PETROV, Andrew et al.

Patent Trials and Appeals Board

Dec 23, 2019

13793013 - (D) (P.T.A.B. Dec. 23, 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.
13/793,013 03/11/2013 Andrew PETROV 054060.001001 2011
33717 7590 12/23/2019
GREENBERG TRAURIG LLP (GT)
C/O: GREENBERG TRAURIG
INTELLECTUAL PROPERTY DEPARTMENT
77 WEST WACKER DRIVE, SUITE 3100
CHICAGO, IL 60601
EXAMINER
DEGA, MURALI K
ART UNIT PAPER NUMBER
3697
NOTIFICATION DATE DELIVERY MODE
12/23/2019 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):
cadanoc@gtlaw.com
clairt@gtlaw.com
gtipmail@gtlaw.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
____________________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________________

Ex parte ANDREW PETROV, SCOTT GOLDTHWAITE,
and WILLIAM GRAYLIN
____________________

Appeal 2019-002531
Application 13/793,013
Technology Center 3600
____________________

Before HUNG H. BUI, ADAM J. PYONIN, and
DAVID J. CUTITTA II, Administrative Patent Judges.

CUTITTA, Administrative Patent Judge.

DECISION ON APPEAL
Pursuant to 35 U.S.C. § 134(a), Appellant1 appeals from the
Examiner’s decision to reject claims 1–7 and 9–24, all of the claims on
appeal.2 We have jurisdiction under 35 U.S.C. § 6(b).
We REVERSE.
We enter a new ground of rejection under 35 U.S.C. § 112, second
paragraph.

1 We use the word “Appellant” to refer to “[A]pplicant” as defined in
37 C.F.R. § 1.42(a). Appellant identifies the real party in interest as
VeriFone, Inc. Appeal Br. 2.
2 Claim 8 is cancelled. Appeal Br. 15.
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STATEMENT OF THE CASE
Invention
Appellant’s invention relates to “a secure transaction module that
performs electronic transactions by interacting with payment cards or
authentication cards.” See Spec. ¶ 4.3
Illustrative Claim
Claim 1, the sole independent claim, is illustrative of the claimed
subject matter and is reproduced below with claim element labels added in
brackets:
1. A secure electronic payment transaction system
comprising:
[a] a secure transaction module (STM) for providing
secure payment transactions utilizing banking cards, said STM
comprising a smart card reader and a processor;
[b] a host device comprising a communication module
for connecting to a financial institution via a network;
[c] wherein said STM further comprises an interface for
communicating with said host device and with said financial
institution, said STM communicating via a network connection
with said financial institution by utilizing said communication
module of said host device to connect to said network;
[d] wherein said interface provides a processor-to-
processor connection between the STM and the host device;

3 Our Decision refers to: (1) Appellant’s Specification filed March 11, 2013
(“Spec.”); (2) the Non-Final Rejection mailed January 11, 2018 (“Non-Final
Act.”); (3) the Appeal Brief filed June 7, 2018 (“Appeal Br.”); (4) the
Examiner’s Answer mailed December 12, 2018 (“Ans.”); and (5) the Reply
Brief filed February 11, 2019 (“Reply Br.”).
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[e] wherein said STM receives payment transaction
commands issued by said host device from said host device via
said interface; and
[f] wherein said STM is operative to process sensitive
information within a cryptographic boundary before said
sensitive information is transmitted to said financial institution
via said host device such that said sensitive information is
transmitted without said sensitive information being
compromised by said host device.
Appeal Br. 14 (Claims Appendix).

REJECTION
The Examiner rejects claims 1–7 and 9–24 under 35 U.S.C. § 101 as
reciting patent-ineligible subject matter. Non-Final Act. 3–8.

DISCUSSION
We review the appealed rejection for error based upon the issues
identified by Appellant and in light of Appellant’s arguments and evidence.
Ex parte Frye, 94 USPQ2d 1072, 1075 (BPAI 2010) (precedential).
Arguments not made are waived. See 37 C.F.R. § 41.37(c)(1)(iv) (2017).

I. Principles of Law
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 US 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. See, e.g., Alice Corp. Pty. Ltd. v. CLS
Bank Int’l, 573 U.S. 208, 216 (2014).
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In determining whether a claim falls within an excluded category, we
are guided by the Court’s two-step framework, described in Alice and Mayo.
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
217.
If the claim recites an abstract idea, we turn to the second step of the
Alice and Mayo framework, in which “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 (quotation marks 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.
(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 Office published revised guidance on the application of § 101.
2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. 50
(Jan. 7, 2019) (hereinafter “Guidance”). Recently, the USPTO published an
update to that guidance. October 2019 Patent Eligibility Guidance Update,
84 Fed. Reg. 55,942 (hereinafter “Guidance Update”). Under the Guidance
and the Guidance Update, in determining whether a claim falls within an
excluded category, we first look to whether the claim recites:
(1) Step 2A — Prong One: 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) Step 2A — Prong Two: additional elements that integrate the
judicial exception into a practical application (see MPEP4
§ 2106.05(a)–(c), (e)–(h)).
See Guidance, 84 Fed. Reg. 54–55 (“Revised Step 2A”). 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 (Step 2B):
(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 id. at 56 (“Step 2B”).
II. Analysis
Step 2A, Prong 1 in the Guidance (Judicial Exceptions)
The Examiner determines the claims are directed toward the abstract
idea of “facilitating financial transaction[s].” Non-Final Act. 5.
Appellant argues the Examiner erred in determining the claim is
directed to an abstract concept because the Examiner does not identify the
category of abstract idea to which the claims belong and because “[t]he
pending claims do not recite any of the judicial exceptions enumerated in the
2019 PEG” including certain methods of organizing human activity, mental
processes, or mathematical concepts. Reply Br. 2–5; Appeal Br. 6–7.
Pursuant to the Guidance, we are persuaded of Examiner error in the
rejection. Examples of certain methods of organizing human activity are
enumerated in the Guidance to include “fundamental economic principles or

4 All Manual of Patent Examining Procedure (“MPEP”) citations herein are
to MPEP, Rev. 08.2017, January 2018.
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practices . . . commercial or legal interactions . . . managing personal
behavior or relationships or interactions between people.” Guidance, 84
Fed. Reg. 52, Section I (Groupings of Abstract Ideas). Further, the
Guidance describes mental concepts as “concepts performed in the human
mind (including an observation, evaluation, judgment, opinion)” and
mathematical concepts as “mathematical relationships, mathematical
formulas or equations, mathematical calculations.” Id.
Claim 1 recites limitations such as [a] “a secure transaction module
(STM) for providing secure payment transactions utilizing banking cards,
said STM comprising a smart card reader and a processor,” [b] “a host
device comprising a communication module for connecting to a financial
institution via a network,” and [f] “wherein said STM is operative to process
sensitive information within a cryptographic boundary before said sensitive
information is transmitted to said financial institution via said host device
such that said sensitive information is transmitted without said sensitive
information being compromised by said host device.” Appeal Br. 14.
The Examiner has not sufficiently demonstrated that these limitations
are consistent with certain methods of organizing human activity, mental
processes, or mathematical concepts, pursuant to the eligibility analysis as
enumerated in the Guidance. Guidance, 84 Fed. Reg. 54, Section III(A)(1)
(Prong One: Evaluate Whether the Claim Recites a Judicial Exception).
For these reasons, we are persuaded claim 1 has not been shown to
“recite a judicial exception within the enumerated groupings of abstract
ideas in the Guidance and thus “the claim is eligible at Prong One of revised
Step 2A.” Guidance, 84 Fed. Reg. 53, Section III (Instructions for Applying
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Revised Step 2A During Examination). Accordingly, we do not sustain the
Examiner’s rejection of claims 1–7 and 9–24 under 35 U.S.C. § 101.
NEW GROUND OF REJECTION
Pursuant to our authority under 37 C.F.R. § 41.50(b), we enter a new
ground of rejection under 35 U.S.C. § 112, second paragraph. Independent
claim 1 recites “wherein said STM is operative to process sensitive
information within a cryptographic boundary before said sensitive
information is transmitted to said financial institution via said host device
such that said sensitive information is transmitted without said sensitive
information being compromised by said host device.” Appeal Br. 14
(emphasis added).
This limitation, as recited in claim 1, is indefinite. In describing the
cryptographic boundary, Appellant’s Specification states:
The STM 100 has the unique ability to have its own
“cryptographic boundary” so that secure payment and other
transactions are not compromised by the host device 200. This
“cryptographic boundary” includes security measures that detect
and prevent tampering with the hardware and software
components of the STM that are used for transaction processing.
All sensitive information that is processed within this
“cryptographic boundary” is encrypted before it is exposed to the
host device. Furthermore, the STM maintains this
“cryptographic boundary” between different transaction
applications that are contained within its memory, thereby
allowing multiple authorities to house approved and secure
transactions processing methodologies.
Spec. 10:10–20.
If the language of the claim is such that a person of ordinary skill in
the art could not have interpreted the metes and bounds of the claim so as to
understand how to avoid infringement, a rejection of the claim under 35
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U.S.C. 112(b) or pre-AIA 35 U.S.C. 112, second paragraph, is appropriate.
See Morton Int’l, Inc. v. Cardinal Chem. Co., 5 F.3d 1464, 1470 (Fed. Cir.
1993).
Appellant’s claim 1 recites that the “STM is operative to process
sensitive information within a cryptographic boundary . . . such that said
sensitive information is transmitted without said sensitive information being
compromised by said host device.” Appeal Br. 14. The Specification
similarly discloses that “The STM 100 has the unique ability to have its own
“cryptographic boundary” so that secure payment and other transactions are
not compromised by the host device 200.” Spec. 10:12–14. However,
neither the Specification nor the claim clarifies what it means for secure
payments and other transactions to be transmitted without being
compromised. Without such a disclosure, an accused infringer would be
unable to determine whether a particular encrypted STM transmits
uncompromised sensitive information, thereby infringing the claim. Thus,
the “cryptographic boundary,” as recited in claim 1, is indefinite because
there is no means to determine the metes and bounds of the limitation.
Accordingly, we enter a NEW GROUND OF REJECTION for claim 1
under 35 U.S.C. § 112, second paragraph, as indefinite. Claims 2–7 and 9–
24 depend from claim 1 and are rejected for similar reasoning.

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CONCLUSION
We reverse the Examiner’s decision to reject claims 1–7 and 9–24
under 35 U.S.C. § 101.
Pursuant to our authority under 37 C.F.R. § 41.50(b), we enter a new
ground of rejection for claims 1–7 and 9–24 under 35 U.S.C. § 112, second
paragraph.

DECISION SUMMARY
In summary:
Claims
Rejected
35
U.S.C.
§
Reference(s)/Basis Affirmed Reversed New
Ground
1–7,
9–24
101 Eligibility 1–7,
9–24

112,
2nd
par.
Indefiniteness 1–7,
9–24
Overall
Outcome
1–7,
9–24
1–7,
9–24

TIME PERIOD FOR RESPONSE
This decision contains a new ground of rejection pursuant to
37 C.F.R. § 41.50(b). 37 C.F.R. § 41.50(b) provides “[a] new ground of
rejection pursuant to this paragraph shall not be considered final for judicial
review.”
37 C.F.R. § 41.50(b) also provides that the Appellant, WITHIN TWO
MONTHS FROM THE DATE OF THE DECISION, must exercise one of
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the following two options with respect to the new ground of rejection to
avoid termination of the appeal as to the rejected claims:
(1) Reopen prosecution. Submit an appropriate
amendment of the claims so rejected or new Evidence relating
to the claims so rejected, or both, and have the matter
reconsidered by the examiner, in which event the prosecution
will be remanded to the examiner. . . .
(2) Request rehearing. Request that the proceeding be
reheard under § 41.52 by the Board upon the same Record. . . .

Further guidance on responding to a new ground of rejection can be
found in the Manual of Patent Examining Procedure § 1214.01.

REVERSED
37 C.F.R. § 41.50(b)