Ex Parte Nelsen et al

Patent Trial and Appeal Board

Oct 25, 2018

12217419 (P.T.A.B. Oct. 25, 2018)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE FIRST NAMED INVENTOR
12/217,419 07/03/2008 Mark Allen Nelsen
66945 7590 10/29/2018
KILPATRICK TOWNSEND & STOCKTONLLP/VISA
Mailstop: IP Docketing - 22
1100 Peachtree Street
Suite 2800
Atlanta, GA 30309
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.
080083-0791793 8553
EXAMINER
DEGA, MURALI K
ART UNIT PAPER NUMBER
3696
NOTIFICATION DATE DELIVERY MODE
10/29/2018 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
KTSDocketing2@kilpatrick.foundationip.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte MARK ALLEN NELSEN,
NANCY THERESE HILGERS, MITCHELL L. WRIGHT, and
PAWANKUMAR
Appeal2017-006490
Application 12/217,419 1
Technology Center 3600
Before: LARRY J. HUME, SCOTT B. HOWARD, and
JOHN D. HAMANN, Administrative Patent Judges.
HUME, 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, 4--22, and 24--29, which are all claims pending in
the application. Appellants have canceled claims 3 and 23. We have
jurisdiction under 35 U.S.C. § 6(b).
We AFFIRM.
1 According to Appellants, the real party in interest is Visa U.S.A. Inc.
Br. 3.
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Application 12/217,419
STATEMENT OF THE CASE2
The Invention
Appellants' disclosed embodiments and claimed "invention relate in
general to financial services. Aspects include a financial fraud prevention
apparatus, system, method and computer-readable storage medium
configured to import fraud prevention rules from an issuer and implement
them in real-time at a payment processor." Spec. 2, 11. 1--4 ("Field of the
Invention").
Exemplary Claim
Claim 1, reproduced below, is representative of the subject matter on
appeal (emphases added to contested prior-art limitations):
1. An issuer fraud prevention apparatus located at an
issuer, the apparatus comprising:
a computer processor comprising:
a rule editor configured to create or edit a fraud
prevention rule;
[LI] a rule test engine configured to:
receive the fraud prevention rule from the
rule editor,
retrieve known fraudulent transaction data
from a local card database, the known fraudulent
transaction data corresponding to the issuer's
historical fraudulent transactions,
2 Our decision relies upon Appellants' Appeal Brief ("Br.," filed
Apr. 18, 2016); Examiner's Answer ("Ans.," mailed Dec. 15, 2016); Final
Office Action ("Final Act.," mailed Nov. 20, 2015); and the original
Specification ("Spec.," filed July 3, 2008). We note Appellants did not file a
Reply Brief in response to the factual findings and legal conclusions in the
Examiner's Answer.
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test the fraud prevention rule against the
known fraudulent transaction data,
generate authorization response data
indicating whether the issuer's historical
fraudulent transactions would be authorized if the
fraud prevention rule were applied to the known
fraudulent transaction data, format the
authorization response data as a results file,
output the results file,
compare the results file against the known
fraudulent transaction data, and
determine that the fraud prevention rule
detects the issuer's historical fraudulent
transactions based on the comparison;
[L2] a computer network interface, coupled to the
computer processor, configured to:
export the fraud prevention rule from the
issuer to a payment processing network, and
receive a notification message from the
payment processing network confirming activation
of the fraud prevention rule by the payment
processing network; and
[L3] a transaction case queue configured to receive a list
of flagged transactions from the payment processing network,
the list of flagged transactions being flagged by the payment
processing network as a result of applying the fraud prevention
rule in real time to the transactions included in the list of
flagged transactions.
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Prior Art
The Examiner relies upon the following prior art as evidence in
rejecting the claims on appeal:
Keithley et al. ("Keithley") US 2006/0226216 Al Oct. 12, 2006
Kranzley
Zhou et al. ("Zhou")
US 2008/0021829 Al Jan. 24, 2008
US 2008/0270303 Al Oct. 30, 2008
Rejections on Appeal
RI. Claims 1, 2, 4--22, and 24--29 stand rejected under 35 U.S.C.
§ 101 as being directed to patent-ineligible subject matter. Final Act. 2.
R2. Claims 1, 2, 4--22, and 24--29 stand rejected under 35 U.S.C.
§ I03(a) as being unpatentable over the combination of Keithley, Kranzley,
and Zhou. Final Act. 5.
CLAIM GROUPING
Based on Appellants' arguments (Br. 8-26), we decide the appeal of
patent-ineligible subject matter Rejection RI of claims 1, 2, 4--22, and 24--29
on the basis of representative claim 1; and we also decide the appeal of
obviousness Rejection RI of claims 1, 2, 4--22, and 24--29 on the basis of
representative claim 1. 3
3 "Notwithstanding any other provision of this paragraph, the failure of
appellant to separately argue claims which appellant has grouped together
shall constitute a waiver of any argument that the Board must consider the
patentability of any grouped claim separately." 37 C.F.R. § 4I.37(c)(l)(iv).
In addition, when Appellants do not separately argue the patentability of
dependent claims, the claims stand or fall with the claims from which they
depend. In re King, 801 F.2d 1324, 1325 (Fed. Cir. 1986).
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ISSUES AND ANALYSIS
In reaching this decision, we consider all evidence presented and all
arguments actually made by Appellants. To the extent Appellants have not
advanced separate, substantive arguments for particular claims, or other
issues, such arguments are waived. 37 C.F.R. § 4I.37(c)(l)(iv).
We disagree with Appellants' arguments with respect to claims 1, 2,
4--22, and 24--29 and, unless otherwise noted, we incorporate by reference
herein and adopt as our own: ( 1) the findings and reasons set forth by the
Examiner in the action from which this appeal is taken, and (2) the reasons
and rebuttals set forth in the Examiner's Answer in response to Appellants'
arguments. We highlight and address specific findings and arguments
regarding claim 1 for emphasis as follows.
1. § 101 Rejection RI of Claims 1, 2, 4--22, and 24--29
Issue 1
Appellants argue (Br. 8-20) the Examiner's rejection of claim 1 under
35 U.S.C. § 101 as being directed to patent-ineligible subject matter is in
error. These contentions present us with the following issue:
Under our governing case law concerning 35 U.S.C. § 101, did the
Examiner err in concluding claim 1 is directed to a judicial exception, i.e., an
abstract idea, without significantly more?
Analysis
Alice Framework
Section 101 provides that anyone who "invents or discovers any new
and useful process, machine, manufacture, or composition of matter, or any
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new and useful improvement thereof' may obtain a patent. 35 U.S.C. § 101.
The Supreme Court has repeatedly emphasized that patent protection should
not extend to claims that monopolize "the basic tools of scientific and
technological work." Gottschalkv. Benson, 409 U.S. 63, 67 (1972); Mayo
Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 71 (2012);
Alice Corp. Pty. Ltd. v. CLS Bank Int'!, 134 S. Ct. 2347, 2354 (2014).
Accordingly, laws of nature, natural phenomena, and abstract ideas are not
patent-eligible subject matter. Alice Corp., 134 S. Ct. at 2354.
The Supreme Court's two-part Alice framework guides us in
distinguishing between patent claims that impermissibly claim the "building
blocks of human ingenuity" and those that "integrate the building blocks into
something more." Alice Corp., 134 S. Ct. at 2354 (internal quotation marks,
citation, and bracketing omitted). First, we "determine whether the claims at
issue are directed to [a] patent-ineligible concept[]." Id. at 2355. If so, we
"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." Id. at 2357 (quoting Mayo, 566 U.S. at 72, 79).
Although the two steps of the Alice framework are related, the "Supreme
Court's formulation makes clear that the first-stage filter is a meaningful one,
sometimes ending the§ 101 inquiry." Elec. Power Grp., LLC v. Alstom
S.A., 830 F.3d 1350, 1353 (Fed. Cir. 2016). We note the Supreme Court
"has not established a definitive rule to determine what constitutes an
'abstract idea"' for the purposes of step one. Enfzsh, LLC v. Microsoft Corp.,
822 F.3d 1327, 1334 (Fed. Cir. 2016) (citing Alice, 134 S. Ct at 2357).
In Enfzsh, our reviewing court held claims directed to a self-referential
logical model for a computer database patent-eligible under step one of
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Alice. Enfzsh, 822 F.3d at 1330. The disclosed technique enabled faster
searching and more effective storage of data than previous methods. Id. at
1333. The court found the claims directed to "a specific improvement to the
way computers operate, embodied in the self-referential table" (id. at 1336),
and explained that the claims are "not simply directed to any form of storing
tabular data, but instead are specifically directed to a self-referential table
for a computer database" that functions differently than conventional
databases. Id. at 1337.
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, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299, 1302-
03, 1307---08, 1314--15 (Fed. Cir. 2016). InMcRO, "the incorporation of the
claimed rules, not the use of the computer," improved an existing
technological process. Id. at 1314.
However, our reviewing court has held claims ineligible as directed to
an abstract idea when they merely collect electronic information, display
information, or embody mental processes that could be performed by
humans. Elec. Power Grp., 830 F.3d at 1353-54 (collecting cases). At the
same time, "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. Abstract ideas may include, but are not limited to, fundamental
economic practices, methods of organizing human activities, an idea of
itself, and mathematical formulas or relationships. Alice 134 S. Ct. at 2355-
57. Under this guidance, we must therefore ensure at step one that we
articulate what the claims are directed to with enough specificity to ensure
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the step one inquiry is meaningful. Id. at 2354 ("[W]e tread carefully in
construing this exclusionary principle lest it swallow all of patent law.").
Under the "abstract idea" step we must evaluate "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 (Fed. Cir. 2016) (internal citation
omitted). If the claims are not directed to a patent-ineligible concept, the
inquiry ends. See Visual Memory LLC v. NVIDIA Corp., 867 F.3d 1253,
1262 (Fed. Cir. 2017). If the concept is directed to a patent-ineligible
concept, we proceed to the "inventive concept" step. For that second step
we 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, 838 F.3d at 1258 (quoting Elec. Power Grp., 830 F.3d at 1353).
Alice Step 1 -Abstract Idea
The Examiner concludes the claims are directed to the abstract idea of
creating, testing, and implementation of a fraud prevention rule, i.e., "using
computers such as performance of financial transactions (buySAFE) and
mitigating risk (Bilski)." Final Act. 4.
Appellants generally contend the claims are not directed to an abstract
idea because "independent claims 1, 8 and 15 are not directed to any
fundamental economic practice, method of organizing human activity, idea
of itself, or mathematical formula." Br. 10. Appellants provide additional
arguments concerning each of these generalized abstract idea categories.
Br. 10-15.
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More specifically, Appellants argue, "in accordance with the Federal
Circuit's holding in DDR Holdings, the claimed invention cannot be directed
to such an economic practice since it is 'necessarily rooted in computer
technology in order to overcome a problem specifically arising in the realm
of computer networks. "' 4 Br. 10 ( citations omitted).
Appellant submits that independent claims 1, 8 and 15 of
the present application are analogous to the patent-eligible
claims in DDR Holdings, since the inventions defined by claims
1, 8 and 15 are also necessarily rooted in computer technology
to overcome a problem arising specifically in the realm of
computer systems and networks. As described at page 1 of the
specification, the present invention solves the problem of
issuers having to incorporate considerable technical
infrastructure to detect fraudulent electronic payment
transactions over a payment network. This is a problem specific
to computer technology with no pre-computer analog.
App. Br, 11. 5
Appellants' reliance on DDR (App. Br. 10-13) is misplaced as the
recited claims do not improve the computer. In DDR, the claims at issue
involved, inter alia, "web pages displays [with] at least one active link
associated with a commerce object associated with a buying opportunity of a
selected one of a plurality of merchants" (claim 1 of US 7,818,399). The
Federal Circuit found the claims in DDR to be patent-eligible under step one
of the Alice test because "the claimed solution is necessarily rooted in
computer technology in order to overcome a problem specifically arising in
the realm of computer networks." DDR Holdings, 773 F.3d at 1257.
4 See DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed.
Cir. 2014).
5 We note page 1 of the Specification cited by Appellants is the coversheet
that includes the title, inventors, and attorney docket number.
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Specifically, the Federal Circuit found the claims addressed the "challenge
of retaining control over the attention of the customer in the context of the
Internet." Id. at 1258.
Appellants allege "[t]he claimed invention addresses the challenges
associated with existing techniques for detecting fraud in electronic payment
transactions over a network, such techniques requiring issuers to incorporate
significant computerized infrastructure, and to maintain and utilize such
infrastructure, in preventing fraud." Br. 12. However, we find the rejected
claims are dissimilar to DDR's web page with an active link, and the
Specification does not support the view that the recited computer related
claim elements in the claims on appeal are unconventional. 6
Under the "abstract idea" step we must evaluate "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, 838 F.3d at
1257 ( citation omitted).
Turning to the claimed invention, claim 1 recites, " [ a ]n issuer fraud
prevention apparatus located at an issuer." Claim 1 (preamble).
6 Appellants argue the "generation and reformatting of data requires the use
of a specially programmed computer with no corollary in the pre-computer
world." Br. 13. Mere attorney arguments and conclusory statements that are
unsupported by factual evidence are entitled to little probative value. In re
Geisler, 116 F.3d 1465, 1470 (Fed. Cir. 1997); see also In re De Blauwe,
736 F.2d 699, 705 (Fed. Cir. 1984); Ex parte Belinne, No. 2009-004693, slip
op. at 7-8 (BP AI Aug. 10, 2009) (informative), available at
http://www. uspto. gov /web/ offices/ dcom/bpai/its/f d09004693. pdf. Further,
"Argument in the brief does not take the place of evidence in the record." In
re Schulze, 346 F.2d 600, 602 (CCPA 1965) (citing In re Cole, 326 F.2d
769, 773 (CCPA 1964)).
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Apparatus claim 1 's limitations also require:
"a computer processor" that includes "a rule editor," and
"a rule test engine" that:
"receive[s] the fraud prevention rule,"
"retrieve[ s] known fraudulent transaction data ...
corresponding to the issuer's historical fraudulent
transactions'',
"test[ s] the fraud prevention rule against the known
fraudulent transaction data,"
"generate [ s] authorization response data,"
"format[ s] the authorization response data as
a results file,"
"output[ s] the results file,"
"compare [ s] the results file against the
known fraudulent transaction data," and
"determine[s] that the fraud prevention rule
detects the issuer's historical fraudulent
transactions based on the comparison;"
"a computer network interface" that:
"export[ s] the fraud prevention rule from the
issuer to a payment processing network," and
"receive[ s] a notification message from the
payment processing network confirming activation
of the fraud prevention;" and
"a transaction case queue" that "receive[s] a list of
flagged transactions ... flagged by the payment processing
network as a result of applying the fraud prevention rule in real
time to the transactions included in the list of flagged
transactions."
Our reviewing courts have often identified abstract ideas by referring
to earlier precedent, e.g., by comparing a claimed concept to the concepts
previously identified as abstract ideas by the courts. Amdocs (Israel), Ltd. v.
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Openet Telecom, Inc., 841 F.3d 1288, 1294 (Fed. Cir. 2016); Enfish, LLC v.
Microsoft Corp., 822 F.3d. at 1334. For example, in Alice, the Supreme
Court identified the claimed systems and methods as describing the concept
of intermediated settlement, and then compared this concept to the risk
hedging concept identified as an abstract idea in Bilski. Because this
comparison revealed "no meaningful distinction between the concept of risk
hedging in Bilski and the concept of intermediated settlement at issue here",
the Court concluded that the concept of intermediated settlement was an
abstract idea. Alice, 134 S. Ct. at 2356-57. Similarly, the Federal Circuit in
Amdocs compared the claims at issue with "eligible and ineligible claims of
a similar nature from past cases" as part of its eligibility analysis. Amdocs,
841 F.3d at 1295-1300.
We particularly note the Federal Circuit's earlier precedent in
Fair Warning in which collecting and analyzing information to detect
fraudulent activity (misuse) and notifying a user when misuse is detected
was held as being directed to an abstract idea, e.g., "an idea 'of itself."' As
held in Fair Warning, "[t]he claim limitations, analyzed alone and in
combination, fail to add 'something more' to 'transform' the claimed abstract
idea of collecting and analyzing information to detect misuse into 'a patent-
eligible application."' Fair Warning IP, LLC v. Iatric Systems, Inc., 839 F.3d
1089, 1095 (Fed. Cir. 2016) (citing Alice, 134 S. Ct. at 2354, 2357)
( emphasis added).
Under step one, we agree with the Examiner that the invention
claimed in independent claim 1 is directed to an abstract idea, i.e., the
abstract idea of creating, testing, and implementation of a fraud prevention
rule. See Ans. 3.
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As the Specification discloses, "[a]spects of the present invention
relate in general to financial services [ and] include a financial fraud
prevention apparatus, system, method and computer-readable storage
medium configured to import fraud prevention rules from an issuer and
implement them in real-time at a payment processor." Spec. 2, 11. 4--77 We
find this type of activity, i.e., implementation of financial fraud enforcement
rules, for example, includes longstanding conduct that existed well before
the advent of computers and the Internet, and could be carried out by a
human with pen and paper. See CyberSource Corp. v. Retail Decisions, Inc.,
654 F.3d 1366, 1375 (Fed. Cir. 2011) ("That purely mental processes can be
7 See also Spec. 21 ("Abstract"):
A system, method, and computer-readable storage
medium configured to import fraud prevention rules from an
issuer and implement them in real-time at a payment processor.
Usually, a card issuing bank either approves or declines
financial transaction; however, in embodiments of the present
invention, the issuing bank creates fraud prevention rules, and
the payment processor implements the created rules. A payment
processor apparatus comprises a network interface, and a
verification engine. The verification engine includes a
transaction driver, and a real time decisioning processor. The
network interface is configured to receive a fraud prevention
rule from a payment card issuing bank, and to receive a
proposed financial transaction from an acquiring bank. The
transaction driver receives the fraud prevention rule. The real
time decisioning processor compares the proposed financial
transaction from the acquirer and the fraud prevention rule to
determine whether the proposed financial transaction should be
declined.
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unpatentable, even when performed by a computer, was precisely the
holding of the Supreme Court in Gottschalk v. Benson."). 8
Our reviewing court has previously held other patent claims ineligible
for reciting similar abstract concepts. For example, while the Supreme
Court has enhanced the § 101 analysis since Cy her Source in cases like Mayo
and Alice, the Federal Circuit continues to "treat[] analyzing information by
steps people go through in their minds, or by mathematical algorithms,
without more, as essentially mental processes within the abstract-idea
category." Synopsys, Inc. v. Mentor Graphics Corp., 839 F.3d 1138, 1146-
47 (Fed. Cir. 2016) (alteration in original) (quoting Elec. Power Grp., 830
F.3d at 1354).
In addition, the Federal Circuit has concluded that abstract ideas
include the concepts of collecting data, recognizing certain data within the
collected data set, and storing the data in memory. Content Extraction &
Transmission LLC v. Wells Fargo Bank, N.A., 776 F.3d 1343, 1347 (Fed.
Cir. 2014). Additionally, the collection of information and analysis of
information (e.g., recognizing certain data within the dataset) are also
abstract ideas. Elec. Power, 830 F.3d at 1353-54 (collecting information
and "analyzing information by steps people go through in their minds, or by
mathematical algorithms, without more, [are] essentially mental processes
within the abstract-idea category"). Similarly, "collecting, displaying, and
manipulating data" is an abstract idea. Intellectual Ventures I LLC v.
Capital One Fin. Corp., 850 F.3d 1332, 1340 (Fed. Cir. 2017). Also,
8 CyberSource further guides that "a method that can be performed by
human thought alone is merely an abstract idea and is not patent-eligible
under§ 101." CyberSource, 654 F.3d at 1373.
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collecting and comparing known information has been determined to be an
abstract idea. Classen Immunotherapies, Inc. v. Biogen IDEC, 659 F.3d
1057, 1067 (Fed. Cir. 2011) ("Claim 1 of the #283 patent states the idea of
collecting and comparing known information"). Further, a process that
employs mathematical algorithms to manipulate existing information to
generate additional information is abstract. Digitech Image Techs., LLC v.
Elec.for Imaging, Inc., 758 F.3d 1344, 1351 (Fed. Cir. 2014). Also, more
recently, our reviewing court has also concluded that acts of parsing,
comparing, storing, and editing data are abstract ideas. Berkheimer v. HP
Inc., 881 F.3d 1360, 1367 (Fed. Cir. 2018).
Appellant also alleges claim 1 is patent-eligible because its practice
does not preempt practice by others. Br.18. We agree with the Examiner's
response, which we incorporate herein by reference. Ans. 4. Regarding
preemption, "[w]hile preemption may signal patent ineligible subject matter,
the absence of complete preemption does not demonstrate patent eligibility
.... Where a patent's claims are deemed only to disclose patent ineligible
subject matter under the ,Mayo framework, as they are in this case,
preemption concen1s are fully addressed and made moot" Ariosa
Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015);
see also OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1362---63
(Fed. Cir. 2015) ("that the claims do not preempt all price optimization or
may be limited to price optimization in the e-commerce setting do not make
them any less abstract").
Therefore, in agreement with the Examiner, we conclude claim 1
involves nothing more than identifying, collecting, storing, comparing, and
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generating data, without any particular inventive technology- an abstract
idea. See Elec. Power Grp., 830 F.3d at 1354. 9
Accordingly, on this record, and under step one of Alice, we agree
with the Examiner's conclusion the claims are directed to an abstract idea.
Alice Step 2 -Inventive Concept
If the claims are directed to a patent-ineligible concept, as we
conclude above, we proceed to the "inventive concept" step. For that step
we 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, 838 F.3d at 1258 (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, 134 S. Ct. at 2357. Those "additional features" must be
more than "well-understood, routine, conventional activity." Mayo, 566
U.S. at 79.
9 Merely automating previously manual processing by using computers does
not qualify as an eligibility-rejection-defeating improvement. Credit
Acceptance Corp. v. Westlake Servs., 859 F.3d 1044 (Fed. Cir. 2017).
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Limitations referenced in Alice that are not enough to qualify as
"significantly more" when recited in a claim with an abstract idea include, as
non-limiting or non-exclusive examples: adding the words "apply it" ( or an
equivalent) with an abstract idea; 10 mere instructions to implement an
abstract idea on a computer; 11 or requiring no more than a generic computer
to perform generic computer functions that are well-understood, routine and
conventional activities previously known to the industry. 12
Evaluating representative claim 1 under step 2 of the Alice analysis,
we agree with the Examiner that it lacks an inventive concept that
transforms the abstract idea of fraud prevention into a patent-eligible
application of that abstract idea. See Ans. 4--5. 13
The Examiner further concludes 11 [ t ]here is no indication that the
combination of elements improves the functioning of a computer or
improves any other technology and their collective functions merely provide
conventional computer implementation. 11 Ans. 5.
10 Id. at 2357-58.
11 Id.: e.g., simply implementing a mathematical principle on a physical
machine, namely a computer (citing Mayo, 566 U.S. at 84--85).
12 Id. at 2359: e.g., using a computer to obtain data, adjust account balances,
and issue automated instructions.
13 The Examiner concludes:
The computer processor, the rule editor and the rule test
engine are recited at a high level of generality and are recited as
performing generic computer functions routinely used in
computer applications. Generic computer components recited as
performing generic computer functions that are well-
understood, routine and conventional activities amount to no
more than implementing the abstract idea with a computerized
system.
Ans. 4.
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We agree with the Examiner and note the patent eligibility inquiry
may contain underlying issues of fact. Mortg. Grader, Inc. v. First Choice
Loan Servs. Inc., 811 F.3d 1314, 1325 (Fed. Cir. 2016). In particular, "[t]he
question of whether a claim element or combination of elements is well-
understood, routine and conventional to a skilled artisan in the relevant field
is a question of fact." Berkheimer, 881 F.3d at 1368.
As evidence of the conventional nature of the claimed apparatus
components and processes, we highlight Appellants' Specification. See
Spec. 7, 11. 4--21; 8, 11. 1-18, 1. 24--9, 1. 21. For example:
It is understood by those known in the art that the issuer
computing device 1400 may be configured on any computing
device, such as a workstation, personal computer, mini-
computer, mainframe, or other computing device known in the
art. For illustrative purposes only, we will assume that the
computing device located at the issuer 1400 is a computer
workstation.
Issuer 1400 may run a multi-tasking operating system
(OS) and include at least one processor or central processing
unit 1410. Processor 1410 may be any central processing unit,
microprocessor, micro-controller, computational device or
circuit known in the art. It is further understood that processor
1410 does not have to be the same model or make as processor
1310.
Spec. 8, 11. 1-10.
We agree with the Examiner that the claim limitations may be broadly
but reasonably construed as reciting conventional computer components and
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techniques, particularly in light of Appellants' Specification, as quoted
above. 14
With respect to the Step 2 analysis, we agree with the Examiner
because, as in Alice, the recitation of an "issuer fraud prevention apparatus
located at an issuer" using a "processor" that includes "a rule editor," and "a
rule test engine" ( claim 1) is simply not enough to transform the patent-
ineligible abstract idea here into a patent-eligible invention. See Alice, 134
S. Ct. at 2357 ("[C]laims, which merely require generic computer
implementation, fail to transform [an] abstract idea into a patent-eligible
invention.").
Accordingly, based upon the findings above, on this record, we are
not persuaded of error in the Examiner's conclusion that the appealed claims
are directed to patent-ineligible subject matter. Therefore, we sustain the
Examiner's § 101 rejection of independent claim 1, and grouped claims 2, 4--
22, and 24--29, not argued separately, and which fall therewith. See Claim
Grouping, supra.
14 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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2. § 103 Rejection R2 of Claims 1, 2, 4--22, and 24--29
Issue 2
Appellants argue (Br. 20-26) the Examiner's rejection of claim 1
under 35 U.S.C. § 103(a) as being obvious over the combination of Keithley,
Kranzley, and Zhou is in error. These contentions present us with the
following issues:
Did the Examiner err in finding the cited prior art combination teaches
or suggests " [ a ]n issuer fraud prevention apparatus located at an issuer" that
includes, inter alia, the following limitations:
[L 1] a rule test engine configured to ... test the fraud
prevention rule against the known fraudulent transaction data,
generate authorization response data indicating whether the
issuer's historical fraudulent transactions would be authorized if
the fraud prevention rule were applied to the known fraudulent
transaction data,format the authorization response data as a
results file ... compare the results file against the known
fraudulent transaction data, and determine that the fraud
prevention rule detects the issuer's historical fraudulent
transactions based on the comparison;
[L2] a computer network interface, coupled to the
computer processor, configured to [ ] export the fraud
prevention rule from the issuer to a payment processing
network,
[L3] a transaction case queue configured to receive a list
of flagged transactions from the payment processing network,
as recited in claim 1?
Analysis
The test for obviousness is what the combined teachings of the prior
art would have suggested to the hypothetical person of ordinary skill in the
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art. In re Keller, 642 F.2d 413,425 (CCPA 1981). Appellants have not
challenged the combinability of the teachings of Keithley, Kranzley, and
Zhou.
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. 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." Morris, 127 F.3d at 1054.
Limitation LI: Rule Test Engine Functionality
Contrary to the Examiner's findings (Final Act. 5), Appellants contend
Keithley's transaction data set 22 merely describes "a current transaction
conducted between consumer 12 and entity 14 .... [ while the] independent
claims ... require that known fraudulent transaction data 'corresponding to
the issuer's historical fraudulent transactions' be retrieved from a database,
and that the fraud prevention rule be tested against this historical transaction
data." Br. 22.
In response, the Examiner finds (Ans. 6) Keithley discloses
authorization denial system 18:
[ A ]uthorization denial system 18 includes an authorization
denial system interface 20 for receiving a transaction data set 22
from the entity 14, and the transaction data set 22 includes
multiple data fields 24 therein. The authorization denial system
18 also includes a denial rule set 26 having multiple rules 28.
The denial rule set 26 outputs the risk data 16 based upon the
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application of one or more of the rules 28 in the denial rule set
26 to one or more of the data fields 24 in the transaction data
set 22.
Keithley ,r 3 1. The Examiner further finds transaction data set 22 comprises
consumer account history in data fields 24 which includes user transaction
history, specifically historical fraudulent transactions, and which the
Examiner concludes, under the broadest reasonable interpretation, discloses
testing the fraud prevention rule against the recited "known fraudulent
transaction data." Ans. 6 (citing Keithley ,r 34 ("data fields 24 may be
populated with data reflecting ... a third-party risk score, risk data, .. .
credit risk data, fraud risk data, transaction risk data, denial data, .. .
previous transaction data ... delinquency data ... consumer account history
... etc.")).
Thus, we agree with the Examiner that the data set in Keithley teaches
or suggests storing not only current transactions, but also testing the fraud
prevention rule against stored "known fraudulent transaction data."
Appellants further argue
The cited art, alone or in combination, also fails to teach
or suggest a rule test engine configured to "generate
authorization response data indicating whether the issuer's
historical fraudulent transactions would be authorized if the
fraud prevention rule were applied to the known fraudulent
transaction data, "to ''format the authorization response data as
a results file, "to "output the results file, "to "compare the
results file against the known fraudulent transaction data," and
to "determine that the fraud prevention rule detects the issuer's
historical fraudulent transactions based on the comparison," as
further recited by independent claim 1.
App. Br. 22-23.
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The Examiner finds:
The authorization denial system interface transmits the resulting
risk data to the entity" [ 0019], and further Keithley discloses
"transmitting the transaction data set to a risk analysis system if
the resulting risk data indicates that the transaction should not
be denied based upon the applied rule", [0023]. It is interpreted
under broadest reasonable interpretation that the outputting and
transmitting of data sets is to be carried out either as individual
data fields or as a group in the form of a file.
Ans. 8.
We note Appellants do not file a Reply Brief to rebut the Examiner's
findings about Keithley's teachings and suggestions regarding the functional
limitations associated with the recited rule test engine. On this record, we
agree with the Examiner that Keithley teaches or at least suggests the
recitations of limitation L 1.
Limitation L2: Computer Network Interface Functionality
Limitation L2 of claim 1 recites, in pertinent part, "a computer
network interface, coupled to the computer processor, configured to [ ]
export the fraud prevention rule from the issuer to a payment processing
network."
Appellants contend:
[E]ven if the rejection consistently relied upon denial rule set 26
for teaching the claimed fraud prevention rule, authorization
denial system 18 does not transmit denial rule set 22 at all.
Instead, as summarized above, authorization denial system 18
uses denial rule set 22 to generate risk data 16 in the first place.
Risk data 16 is transmitted to entity 14, but denial rule set 22 is
not.
Appellant further notes that independent claims 1, 8 and
15 require that the fraud prevention rule be exported by the
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issuer to a "payment processing network." At page 6 of the
Final Office Action, the Examiner concedes that Keithley does
not disclose transmitting risk data 16 to a payment processing
network, and instead cites to Kranzley. At best, however,
Kranzley merely discloses that a customer can supply account-
selection rules to a payment card association, and that the rules
determine which of the customer's payment accounts is to be
used for a given transaction.
Br. 24.
Nonobviousness cannot be established by attacking the references
individually when the rejection is predicated upon a combination of prior art
disclosures. See In re Merck & Co. Inc., 800 F.2d 1091, 1097 (Fed.
Cir. 1986).
Although the Examiner acknowledges that Keithley does not
explicitly teach or suggest forwarding risk data to a payment processing
network (Final Act. 6), the Examiner further finds:
Kranzley teaches the presence of a Processing network
("payment card association", [0016]) which receives the error
free data (" submit information to the server computer 108 to
define rules that are applied to each of the customers' payment
card transactions to determine which account is to be used for
the transaction in question", [0016]) before being forwarded to
the processor 125.
Id. (citing Kranzley ,r 16). Based on the above, we agree with the
Examiner's determination that Kranzley teaches or at least suggests
limitation L2, i.e., forwarding of transaction risk data to a payment
processing network.
We agree with the Examiner because, as found by the Examiner:
[I]t would have been obvious to a person having ordinary skill
in the art at the time of the invention to modify the system of
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Keithley to include the presence of processing network as per
the teachings of Kranzley in developing a fraud prevention
system, thus enabling various transaction processing systems
present on the processing network to be part of the fraud
prevention system, with neither undue experimentation nor
unexpected results.
Final Act. 7.
Limitation L3: Transaction Case Queue Functionality
Limitation L3 of claim 1 recites, in pertinent part, "a transaction case
queue configured to receive a list of flagged transactions from the payment
processing network." The Examiner cites Kranzley paragraph 54 as
teaching or suggesting this limitation. Final Act. 7.
Appellants contend:
At best, however, the cited portion of Kranzley merely
discloses that the payment card association applies a rule to
select a customer account and then informs the account issuer
of the selected account. Appellant submits that no "list of
flagged transactions" is transmitted to the issuer in Kranzley.
Instead, only a selected account is provided. Moreover, the
account is not ''flagged' as a result of applying a ''fraud
detection rule."
Br. 25.
In response, the Examiner further clarifies the rejection by finding:
Keithly discloses a 'transaction data set 22' that includes
'consumer account history' in paragraph [0034]. Under broadest
reasonable interpretation the Examiner is interpreting that the
'consumer account history' in the 'transaction data set 22' to
include the entire transaction history of the user including the
historical fraudulent transactions.
Ans. 10.
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The Examiner further clarifies the rejection by citing to KSR. 15
Ans. 10. "The rationale to support a conclusion that the claim would have
been obvious is that the substitution of one known element for another yields
predictable results to one of ordinary skill in the art." Ans. 11.
In KSR, the Court stated "[t]he combination of familiar elements
according to known methods is likely to be obvious when it does no more
than yield predictable results." KSR, 550 U.S. at 416.
When a work is available in one field of endeavor, design
incentives and other market forces can prompt variations of it,
either in the same field or a different one. If a person of
ordinary skill can implement a predictable variation, § 103
likely bars its patentability. For the same reason, if a technique
has been used to improve one device, and a person of ordinary
skill in the art would recognize that it would improve similar
devices in the same way, using the technique is obvious unless
its actual application is beyond his or her skill .... [A] court
must ask whether the improvement is more than the predictable
use of prior art elements according to their established
functions.
Id. at 417.
We find the Examiner's suggested combination of Keithley's
"consumer account history," including historic fraudulent transactions, with
Kranzley's indication of potential fraud alerts for a selected account would
have been within the level of skill in the art. Appellants have not
demonstrated that the Examiner's proffered combination of references would
have been "uniquely challenging or difficult for one of ordinary skill in the
art." See Leapfrog Enters., Inc. v. Fisher-Price, Inc., 485 F.3d 1157, 1162
(Fed. Cir. 2007) (citing KSR, 550 U.S. at 418). Nor have Appellants
15 KSR Int'! Co. v. Teleflex, Inc., 550 U.S. 398 (2007).
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provided objective evidence of secondary considerations which our
reviewing court guides II operates as a beneficial check on hindsight. 11
Cheese Sys., Inc. v. Tetra Pak Cheese and Powder Sys., 725 F.3d 1341, 1352
(Fed. Cir. 2013).
Therefore, based upon the findings above, on this record, we are not
persuaded of error in the Examiner's reliance on the cited prior art
combination to teach or suggest the disputed limitation of claim 1, nor do we
find error in the Examiner's resulting legal conclusion of obviousness.
Therefore, we sustain the Examiner's obviousness rejection of independent
claim 1, and grouped claims 2, 4--22, and 24--29 which fall therewith. See
Claim Grouping, supra.
CONCLUSIONS
(1) The Examiner did not err with respect to patent-ineligible
subject matter Rejection RI of claims 1, 2, 4--22, and 24--29 under 35 U.S.C.
§ 101, and we sustain the rejection.
(2) The Examiner did not err with respect to obviousness Rejection
R2 of claims 1, 2, 4--22, and 24--29 under 35 U.S.C. § I03(a) over the cited
prior art combination of record, and we sustain the rejection.
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DECISION
We affirm the Examiner's decision rejecting claims 1, 2, 4--22,
and 24--29.
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). See 37
C.F.R. § 41.50(±).
AFFIRMED
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