible.” See Digitech Image
Techs, LLC v. Elecs. for Imaging, Inc., 758 F.3d 1344, 1351 (Fed. Cir.
2014). In OIP Technologies, Inc. v. Amazon.com, Inc., 788 F.3d 1359, (Fed.
Cir. 2015) at 1363 it was held that offer-based price optimization was
directed to an abstract idea.
We next determine whether the claim recites additional elements in
the claim to integrate the judicial exception into a practical application. See
Guidance, 84 Fed. Reg. at 54–55. The Revised Guidance references the
MANUAL OF PATENT EXAMINING PROCEDURE (“MPEP”) §§ 2106.05(a)–(c)
and (e)–(h).
Here, the claims do not improve computer functionality, improve
another field of technology, utilize a particular machine, or effect a
particular physical transformation. Rather, we determine that nothing in the
claims imposes a meaningful limit on the judicial exception, such that the
claims are more than a drafting effort to monopolize the judicial exception.
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For example, in the claim, the additional elements beyond the abstract
idea are the recited online retail platform, website, and computing device.
The claimed limitations of these elements “do not purport to improve the
functioning of the computer itself,” do not improve the technology of the
technical field, and do not require a “particular machine.” Rather, they are
performed using generic computer components. Further, the claim as a
whole fails to effect any particular transformation of an article to a different
state. The recited steps in the claim fail to provide meaningful limitations to
limit the judicial exception. In this case, the claim merely uses the claimed
computer elements as a tool to perform the abstract idea.
Considering the elements of the claim both individually and as “an
ordered combination” the functions performed by the computer system at
each step of the process are purely conventional. Each step of the claimed
method does no more than require a generic computer to perform a generic
computer function. Thus, the claimed elements have not been shown to
integrate the judicial exception into a practical application as set forth in the
Revised Guidance which references the MANUAL OF PATENT EXAMINING
PROCEDURE (“MPEP”) §§ 2106.05(a)–(c) and (e)–(h).
Turning to the second step of the Alice and Mayo framework, we
determine that the claim does not contain an inventive concept sufficient to
“transform” the abstract nature of the claim into a patent-eligible application.
Considering the claim both individually and as an ordered combination fails
to add subject matter beyond the judicial exception that is not well-
understood, routine, and conventional in the field. Rather the claim uses
well-understood, routine, and conventional activities previously known in
the art and they are recited at a high level of generality. The Specification at
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paragraphs 110–114 for example describes using conventional computer
components such as a personal computer, memory, and communications
network in a conventional manner. Here, the claimed generic computer
components which are used to implement the claimed method are well
understood, routine, or conventional in the field. Here, the claim has not
been shown to be “significantly more” than the abstract idea.
The Appellants at pages 11 and 12 of the Appeal Brief have also cited
to Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016) to show
that the claim is not abstract but the claims in that case were not similar in
scope to those here and were in contrast directed to a self-referential data
table.
The Appellants at page 3 of the Reply Brief have also cited to McRO,
Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299 (Fed. Cir. 2016) but
the claims in that case are distinguished from this case in being directed to
rules for lip sync and facial expression animation.
For these above reasons the rejection of claim 8 is sustained. The
Appellant has provided the same arguments for the remaining claims which
are drawn to similar subject matter and the rejection of these claims is
sustained as well for the same reasons given above.

CONCLUSIONS OF LAW
We conclude that Appellants have not shown that the Examiner erred
in rejecting claims 1, 3–8, 10–15, and 17–20 under 35 U.S.C. § 101.

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DECISION SUMMARY
In summary:
Claims
Rejected
35 U.S.C.
§
Reference(s)/Basis Affirmed Reversed
1, 3–8, 10–
15, 17–20
101 Eligibility 1, 3–8, 10–
15, 17–20

TIME PERIOD FOR 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). See 37 C.F.R.
§ 1.136(a)(1)(iv).

AFFIRMED