William Marc. Graham et al.

Patent Trials and Appeals Board

Oct 1, 2019

13687360 - (D) (P.T.A.B. Oct. 1, 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.
13/687,360 11/28/2012 William Marc Graham 43750.09003 1276
27530 7590 10/01/2019
Nelson Mullins Riley & Scarborough LLP
IP Department
One Wells Fargo Center
301 South College Street, 23rd Floor
Charlotte, NC 28202
EXAMINER
KHATTAR, RAJESH
ART UNIT PAPER NUMBER
3693
NOTIFICATION DATE DELIVERY MODE
10/01/2019 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):
ip@nelsonmullins.com
PTOL-90A (Rev. 04/07)

UNITED STATES PATENT AND TRADEMARK OFFICE
____________________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________________

Ex parte WILLIAM MARC GRAHAM,
WILLIAM JOSEPH JOLICOEUR III, CHRISTOPHER H. HAUSE,
ROBERT WAYNE BUSBY, and KEITH EUGENE NELSON1
____________________

Appeal 2018-004849
Application 13/687,360
Technology Center 3600
____________________

Before THU A. DANG, ELENI MANTIS MERCADER, and
JAMES R. HUGHES, Administrative Patent Judges.

MANTIS MERCADER, Administrative Patent Judge.

DECISION ON APPEAL
This is a decision on appeal under 35 U.S.C. § 134(a) of the Final
Rejection of claims 1–2, 7–19, 21–39, 44–56, 58–63, 65–68, and 69, which
are all of the claims pending in the application. We have jurisdiction under
35 U.S.C. § 6(b).
We affirm.

1 The real party in interest is William Marc Graham. Appeal Br. 1.
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The Invention
Appellant’s claimed invention is directed to a computer-implemented
method and system for providing an insurance product or products that
protects a wage earner against a reduction in compensation resulting from an
event such as involuntary dismissal from employment and subsequent
reemployment at a reduced compensation. Abstract.
Exemplary Claim
Claim 27, reproduced below is representative of the subject matter on
appeal:

27. A computer-implemented method for an insurance product,
the method comprising:
providing a computer having a memory, a computer processor unit,
and a computation system operable by the computer processor unit,
receiving input data by the computer from an input device,
generating output data comprised of benefits criteria and costs by the
computation system of the computer, and
determining by the computer SGQd which is the number of persons
returning to work during duration (d) who qualify for salary gap benefits:

SGQd = RWd x W%
where
RWd is number returning to work during duration (d);
d is duration in months from a qualifying event
referred to as an incidence date;

W% is expected % returning to work whose "replacement
employment salary" (RES) are no greater than XX% of their "original
employment salary" (OES); and
XX% is a percentage in a range of 0 to 100%,
wherein the insurance product protects an insured against a salary gap
differential caused by a reduction in compensation, the reduction in
compensation arising from the insured being involuntarily dismissed from an
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initial employment position having an initial compensation and commencing
employment position having a reduced compensation amount that is less
than the initial compensation amount; and
wherein the benefits criteria is a number of monthly payments
received through maximum benefit period (z) by a salary gap qualified
person and wherein SGPd:z is a number of monthly payments received
calculated according to equation:

SGPd:z= SGQd x SGQPd:z (for d > waiting period)

where

SGQd = RWd x W%;
RWd = IUd - IUd-1;
IUd = IU0 x SGAMCFd;
IU0 = number of involuntarily unemployed at the incidence
date;
SGAMCFd = Adjusted Monthly Continuance Factor= a ratio of
number
of persons remaining involuntarily unemployed at end of duration (d) to
number of persons involuntarily unemployed at the incidence date;
d = duration in months from the incidence date;
d-1 = previous month;
W% = expected % returning to work whose "replacement
employment
salary" (RES) are no greater than XX% of their "original employment
salary" (OES); and
XX% = is a percentage in a range of 0 to 100%.
Rejection on Appeal
Claims 1–2, 7–19, 21–39, 44–56, 58–63, 65–68, and 69 stand rejected
under 35 U.S.C. § 101 as directed to patent-ineligible subject matter. Final
Act. 2–7.
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ANALYSIS
We adopt the Examiner’s findings in the Answer and Final Office
Action and add the following.
Section 101 of the Patent Act provides that “any new and useful
process, machine, manufacture, or composition of matter, or any new and
useful improvement thereof” is patent eligible. 35 U.S.C. § 101. But the
Supreme Court has long recognized an implicit exception to this section:
“Laws of nature, natural phenomena, and abstract ideas are not patentable.”
Alice Corp. v. CLS Bank Int’l, 573 U.S. 208, 216 (2014) (quoting Ass’n for
Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 589 (2013)).
To determine whether a claim falls within one of these excluded categories,
the Court has set out a two-part framework. The framework requires us first
to consider whether the claim is “directed to one of those patent-ineligible
concepts.” Alice, 573 U.S. at 217. If so, we then examine “the elements of
[the] claim both individually and ‘as an ordered combination’ to determine
whether the additional elements ‘transform the nature of the claim’ into a
patent-eligible application.” Alice, 573 U.S. at 217 (quoting Mayo
Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 78, 79 (2012)).
That is, we examine the claim for an “inventive concept,” “an element or
combination of elements that is ‘sufficient to ensure that the patent in
practice amounts to significantly more than a patent upon the [ineligible
concept] itself.’” Alice, 573 U.S. at 217–18 (alteration in original) (quoting
Mayo, 566 U.S. at 72–73).
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. 593 at 611);
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mathematical formulas (Parker v. Flook, 437 U.S. 584, 594-95 (1978)); and
mental processes (Gottschalk v. Benson, 409 U.S. 63, 67 (1972)).
The Patent Office recently revised its guidance about this framework.
See 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg.
50 (Jan. 7, 2019) (“Revised Guidance”). Under the Revised Guidance, to
decide whether a claim is directed to an abstract idea, we evaluate whether
the claim (1) recites subject matter that falls within one of the abstract idea
groupings identified in the Revised Guidance and (2) fails to integrate the
recited abstract idea into a practical application. See Revised Guidance, 84
Fed. Reg. at 51, 54. If the claim is directed to an abstract idea, as noted
above, we then determine whether the claim has an inventive concept. The
Revised Guidance explains that when making this determination, we should
consider whether the additional claim elements add “a specific limitation or
combination of limitations that are not well-understood, routine,
conventional activity in the field” or “simply append[] well-understood,
routine, conventional activities previously known to the industry, specified
at a high level of generality.” Revised Guidance, 84 Fed. Reg. at 56.

Step 2A(i): Does the Claim Recite a Judicial Exception?
The Examiner determined that claim 27 is “directed to an abstract idea
of using a mathematical relationship/formula in determining the salary gap
benefits associated with an insurance product.” Ans. 2. The Examiner in
particular finds
Claim 27 recites the steps of providing, receiving input data,
generating output data comprised of benefits criteria and costs,
determining a number of persons returning to work during
duration (d) who qualify for salary gap benefits as per the
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benefits associated with an insurance product which protects an
insured against a salary gap differential caused by a reduction in
compensation, the reduction in compensation arising from the
insured being involuntarily dismissed from an initial
employment position having a reduced compensation amount
that is less than the initial compensation amount and where the
benefits criteria is a number of monthly payments received
through maximum benefit period (z) by a salary gap qualified
person and wherein SGPd:z is a number of monthly payments
received calculated according to a mathematical
relationships/formulas. In other words, the claim makes use of a
mathematical relationship/formula in determining the salary gap
benefits with an insurance product which can be performed
mentally and is interpreted as a certain method of organizing
human activity.
Ans. 3. We agree with the Examiner that the claim recites a
mathematical relationship but we further find that the mathematical
relationship (formula) is applied to a fundamental economic practice.
The mathematical relationship and the fundamental economic practice
constitute abstract ideas.
Claim 27, as drafted, is a system that, under its broadest reasonable
interpretation, is a fundamental economic practice similar to risk the
intermediated settlement in Alice (see Alice, 573 U.S. at 218–19), verifying
credit card transactions in CyberSource Corp. v. Retail Decisions, Inc., 654
F.3d 1366, 1370 (Fed. Cir. 2011), and guaranteeing transactions in
buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1354 (Fed. Cir. 2014). The
Specification describes an “insurance product for protecting a wage earner
against a reduction in compensation.” Spec. ¶ 8. As such, claim 27 recites a
fundamental economic practice—i.e., a certain method of organizing human
activity—which is an abstract idea. See Revised Guidance, 84 Fed. Reg. at
54–55.
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Claim 27 recites, in pertinent part:
determining by the computer SGQd which is the number of persons returning
to work during duration (d) who qualify for salary gap benefits:
SGQd = RWd x W%
where
RWd is number returning to work during duration (d);
d is duration in months from a qualifying event
referred to as an incidence date;
W% is expected % returning to work whose
"replacement
employment salary" (RES) are no greater than XX% of their "original
employment salary" (OES); and
XX% is a percentage in a range of 0 to 100%,
wherein the insurance product protects an insured against a salary gap
differential caused by a reduction in compensation, the reduction in
compensation arising from the insured being involuntarily dismissed
from an initial employment position having an initial compensation
and commencing employment position having a reduced
compensation amount that is less than the initial compensation
amount; and
wherein the benefits criteria is a number of monthly payments
received through maximum benefit period (z) by a salary gap
qualified person and wherein SGPd:z is a
number of monthly payments received calculated according to
equation:

SGPd:z= SGQd x SGQPd:z (ford > waiting period)

where

SGQd = RWd x W%;
RWd = IUd - IUd-1;
IUd = IU0 x SGAMCFd;
IU0 = number of involuntarily unemployed at the incidence
date;
SGAMCFd = Adjusted Monthly Continuance Factor= a ratio of
number of persons remaining involuntarily unemployed at end of
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duration (d) to number of persons involuntarily unemployed at the
incidence date;
d = duration in months from the incidence date;
d-1 = previous month;
W% = expected % returning to work whose "replacement
employment salary" (RES) are no greater than XX% of their "original
employment salary" (OES); and
XX% = is a percentage in a range of 0 to 100%.

Claims App’x. 22.
Under the broadest reasonable interpretation standard,2 we conclude
that the above limitations recite steps in a fundamental economic practice
using a mathematical relationship to determine the salary gap benefits
associated with an insurance product. See Spec. ¶¶ 168–224.
Thus, under Step 2A(i), we agree with the Examiner that claim 27
recites a judicial exception. Specifically, we conclude claim 27, as a whole,
under our Revised Guidance, recites a fundamental economic practice, i.e., a
certain method of organizing human activity that uses a mathematical
formula, and thus an abstract idea.
We do not agree with Appellant’s argument that the claims do not
recite an abstract idea because “a computer system comprised of computer

2 During prosecution, claims must be given their broadest reasonable
interpretation when reading claim language in light of the specification as it
would be interpreted by one of ordinary skill in the art. In re Am. Acad. of
Sci. Tech. Ctr., 367 F.3d 1359, 1364 (Fed. Cir. 2004). Under this standard,
we interpret claim terms using “the broadest reasonable meaning of the
words in their ordinary usage as they would be understood by one of
ordinary skill in the art, taking into account whatever enlightenment by way
of definitions or otherwise that may be afforded by the written description
contained in the applicant’s specification.” In re Morris, 127 F.3d 1048,
1054 (Fed. Cir. 1997).
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hardware and software for calculating insurance metrics for a specific
insurance offering using complex algorithms which would not be possible to
process using a mere mental process due to their complexity.” See Appeal
Br. 7–8.
The Supreme Court has held that performing mathematical
calculations using a pencil and paper, even if the mathematical formula is
primarily useful for computerized calculations, “cannot support a patent
unless there is some other inventive concept in its application.” Flook, 437
U.S.584 at 586, 594 (1978). Furthermore, the fact that claim 27’s method
provides a system that comprises computer elements that perform
mathematical calculations does not change our analysis. See OIP Techs.,
Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1363 (Fed. Cir. 2015) (“[R]elying
on a computer to perform routine tasks more quickly or more accurately is
insufficient to render a claim patent eligible.”).
Accordingly, under Step 2A(i), we agree with the Examiner that
representative claim 27 recites a judicial exception.

Step 2A(ii): Judicial Exception Integrated into a Practical Application?
If the claims recite a patent-ineligible concept, as we conclude above,
we proceed to the “practical application” Step 2A(ii) in which we determine
whether the recited judicial exception is integrated into a practical
application of that exception by: (a) identifying whether there are any
additional elements recited in the claim beyond the judicial exception(s); and
(b) evaluating those additional elements individually and in combination to
determine whether they integrate the exception into a practical application.
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Claim 27 recites an abstract idea as identified in Step 2A(i), supra, and
none of the additional elements integrates the judicial exception of a
fundamental economic practice into a practical application. Here, the
additional elements, which are not part of the abstract idea, are the recited
elements of “computer having a memory,” “a computer processor unit,” and
a “computation system operable by the computer processor unit,”
performing each of the functions that comprise the abstract idea.
We note that Appellant’s Specification describes the computer as a
“mini-computer or a personal computer.” See Spec. ¶ 26. Thus, claim 27 as
a whole merely uses instructions and a generic processor to implement the
abstract idea on a computer or, alternatively, merely uses a computer as a
tool to perform the abstract idea.
Appellant argues the claimed invention is similar to McRO citing
“limited rules in a process specifically designed to achieve an improved
technological result in conventional industry practice.”3 Appeal Br. 12–13.
We are not persuaded by Appellant’s arguments. In McRO, the
claims were not held to be abstract because they recited a “specific . . .
improvement in computer animation” using “unconventional rules that
relate[d] sub sequences of phonemes, timings, and morph weight sets.”
McRO, 837 F.3d at 1302–03, 1307–08, 1314–15. In McRO, “the
incorporation of the claimed rules, not the use of the computer,” improved
an existing technological process. Id. at 1314. The claims in McRO,
however, recited a “specific . . . improvement in computer animation” using
“unconventional rules that relate[d] sub sequences of phonemes, timings,

3 Referring to McRO, Inc. v. Bandai Namco Games America Inc., 837 F.3d
1299 (Fed. Cir. 2016).
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and morph weight sets.” McRO, 837 F.3d at 1302–03, 1307–08, 1314–15
(emphasis added). Appellant does not, however, identify how claim 27
improves an existing technological process. See Alice, 134 S. Ct. at 2358
(explaining that “the claims in Diehr were patent eligible because they
improved an existing technological process”). Rather, claim 27 concerns an
“insurance product.” See claim 27.
Furthermore, we note that any increase in processing speed in the
claimed method (as compared to without using computers) comes from the
capabilities of the generic computer components, and not the recited process
itself. See FairWarning IP, LLC v. Iatric Sys., Inc., 839 F.3d 1089, 1095
(Fed. Cir. 2016) (citing Bancorp Servs., LLC v. Sun Life Assurance Co., 687
F.3d 1266, 1278 (Fed. Cir. 2012) (“[T]he fact that the required calculations
could be performed more efficiently via a computer does not materially alter
the patent eligibility of the claimed subject matter.”)); see also Intellectual
Ventures I LLC v. Erie Indemnity Co., 711 F. App’x 1012, 1017 (Fed. Cir.
2017) (unpublished) (“Though the claims purport to accelerate the process
of finding errant files and to reduce error, we have held that speed and
accuracy increases stemming from the ordinary capabilities of a general-
purpose computer ‘do[ ] not materially alter the patent eligibility of the
claimed subject matter.’”).
Therefore, we conclude the abstract idea is not integrated into a
practical application, and thus the claim is directed to the judicial exception.

Step 2B – “Inventive Concept” or “Significantly More”
If the claims are directed to a patent-ineligible concept, as we
conclude above, we proceed to the “inventive concept” step. For Step 2B we
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must “look with more specificity at what the claim elements add, in order to
determine ‘whether they identify an “inventive concept” in the application of
the ineligible subject matter’ to which the claim is directed.” Affinity Labs
of Texas, LLC v. DIRECTV, LLC, 838 F.3d 1253, 1258 (Fed. Cir. 2016)
(quoting Elec. Power Grp., 830 F.3d at 1353).
In applying step two of the Alice analysis, our reviewing court guides
we must “determine whether the claims do significantly more than simply
describe [the] abstract method” and thus transform the abstract idea into
patentable subject matter. Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709,
715 (Fed. Cir. 2014). We look to see whether there are any “additional
features” in the claims that constitute an “inventive concept,” thereby
rendering the claims eligible for patenting even if they are directed to an
abstract idea. Alice, 573 U.S. at 221. Those “additional features” must be
more than “well-understood, routine, conventional activity.” Mayo, 566
U.S. at 79.
Evaluating representative claim 27 under Step 2B, we conclude it
lacks an inventive concept that transforms the abstract idea of managing a
target outcome fund into a patent-eligible application of that abstract idea.
The conventional nature of the “computer” is evidenced by the
generic “computer” as sated above and a computer software program, stored
in memory and executed by the processor(s) of the computer, to perform the
disclosed functions. See Spec. ¶ 26.
We conclude the claims fail the Step 2B analysis because claim 27, in
essence, merely recites a method that provides a generic computer and
trading system along with no more than mere instructions to implement the
identified abstract idea using the computer-based elements.
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Therefore, because the claims fail under both the Step 2A and Step 2B
analyses, we sustain the Examiner’s § 101 rejection of claim 27 and claims
2, 7–19, 21–39, 44–56, 58–63, 65–68, and 69.

DECISION
We affirm the Examiner’s decision rejecting claims 1–2, 7–19, 21–39,
44–56, 58–63, 65–68, and 69.
No time period for taking any subsequent action in connection with
this appeal may be extended under 37 C.F.R. § 1.136(a)(1)(iv). See
37 C.F.R. § 41.50(f).
AFFIRMED