Stephen SeawallDownload PDFPatent Trials and Appeals BoardMay 28, 20202020000565 (P.T.A.B. May. 28, 2020) 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. 13/792,110 03/10/2013 Stephen L. Seawall SEAW-001 3790 68371 7590 05/28/2020 DEEPAK MALHOTRA MALHOTRA LAW FIRM, PLLC P.O. BOX 1433 SPOKANE, WA 99210 EXAMINER CHEIN, ALLEN C ART UNIT PAPER NUMBER 3687 NOTIFICATION DATE DELIVERY MODE 05/28/2020 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): dmalhotra@patentsusa.com docketing@patentsusa.com malhotraspokane@hotmail.com PTOL-90A (Rev. 04/07) UNITED STATES PATENT AND TRADEMARK OFFICE BEFORE THE PATENT TRIAL AND APPEAL BOARD Ex parte STEPHEN L. SEAWALL Appeal 2020-000565 Application 13/792,110 Technology Center 3600 Before JOHN A. EVANS, CATHERINE SHIANG, and SCOTT B. HOWARD, Administrative Patent Judges. HOWARD, 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, 2, and 5–20. Claims 3 and 4 have been cancelled. See Final Act. 1. We have jurisdiction under 35 U.S.C. § 6(b). We AFFIRM. 1 We use the word Appellant to refer to “applicant” as defined in 37 C.F.R. § 1.42. Appellant identifies the real party in interest as Stephen L. Seawall. Appeal Br. 3. Appeal 2020-000565 Application 13/792,110 2 CLAIMED SUBJECT MATTER The claims are directed to “accounting data management, and accounting systems and methods.” Spec. ¶ 1. Claim 1, reproduced below with emphases added, is illustrative of the claimed subject matter: 1. A computerized accounting system comprising a memory defining a data warehouse, the data warehouse being defined as a plurality of logical accounting and reporting sub-systems which have different functions, including recording and retrieval of data, the sub-systems being configured to record single entry transactions, the single entry transactions including transactions for a business entity and for a subsidiary of the business entity, a processor in communication with the memory, and a communications interface coupled to the processor and memory, for user input, the system being configured to record single entry transactions, in the data warehouse, including transactions for cash receipts, cash disbursements, accounts payable, payroll payable, and legal commitments and to selectively generate, using the processor, a cash basis statement including, for a period, beginning cash balance, cash receipts, cash disbursements, and ending cash balance, the cash basis statement being for a selected one of the business entity and the subsidiary of the business entity; wherein the system is further configured to selectively generate, using the transactions for accounts payable, the payroll payable, and the legal commitments, a budgetary basis statement including, for a period, beginning uncommitted cash, receipts, expenditures, including legal commitments, and uncommitted cash, the budgetary basis statement being for a selected one of the business entity and the subsidiary of the business entity; wherein the system is further configured to selectively generate a tax cash basis statement, the tax cash basis statement being for a selected one of the business entity and the subsidiary of the business entity; wherein the data warehouse includes data defining accounts, wherein the data warehouse includes a chart of accounts configured to map detailed transaction codes to Appeal 2020-000565 Application 13/792,110 3 different of the accounts, and wherein the data warehouse further includes a general ledger configured to store data concerning the accounts as double entries, wherein the transactions include cash basis transactions stored as single entry data and configured, in response to a request, to generate an unadjusted cash basis trial balance by extracting single entry cash transactions for a reporting period from the data warehouse, by summarizing the extracted single entry cash transactions by detailed transaction code, by identifying each detailed transaction code and summarized amount, by determining the general ledger account each detailed transaction code is mapped to by using the chart of accounts, by converting the single entry data to double entries, by identifying and tagging double entries that require adjusting entries, and by adding the double entries to the general ledger thereby creating an unadjusted cash basis trial balance ready for adjusting entries, to receive adjusting entries from a user, and to generate, for at least one of the business entity and the subsidiary of the business entity, at least one of accrual basis and tax accrual basis statements using the unadjusted cash basis trial balance and the adjusting entries; wherein less memory is required to generate a cash basis, tax cash basis, or budgetary basis statement than if transactions for cash receipts, cash disbursements, accounts payable, payroll payable, and legal commitments were stored in a double entry format. REJECTION Claims 1, 2, and 5–20 are rejected under 35 U.S.C. § 101 as directed to patent ineligible subject matter. Final Act. 10. OPINION We have reviewed the Examiner’s rejection in light of Appellant’s arguments that the Examiner erred. In reaching this decision, we have considered all evidence presented and all arguments made by Appellant. We are not persuaded by Appellant’s arguments regarding claims 1, 2, and 5–20. Appeal 2020-000565 Application 13/792,110 4 A. Section 101 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 U.S. 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 Court’s two-part 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, 67 (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 waterproof cloth, vulcanizing India rubber, smelting ores” (id. at 182 n.7 (quoting Corning v. Burden, 56 U.S. Appeal 2020-000565 Application 13/792,110 5 252, 267–68 (1853))); 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 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 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. (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.”). 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 (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. (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. Appeal 2020-000565 Application 13/792,110 6 B. USPTO Section 101 Guidance In January 2019, the U.S. Patent and Trademark Office (USPTO) published revised guidance on the application of § 101. 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. 50 (Jan. 7, 2019) (“2019 Revised Guidance”).2 “All USPTO personnel are, as a matter of internal agency management, expected to follow the guidance.” Id. at 51; see also October 2019 Update at 1. Under the 2019 Revised Guidance and the October 2019 Update, 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) (“Step 2A, Prong One”); and (2) additional elements that integrate the judicial exception into a practical application (see MPEP § 2106.05(a)–(c), (e)–(h) (9th ed. Rev. 08.2017, Jan. 2018)) (“Step 2A, Prong Two”).3 2019 Revised Guidance, 84 Fed. Reg. at 52–55. 2 In response to received public comments, the Office issued further guidance on October 17, 2019, clarifying the 2019 Revised Guidance. USPTO, October 2019 Update: Subject Matter Eligibility (the “October 2019 Update”) (available at https://www.uspto.gov/sites/default/files/ documents/peg_oct_2019_update.pdf). 3 This evaluation is performed by (a) identifying whether there are any additional elements recited in the claim beyond the judicial exception, and (b) evaluating those additional elements individually and in combination to determine whether the claim as a whole integrates the exception into a practical application. See 2019 Revised Guidance - Section III(A)(2), 84 Fed. Reg. 54–55. Appeal 2020-000565 Application 13/792,110 7 Only if a claim (1) recites a judicial exception and (2) does not integrate that exception into a practical application, do we then look, under Step 2B, 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. 2019 Revised Guidance, 84 Fed. Reg. at 52–56. USPTO STEP 2A, PRONG 1 The Examiner concludes that claim 1 is directed to accounting, which is a fundamental economic practice and a method of organizing human activity. Final Act. 12; Ans. 4–5. Appellant argues the Examiner applied “an unreasonably high level of abstraction to claim 1.” Appeal Br. 11. We are not persuaded by Appellant’s arguments that the Examiner erred. The emphasized limitations in the recitation of claim 1 above, under their broadest reasonable interpretation, recite an accounting system because the various limitations recite the steps that would ordinarily be used in an accounting system. For example, the preamble explicitly recites that the claim is an accounting system. The remainder of the emphasized limitations recite various details regarding the how data is entered into the accounting system and how that data is used to generate accounting reports. An accounting system is used by various entities to keep track of economic activity. Thus, Appeal 2020-000565 Application 13/792,110 8 like the concept of intermediated settlement in Alice, and the concept of hedging in Bilski, the concept of an accounting system recited in Appellants' claims “is a fundamental economic practice long prevalent in our system of commerce.” Alice, 573 U.S. at 216 (citations and internal quotation marks omitted). Accordingly, we conclude the claims recite a fundamental economic practice, which is one of certain methods of organizing human activity identified in the Revised Guidance, and thus an abstract idea. We do not agree with Appellant’s argument that the Examiner used too high a level of abstraction. Both the title and field of the invention make it clear that the claimed invention is directed to methods of financial accounting. Spec. ¶ 1, Title. Similarly, the preamble of claim recites the claim is for an “accounting system.” And, as discussed above, the specific limitations of the claims recite various properties of an accounting system such as the type of data used and the type of reports that can be generated.4 D. USPTO STEP 2A, PRONG 2 In determining whether claim 1 is “directed to” the identified abstract ideas, we next consider whether claim 1 recites additional elements that integrate the judicial exception into a practical application. For the reasons set forth below, we discern no additional element (or combination of elements) recited in claim 1 that integrates the judicial exception into a practical application. See 2019 Revised Guidance, 84 Fed. Reg. at 54–55. 4 Appellant also argues that the claim is not directed to a mental process. See Appeal Br. 17–18. Because we do not rely on the Examiners’ determination that the claim is directed to a mental process, those arguments are moot. Appeal 2020-000565 Application 13/792,110 9 Appellant argues that claim 1 is directed to a “practical application: the capability of generating financing statements using different bases of accounting.” Reply Br. 5. Appellant also argues that the claims a computer memory improvement. Appeal Br. 54–55 (citing Spec. ¶ 125); Reply Br. 4. Appellant further argues that the claims of the instant application are similar to the claims found patent eligible in Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016). Id. at 11–14. We do not agree. Although claim 1 recites using “less memory” than if the data was stored in a double entry format, that is merely describing the results of the abstract idea. The claim does not recite any improvement in computer functionality that achieves that result. An improvement in an abstract idea, as opposed to the improvement of computer functionality, is not sufficient to show that the abstract idea is integrated into a practical application. See MPEP 2106.05(f) (“Use of a computer or other machinery in its ordinary capacity for economic or other tasks (e.g., to receive, store, or transmit data) or simply adding a general purpose computer or computer components after the fact to an abstract idea (e.g., a fundamental economic practice or mathematical equation) does not provide significantly more.”). Moreover, Appellant has not persuasively shown how the Specification supports using less memory. Appellant directs us to paragraph 125, which is reproduced in its entirety: As described above, there are typically transactions in the cash basis trial balance that are not actually accrual basis revenues and expenses. However, the system 30 uses tagging to identify such transactions as possibly requiring an adjusting entry under accrual basis reporting requirements. Nothing in that paragraph discusses how much memory will be used and Appellant has not presented any persuasive argument or evidence in support Appeal 2020-000565 Application 13/792,110 10 of its position. Attorney argument unsupported by evidence is not sufficient to show such an improvement. In re Geisler, 116 F.3d 1465, 1470 (Fed. Cir. 1997); see also In re Pearson, 494 F.2d 1399, 1405 (CCPA 1974) (attorney argument is not evidence). Rather, the Specification simply describes using conventional computer components—such as servers, computers, processors, and networks. See Spec. ¶ 37; see also Ans. 4 (“This is not persuasive, because the additional elements of Appellant's invention are only generic computing components and a conventional memory improvement.”). Accordingly, claim 1 simply “includes instructions to implement an abstract idea on a computer, or merely uses a computer as a tool to perform an abstract idea.” See 2019 Revised Guidance, 84 Fed. Reg. at 55. We also disagree with Appellant that claim 1 is similar to the claims found patent eligible in Enfish. In Enfish, the claims were “directed to a specific improvement to the way computers operate.” 822 F.3d at 1336. Specifically, in Enfish, “the claims are not simply directed to any form of storing tabular data, but instead are specifically directed to a self- referential table for a computer database.” Id. at 1337. Moreover, the specification made it clear that the invention improved the functioning of the computer. Id. In this case, unlike in Enfish, the claims are not directed to improving the functioning of the computer. Rather, the claims are directed to a “new” accounting system that uses single entry transactions while tagging those transactions that may requires “adjusting” when preparing a report. See Spec. ¶¶ 15–16. That is, the claims are not directed to an improvement in technology and the operation of a computer, but to using technology to implement a financial accounting system. Appeal 2020-000565 Application 13/792,110 11 Accordingly, we are not persuaded of error in the Examiner’s determination that claim 1 is directed to an abstract idea, and we find the claimed additional elements do not integrate the abstract idea into a practical application. E. USPTO STEP 2B Turning to step 2B of the 2019 Revised Guidance, we look to whether claim 1 (a) adds a specific limitation or combination of limitations that are not well-understood, routine, conventional activity in the field, or (b) simply appends well-understood, routine, conventional activities previously known to the industry, specified at a high level of generality, to the judicial exception. 2019 Revised Guidance, 84 Fed. Reg. at 56. The Examiner determines that “Appellant’s additional elements appear to largely comprise generic computing or data storage elements, which is used to implement an abstract accounting process. This does not lend itself to patent eligibility.” Ans. 5 (citing MPEP 2106.05(f)). Appellant argues that the Examiner did not make sufficient findings in light of Berkheimer.5 Appeal Br. 14–17; Reply Br. 3. Appellant also argue that the claim is not directed to conventional single entry accounting; instead Appellant argues that the claim is directed to significantly more than the abstract idea. See Appeal Br. 20–47. 5 Berkheimer v. HP Inc., 890 F.3d 1369, 1376 (Fed. Cir. 2018) and USPTO Memorandum of April 19, 2018, “Changes in Examination Procedure Pertaining to Subject Matter Eligibility, Recent Subject Matter Eligibility Decision (Berkheimer v. HP, Inc.)” (Apr. 19, 2018), available at https://www.uspto.gov/sites/default/files/documents/memo-berkheimer- 20180419.PDF (hereinafter “USPTO Berkheimer Memorandum”). Appeal 2020-000565 Application 13/792,110 12 Appellant does not direct our attention to anything in the Specification that indicates the claimed computer components—whether considered individually or as an ordered combination—perform anything other than well-understood, routine, and conventional functions, such as collecting data, transmitting data, and manipulating data (i.e., associating the ordering scheme with an identifier, and determining to place the purchase order). Those types of generic computer components performing generic computer functions—both individually and in combination—have been found to be well understood, routine, and conventional. See, e.g., Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1355 (Fed. Cir. 2016) (“Nothing in the claims, understood in light of the specification, requires anything other than off-the-shelf, conventional computer, network, and display technology for gathering, sending, and presenting the desired information”); buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1355 (Fed. Cir. 2014) (“That a computer receives and sends the information over a network—with no further specification—is not even arguably inventive”); In re TLI Commc’ns LLC Patent Litig., 823 F.3d 607, 614 (Fed. Cir. 2016) (server that receives data, extracts classification information from the received data, and stores the digital images insufficient to add an inventive concept); Alice, 573 U.S. at 225–26 (receiving, storing, sending information over networks insufficient to add an inventive concept); CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1370 (Fed. Cir. 2011) (use of Internet to verify credit-card transaction does not add enough to abstract idea of verifying the transaction); see also MPEP § 2106.05(d) (“Courts have held computer‐ implemented processes not to be significantly more than an abstract idea (and thus ineligible) where the claim as a whole amounts to nothing more than generic computer functions merely used to implement an abstract idea, Appeal 2020-000565 Application 13/792,110 13 such as an idea that could be done by a human analog (i.e., by hand or by merely thinking.”)). We also do not we find Appellant’s arguments directed to “something more” persuasive. Appellant devotes a significant portion of the Appeal Brief discussing the differences between the claimed accounting system and single entry accounting. See Appeal Brief 20–47. However, those arguments focus on the improvement of the abstract idea, not the additional elements. A “claimed invention’s use of the ineligible concept,” e.g., an abstract idea, “cannot supply the inventive concept that renders the invention ‘significantly more’ than that ineligible concept.” BSG Tech LLC v. BuySeasons, Inc., 899 F.3d 1281, 1290 (Fed. Cir. 2018). “[U]nder the Mayo/Alice framework, a claim directed to a newly discovered” abstract idea “cannot rely on the novelty of that discovery for the inventive concept necessary for patent eligibility.” Genetic Techs. Ltd. v. Merial L.L.C., 818 F.3d 1369, 1376 (Fed. Cir. 2016). F. ADDITIONAL ARGUMENTS In addition to the arguments premised on the Alice/Mayo Framework as reflected in the Revised Guidance, Appellant presents two additional arguments. First, Appellant argues that the claims are patent eligible because they do not preempt a broad field of accounting. Appeal Br. 18–20. Second Appellant argues that granting some patent for accounting systems and not the instant application is a violation of the Fourteenth Amendment. Id. at 18. We are not persuaded by either argument. With regard to preemption, although the extent of preemption is a consideration, the absence of complete preemption is not dispositive. See, Appeal 2020-000565 Application 13/792,110 14 e.g., Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015) (“While preemption may signal patent ineligible subject matter, the absence of complete preemption does not demonstrate patent eligibility.”); Ultramercial, Inc. v. Hulu, LLC, 722 F.3d 1335, 1346 (Fed. Cir. 2013) (“[T]he Supreme Court has stated that, even if a claim does not wholly pre-empt an abstract idea, it still will not be limited meaningfully if it contains only insignificant or token pre- or post-solution activity—such as identifying a relevant audience, a category of use, field of use, or technological environment.”) (citations omitted), vacated and remanded, WildTangent, Inc. v. Ultramercial, LLC, 134 S. Ct. 2870 (2014) (remanding for consideration in light of Alice, 134 S. Ct. 2347). Similarly, we do not find Appellant’s Fourteenth Amendment argument persuasive. The gravamen of Appellant’s argument is that Appellant is being treated different than other patent applicants. See Appeal Br. 14. However, the Appeal Brief does not persuasively demonstrate unequal treatment. There is no discussion of the similarities or differences between the allowed claims and the claims of the instant application. Id. Nor is there a discussion of differences in the prosecution. Id. Accordingly, Appellant has not shown sufficiently shown any disparate treatment or a violation of the Fourteenth Amendment. Moreover, the only case cited by Appellant—Bolling v. Sharpe, 347 U.S. 497 (1954)—is inapposite. In Bolling, the Supreme Court held that the due process clause of the Fifth Amendment prohibited race based discrimination in the District of Columbia’s school systems. 347 U.S. at 498–99. It is unclear, based on Appellant’s arguments how the Court’s holding “that racial segregation in the public schools of the District of Appeal 2020-000565 Application 13/792,110 15 Columbia is a denial of the due process of law guaranteed by the Fifth Amendment to the Constitution” applies to the facts of this case. Id. at 500. G. CLAIMS 12, 16, AND 17 Appellant present additional, separate arguments for independent claims 12, 16, and 17. Specifically, Appellant identifies an additional limitation in each claim and argues the Examiner did not make sufficient findings based on Berkheimer. We do not find those arguments persuasive. The additional limitation Appellant focuses on for claims 12 and 17 and just further aspects of the abstract idea. Accordingly, because those limitations are part of the abstract idea and not part of the additional elements, Bekrheimer is not applicable. See Berkheimer Memo at 2. With regard to claim 16, Appellant focuses on the use of less memory. Appellant’s argument is not persuasive for the same reasons discussed above with regard to claim 1. H. CONCLUSION ON SECTION 101 REJECTION Appellant does not separately argue claims 2, 5–11, 13–15, and 18– 20. Accordingly, those claims are considered as grouped with claim 1. Accordingly, we sustain the § 101 rejection of claims 1, 2 and 5–10 as being directed to patent-ineligible subject matter. CONCLUSION We affirm the Examiner’s § 101 rejection of claims 1, 2, and 5–20. Appeal 2020-000565 Application 13/792,110 16 DECISION SUMMARY Claims Rejected 35 U.S.C. § Reference(s)/Basis Affirmed Reversed 1, 2, 35–20 101 Eligibility 1, 2, 5–20 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 Copy with citationCopy as parenthetical citation