Ex Parte Morgenstern et al

Patent Trial and Appeal Board

Mar 12, 2019

13954948 (P.T.A.B. Mar. 12, 2019)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
13/954,948 07/30/2013
87851 7590
Facebook/Fenwick
Silicon Valley Center
801 California Street
Mountain View, CA 94041
03/14/2019
FIRST NAMED INVENTOR
Jared S. Morgenstern
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
ATTORNEY DOCKET NO. CONFIRMATION NO.
26295-24097 7597
EXAMINER
IWARERE, OLUSEYE
ART UNIT PAPER NUMBER
3687
NOTIFICATION DATE DELIVERY MODE
03/14/2019 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):
ptoc@fenwick.com
fwfacebookpatents@fenwick.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte JARED S. MORGENSTERN, GEORGE LEE, GUY ROM, and
DANIEL ALAN LEVY
Appeal2018-000481
Application 13/954,948
Technology Center 3600
Before ST. JOHN COURTENAY III, WSTIN BUSCH, and
JASON M. REPKO, Administrative Patent Judges.
REPKO, Administrative Patent Judge.
DECISION ON APPEAL
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Application 13/954,948
STATEMENT OF THE CASE
Appellants 1 appeal under 35 U.S.C. § 134(a) from the Examiner's
rejection of claims 1-9, 11-17, 19, and 20. See App. Br. 1. 2 Claims 10, 18,
and 21 are canceled. Id. at 19-20, 22. We have jurisdiction under 35 U.S.C.
§ 6(b).
We affirm.
THE INVENTION
Appellants' invention allows for targeting offers to virtual-economy
participants using the values of the participant's credits. Spec. ,r,r 66-69.
Specifically, the invention uses credits with two types of values: internal
and external. Id. ,r 19. The original rate for creating the credits sets the
credit's internal value. Id. The credit's exchange rate for real currency sets
the external value. Id.
Seeding credits refers to giving credits to users at no cost to the user.
Id. ,r 56. By using seeded credits, users can try an online game for free,
which can be a way to promote the game. Id. Credits with unique internal
and external values allows credit seeding. Id. For example, setting the
internal value to zero allows credits to be seeded to the user for free.
Id. ,r 20. Some embodiments target offers to participants holding credits
with certain assigned values. Id. ,r 67. For instance, a central manager can
1 According to Appellants, the real party in interest is Facebook Inc. of
Menlo Park, California. App. Br. 2.
2 Throughout this opinion, we refer to the Final Rejection ("Final Act.")
mailed August 3, 2016; the Appeal Brief ("App. Br.") filed May 1, 2017; the
Examiner's Answer ("Ans.") mailed August 16, 2017; and the Reply Brief
("Reply Br.") filed October 17, 2017.
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target offers to users with seeded credits to remove those credits from the
virtual currency system or to encourage spending. Id.
Claims 1, 9, and 19 are independent. Claim 1 is reproduced below:
1. A computer-implemented method comprising:
storing an account for each of a plurality of participants of a
virtual economy;
receiving a request to create new credits of a virtual currency;
recording a plurality of created credits and a set of attributes
associated with the created credits in a data store, the
created credits being associated with an identifier and the
set of attributes including:
an internal value of the created credits, the internal value
being an amount of real currency to be received
from a participant to be assigned the created credits,
and
an external value of the created credits, the external value
being an amount of real currency to be provided to
a vendor for redeeming the created credits, the
external value being greater than the internal value;;
[sic]
recording, in the data store, an assignment of the created credits
to an account of a participant in exchange for receiving
real currency equal to the internal value of the created
credits from the participant, wherein the assignment
records the identifier of the created credits in the account
of the participant;
tracking the created credits as the created credits are exchanged
among participants in the virtual economy;
querying the data store, using the identifier for the created
credits, for accounts of one or more participants assigned
to one or more of the created credits; and
targeting an offer to the one or more participants to allow the one
or more participants to spend the created credits on the
offer.
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App. Br. 16-17, Claims Appendix.
THE REJECTION
Claims 1-9, 11-17, 19, and 20 stand rejected under 35 U.S.C. § 101
as directed to patent-ineligible subject matter. Final Act. 2-5.
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 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. Kappas, 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 );
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mathematical formulas (Parker v. Flook, 437 U.S. 584, 594--95 (1978)); and
mental processes (Gottschalkv. Benson, 409 U.S. 63, 69 (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 water-proof cloth, vulcanizing India
rubber, smelting ores" (id. at 183 n.7 (quoting Corning v. Burden, 56 U.S.
(15 How.) 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 176; 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. ( 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 tum 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-
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eligible application." Alice, 573 U.S. at 221. "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 PTO recently published revised guidance on the application of
§ 101. See 2019 Revised Patent Subject Matter Eligibility Guidance, 84
Fed. Reg. 50 (USPTO Jan. 7, 2019) ("Guidance"). Under that 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 activities such as a fundamental economic practice, or mental
processes); 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)).
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, 84 Fed. Reg. at 56.
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ANALYSIS
The Examiner's Rejection
The Examiner rejects representative3 claim 1 under 35 U.S.C. § 101
because the claim is directed to the abstract ideas of currency exchanging
and accounting and the claim does not include additional elements that
amount to significantly more than the judicial exception itself. Final Act. 2-
4. For the reasons discussed below, we are not persuaded that the Examiner
erred.
The Judicial Exception
Viewing the Examiner's rejection through the lens of the Office's
recent guidance, we first consider whether the claim recites a judicial
exception before proceeding to determine whether the claim considered as a
whole is directed to that exception.
Here, claim 1 recites the business practice of currency exchanging.
Appellants use the term "credit" to mean "a unit of virtual currency used in
the virtual currency system." Spec. ,r 18. In claim 1, the limitations to
currency exchanging include (1) assigning credits "in exchange for receiving
real currency equal to the internal value of the created credits from the
participant," (2) "the created credits are exchanged among participants in the
virtual economy," and (3) allowing the participants to "spend" the credits.
Claim 1 also recites limitations related to keeping records about how
the participants exchange the currency. We understand the Examiner to
refer to this aspect as "accounting." See Final Act. 2-3. In particular, the
3 Appellants argue claims 1-9, 11-17, 19, and 20 as a group.
See App. Br. 6--15. We select independent claim 1 as representative of
claims 1-9, 11-17, 19, and 20. See 37 C.F.R. § 41.37(c)(l)(iv).
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recited method stores or records (1) "an account for each of a plurality of
participants of a virtual economy," (2) "a plurality of created credits and a
set of attributes associated with the created credits," (3) the assignment of
credits to the account, and ( 4) tracked credits.
In this way, claim 1 recites the business practices of currency
exchanging and accounting.
Exchanging currency is a commercial interaction and a fundamental
economic practice. Because the claimed method creates new credits and
maintains records about how the participants exchange the credits, claim 1
recites a concept similar to other economic principles and practices held to
be abstract ideas. See Alice, 573 U.S. at 219-20 (intermediated settlement);
Bilski, 561 U.S. at 611 (hedging). In view of the Office's recent guidance,
claim 1 recites subject matter that falls within the group covering certain
methods of organizing human activity. See Guidance, 84 Fed. Reg. at 52
( explaining that certain methods of organizing human activity includes
"commercial or legal interactions," and "fundamental economic principles or
practices"). For these reasons, claim 1 recites an abstract idea.
Appellants argue that claim 1 is directed to a narrower concept than
virtual-currency accounting and exchanging. App. Br. 6. According to
Appellants, currencies do not conventionally have two values. Id. at 9.
Appellants argue that this feature is not common. Id.; see also id. at 14--15.
For example, Appellants argue that recording the internal and external
values is not inherent to currency exchanging and tracking. Id. at 9. In
Appellants' view, there are no "brick-and-mortar equivalents to storing
different exchange rate values for credits on an individual basis, and
therefore the improvements to virtual economies are technological
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improvements." Id. at 11. Appellants argue that the "U.S. dollar can be
used to exchange for the amount of Chinese Yuan, no matter which one
dollar bill one uses." Reply Br. 5. Appellants argue that, by contrast, the
recited credits have an external and internal value on a credit-by-credit basis.
Id.
The values are a feature of the recited currency system. Essentially,
Appellants' argument is that the claimed currency system has features not
found in existing ones-i.e., it is a new currency system. Id. at 5---6. But "a
claim for a new abstract idea is still an abstract idea." Synopsys, Inc. v.
Mentor Graphics Corp., 839 F.3d 1138, 1151 (Fed. Cir. 2016); see also
Intellectual Ventures I LLCv. Symantec Corp., 838 F.3d 1307, 1321 (Fed.
Cir. 2016) ("A narrow claim directed to an abstract idea, however, is not
necessarily patent-eligible .... "). So narrowing the abstract idea by using
the recited internal and external values does not render the claim any less
abstract.
Thus, claim 1 recites the abstract ideas of currency exchanging and
accounting, which are fundamental economic practices.
Integration into a Practical Application
Claim 1 recites features in addition to the abstract ideas of currency
exchanging and accounting. Namely, claim 1 recites (1) recording and
retrieving information about the participants and the credits in a data store in
a virtual environment and (2) targeting offers to customers. As we discuss
below, these additional elements do not integrate the judicial exception into
a practical application, and thus, claim 1 is directed to the abstract idea. See
Guidance, 84 Fed. Reg. at 55 nn.25 & 27-32 (citing MPEP § 2106.05(a}-
( C ), ( e }-(h)).
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Claim 1 does not purport to improve the functioning of the computer
itself or any other technology or technical field. See Alice, 573 U.S. at 210,
cited in MPEP § 2106.05(a). For example, Appellants have not shown that
the recited storing and querying data in a virtual environment improves
operating efficiency or reduces storage costs. Rather, claim 1 purportedly
improves an economy and only uses a computer as a tool.
For instance, Appellants argue that the claims "improve on
conventional virtual economies." App. Br. 10. According to Appellants, the
claims use different internal and external values so the system can target
offers to participants with virtual credits having internal values less than
external values. Id. at 10-11 (citing Spec. ,r,r 3---6, 66---68); see also
Reply Br. 6-7. Appellants argue that the steps encourage economic
participation. App. Br. 10-11.
Yet claim 1 does not recite how the computer meaningfully
contributes to this objective. As Appellants point out, it is the concept of
associating two values with the credits-not the data store or the computer-
that allows the credits to be seeded. Id. at 10-11; see also Spec. ,r,r 20, 57,
66-68. These values are a feature of the currency system, not the computer.
In fact, the Specification explains that the recited data store uses a generic
database to store the values. See Spec. ,r 30. Thus, claim 1 merely adds
generic computer components to support the method's recordkeeping needs,
which is insufficient to integrate the judicial exception into a practical
application. See MPEP § 2106.05(a).
Also, the recited step of targeting offers to potential customers using
the recorded data does not impart a meaningful limitation on the abstract
ideas because it is claimed generically. See OIP Techs., Inc. v. Amazon.com,
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Inc., 788 F.3d 1359, 1363 (Fed. Cir. 2015) (explaining that presenting offers
and gathering statistics amounted to mere data gathering in the claimed
invention), cited in MPEP § 2106.05(g). For instance, claim 1 merely
recites "targeting customers" without claiming the specific technical
limitations for doing so.
Although a computer and data store are recited, claim 1 does not
apply or use the abstract ideas in a "particular machine," as described in
Bilski. See MPEP § 2106.05(b) (citing Bilski, 561 U.S. at 604). For the
currency to exist in a computer environment, there must be some
representation of currency values stored somewhere. Beyond storing data,
the recited data store contributes only nominally or insignificantly to the
recited method. See In re TL! Comms. LLC Patent Litig., 823 F.3d 607,
612-13 (Fed. Cir. 2016) (explaining that a server used in its ordinary
capacity to store images was insufficient to render the claim eligible), cited
in MPEP § 2106.05(±).
Here, the recited data store and virtual economy merely link the use of
the judicial exception to a virtual environment. See Ans. 7. In Appellants'
view, "the claims provide an improvement to virtual economies" and this
"ensures that the claims are not directed to an abstract idea." App. Br. 10.
But following Appellants' argument to its logical conclusion would exalt
form over substance because a competent claim drafter could draft a claim to
almost any fundamental economic practice by reciting that it is performed in
a virtual economy and records its data in a "data store." See Flook, 437 U.S.
at 590 ("The notion that post-solution activity, no matter how conventional
or obvious in itself, can transform an unpatentable principle into a patentable
process exalts form over substance."), cited in MPEP § 2106.05(g), (h). In
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this way, the involvement of the virtual environment is merely a field of use,
which does not integrate the judicial exception into a practical application.
Guidance, 84 Fed. Reg. at 55; see also MPEP § 2106.05 (f), (h).
Thus, claim 1 does not integrate the judicial exception into a practical
application. See Guidance, 84 Fed. Reg. at 54--55 (enumerating the above-
discussed considerations as part of prong two of step 2A).
The Inventive Concept
Claim 1 also lacks an inventive concept.
As to the inventive concept, Appellants argue that if the claims were
directed to currency exchanging, they would be anticipated by or obvious
over the prior art. App. Br. 13. Appellants argue claim 1 's subject matter is
different from a reference about currency exchanging that was listed in the
Information Disclosure Statement and considered by the Examiner.
Id. at 14--15. According to Appellants, the additional limitations ensure that
the claims are not merely reciting currency exchanging, but they provide
significantly more than the abstract idea. Id. at 15; Reply Br. 7-8. We
disagree.
It is not "enough for subject-matter eligibility that claimed techniques
be novel and nonobvious in light of prior art, passing muster under
35 U.S.C. §§ 102 and 103." SAP Am., Inc. v. InvestPic, LLC, 898 F.3d
1161, 1163 (Fed. Cir. 2018); see also Affinity Labs of Tex., LLC v. DirecTV,
LLC, 838 F.3d 1253, 1263 (Fed. Cir. 2016) (explaining that "[e]ven
assuming" that a particular claimed feature was novel, the problem of
abstractness was not avoided). Rather, to determine whether claim 1
provides an inventive concept, we consider the additional elements,
individually and in combination, to determine whether (1) they add a
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specific limitation beyond the judicial exception that is not "well-
understood, routine, conventional" activity in the field or (2) simply append
well-understood, routine, conventional activities previously known to the
industry, specified at a high level of generality, to the judicial exception.
Guidance, 84 Fed. Reg. at. 56.
Under this framework, claim 1 's additional elements simply append
well-understood, routine, conventional activities to the judicial exception.
Specifically, claim 1 's additional elements include recording and retrieving
information about the participants and the credits in a data store in a virtual
environment. Here, the Specification explains that the recited data store
simply uses a generically described database. Spec. ,r 30. Indeed, claim 1
merely uses the data store for recordkeeping, which is well-understood,
routine, and conventional. See Alice, 573 U.S. at 224 ("Using a computer to
create and maintain 'shadow' accounts amounts to electronic
recordkeeping----one of the most basic functions of a computer.");
Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 716 (Fed. Cir. 2014)
(updating an activity log); see also MPEP § 2106.05(d)(II)(iii).
Claim 1 's additional elements also include targeting offers to
participants. Similarly, the Federal Circuit has recognized that presenting
offers and gathering statistics are well-understood, routine, conventional
activities, when claimed in a merely generic manner or as extra-solution
activity, which is the case here. See OIP Techs., Inc., 788 F.3d at 1363.
Specifically, claim 1 merely requires targeting an offer to participants
without any additional purportedly inventive technical solution for doing so.
In fact, claim 1 broadly recites "targeting an offer to the one or more
participants to allow the one or more participants to spend the created credits
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on the offer" and uses "comprising" as the transitional phrase. Because the
transitional phrase "comprising" does not exclude additional unrecited steps,
the claim includes targeting all participants-i.e., tracked and untracked
participants.
Considering the elements in combination, Appellants have not shown
that the recited storing and querying data improve operating efficiency,
reduce storage cost, or otherwise operate in an unconventional way. Thus,
the additional elements, individually and in combination, do not provide an
inventive concept. See Guidance, 84 Fed. Reg. at. 56.
Appellants' inventive-concept argument focuses on economic
improvements. See App. Br. 11; Reply Br. 7-8. According to Appellants,
the claimed features improve an economy because the values allow for steps
that encourage economic participation. App. Br. 11. In this way,
Appellants' alleged inventive concept is the abstract idea. Yet "[i]t is clear
from Mayo that the 'inventive concept' cannot be the abstract idea itself,"
and a number of Federal Circuit cases "have held claims ineligible because
the only alleged 'inventive concept' is the abstract idea." Berkheimer v. HP
Inc., 890 F.3d 1369, 1374 (Fed. Cir. 2018) (denial of rehearing en bane)
(Moore, J., concurring); see also SAP Am., 898 F.3d at 1168 ("What is
needed is an inventive concept in the non-abstract application realm.").
On this record, Appellants have not persuaded us of error in the
rejection of representative claim 1 under 35 U.S.C. § 101. Thus, we sustain
the Examiner's rejection of claims 1-9, 11-17, 19, and 20, which are argued
as a group. See n.3 supra.
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DECISION
We affirm the Examiner's decision to reject claims 1-9, 11-17, 19,
and 20.
No time period for taking any subsequent action in connection with
this appeal may be extended under 37 C.F.R. § 1.136(a)(l )(iv).
AFFIRMED
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