Ex Parte Nauman et al

Patent Trial and Appeal Board

Feb 28, 2018

13300265 (P.T.A.B. Feb. 28, 2018)

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.
13/300,265 11/18/2011 George Nauman 87188-027320US-826199 1041
20350 7590 03/02/2018
KILPATRICK TOWNSEND & STOCKTON LLP
Mailstop: IP Docketing - 22
1100 Peachtree Street
Suite 2800
Atlanta, GA 30309
EXAMINER
DEGA, MURALI K
ART UNIT PAPER NUMBER
3696
NOTIFICATION DATE DELIVERY MODE
03/02/2018 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):
ipefiling@kilpatricktownsend.com
KT S Docketing2 @ kilpatrick. foundationip .com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte GEORGE NAUMAN, JUDY TUREK,
DOUG SWARTZ, and VICKI ABEL
Appeal 2017-000069
Application 13/300,265
Technology Center 3600
Before CARLA M. KRIVAK, HUNG H. BUI, and
JON M. JURGOVAN, Administrative Patent Judges.
KRIVAK, Administrative Patent Judge.
DECISION ON APPEAL
Appellants appeal under 35 U.S.C. § 134(a) from a final rejection of
claims 2, 4-12, 14-17, and 19-21. We have jurisdiction under 35 U.S.C.
§ 6(b).
We affirm.
Appeal 2017-000069
Application 13/300,265
STATEMENT OF THE CASE
Appellants’ invention is directed to “computing systems programmed
to process value transactions through one or more processing networks in a
selectable manner” using “rules that define transaction processing between
combinations of a plurality of origination entities and a plurality of
destination entities” (Spec. ^ 2; Abstract).
Independent claim 2, reproduced below, is exemplary of the subject
matter on appeal.
2. A method for processing a transaction, the method
comprising:
storing, by a computer system, a plurality of rules that
define transaction processing between a plurality of origination
entities and a plurality of destination entities, wherein:
the plurality of rules permit transaction settlement
outside of a card association network,
each rule of the plurality of rules is based on
mutual agreement of a corresponding origination entity
and corresponding destination entity,
the card association network is used to settle
financial transactions,
the origination entity is selected from the group
consisting of: a merchant, and an acquiring bank, and
the destination entity is a bank;
receiving, by the computer system, transaction
information corresponding to the transaction, wherein:
the computer system is in communication with a
plurality of point-of-sale (POS) devices accessible via
one or more networks;
the computer system is in communication with a
plurality of banking networks;
the transaction information is received from a POS
device of the plurality of POS devices accessible via the
one or more network and corresponds to a transaction
instrument issued pursuant to a license from the card
association network;
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the transaction is between an origination entity of
the plurality of origination entities and a destination
entity of the plurality of destination entities;
the transaction comprises a financial transaction
involving a financial account linked with an account
identifier; and
the transaction information comprises the account
identifier, which is associated with the destination entity;
using, by the computer system, the transaction
information to identify the destination entity;
selecting, by the computer system, a rule from the
plurality of rules based on an identity of the origination entity
and an identity of the destination entity, wherein the identity of
the origination entity and the identity of the destination entity
are determined based on the received transaction information;
accessing, by the computer system, the rule from the
plurality of rules that defines transaction processing between
the origination entity and the destination entity; and
processing, by the computer system, the transaction using
the rule via a banking network of the plurality of banking
networks, such that the card association network is not used for
settlement of the transaction, wherein
the transaction being processed according to the rule
results in a transaction fee being decreased.
REFERENCES and REJECTIONS
The Examiner rejected claims 2, 4-12, 14-17, and 19-21 under
35 U.S.C. § 101 as directed to non-statutory subject matter.
ANALYSIS
Under 35 U.S.C. § 101, a patent may be obtained for “any new and
useful process, machine, manufacture, or composition of matter, or any new
and useful improvement thereof.” The Supreme Court has “long held that
this provision contains an important implicit exception: Laws of nature,
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natural phenomena, and abstract ideas are not patentable” {Alice Corp. Pty.
Ltd. v. CLSBankInt7, 134 S. Ct. 2347, 2354 (2014) (quoting Ass’nfor
Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2116
(2013)). The Supreme Court in Alice reiterated the two-step framework
previously set forth in Mayo Collaborative Services v. Prometheus
Laboratories, Inc., 566 U.S. 66, 82-84 (2012), “for distinguishing patents
that claim laws of nature, natural phenomena, and abstract ideas from those
that claim patent-eligible applications of these concepts” {Alice, 134 S. Ct. at
2355). The first step in that analysis is to “determine whether the claims at
issue are directed to one of those patent-ineligible concepts,” such as an
abstract idea {id.). The Court acknowledged in Mayo that “all inventions at
some level embody, use, reflect, rest upon, or apply laws of nature, natural
phenomena, or abstract ideas”( Mayo, 566 U.S. at 71). We, therefore, look
to whether the claims focus on a specific means or method that improves the
relevant technology or are instead directed to a result or effect that is the
abstract idea and merely invoke generic processes and machinery {see
Enfish, LLCv. Microsoft Corp., 822 F.3d 1327, 1336 (Fed. Cir. 2016)). If
the claims are not directed to an abstract idea, the inquiry ends. Otherwise,
the inquiry proceeds to the second step where the elements of the claims are
considered “individually and ‘as an ordered combination’ to determine
whether the additional elements ‘transform the nature of the claim’ into a
patent-eligible application” {Alice, 134 S. Ct. at 2355 (quoting Mayo, 566
U.S. at 79, 78)).
Alice/Mayo—Step 1
Turning to the first part of the Alice!Mayo analysis, the Examiner
concludes claim 2 is directed to a “centralized transaction authorization
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process where banking networks are used instead of [a] card association
network” for “processing a transaction between entities based on rules
agreed upon,” (Ans. 2-3; Final Act. 3), which is an abstract idea analogous
or similar to the abstract ideas of guaranteeing performance of financial
transactions discussed in buySAFE, mitigating risk discussed in Bilski, and
organizing, storing, and transmitting information discussed in Cyberfone
{see buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1355 (Fed. Cir. 2014);
Bilski v. Kappos, 561 U.S. 593, 599 (2010); and Cyberfone Sys., LLC v.
CNN Interactive Grp., Inc., 558 F. App’x 988, 992 (Fed. Cir. 2014)).
Appellants argue independent claims 2, 12, and 17 together (App. Br.
13-14).1 We select claim 2 as representative. Claims 12 and 17 stand or fall
with claim 2. See 37 C.F.R. § 41.37(c)(l)(iv).
Appellants contend the Examiner erred in rejecting the claims under
35 U.S.C. § 101 as directed to non-statutory subject matter because the
claims amount to more than an abstract idea (App. Br. 13) and the Examiner
overgeneralized the claims (Reply Br. 2). However, the Examiner
concludes, and we agree, the claims are abstract because they are directed to
a “financial transaction authorization process” based on stipulated rules
between transacting entities—an abstract idea similar to the transactional
practices identified in Alice, Bilski, buySAFE, Intellectual Ventures, and
CyberSource (Ans. 3) {see Alice, 134 S. Ct. at 2356-57 (intermediated
settlement to mitigate risk); Bilski, 561 U.S. at 599 (risk hedging); buySAFE,
765 F.3d at 1355 (guaranteeing a party’s performance of its online
transaction); Intellectual Ventures I LLC v. Capital One Bank (USA), 792
1 Appeal brief citations are to the Appeal Brief filed on October 19, 2015.
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Application 13/300,265
F.3d 1363, 1367 (Fed. Cir. 2015) (budgeting by “tracking financial
transactions to determine whether they exceed a pre-set spending limit”);
and CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1370 (Fed.
Cir. 2011) (verifying the validity of a credit card transaction over the
Internet)).
Appellants argue the claims are not directed to an abstract idea
because the claims are directed to “a technical improvement over
conventional financial transaction routing systems” by the claimed
“bypassing [of] card association networks to enable point-of-sale devices
and banks to communicate with each other directly through the internet”
(Reply Br. 3—4). Appellants argue the claims’ technical improvement
provides “a technical advantage over conventional transaction routing
systems because it ‘permits authorization and settlement to proceed as
rapidly as possible, and also may reduce transaction costs’” (Reply Br. 3
(citing Spec. ^ 30)).
We disagree. Claims 2, 12, and 17 do not recite a specific
improvement to the way computers operate, and Appellants do not present
evidence to establish these claims recite a specific improvement to the
computers. See Enfish, 822 F.3d at 1336, 1339. Appellants also have not
demonstrated their claims “improve the way a computer stores and retrieves
data in memory,” as the claims in Enfish did via a “self-referential table for a
computer database” (see Enfish, 822 F.3d at 1336, 1339). For example,
claim 2 merely requires a generically-claimed computer system and point-
of-sale devices to communicate over “one or more networks” to identify
entities from a transaction’s information, and select a stored rule to process
the transaction using the rule. This does not demonstrate an actual
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improvement in computer memory operations or in the technical functioning
of the network.
Additionally, the “advantage over conventional transaction routing
systems” advocated by Appellants (see Reply Br. 3) is due to stipulated
rules between transacting entities relaxing transactional requirements and
reducing transaction fees, in order to (i) increase usage of an entity’s issued
cards, (ii) increase a merchant’s/entity’s popularity and customer base,
and/or (iii) provide streamlined service to low-risk/premier cardholders or
cardholders verified by more stringent fraud detection methods (see Spec.
27, 29-33, 52). Such advantages are not caused by a technical
improvement to routing technology or point-of-sale devices, as Appellants
advocate (Reply Br. 3^1).
Appellants also argue their claims, like the claims of DDR, address “a
challenge particular to the internet (i.e., routing transactions)” and “problems
associated with card associations networks and transactions with point-of-
sale device” that “did not even exist in the pre-internet world” (Reply Br. 4
(citing DDR Holdings, LLC, v. Hotels.com, L.P., 773 F.3d 1245, 1257 (Fed.
Cir. 2014))). We remain unpersuaded, as Appellants have not demonstrated
their claimed generic computer system and point-of-sale devices are able in
combination to perform functions that are not merely generic, as were the
claims in DDR (see DDR, 773 F.3d at 1256-57). Additionally, the claims
focus on the problem of reducing the number of intermediaries in financial
transactions—a problem that is not a technical problem or one rooted in
computer technology or particular only to the Internet (see Spec. 10-12,
30). As Appellants’ Specification explains, solving this problem provides an
improvement to the business practice for processing value transactions with
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fewer parties in the transactional chain, thereby enabling faster authorization
and settlement and reduced transaction costs (see Spec. 2, 30).
In fact, none of the steps and elements recited in Appellants’ claims
provide, and nowhere in Appellants’ Specification can we find, any
description or explanation as to how the claimed transactional steps are
intended to provide: (1) a “solution . . . necessarily rooted in computer
technology in order to overcome a problem specifically arising in the realm
of computer networks,” as explained by the Federal Circuit in DDR, 773
F.3d at 1257; (2) “a specific improvement to the way computers operate,” as
explained in Enflsh, 822 F.3d at 1336; or (3) an “unconventional
technological solution ... to a technological problem” that “improve[s] the
performance of the system itself,” as explained in Amdocs (Israel) Ltd. v.
Openet Telecom, Inc., 841 F.3d 1288, 1300, 1302 (Fed. Cir. 2016).
We also find Appellants’ reliance on McRO unavailing (Reply Br. 4-5
(citing McRO, Inc. v. Bandai Namco Games America Inc., 837 F.3d 1299
(Fed. Cir. 2016))). Particularly, Appellants argue their claims, like the
claims of McRO, “use predetermined rules between an origination entity and
a destination entity in order to bypass card association networks” and
“therefore do not preempt any conventional transaction processing methods”
(Reply Br. 4-5). However, the court determined that McRO’s claim was not
directed to an abstract idea because it “uses the limited rules in a process
specifically designed to achieve an improved technological result” over
“existing, manual 3-D animation techniques”; in contrast, Appellants’
claimed rules address a business problem of bypassing a transactional check
by a financial entity (a card association network) (see McRO, 837 F.3d at
1316). Additionally, the claims in McRO were drawn to improvements in
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the operation of a computer at a task, rather than applying a computer
system to perform known routing controlled by routing rules, as in
Appellants’ claim 2 (see McRO, 837 F.3d at 1314). Further, with respect to
Appellants’ preemption argument, we note the McRO court also explicitly
“recognized that ‘the absence of complete preemption does not demonstrate
patent eligibility’” {see McRO, 837 F.3d at 1315 (quoting Ariosa
Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015))).
Accordingly, we agree with the Examiner claims 2, 12, and 17 are
directed to an abstract idea.
Alice/Mayo—Step 2
Appellants also allege claims 2, 12, and 17 “include significantly more
than the alleged abstract idea” because the claims require “particular
machines (i.e., non-generic machines/computers)” such as “a server . . . able
to communicate digital data with many different financial networks and their
associated protocols” (App. Br. 13 (citing Spec. 39^40); Reply Br. 6).
Appellants argue the claimed particular machines cannot be “[o]ff-the-shelf
generic computers[, which] are not capable of performing such functions,
much less during a period of heavy transactions that occur in this industry”
(App. Br. 13 (citing Spec. 7-8)). Appellants’ argument is not persuasive.
As the Examiner correctly shows, the claims merely recite generic computer
systems performing “well-understood routines and conventional activities
previously known to the industry” (Ans. 3—4; Final Act. 4). The
Specification, too, discloses using generic computer systems and point-of-
sale payment terminals known in the electronic payment and card-processing
industry {see Spec. 35-36, 3 8^40). The evidence on record therefore
supports the view that the broadest reasonable interpretation of such claim
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terms as “computer system” and “point-of sale (POS) devices” (see e.g.,
claim 2) should be construed to cover generic devices.
Appellants also argue claims 2, 12, and 17 amount to “significantly
more” than an abstract idea because the claims “are technically different”
and “provide a technical advantage” over conventional routing systems.
Particularly, the claims reduce total transaction time and cost and avoid
“delays [that] can compound and decrease a merchant’s ability to service
clients as well as cost the merchant in various ways (e.g., lost time for
checkout clerks)” (App. Br. 14). However, the claims do not recite or
require reducing “total transaction time,” “permit[ting] authorization and
settlement... as rapidly as possible” “during a period of heavy
transactions,” or reducing merchants’ transactional “lost time,” as
Appellants advocate (App. Br. 13-14).
Additionally, as discussed supra, we are not persuaded Appellants’
stated advantages are caused by a technical improvement to routing
technology, computer operation, or point-of-sale devices. “[T]he use of
generic computer elements like a microprocessor” to perform conventional
computer functions “do not alone transform an otherwise abstract idea into
patent-eligible subject matter.” (FairWarning IP, LLC v. Iatric Sys., Inc.,
839 F.3d 1089, 1096 (Fed. Cir. 2016) (citing DDR Holdings, 773 F.3d at
1256)).
Appellants further argue the claims amount to “significantly more”
because “claims 2, 12, and 17 are novel and non-obvious over any prior art
of record” and they “include limitations other than what is well understood,
routine, and conventional in the field, or else the claims would not be novel
and non-obvious” (App. Br. 13-14; Reply Br. 6). This improperly conflates
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the test for § 101 with the separate tests for §§102 and 103, see, e.g.,
Genetic Techs. Ltd. v. MerialL.L.C., 818 F.3d 1369, 1376 (Fed. Cir. 2016)
(“under the Mayo/Alice framework, a claim directed to a newly discovered
law of nature (or natural phenomenon or abstract idea) cannot rely on the
novelty of that discovery for the inventive concept necessary for patent
eligibility”); Diamond v. Diehr, 450 U.S. 175, 188-89 (1981) (“The
‘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.”).
Because we agree with the Examiner’s analysis and find Appellants’
arguments insufficient to show error, we sustain the rejection of claims 2, 4-
12, 14-17, and 19-21 under 35 U.S.C. § 101.
DECISION
The Examiner’s decision rejecting claims 2, 4-12, 14-17, and 19-21
is affirmed.
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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