Ex Parte Merz et al

Patent Trial and Appeal Board

Feb 28, 2019

13797400 (P.T.A.B. Feb. 28, 2019)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
13/797,400 03/12/2013
75564 7590 03/04/2019
DANIEL M. FITZGERALD (21652)
ARMSTRONG TEASDALE LLP
7700 Forsyth Boulevard
Suite 1800
St. Louis, MO 63105
FIRST NAMED INVENTOR
Christopher J. Merz
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.
21652-00242 1467
EXAMINER
FLYNN,ABBYJ
ART UNIT PAPER NUMBER
3625
NOTIFICATION DATE DELIVERY MODE
03/04/2019 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):
USpatents@armstrongteasdale.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte CHRISTOPHER J. MERZ, WALTER LO FARO,
ADAM K. HOSP, MATTHEW RICHARD STOCKE,
STEPHEN P. HENDRIX, and ROBERT T. GROTHE JR. 1
Appeal2018-000954
Application 13/797,400
Technology Center 3600
Before BARBARA A. BENOIT, JAMES B. ARPIN, and
MICHAEL M. BARRY, Administrative Patent Judges.
BARRY, Administrative Patent Judge.
DECISION ON APPEAL
STATEMENT OF THE CASE
Introduction
This is an appeal under 35 U.S.C. § 134(a) from the Examiner's final
rejection of claims 1, 4--11, 13-15, and 17-24, which are all of the pending
claims. 2 We have jurisdiction under 35 U.S.C. § 6(b).
We REVERSE.
1 Appellants identify the real party in interest as MasterCard International
Incorporated. App. Br. 1.
2 See Final Act. l; see also App. Br. 17-26 (Claims App'x).
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Application 13/797,400
Subject Matter
Appellants' disclosure and claims relate to "recommending merchants
to a transaction payment cardholder based at least in part on the cardholder's
past transaction history and the cardholder's merchant preferences."
Spec. ,r 1. Appellants disclose a "recommender application" for providing
merchant recommendations to cardholders based on electronic payment
information from network transactions, and, specifically, based on
transaction information over the payment card network by cardholders that
have each engaged in transactions with multiple merchants within a
predetermined time period and geographic region. See Spec. ,r,r 17, 71-80,
Figs. 2, 3, 6-8. Appellants disclose an algorithm for processing the
merchant transaction data in a manner that eliminates individual cardholder
bias to create an unbiased "merchant popularity matrix" for use in making
recommendations. Spec. ,r,r 80, 81. The matrix is used along with a
candidate cardholder' s individual preference information (i.e., which can
reflect that cardholder's bias) to create a ranked list of merchant
recommendations, which is displayed on a cardholder's device, such as a
smartphone. See Spec. ,r,r 81-87, Figs. 7, 12.
Claims 1, 15, and 21 are independent; claim is illustrative and recites:
1. A computer system for recommending at least one
merchant of a plurality of merchants to a candidate cardholder,
said computer system comprising:
a memory device for storing data; and
a processor in communication with said memory device,
said processor programmed to:
identify a plurality of merchants located within a
predefined geographical region;
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retrieve, from a payment network, electronic
payment transaction information for a plurality of
electronic payment card transactions involving a plurality
of cardholders including the candidate cardholder and at
least some of the plurality of merchants, the plurality of
electronic payment transactions occurring within a
predefined time period;
identify from the electronic payment transaction
information a subset of cardholders from the plurality of
cardholders, each of the subset of cardholders having
completed electronic payment transactions with at least
two of the plurality of merchants;
create, based on the retrieved electronic payment
transaction information associated with the subset of
cardholders, a merchant popularity matrix, wherein the
merchant popularity matrix includes a counter associated
with each pair of merchants included within the plurality
of merchants, wherein to create the matrix, an associated
counter is incremented when a cardholder in the subset of
cardholders completes electronic payment transactions at
both merchants in the pair, and wherein, to reduce an
effect of cardholder bias towards a single merchant, no
counter in the merchant popularity matrix is incremented
when a cardholder completes multiple electronic
payment transactions at the same merchant;
receive data signals from the payment network
including data associated with electronic payment
transactions for the candidate cardholder;
determine gratuity information for the candidate
cardholder from the data signals;
determine candidate cardholder preference
information for at least one candidate merchant of the
plurality of merchants based at least in part on the
gratuity information determined from the data signals;
create a candidate cardholder preference vector
based on the candidate cardholder preference
information, wherein the candidate cardholder preference
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vector represents a level of preference of the candidate
cardholder for one merchant relative to at least one other
merchant;
determine a merchant rank for each merchant of
the plurality of merchants based on the merchant
popularity matrix and the candidate cardholder
preference vector;
determine a neutral merchant rank for each
merchant of the plurality of merchants based on the
retrieved electronic payment transaction information
associated with the plurality of cardholders and a neutral
preference vector including preference information
values that are equal for each merchant of the plurality of
merchants;
determine a merchant score for each merchant of
the plurality of merchants based on a difference between
the merchant rank and the neutral merchant rank; and
cause a list of recommended merchants including
the at least one merchant to be displayed on a user device
based on the determined merchant scores, wherein the
user device is associated with the candidate cardholder.
App. Br. 17-18 (Claims App'x).
Rejections3
Claims 1, 4--11, 13-15, and 17-24 stand rejected under 35 U.S.C.
§ 112, first paragraph for failing to comply with the written description
requirement. Final Act. 12-14.
Claims 1, 4--11, 13-15, and 17-24 stand rejected under 35 U.S.C.
§ 101 as directed to patent-ineligible subject matter. Id. at 17-24.
3 The Examiner had rejected claims 1, 4--11, 13-15, and 17-24 for
indefiniteness under 35 U.S.C. § 112, second paragraph, but withdrew that
rejection in response to Appellants' Appeal Brief argument. See Final
Act. 15-16; App. Br. 15; Ans. 3.
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ANALYSIS
(a) Adequate Written Description
All three independent claims recite "wherein, to reduce an effect of
cardholder bias towards a single merchant, no counter in the merchant
popularity matrix is incremented when a cardholder completes multiple
electronic payment transactions at the same merchant." The Examiner
determines this limitation lacks written description support in the
Specification. Final Act. 12-14 (citing Spec. ,r 81). Specifically, the
Examiner finds that "while there is disclosure of a matrix that is free of bias,
[the] Examiner cannot find disclosure in the specification that [a reduction
in] the effect of cardholder bias is achieved by not incrementing counters
when a cardholder completes multiple electronic payment transactions at the
same merchant." Id. at 13-14.
Appellants argue the Examiner errs because the cited Specification
paragraph explains that "a cardholder must have transacted with two or more
[] merchants ... to be counted in matrix 806. This facilitates reducing an
effect of cardholder bias towards a single merchant." App. Br. 15 (quoting
Spec. ,r 81, emphasis omitted). We agree with Appellants. Each value in the
matrix is associated with a merchant pair, and a value is incremented only
when there are transactions with both merchants in the pair. Spec. ,r 81.
Accordingly, an ordinarily skilled artisan would have understood, as
Appellants explain, that "if a cardholder only completes multiple
transactions at the same merchant, no counter is incremented." App. Br. 15.
Thus, we do not sustain the rejection of claims 1, 4--11, 13-15, and
17-24 under 35 U.S.C. § 112, first paragraph.
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(b) Patent Eligible Subject Matter
Appellants argue the Examiner errs in the§ 101 rejection based on the
independent claims. App. Br. 7-15. We select claim 1 as representative of
all claims. 37 C.F.R. 4I.37(c)(l)(iv).
(1) 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. The
Supreme Court, however, 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. Pty. Ltd. 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 U.S. 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 );
mathematical formulas (Parker v. Flook, 437 U.S. 584, 594--95 (1978)); and
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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 182 n.7 (quoting Corning v. Burden, 56 U.S.
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
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 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 also 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-
eligible application." Alice, 573 U.S. at 221 (internal citation omitted). "A
claim that recites an abstract idea must include 'additional features' to
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ensure 'that the [claim] is more than a drafting effort designed to
monopolize the [abstract idea]."' Id. ( quoting Mayo, 566 U.S. at 77).
"[M]erely requir[ing] generic computer implementation[] fail[ s] to transform
that abstract idea into a patent-eligible invention." Id.
The Office recently published revised guidance on the application of
§ 101. 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed.
Reg. 50-57 (Jan. 7, 2019) ("2019 PEG"). Under the 2019 PEG, 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)). 4
See 2019 PEG at 52, 54--55. Only if a claim (1) recites a judicial exception
and (2) does not integrate that exception into a practical application, does the
office then look to whether the claim:
(3) adds a specific limitation beyond the judicial exception that are 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 2019 PEG at 56.
(2) The Examiner's Abstract Idea Determination
The Examiner determines claim 1 "can be summarized [as] generating
merchant recommendations by processing payment transaction information."
4 All references to the MPEP are to Rev. 08.2017 (Jan. 2018).
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Final Act. 19. The Examiner determines the limitations of claim 1 are
similar, at least in part, those found to be abstract in SmartGene and Electric
Power Group, Digitech, Cyberfone, and Cybersource. 5 Final Act. 19-20.
Thus, the Examiner determines claim 1 recites limitations that "represent
(a) an idea of itself, in that they represent mental processes that can be
performed in the human mind or by a human using pen and paper,
(b) concepts relating to the economy and commerce, and ( c) concepts
relating to interpersonal and intrapersonal activities." Final Act. 21.
(3) Appellants' Contentions6
Appellants contend claim 1 has a technological focus on a software
application that uses transactions over an electronic payment network and is
directed to patent-eligible subject matter because it "focus[ es] on a specific
means or method that improves the relevant technology." App. Br. 7
(quotingMcRO, Inc. v. Bandai Namco Games America Inc., 837 F.3d 1299,
1314 (Fed. Cir. 2016)). Appellants argue that claim 1 recites "a
combination of limitations that operate in a non-conventional and non-
generic way to process electronic payment transaction information and data
signals from a payment network to generate accurate merchant
5 SmartGene, Inc. v. Advanced Biological Labs., SA, 555 F. App'x 950
(Fed. Cir. 2014); Electric Power Group, LLC v. Alstom S.A., 830 F.3d 1350
(Fed. Cir. 2016); Digitech Image Technologies, LLC v. Electronics for
Imaging, Inc., 758 F.3d 1344 (Fed. Cir. 2014); Cyberfone Systems, LLC v.
CNN Interactive Group, Inc., 558 F. App'x 988 (Fed. Cir. 2014);
CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366 (Fed. Cir. 2011).
6 Our decision to reverse the Examiner on the § 101 rejection discusses only
those of Appellants' contentions necessary to reach our conclusion.
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recommendations for display on a user device. App. Br. 11. This argument
. .
1s persuasive.
(4) Our Analysis
We agree with the Examiner that claim 1 recites limitations that "can
be summarized [as] generating merchant recommendations by processing
payment transaction information." Final Act. 19. We also agree with the
Examiner that claim 1 recites limitations that "are, at least in part, similar to
those found to be abstract in [SmartGene, Electric Power Group, Digitech,
Cyberfone, and Cybersource]." Id. at 19-20. Thus, there is support for the
Examiner's determination that "the claims are at least in part directed to
concepts found to be abstract." Id. at 20. Consistent with the 2019 PEG,
however, as discussed below, we disagree with the Examiner's conclusion
under the first step of Alice/Mayo.
As the Federal Circuit has repeatedly cautioned, we "'must be careful
to avoid oversimplifying the claims' by looking at them generally and failing
to account for the specific requirements of the claims." McRO, 837 F.3d at
1313 (quoting In re TL! Commc 'ns LLC Patent Litig., 823 F.3d 607, 611
(Fed. Cir. 2016)). For example, in McRO, the claim at issue recited a "rules-
based" algorithm that the Federal Circuit determined was integrated into a
process directed to a patent-eligible improvement to computer-automated
animation (i.e., to improve a computer-automated process of an otherwise
human activity). See 837 F.3d at 1314--16; see also id. at 1313 (noting
"processes that automate tasks that humans are capable of performing are
patent eligible if properly claimed").
Here, Appellants' claim 1 includes a rules-based algorithm that is
integrated into a user interface application for providing merchant
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recommendations to a cardholder based on payment network information.
In addition to providing a user interface, claim 1 integrates the algorithm
with, in the vernacular of the claim, "data signals from the payment network
including data associated with electronic payment transactions for the
candidate cardholder." In other words, claim 1 does not seek to patent the
recited mathematical algorithm and data processing steps in the abstract, but
instead includes additional elements that integrate them into a practical
application. In similar situations, our reviewing court has found claims
directed to such practical user interface functionality to be patent eligible.
See, e.g., Trading Technologies Int'!, Inc. v. CGQ, INC, 675 F. App'x 1001,
1003---05, (Fed. Cir. 2017) (determining claims directed to electronic trading
of stocks, bonds, etc. were directed to patent-eligible improvements in
existing graphical user interface devices that had no pre-electronic trading
analog); Core Wireless Licensing S.A.R.L. v. LG Electronics, Inc., 880 F.3d
1356, 1359-60, 1362---63 (Fed. Cir. 2018) (determining at Alice/Mayo step
one "[t]he asserted claims in this case are directed to an improved user
interface for computing devices, not to the abstract idea."); see also Finjan,
Inc. v. Blue Coat Systems, Inc., 879 F.3d 1299, 1305 (Fed. Cir. 2018)
(holding the claims at issue were "directed to a non-abstract improvement in
functionality, rather than the abstract idea"); Diehr, 450 U.S. at 185-91
( observing "an application of a ... mathematical formula to a known ...
process may well be deserving of patent protection" ( quoting id. at 187) ).
Thus, we conclude at Alice/Mayo step one that claim 1, as a whole, is
not directed merely to the abstract ideas of its recited algorithm and data
processing limitations, but, instead, recites additional elements that integrate
the abstract ideas into a practical application for a user interface for
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recommending merchants based on electronic payment network transaction
information. See 2019 PEG at 54--55; MPEP § 2106.04(a)(l)(II).
DECISION
For the above reasons, we reverse the rejections of claims 1, 4--11,
13-15, and 17-24 under both 35 U.S.C. §§ 101 and 112, first paragraph.
REVERSED
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