Ex Parte Smith et al

Patent Trials and Appeals Board

Mar 25, 2019

13360537 - (D) (P.T.A.B. Mar. 25, 2019)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
13/360,537 01/27/2012
75564 7590 03/27/2019
DANIEL M. FITZGERALD (21652)
ARMSTRONG TEASDALE LLP
7700 Forsyth Boulevard
Suite 1800
St. Louis, MO 63105
FIRST NAMED INVENTOR
Janet Smith
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.
21652-00178 8496
EXAMINER
KAZIMI, HAN! M
ART UNIT PAPER NUMBER
3691
NOTIFICATION DATE DELIVERY MODE
03/27/2019 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 JANET SMITH, JOHN D. CHISHOLM, JOHAN GERBER,
CLARA SALAZAR, MATTHEW WICKMAN, SUSAN MEYER,
RACHAEL VAHLE CORDERO, and CHRISTOPHER JOHN MERZ
Appeal 2018-001 726
Application 13/360,537 1
Technology Center 3600
Before JUSTIN BUSCH, CARL L. SILVERMAN, and
JAMES W. DEJMEK, Administrative Patent Judges.
DEJMEK, Administrative Patent Judge.
DECISION ON APPEAL
Appellants appeal under 35 U.S.C. § 134(a) from a Final Rejection of
claims 1-24. We have jurisdiction over the pending claims under 35 U.S.C.
§ 6(b).
We affirm.
1 Appellants identify MasterCard International Incorporated as the real party
in interest. App. Br. 1.
Appeal 2018-001726
Application 13/360,537
STATEMENT OF THE CASE
Introduction
Appellants' disclosed and claimed invention generally relates to
"providing fraud risk scoring of payment card transactions including card-
not-present (CNP) transactions." Spec. ,r 2. According to the Specification,
a fraud risk score provides an indication of the likelihood that the transaction
on the associated card account is fraudulent. Spec. ,r 51. In a disclosed
embodiment, a fraud risk score may be determined by using at least one of a
plurality of fraud scoring models. Spec. ,r 5 3. A fraud scoring model may
be selected based on predetermined criteria such as an issuing region
associated with the payment card account. Spec. ,r 53. The scoring model
also uses a payment card account profile associated with the payment card
used in the transaction. Spec. ,r 54. According to the Specification, the
payment card account profile may contain historical transaction information
as well as "long term variables," which collect spending behaviors over a
defined time period. Spec. ,r,r 54--55.
Claim 1 is representative of the subject matter on appeal and is
reproduced below:
1. A fraud detection computer system comprising:
a network host site;
an interchange network compnsmg a processor
communicatively coupled to a memory device for storing data
and to said network host site, said processor programmed to:
store a payment card account profile in the memory
device, wherein the payment card account profile is
associated with a payment card account, and wherein the
payment card account profile includes one or more long
term variables representing a spending behavior for card-
present and card-not-present transactions over a
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predetermined and selectable time period for the payment
card account;
store a plurality of fraud scoring models at said
network host site, wherein each of the plurality of fraud
scoring models is configured to generate a fraud risk score
by applying a fraud scoring algorithm to the one or more
long term variables;
receive, from a merchant, a card transaction
authorization request message that includes transaction
data for a card-not-present (CNP) transaction, fraud
scoring model selection criteria, and a fraud risk score
request indicator representing an instruction by the
merchant to score the CNP transaction for fraud risk,
wherein the transaction data includes a primary account
number (PAN) for the payment card account, and the fraud
scoring model selection criteria include one or more of:
(i) an issuing region associated with the CNP transaction
and (ii) a subscription status of the merchant and an issuer
of the payment card;
convert the PAN into a hashed PAN value using a
secure hash algorithm (SHA), wherein the hashed PAN
value is of a predetermined digest size;
load, into the plurality of fraud scoring models, the
hashed PAN value and the one or more long term
variables, wherein the one or more long term variables are
loaded as a single comma-delimited line;
select at least one fraud scoring model of the
plurality of fraud scoring models, based on the fraud
scoring model selection criteria;
calculate the fraud risk score for the CNP
transaction using the at least one fraud scoring model;
transmit the card transaction authorization request
message to the issuer of the payment card for approval of
the card transaction authorization request; and
route a card transaction authorization request
response message received from the issuer to the
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merchant, wherein the card transaction authorization
request response message includes an issuer authorization
decision received from the issuer and the fraud risk score.
The Examiner's Rejection
Claims 1-24 stand rejected under 35 U.S.C. § 101 as being directed to
patent-ineligible subject matter. Final Act. 2-5.
ANALYSIS 2
Appellants dispute the Examiner's conclusion that the pending claims
are directed to patent-ineligible subject matter. App. Br. 6-14; Reply Br. 1-
4. In particular, Appellants argue the Examiner oversimplifies the claims
and overlooks specific requirements of the claims that "go far beyond the
alleged abstract idea of 'providing fraud risk scoring of payment card-not-
present (CNP) transactions."' App. Br. 7-8 ( quoting Final Act. 3); Reply
Br. 1-2. For example, Appellants assert storing a plurality of fraud scoring
models for selection based on the issuing region associated with the
transaction card account or the inclusion of historical transaction information
for a payment card account "provides a much richer fraud score to the
merchants." App. Br. 9. Thus, rather than being directed to an abstract idea,
Appellants argue the claims are directed to "a specific implementation of a
solution to a problem in the software arts." App. Br. 7-10 (discussing
McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299, 1314 (Fed.
2 Throughout this Decision, we have considered the Appeal Brief, filed
July 5, 2017 ("App. Br."); the Reply Brief, filed December 6, 2017 ("Reply
Br."); the Examiner's Answer, mailed October 6, 2017 ("Ans."); and the
Final Office Action, mailed December 3 0, 2016 ("Final Act."), from which
this Appeal is taken.
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Application 13/360,537
Cir. 2016) and Enfzsh, LLC v. Microsoft Corp., 822 F.3d 1327, 1336 (Fed.
Cir. 2016)); Reply Br. 2-3. Appellants further argue the benefits of the
claimed invention come not from merely executing mathematical equations
on a generic computing platform, but, rather, by applying specific rules to
the approach. App. Br. 10. Moreover, Appellants assert the claims recite
"significantly more" than the alleged abstract idea to transform the alleged
abstract idea into a patent-eligible application. App. Br. 11-13; Reply
Br. 3--4. Specifically, Appellants assert the claimed invention is "necessarily
rooted in computer technology----detection of fraud inherent in an electronic
payment network that enables card-based transactions to occur without the
cardholderbeingpresent." App. Br. 12-13; Reply Br. 3--4 (citing BASCOM
Global Internet Servs. v. AT&T Mobility LLC, 827 F.3d 1341 (Fed. Cir.
2016)).
The Supreme Court's two-step framework guides our analysis of
patent eligibility under 35 U.S.C. § 101. Alice Corp. Pty. Ltd. v. CLS Bank
Int'!, 573 U.S. 208,217 (2014). In addition, the Office recently published
revised guidance for evaluating subject matter eligibility under 35 U.S.C.
§ 101, specifically with respect to applying the Alice framework. USPTO 's
2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. 50
(Jan. 7, 2019) ("Office Guidance"). If a claim falls within one of the
statutory categories of patent eligibility (i.e., a process, machine,
manufacture, or composition of matter) then the first inquiry is whether the
claim is directed to one of the judicially recognized exceptions (i.e., a law of
nature, a natural phenomenon, or an abstract idea). Alice, 573 U.S. at 217.
As part of this inquiry, we must "look at the 'focus of the claimed advance
over the prior art' to determine if the claim's 'character as a whole' is
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directed to excluded subject matter." Affinity Labs of Tex., LLC v. DirecTV,
LLC, 838 F.3d 1253, 1257-58 (Fed. Cir. 2016) (internal citations omitted).
Per Office Guidance, this first inquiry has two prongs of analysis: (i) does
the claim recite a judicial exception ( e.g., an abstract idea), and (ii) if so, is
the judicial exception integrated into a practical application. 84 Fed. Reg. at
54. Under the Office Guidance, if the judicial exception is integrated into a
practical application, see infra, the claim is eligible under § 101. 84 Fed.
Reg. at 54--55. If the claim is directed to a judicial exception (i.e., recites a
judicial exception and does not integrate the exception into a practical
application), the next step is to determine whether any element, or
combination of elements, amounts to significantly more than the judicial
exception. Alice, 573 U.S. at 217; 84 Fed. Reg. at 56.
Here, we conclude Appellants' claims recite an abstract idea of a
mental process. In particular, Appellants' claims are generally directed to
calculating a fraud risk score for a card-not-present (CNP) transaction, i.e.,
an evaluation that may be performed in the human mind. See Spec. ,r 21
("Embodiments ... relate to determining a fraud risk score in payment card
transactions, such as, card-not-present payment card transactions."); see also
App. Br. 6-7. Consistent with our Office Guidance and case law, we
conclude that calculating a fraud risk score for a CNP transaction is a mental
process-i.e., an abstract idea. See 84 Fed. Reg. at 52; see also CyberSource
Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1371-72 (Fed. Cir. 2011)
( concluding claims directed to "detecting credit card fraud based on
information relating to past transactions" can be performed in the human
mind and were drawn to a patent-ineligible mental process); FairWarning
IP, LLC v. Iatric Sys., Inc., 839 F.3d 1089, 1093-94 (Fed. Cir. 2016)
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( concluding claims directed to "collecting and analyzing information to
detect misuse and notifying a user when misuse is detected" to be mental
processes within the abstract-idea category).
Claim 1 is reproduced below and includes the following claim
limitations that recite calculating a fraud risk score for a card-not-present
(CNP) transaction, emphasized in italics.
1. A fraud detection computer system comprising:
a network host site;
an interchange network compnsmg a processor
communicatively coupled to a memory device for storing data
and to said network host site, said processor programmed to:
store a payment card account profile in the memory
device, wherein the payment card account profile is
associated with a payment card account, and wherein the
payment card account profile includes one or more long
term variables representing a spending behavior for card-
present and card-not-present transactions over a
predetermined and selectable time period for the payment
card account;
store a plurality of fraud scoring models at said
network host site, wherein each of the plurality of fraud
scoring models is configured to generate a fraud risk score
by applying a fraud scoring algorithm to the one or more
long term variables;
receive, from a merchant, a card transaction
authorization request message that includes transaction
data for a card-not-present (CNP) transaction, fraud
scoring model selection criteria, and a fraud risk score
request indicator representing an instruction by the
merchant to score the CNP transaction for fraud risk,
wherein the transaction data includes a primary account
number (PAN) for the payment card account, and the
fraud scoring model selection criteria include one or more
of (i) an issuing region associated with the CNP
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transaction and (ii) a subscription status of the merchant
and an issuer of the payment card;
convert the PAN into a hashed PAN value using a
secure hash algorithm (SHA), wherein the hashed PAN
value is of a predetermined digest size;
load, into the plurality of fraud scoring models, the
hashed PAN value and the one or more long term
variables, wherein the one or more long term variables
are loaded as a single comma-delimited line;
select at least one fraud scoring model of the
plurality of fraud scoring models, based on the fraud
scoring model selection criteria;
calculate the fraud risk score for the CNP
transaction using the at least one fraud scoring model;
transmit the card transaction authorization request
message to the issuer of the payment card for approval of
the card transaction authorization request; and
route a card transaction authorization request
response message received from the issuer to the
merchant, wherein the card transaction authorization
request response message includes an issuer authorization
decision received from the issuer and the fraud risk score.
More particularly, calculating a fraud risk score for a card-not-present
(CNP) transaction comprises: (i) receiving the relevant transaction data and
identifying the desired fraud risk model to be used (i.e., the claimed steps of
receiving a card authorization request message and selecting a fraud risk
score model based on the content of the received message); and
(ii) calculating the fraud risk score (i.e., the claimed steps of securely
converting the account number to a determined size, loading the relevant
data into the selected fraud score model, and calculating the fraud risk
score).
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Because the claim recites a judicial exception, we next determine
whether the claim integrates the judicial exception into a practical
application. 84 Fed. Reg. at 54. To determine whether the judicial
exception is integrated into a practical application, we identify whether there
are "any additional elements recited in the claim beyond the judicial
exception(s)" and evaluate those elements to determine whether they
integrate the judicial exception into a recognized practical application.
84 Fed. Reg. at 54--55 (emphasis added); see also Manual of Patent
Examining Procedure (MPEP) § 2106.05(a}-(c), (e}-(h) (9th ed. Rev.
08.2017, Jan. 2018).
Here, we find the additional limitations do not integrate the judicial
exception into a practical application. More particularly, the claims do not
recite: (i) an improvement to the functionality of a computer or other
technology or technical field (see MPEP § 2106.05(a)); (ii) use a "particular
machine" to apply or use the judicial exception (see MPEP § 2106.05(b) );
(iii) a particular transformation of an article to a different thing or state (see
MPEP § 2106.05(c)); or (iv) any other meaningful limitation (see MPEP
§ 2106.05(e)). See also 84 Fed. Reg. at 55. Specifically, (i) storing a
payment card account profile; (ii) storing a plurality of fraud scoring models;
(iii) transmitting the card transaction authorization request message to the
payment card issuer; and (iv) routing a response message comprising an
authorization decision and the calculated fraud risk score merely recite the
type of extra-solution activities (i.e., in addition to the judicial exception) the
courts have determined insufficient to transform judicially excepted subject
matter into a patent-eligible application. See MPEP § 2106.05(g); see also
Bilski v. Kappas, 561 U.S. 593, 612 (holding the use of well-known
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techniques to establish inputs to the abstract idea as extra-solution activity
that fails to make the underlying concept patent eligible); Elec. Power Grp.,
LLC v. Alstom S.A., 830 F.3d 1350, 1355 (Fed. Cir. 2016) (explaining that
"selecting information, by content or source, for collection analysis, and
display does nothing significant to differentiate a process from ordinary
mental processes"); Elec. Power, 830 F.3d at 1354 (recognizing "that merely
presenting the results of abstract processes of collecting and analyzing
information, without more ( such as identifying a particular tool for
presentation), is abstract as an ancillary part of such collection and
analysis"); Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 716 (Fed. Cir.
2014) (determining "the steps of consulting and updating an activity log
represent insignificant data-gathering steps") (internal quotation omitted);
Bancorp Servs, L.L.C. v. Sun Life Assur. Co. of Can., 771 F.Supp.2d 1054,
1065 (E.D. Mo. 2011) aff'd, 687 F.3d 1266 (Fed. Cir. 2012) (explaining that
"storing, retrieving, and providing data ... are inconsequential data
gathering and insignificant post solution activity").
Additionally, we disagree with Appellants (see App. Br. 7) that, as a
whole, the claims are directed to a specific implementation of a solution to a
problem in the software arts. Unlike the claims in Enfzsh, the instant claims
are not focused on an improvement to computers as tools, but rather use
computers to execute the judicial exception. See Ans. 6; see also Credit
Acceptance Corp. v. Westlake Servs., 859 F.3d 1044, 1055 (Fed. Cir. 2017).
In DDR Holdings, the Federal Circuit explained that the patent-
eligible claims specified "how interactions with the Internet are manipulated
to yield a desired result ... that overrides the routine and conventional
sequence of events ordinarily triggered by the click of a hyperlink." DDR
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Holdings, 773 F.3d at 1258. The court reasoned that those claims recited a
technological solution "necessarily rooted in computer technology" that
addressed a "problem specifically arising in the realm of computer
networks." DDR Holdings, 773 F.3d at 1257. In contrast, Appellants
acknowledge in the Specification that fraud detection may be performed by
various techniques including "manually flagging and checking high risk
orders." Spec. ,r 4. Thus, the problem does not arise specifically in the
realm of computer networks or the software arts.
Moreover, in BASCOM, the court found "the patent describes how its
particular arrangement of elements is a technical improvement," and, when
construed in favor of BASCOM, 3 the claims may be read to improve an
existing technological process. BASCOM, 827 F.3d at 1350. We disagree
with Appellants (see Reply Br. 4) that moving fraud scoring models from
merchant systems to a network host system represents an unconventional
arrangement of elements sufficient to confer patent eligibility. Appellants
suggest such an arrangement provides for a different fraud model to be
selected based upon certain criteria. Reply Br. 4. However, the
Specification does not describe why desired fraud scoring models could not
be hosted on merchant systems, or other technical concerns that are
addressed by moving the plurality of fraud scoring models to a network host.
For at least the foregoing reasons, the claims do not integrate the
judicial exception into a practical application.
Because we determine the claims are directed to an abstract idea or
combination of abstract ideas, we analyze the claims under step two of Alice
3 In BASCOM, BASCOM appealed the district court's granting of a motion
to dismiss under Fed. R. Civ. P. 12(b)(6). BASCOM, 827 F.3d at 1341.
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to determine if there are additional limitations that individually, or as an
ordered combination, ensure the claims amount to "significantly more" than
the abstract idea. Alice, 573 U.S. at 217-18 (citing Mayo Collaborative
Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 72-73, 77-79 (2012)). As
stated in the Office Guidance, many of the considerations to determine
whether the claims amount to "significantly more" under step two of the
Alice framework are already considered as part of determining whether the
judicial exception has been integrated into a practical application. 84 Fed.
Reg. at 56. Thus, at this point of our analysis, we determine if the claims
add a specific limitation, or combination of limitations, that is not well-
understood, routine, conventional activity in the field; or simply append
well-understood, routine, conventional activities at a high level of generality.
84 Fed. Reg. at 56.
Here, Appellants' claims do not recite specific limitations ( or a
combination of limitations) that are beyond what was well-understood,
routine, and conventional. As an initial matter, we note, as does the
Examiner (see, e.g., Ans. 8), Appellants describe the components of the
claimed invention at a high level of generality and the components perform
generic functions that are well-understood, routine, and conventional. See
Spec. ,r,r 30-33, 40-50, 72-72, Figs. 4, 5. For example, transmitting the
card authorization request to the payment card issuer or routing a card
authorization request response message from the payment card issuer to the
merchant via a communication interface does not amount to "significantly
more" than the judicial exception. See buySAFE, Inc. v. Google, Inc., 7 65
F.3d 1350, 1355 (Fed. Cir. 2014) ("That a computer receives and sends the
information over a network-with no further specification-is not even
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arguably inventive."). Similarly, storing data (i.e., either payment card
account profiles or a plurality of fraud scoring models) in memory is a
generic function of a workstation (i.e., computer) located at a network host
site. See Alice, 573 U.S. at 226 at 2360 ("Nearly every computer will
include a 'communications controller' and a 'data storage unit' capable of
performing the basic calculation, storage, and transmission functions
required by the method claims."); Content Extraction & Transmission v.
Wells Fargo Bank, N.A., 776 F.3d 1343, 1348 (Fed. Cir. 2014) ("storing
information" into memory and using a computer to "translate the shapes on a
physical page into typeface characters" are insufficient to confer patent
eligibility); Mortgage Grader, Inc. v. First Choice Loan Servs. Inc., 811
F.3d 1314, 1324--25 (Fed. Cir. 2016) (generic computer components, such as
an "interface," "network," and "database," fail to satisfy the inventive
concept requirement).
Additionally, to the extent Appellants contend the claims do not seek
to tie-up an abstract idea (App. Br. 13), we are unpersuaded of Examiner
error. "' [W]hile preemption may signal patent ineligible subject matter, the
absence of complete preemption does not demonstrate patent eligibility."'
FairWarning IP, 839 F.3d at 1098 (quotingAriosa 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) ("[T]hat
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."). Further, "[ w ]here a patent's claims are deemed only to disclose
patent ineligible subject matter under the Mayo framework, as they are in
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this case, preemption concerns are fully addressed and made moot." Ariosa,
788 F.3d at 1379.
For the reasons discussed supra, we are unpersuaded of Examiner
error. Accordingly, we sustain the Examiner's rejection of claims 1-24
under 35 U.S.C. § 101.
DECISION
We affirm the Examiner's decision rejecting claims 1-24 under
35 U.S.C. § 101.
No time period for taking any subsequent action in connection with
this appeal may be extended under 37 C.F.R. § 1.136(a). See 37 C.F.R.
§ 4I.50(f) (2016).
AFFIRMED
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