Yates, James M.

Patent Trials and Appeals Board

Mar 13, 2020

10591416 - (D) (P.T.A.B. Mar. 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.
10/591,416 09/01/2006 James M. Yates YATJ 8888W1 2529
1688 7590 03/13/2020
Sandberg Phoenix & von Gontard, PC
120 S. Central Ave.
Suite 1600
St. Louis, MO 63105
EXAMINER
NELSON, FREDA ANN
ART UNIT PAPER NUMBER
3628
NOTIFICATION DATE DELIVERY MODE
03/13/2020 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):
USPTO@sandbergphoenix.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
____________________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________________

Ex parte JAMES M. YATES
____________________

Appeal 2018-006613
Application 10/591,416
Technology Center 3600
____________________

Before JOSEPH L. DIXON, JUSTIN BUSCH, and
JAMES W. DEJMEK, Administrative Patent Judges.

DEJMEK, Administrative Patent Judge.

DECISION ON APPEAL
Appellant1 appeals under 35 U.S.C. § 134(a) from a Final Rejection of
claims 38–56 and 60–67. Appellant has canceled claims 1–37 and 57–59.
See Amdt 6–14 (filed February 10, 2016). We have jurisdiction over the
remaining pending claims under 35 U.S.C. § 6(b). An oral hearing was
scheduled for February 25, 2020, but the hearing was waived. Therefore, we
decide the appeal on the briefs.
We affirm.

1 Throughout this Decision, we use the word “Appellant” to refer to
“applicant” as defined in 37 C.F.R. § 1.42 (2016). Appellant identifies the
inventor, James M. Yates, as the real party in interest. Appeal Br. 1.
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STATEMENT OF THE CASE
Introduction
Appellant’s disclosed and claimed invention generally relates to “the
commercial exchange of digital media files in a secure manner ensuring
authorized transactions and compensation payments to owners and
authorized sellers.” Spec. 1:9–13. In a disclosed embodiment, Appellant
describes an exchange service—a Digital Copyright Exchange (DCE)—to
serve as a structure to facilitate the legal transfer of assets and money.
Spec. 5:19–6:2. According to the Specification, the DCE is able to identify
and verify digital media and also ensures the copyright holder (in addition to
the seller) is compensated as part of a transaction. Spec. 12:13–13:2.
Claim 38 is representative of the subject matter on appeal and is
reproduced below:
38. A method for operating a commercial exchange
comprising the steps of:
storing digital masters of items in a central media database
in a non-transitory computer-readable medium, each digital
master being associated with a unique digital master identifier;
storing membership data in a non-transitory computer-
readable medium, the membership data including a unique
member identifier for each member;
maintaining an association between each digital master
identifier and one or more of the unique member identifiers as an
owner of a legal copy of the item, the association giving the
members represented by the unique member identifiers access to
the master file;
receiving, from a first member as an owner of a legal copy
of an item, a request to make the item available on the
commercial exchange;
verifying that the first member legally possesses the item;
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operatively associating the central media database with an
exchange interface structured and operable to execute a
transaction between the first member as a verified legal owner of
the legal copy of the item and a second member as an acquirer of
the legal copy of the item; and
upon occurrence of the transaction, recording in the central
media database a change reflecting a change in rights to the legal
copy of the item by changing access to the master file from the
first member to the second member.

The Examiner’s Rejections2
1. Claims 38–56 and 60–67 stand rejected under 35 U.S.C. § 101
as being directed to patent-ineligible subject matter. Final Act. 3–5.
2. Claims 60–63 stand rejected under pre-AIA 35 U.S.C. § 103(a)
as being unpatentable over Fanning et al. (US 8,180,792 B2; May 15, 2012)
(“Fanning”) and Kreuzer (US 2004/0034601 A1; Feb. 19, 2004). Final
Act. 20–23.

ANALYSIS3
Rejection under pre-AIA 35 U.S.C. § 103(a)
In the Final Office Action, the Examiner rejected claims 38–56 and
60–67 under pre-AIA 35 U.S.C. § 103(a). Final Act. 6–26. On appeal,
Appellant argued the Examiner’s rejections were in error. Appeal Br. 31–

2 The Examiner also rejected claims 38–56 and 64–67 under pre-AIA
35 U.S.C. § 103(a). Final Act. 6–20, 23–26. The Examiner has withdrawn
the rejections under pre-AIA 35 U.S.C. § 103(a) of these claims. Ans. 2.
3 Throughout this Decision, we have considered the Appeal Brief, filed
November 17, 2017 (“Appeal Br.”); the Reply Brief, filed June 12, 2018
(“Reply Br.”); the Examiner’s Answer, mailed April 13, 2018 (“Ans.”); and
the Final Office Action, mailed January 17, 2017 (“Final Act.”), from which
this Appeal is taken.
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78. The Examiner subsequently withdrew the rejections under pre-AIA
35 U.S.C. § 103(a) of claims 38–56 and 64–67, maintaining the rejection of
claims 60–63. Ans. 2; 22–26. In an amendment filed June 12, 2018,
Appellant canceled claims 60–63 “to simplify the issues on appeal.”
Amdt 11. Moreover, in the Reply Brief, Appellant did not reply to the
Examiner’s response regarding the rejection of claims 60–63 under pre-AIA
35 U.S.C. § 103(a) other than to indicate that an amendment cancelling the
claims had been filed. Reply Br. 2.
Because Appellant’s amendment to cancel claims 60–63 has not been
entered into the record by the Examiner, the rejection of these claims is still
before the Board. See Manual of Patent Examining Procedure (MPEP)
§ 1206(I) (9th ed. Rev. 08.2017, Jan. 2018) (“[a]n amendment . . . received
after jurisdiction has passed to the Board should not be considered by the
examiner unless remanded for that purpose”).
In view of Appellant’s filed amendment canceling still-pending claims
60–63, we summarily affirm the rejection of claims 60–63 under pre-AIA
35 U.S.C. § 103(a).

Rejection under 35 U.S.C. § 101
Appellant disputes the Examiner’s conclusion that the pending claims
are directed to patent-ineligible subject matter. Appeal Br. 16–31; Reply
Br. 2–7. In particular, Appellant argues the claims are directed to a problem
specific to digital media files and provide a solution “specific to computer
technology.” Appeal Br. 18 (citing DDR Holdings, LLC v. Hotels.com, L.P.,
773 F.3d 1245, 1257 (Fed. Cir. 2014)). Appellant argues the claimed
invention solves issues related to piracy/counterfeiting and the spread of
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corrupted or virus-infected files and, therefore, represents an improvement
over conventional practices. Appeal Br. 20. Moreover, Appellant asserts
the claims recite significantly more than the alleged abstract idea. Appeal
Br. 17–31.
The Supreme Court’s two-step framework guides our analysis of
patent eligibility under 35 U.S.C. § 101. Alice Corp. v. CLS Bank Int’l, 573
U.S. 208, 217 (2014). In addition, the Office has published revised guidance
for evaluating subject matter eligibility under 35 U.S.C. § 101, specifically
with respect to applying the Alice framework. USPTO, 2019 Revised Patent
Subject Matter Eligibility Guidance, 84 Fed. Reg. 50 (Jan. 7, 2019) (“Office
Guidance”). If a claim falls within one of the statutory categories of patent
eligibility (i.e., a process, machine, manufacture, or composition of matter)
then the first inquiry is whether the claim is directed to one of the judicially
recognized exceptions (i.e., a law of nature, a natural phenomenon, or an
abstract idea). Alice, 573 U.S. at 217. As part of this inquiry, we must “look
at the ‘focus of the claimed advance over the prior art’ to determine if the
claim’s ‘character as a whole’ is directed to excluded subject matter.”
Affinity Labs of Tex., LLC v. DIRECTV, LLC, 838 F.3d 1253, 1257–58 (Fed.
Cir. 2016). Per Office Guidance, this first inquiry has two prongs of
analysis (i) does the claim recite a judicial exception (e.g., an abstract idea),
and (ii) if so, is the judicial exception integrated into a practical application.
84 Fed. Reg. at 54. Under the Office Guidance, if the judicial exception is
integrated into a practical application, see infra, the claim passes muster
under § 101. 84 Fed. Reg. at 54–55. If the claim is directed to a judicial
exception (i.e., recites a judicial exception and does not integrate the
exception into a practical application), the next step is to determine whether
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any element, or combination of elements, amounts to significantly more than
the judicial exception. Alice, 573 U.S. at 217; 84 Fed. Reg. at 56.
Here, we conclude Appellant’s claims recite an abstract idea. More
specifically, Appellant’s claims are generally directed to transferring digital
files via a commercial exchange from an authorized seller to a buyer. This is
consistent with how Appellant describes the claimed invention. See
Spec. 1:9–13, 5:19–21; Appeal Br. 17 (stating the claims are “directed to
methods and systems for transferring used, previously legally acquired,
digital files from a seller to a buyer” (emphasis omitted)). Transferring
digital files via a commercial exchange from an authorized seller to a buyer
is a commercial interaction (sales activity) and is a certain method of
organizing human activity—an abstract idea. See 84 Fed. Reg. at 52; see
also Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 714 (Fed. Cir. 2014)
(concluding the claims were directed to using advertising as an exchange or
currency to access media content and, therefore, to an abstract idea);
Smartflash LLC v. Apple Inc., 680 F. App’x 977, 980–83 (Fed. Cir. 2017)
(concluding claims describing providing multimedia content in response to a
selection of available multimedia content and payment validation for the
content were directed to “conditioning and controlling access to data based
on payment” and fell generally within the certain methods of organizing
human activity category).
Claim 38 is reproduced below and includes the following limitations
that recite transferring digital files via a commercial exchange from an
authorized seller to a buyer, emphasized in italics:
38. A method for operating a commercial exchange
comprising the steps of:
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storing digital masters of items in a central media database
in a non-transitory computer-readable medium, each digital
master being associated with a unique digital master identifier;
storing membership data in a non-transitory computer-
readable medium, the membership data including a unique
member identifier for each member;
maintaining an association between each digital master
identifier and one or more of the unique member identifiers as an
owner of a legal copy of the item, the association giving the
members represented by the unique member identifiers access to
the master file;
receiving, from a first member as an owner of a legal copy
of an item, a request to make the item available on the
commercial exchange;
verifying that the first member legally possesses the item;
operatively associating the central media database with an
exchange interface structured and operable to execute a
transaction between the first member as a verified legal owner
of the legal copy of the item and a second member as an acquirer
of the legal copy of the item; and
upon occurrence of the transaction, recording in the central
media database a change reflecting a change in rights to the legal
copy of the item by changing access to the master file from the
first member to the second member.
More particularly, transferring digital files via a commercial exchange
from an authorized seller to a buyer comprises (i) an owner of the digital file
making the file available for transfer on a commercial exchange (i.e., the
claimed step of receiving a request from an owner of a legal copy to make
the digital item available on the commercial exchange); (ii) authenticating
that the owner possess a legal copy of the item (i.e., the claimed step of
verifying the member (i.e., owner or seller) legally possess the item); and
(iii) executing the transfer of the digital item from the owner to a buyer (i.e.,
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the claimed step of executing a transaction between a first and second
member).
Because the claim recites a judicial exception, we next determine
whether the claim integrates the judicial exception into a practical
application. 84 Fed. Reg. at 54. 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 recognized practical application. 84
Fed. Reg. at 54–55 (emphasis added); see also Manual of Patent Examining
Procedure (“MPEP”) § 2106.05(a)–(c), (e)–(h) (9th ed. Rev. 08.2017,
Jan. 2018).
Here, we find the additional limitation(s) do not integrate the judicial
exception into a practical application. More particularly, the claims do not
recite (i) an improvement to the functionality of a computer or other
technology or technical field (see MPEP § 2106.05(a)); (ii) 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 84 Fed. Reg. at 55.
Rather, the steps of storing digital masters of the digital items in a
database, storing membership data, maintaining an association between each
digital master and members that own a legal copy of the item, and updating
the association to reflect a change in ownership after the transaction are the
type of extra-solution activities (i.e., in addition to the judicial exception) the
courts have determined insufficient to transform judicially excepted subject
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matter into a patent-eligible application. See MPEP § 2106.05(g); see also
Bilski v. Kappos, 561 U.S. 593, 612 (2010) (holding the use of well-known
techniques to establish inputs to the abstract idea as extra-solution activity
that fails to make the underlying concept patent eligible); Elec. Power Grp.,
LLC v. Alstom S.A., 830 F.3d 1350, 1355 (Fed. Cir. 2016) (explaining that
“selecting information, by content or source, for collection, analysis, and
display does nothing significant to differentiate a process from ordinary
mental processes”); Elec. Power, 830 F.3d at 1354 (recognizing “that merely
presenting the results of abstract processes of collecting and analyzing
information, without more (such as identifying a particular tool for
presentation), is abstract as an ancillary part of such collection and
analysis”); Ultramercial, 772 F.3d at 716 (determining “the steps of
consulting and updating an activity log represent insignificant data-gathering
steps” (internal quotation marks omitted)); Bancorp Servs., L.L.C. v. Sun
Life Assurance Co. of Can., 771 F.Supp.2d 1054, 1066 (E.D. Mo. 2011)
aff’d, 687 F.3d 1266 (Fed. Cir. 2012) (explaining that “storing, retrieving,
and providing data . . . are inconsequential data gathering and insignificant
post solution activity”).
Moreover, contrary to Appellant’s assertions (see, e.g., Appeal
Br. 19–31), limitations recited in the dependent claims also fail to transform
the abstract idea into a patent-eligible application. Rather, the additional
limitations merely refine the abstract idea itself (e.g., defining the transaction
to include a payment from the second member to the first member, as in
claims 39, 48, 54, and 65; specifying the version of the file to be transferred
(i.e., a digital master as opposed to a copy) as in claims 40 and 49; refining
the verification step, as in claims 44, 46, and 47; maintaining the digital item
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in a specified location (e.g., a digital storage locker) as in claims 53, 61–63,
66, and 67) or append extra-solution activities to the abstract idea (e.g.,
requiring the seller to provide a physical copy of the digital item, as in
claims 41 and 52; or directing portions of the payment, as in claims 42, 43,
50, and 51). As discussed above, these limitations are insufficient to
transform judicially excepted subject matter into a patent-eligible
application.
In addition, we disagree that the claimed invention is a technological
improvement to the practice of transferring a digital file from a seller to a
buyer. Appellant suggests the claims overcome issues of piracy, prevent the
creation of illegal copies of the file in the transfer process, and stop the
spread of corrupted or virus-infected files. Appeal Br. 20. As Appellant
describes in the Specification, it was known to purchase legal copies of
digital files from, for example, iTunes®. See Spec. 2:19–27. Purchasing
digital media from a trusted source (such as iTunes®) would also overcome
issues of piracy, prevent the creation of illegal copies of the file in the
transfer process, and stop the spread of corrupted or virus-infected files.
Moreover, any purported improvement however, relates to the abstract idea,
and does not improve a computer, technology, or a technical field. See
McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299, 1314 (Fed.
Cir. 2016) (“We . . . look to whether the claims in these patents focus on a
specific means or method that improves the relevant technology or are
instead directed to a result or effect that itself is the abstract idea and merely
invoke generic processes and machinery.”) (citing Enfish, LLC v. Microsoft
Corp., 822 F.3d 1327, 1336 (Fed. Cir. 2016)).
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Also, contrary to Appellant’s assertions, the claims are not rooted in
computer technology, nor do they overcome a problem specifically arising in
the field of digital media files. See Appeal Br. 18. As explained in OIP
Technologies, Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1363 (Fed. Cir.
2015), “relying on a computer to perform routine tasks more quickly or more
accurately is insufficient to render a claim patent eligible.” See also Alice,
573 U.S. at 224 (“use of a computer to create electronic records, track
multiple transactions, and issue simultaneous instructions” is not an
inventive concept); Bancorp Servs., L.L.C. v. Sun Life Assurance Co. of
Can. (U.S.), 687 F.3d 1266, 1278 (Fed. Cir. 2012) (a computer “employed
only for its most basic function . . . does not impose meaningful limits on the
scope of those claims”).
By contrast, in DDR Holdings, the Federal Circuit determined “the
claimed solution amount[ed] to an inventive concept for resolving [a]
particular Internet-centric problem,” i.e., a challenge unique to the Internet.
DDR Holdings, 773 F.3d at 1257–59; see Synopsys, Inc. v. Mentor Graphics
Corp., 839 F.3d 1138, 1151 (Fed. Cir. 2016) (noting that “[i]n DDR
Holdings, we held that claims ‘directed to systems and methods of
generating a composite web page that combines certain visual elements of a
“host” website with content of a third-party merchant’ contained the
requisite inventive concept”). The Federal Circuit explained that the patent-
eligible claims specified “how interactions with the Internet are manipulated
to yield a desired result . . . that overrides the routine and conventional
sequence of events ordinarily triggered by the click of a hyperlink.” DDR
Holdings, 773 F.3d at 1258. The court reasoned that those claims recited a
technological solution “necessarily rooted in computer technology” that
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addressed a “problem specifically arising in the realm of computer
networks.” DDR Holdings, 773 F.3d at 1257. Here, unlike the claims at
issue in DDR Holdings, Appellant’s claims rely on a “computer network
[(i.e., a commercial exchange)] operating in its normal, expected manner.”
DDR Holdings, 773 F.3d at 1258–59.
For at least the foregoing reasons, the claims do not integrate the
judicial exception into a practical application.
Because we determine the claims are directed to an abstract idea or
combination of abstract ideas, we analyze the claims under step two of Alice
to determine if there are additional limitations that individually, or as an
ordered combination, ensure the claims amount to “significantly more” than
the abstract idea. Alice, 573 U.S. at 217–18 (citing Mayo Collaborative
Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 77–79 (2012)). As stated in
the Office Guidance, many of the considerations to determine whether the
claims amount to “significantly more” under step two of the Alice
framework are already considered as part of determining whether the
judicial exception has been integrated into a practical application. 84 Fed.
Reg. at 56. Thus, at this point of our analysis, we determine if the claims
add a specific limitation, or combination of limitations, that is not well-
understood, routine, conventional activity in the field, or simply appends
well-understood, routine, conventional activities at a high level of generality.
84 Fed. Reg. at 56.
Here, Appellant’s claims fail to recite specific limitations (alone or
when considered as an ordered combination) that are not well-understood,
routine, and conventional. Rather, the claims merely recite generic
computer components (e.g., a system comprising a processor and storage
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media) performing generic computing functions that are well-understood,
routine, and conventional (e.g., storing and organizing data in a database,
receiving and transmitting information (e.g., requests and payment
information)). See Mort. Grader, Inc. v. First Choice Loan Servs. Inc., 811
F.3d 1314, 1324–25 (Fed. Cir. 2016) (generic computer components, such as
an “interface,” “network,” and “database,” fail to satisfy the inventive
concept requirement); Alice, 573 U.S. at 226 (“Nearly every computer will
include a ‘communications controller’ and a ‘data storage unit’ capable of
performing the basic calculation, storage, and transmission functions
required by the method claims.”); Intellectual Ventures I LLC v. Erie Indem.
Co., 850 F.3d 1315, 1329 (Fed. Cir. 2017) (explaining that receiving a
request to execute a database search and delivering records are routine
computer functions that can only be described as generic or conventional);
see also Final Act. 5; Ans. 6. In addition, Appellant states that the
“operation of the present invention is an extension of the use of available
technology.” Spec. 8:10–12; see also Spec. 17:13–29 (describing, at a high
level, generic computer processes and apparatuses for practicing the claimed
invention).
Further, to the extent Appellant is asserting that the Examiner’s
withdrawal of the rejections under 35 U.S.C. § 103(a) suggests the instant
claims do not recite well-understood, routine, or conventional activities, or
otherwise recite an inventive concept (see, e.g., Reply Br. 4–5), we are not
persuaded. Subject-matter eligibility under 35 U.S.C. § 101 is a requirement
separate from other patentability inquiries. See Mayo, 566 U.S. at 90
(recognizing that the § 101 inquiry and other patentability inquiries “might
sometimes overlap,” but that “shift[ing] the patent-eligibility inquiry entirely
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to these [other] sections risks creating significantly greater legal uncertainty,
while assuming that those sections can do work that they are not equipped to
do”); see also Diamond v. Diehr, 450 U.S. 175, 188–89 (1981) (“[t]he
‘novelty’ of any element or steps in a process, or even of the process itself, is
of no relevance in determining whether the subject matter of a claim falls
within the § 101 categories of possibly patentable subject matter”); Ass’n for
Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 591 (2013)
(“Groundbreaking, innovative, or even brilliant discovery does not by itself
satisfy the § 101 inquiry.”); Two-Way Media Ltd. v. Comcast Cable
Commc’ns, LLC, 874 F.3d 1329, 1340 (Fed. Cir. 2017) (“[e]ligibility and
novelty are separate inquiries”).
For the reasons discussed supra, we are unpersuaded of Examiner
error. Accordingly, we sustain the Examiner’s rejection of claims 38–56 and
60–67 as patent ineligible under 35 U.S.C. § 101.

CONCLUSION
We affirm the Examiner’s decision rejecting claims 38–56 and 60–67
under 35 U.S.C. § 101.
We summarily affirm the Examiner’s decision rejecting claims 60–63
under pre-AIA 35 U.S.C. § 103(a).

DECISION SUMMARY
Claims
Rejected
35 U.S.C. § Reference(s)/Basis Affirmed Reversed
38–56, 60–
67
101 Eligibility 38–56,
60–67

60–63 103(a) Fanning, Kreuzer 60–63
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Claims
Rejected
35 U.S.C. § Reference(s)/Basis Affirmed Reversed
Overall
Outcome
38–56,
60–67

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.
§ 41.50(f).

AFFIRMED