Fannie Mae

Patent Trials and Appeals Board

Jan 27, 2021

2020003825 (P.T.A.B. Jan. 27, 2021)

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.
13/840,709 03/15/2013 David Monaco 880417-0127-US00 8477
134795 7590 01/27/2021
MICHAEL BEST & FRIEDRICH LLP (DC)
790 N WATER ST
SUITE 2500
MILWAUKEE, WI 53202
EXAMINER
HAMILTON, LALITA M
ART UNIT PAPER NUMBER
3691
NOTIFICATION DATE DELIVERY MODE
01/27/2021 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):
DCipdocket@michaelbest.com
nbenjamin@michaelbest.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
________________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
________________

Ex parte DAVID MONACO, MATTHEW GIBBS, KATHERINE
MELNICHENKO, STACEY SHIFMAN, and ERIC ROSENBLATT
________________

Appeal 2020-003825
Application 13/840,709
Technology Center 3600
________________

Before ROBERT E. NAPPI, JASON J. CHUNG, and
MATTHEW J. McNEILL, Administrative Patent Judges.

CHUNG, Administrative Patent Judge.

DECISION ON APPEAL
Pursuant to 35 U.S.C. § 134(a), Appellant1 appeals the Final Rejection
of claims 1–18 and 25.2 On January 13, 2021, there was an Oral Hearing.
We will add a transcript to the record in due course. We have jurisdiction
under 35 U.S.C. § 6(b).
We AFFIRM.
INVENTION
The invention relates to enhancing security of payment transactions.
Spec. 2:11–12. Claim 1 is illustrative of the invention and is/are reproduced

1 We use the word “Appellant” to refer to “applicant” as defined in
37 C.F.R. § 1.42. According to Appellant, Fannie Mae is the real party in
interest. Appeal Br. 2.
2 Claims 19–24, 26, and 27 are cancelled. Appeal Br. 23–24.
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below:
1. A method for detecting an underwriting
manipulation, the method comprising:
receiving, by an electronic processor, a plurality of
sequential underwriting submissions, each of the plurality of
sequential underwriting submissions being a separate request
from a same requestor for underwriting pertaining to a same
transaction;
comparing, by the electronic processor, corresponding
data fields of each of the plurality of sequential underwriting
submissions, pertaining to the same transaction, to identify
whether the corresponding data fields include inconsistent
information;
comparing, by the electronic processor, the corresponding
data fields of the each of the plurality of sequential underwriting
submissions to secondary information by correlating variables
from the secondary information to the corresponding data fields,
to identify whether the corresponding data fields include the
inconsistent information;
determining, by the electronic processor, whether the
inconsistent information is indicative of the underwriting
manipulation;
generating, by the electronic processor, defect probability
estimations based on the determination of whether the
inconsistent information is indicative of the underwriting
manipulation;
estimating, by the electronic processor, a risk that the
inconsistent information is resulting in the underwriting
manipulation based on the defect probability estimations;
flagging, by the electronic processor, an underwriting
submission of the plurality of sequential underwriting
submissions based on the defect probability estimations;
generating, by the electronic processor, a graphical user
interface including the estimation of the risk that the inconsistent
information is resulting in the underwriting manipulation and
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the underwriting submission of the plurality of sequential
underwriting submissions that is flagged; and
controlling, by the electronic processor, an electronic
display to display the graphical user interface.
Appeal Br. 17–18 (Claims Appendix) (emphases added).

REJECTION
The Examiner rejects claims 1–18 and 25 under 35 U.S.C. § 101 as
being directed to patent ineligible subject matter. Final Act. 3–7.
ANALYSIS
I. Claims 1–18 and 25 Rejected Under 35 U.S.C. § 101
A. Principles of Law
Inventions for a “new and useful process, machine, manufacture, or
composition of matter” generally constitute patent-eligible subject matter.
35 U.S.C. § 101. However, the U.S. Supreme Court has long interpreted
35 U.S.C. § 101 to include implicit exceptions: “[l]aws of nature, natural
phenomena, and abstract ideas” are not patentable. Alice Corp. v. CLS Bank
Int’l, 573 U.S. 208, 216 (2014).
In determining whether a claim falls within an excluded category, we
are guided by the Court’s two-step framework, described in Mayo
Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66
(2012), and Alice. Alice, 573 U.S. at 217–18 (citing Mayo, 566 U.S. at 75–
77). 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.
Kappos, 561 U.S. 593, 611 (2010) (“Claims 1 and 4 in petitioners’
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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
mental processes (Gottschalk v. Benson, 409 U.S. 63, 67 (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 (1853))); 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 187; 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. at 191 (citing
Benson and Flook); see also, e.g., id. at 187 (“It is now commonplace that an
application of a law of nature or mathematical formula to a known structure
or process may well be deserving of patent protection.”).
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If the claim is “directed to” an abstract idea, we turn 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 quotation marks
omitted). “A claim that recites an abstract idea must include ‘additional
features’ to ensure ‘that the [claim] is more than a drafting effort designed to
monopolize the [abstract idea].’” Id. (alterations in original) (quoting Mayo,
566 U.S. at 77). “[M]erely requir[ing] generic computer implementation[]
fail[s] to transform that abstract idea into a patent-eligible invention.” Id.
B. USPTO Section 101 Guidance
In January 2019, the U.S. Patent and Trademark Office (“USPTO”)
published revised guidance on the application of 35 U.S.C. § 101. See
2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. 50
(Jan. 7, 2019) (“2019 Guidance”), updated by USPTO, October 2019
Update: Subject Matter Eligibility (available at https://www.uspto.gov/sites/
default/files/documents/peg_oct_2019_update.pdf) (“Update”); see also
October 2019 Patent Eligibility Guidance Update, 84 Fed. Reg. 55942 (Oct.
18, 2019) (notifying the public of the availability of the Update). “All
USPTO personnel are, as a matter of internal agency management, expected
to follow the guidance.” 2019 Guidance, 84 Fed. Reg. at 51; see also
October 2019 Guidance Update at 1. The Manual of Patent Examining
Procedure (“MPEP”) now incorporates this revised guidance and subsequent
updates at Section 2106 (9th ed. Rev. 10.2019, rev. June 2020).3

3 All references to the MPEP are to the Ninth Edition, Revision 10.2019
(Last Revised June 2020), unless otherwise indicated.
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Under MPEP § 2106, we first look to whether the claim recites the
following:
(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.4
MPEP §§ 2106.04(a), (d).
Only if a claim (1) recites a judicial exception and (2) does not
integrate that exception into a practical application, do we then look to
whether the claim:
(3) adds a specific limitation beyond the judicial exception that is not
“well-understood, routine, [and] conventional activity” in the field; 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.
MPEP § 2106.05(d).
C. The Examiner’s Rejection and Appellant’s Arguments
The Examiner concludes the present claims recite certain methods of
organizing human activity. Ans. 4; Final Act 2, 5. The Examiner concludes
the present claims are not integrated into a practical application and there are

4 “Examiners evaluate integration into a practical application by
(a) identifying whether there are any additional elements recited in the claim
beyond the judicial exception, and (b) evaluating those additional elements
individually and in combination to determine whether the claim as a whole
integrates the exception into a practical application.” MPEP § 2106.04(d)II.
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no limitations recited in the present claims that add significantly more to the
abstract idea. Ans. 5; Final Act. 3.
Appellant argues that the present claims recite a graphical user
interface including the estimation of the risk that the inconsistent
information is resulting in the underwriting manipulation and the
underwriting submission of the plurality of sequential underwriting
submissions that is flagged, which is an improvement over prior systems.
Appeal Br. 10–12 (citing Spec. ¶¶ 9, 11; Example 37); Reply Br. 3–5.
Appellant argues the present claims do not preempt any abstract idea.
Appeal Br. 10. Appellant argues the present claims are an improvement to
other technology or technical field because there is no prior art rejection. Id.
at 14–15. Appellant argues the Examiner does not provide sufficient notice
of the reasons for patent ineligibility in the dependent claims analysis. Id. at
15. We disagree with Appellant.
D. Step 2A, Prong 1
Patent eligibility under 35 U.S.C. § 101 is a question that we resolve
pursuant to the MPEP §§ 2106.04(a), (d).5 The emphasized portions of
claim 1, reproduced above (see supra at 2–3)6, recite fundamental economic
principles or practices (including insurance or mitigating risk) because the
emphasized portions pertain to estimating risk from underwriting
manipulation, which Appellant concedes (see Appeal Br. 10). See MPEP

5 We, therefore, need not resolve Appellant’s arguments pertaining to the
Examiner’s alleged failure to perform the broadest reasonable interpretation
and the Examiner’s alleged failure to respond to Appellant’s remarks.
Appeal Br. 12–14.
6 We determine that the “receiving and storing” limitation amounts to
insignificant extra-solution activities.
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§§ 2106.04(a), (d).7 Fundamental economic principles or practices
(including insurance or mitigating risk) fall into the category of certain
methods of organizing human activity. Id. Certain methods of organizing
human activity are a type of abstract idea. Id.
In addition, the present claims recite “comparing,” “comparing,”
“determining . . . whether the inconsistent information is indicative of the
underwriting manipulation,” “generating . . . defect probability estimations
based on the determination of whether the inconsistent information is
indicative of the underwriting manipulation,” “estimating . . . a risk that the
inconsistent information is resulting in the underwriting manipulation based
on the defect probability estimations,” “flagging . . . an underwriting
submission of the plurality of sequential underwriting submissions based on
the defect probability estimations,” and “generating . . . a graphical user
interface including the estimation of the risk that the inconsistent
information is resulting in the underwriting manipulation and the
underwriting submission of the plurality of sequential underwriting
submissions that is flagged,” which are concepts performed in the human
mind (including an observation, evaluation, judgment, opinion) because
these steps can be performed using pen and paper. See MPEP
§§ 2106.04(a), (d). Concepts performed in the human mind (including an
observation, evaluation, judgment, opinion) fall into the category of mental
processes. Id. Mental processes are a type of abstract idea. Id.
We disagree with Appellant’s argument that the Examiner does not

7 The limitation “controlling, by the electronic processor, an electronic
display to display the graphical user interface” is an insignificant extra-
solution activity.
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provide sufficient notice of the reasons for patent ineligibility in the
dependent claims analysis. Appeal Br. 15. That is, we agree with the
Examiner’s conclusion that the dependent claims recite certain methods of
organizing human activity. Ans. 4–5; Final Act. 6.
We must still determine whether the abstract idea is integrated into a
practical application, namely whether the claim applies, relies on, or uses the
abstract idea in a manner that imposes a meaningful limit on the abstract
idea, such that the claim is more than a drafting effort designed to
monopolize the abstract idea. See MPEP §§ 2106.04(a), (d). We therefore
(1) identify whether there are any additional recited elements beyond the
abstract idea, and (2) evaluate those elements both individually and
collectively to determine whether they integrate the exception into a
practical application. See id.
Accordingly, we proceed to Prong 2.
E. Step 2A, Prong 2
Here, the elements in the present claims used to implement the
abstract idea are the “electronic processor,”8 “graphical user interface,”
“electronic display,” and “memory.”9 See MPEP §§ 2106.04(a), (d). We
agree with the Examiner’s conclusion that the additional elements of the
present claims do not integrate the abstract idea into a practical application
because they do not impose any meaningful limits on practicing the abstract
idea for the following reasons. Ans. 5.
Appellant does not identify persuasively how the Specification sets
forth an improvement in technology. Appeal Br. 10–12 (citing Spec. ¶¶ 9,

8 This feature is recited in claims 1, 7, and 13, but not recited in claim 25.
9 This feature is recited in claim 13, but not recited in claims 1, 7, and 25.
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11; Example 37); Reply Br. 3–5. The MPEP, which incorporates the Update
addresses how we consider evidence of improvement that is presented to us.
The Update states:
[T]he evaluation of Prong Two requires the use of the
considerations (e.g. improving technology, effecting a particular
treatment or prophylaxis, implementing with a particular
machine, etc.) identified by the Supreme Court and the Federal
Circuit, to ensure that the claim as a whole integrates [the]
judicial exception into a practical application [that] will apply,
rely on, or use the judicial exception in a manner that imposes a
meaningful limit on the judicial exception, such that the claim is
more than a drafting effort designed to monopolize the judicial
exception.
MPEP §§ 2106.04(a), (d) (citing Update 11 (emphases added)). The Update
further states:
During examination, the examiner should analyze the
“improvements” consideration by evaluating the specification
and the claims to ensure that a technical explanation of the
asserted improvement is present in the specification, and that the
claim reflects the asserted improvement. Generally, examiners
are not expected to make a qualitative judgment on the merits of
the asserted improvement. If the examiner concludes the
disclosed invention does not improve technology, the burden
shifts to applicant to provide persuasive arguments supported by
any necessary evidence to demonstrate that one of ordinary skill
in the art would understand that the disclosed invention improves
technology. Any such evidence submitted under 37 C.F.R.
§ 1.132 must establish what the specification would convey to
one of ordinary skill in the art and cannot be used to supplement
the specification. For example, in response to a rejection under
35 U.S.C. § 101, an applicant could submit a declaration under
§ 1.132 providing testimony on how one of ordinary skill in the
art would interpret the disclosed invention as improving
technology and the underlying factual basis for that conclusion.
MPEP §§ 2106.04(a), (d) (citing Update 13 (emphasis added)).
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We, therefore, focus on any evidence Appellant cites in its briefs, as
discussed in the Update. Appellant refers us to paragraphs 9 and 11 of the
Specification. Appeal Br. 10–12 (citing Spec. ¶¶ 9, 11). However,
paragraphs 9 and 11 discuss detecting underwriting manipulation, which is
an abstract idea as discussed supra in § D. Spec. ¶¶ 9, 11.
At best, this is an improvement to certain methods of organizing
human activity (i.e., an abstract idea as discussed supra in § D). Id.; see,
e.g., Synopsys, Inc. v. Mentor Graphics Corp., 839 F.3d 1138, 1151 (Fed.
Cir. 2016) (“[A] claim for a new abstract idea is still an abstract idea.”).
“[U]nder 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 . . . .” Genetic Techs. Ltd. v. Merial L.L.C., 818 F.3d 1369, 1376
(Fed. Cir. 2016) (citations omitted).
Furthermore, the additional elements in the present claims, namely
“electronic processor,” “graphical user interface,” “electronic display,” and
“memory” do not, either individually or in combination, integrate the
abstract idea into a practical application. In particular, Appellant’s
Specification discloses that these elements encompass generic computer
components. Spec. ¶¶ 16, 18, 21, 29, Figs. 4B–4D, 5C. Merely adding
generic computer components to perform abstract ideas does not integrate
those ideas into a practical application. See MPEP §§ 2106.04(a), (d) (citing
2019 Revised Guidance, 84 Fed. Reg. at 55 (identifying “merely includ[ing]
instructions to implement an abstract idea on a computer” as an example of
when an abstract idea has not been integrated into a practical application)).
We, therefore, disagree with Appellant’s argument that the present
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claims do not recite an abstract idea. Appeal Br. 10–12 (citing Example 37).
In addition, the claims in Example 37 are unlike the present claims because
the claims in Example 37 recite a mental process that pertain to a relocation
of icons on a graphical user interface; whereas, the present claims recite
certain methods of organizing human activity and a mental process (see
supra § D) for predicting underwriting manipulation and generating a
graphical user interface that displays information regarding a potential
underwriting manipulation based on the predicted underwriting
manipulation.
Appellant’s arguments that the present claims do not preempt any
abstract idea (Appeal Br. 10) do not persuade us that the claims are patent
eligible. Although preemption may denote patent ineligibility, its absence
does not demonstrate patent eligibility. See FairWarning IP, LLC v. Iatric
Sys., Inc., 839 F.3d 1089, 1098 (Fed. Cir. 2016). For claims covering a
patent-ineligible concept, preemption concerns “are fully addressed and
made moot” by an analysis under the Mayo/Alice framework. Ariosa
Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015).
We disagree with Appellant’s argument that the present claims are an
improvement to other technology or technical field because there is no prior
art rejection. Appeal Br. 14–15. Appellant improperly conflates the
requirements for patent-eligible subject matter (§ 101) with the independent
requirements of novelty (§ 102) and non-obviousness (§ 103). “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.” Diehr,
450 U.S. at 188–89; see also Genetic Techs. Ltd. v. Merial L.L.C., 818 F.3d
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1369, 1376 (Fed. Cir. 2016) (stating that, “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”).
We, therefore, conclude that the additional elements, whether
considered individually or as an ordered combination, do not integrate the
abstract idea into a practical application because the additional elements are
generic computer components that do not impose meaningful limits on
practicing the abstract idea.
Appellant does not make any other arguments pertaining to Step 2A,
Prong 2. Because we determine that the present claims recite an abstract
idea that is not integrated into a practical application, we proceed to Step 2B.
F. Step 2B
We determine the present claims do not amount to significantly more
than an abstract idea itself because the abstract idea is implemented using
additional elements that are well-understood, routine, and conventional.
Furthermore, the Specification indicates that the additional elements (i.e.,
“electronic processor,” “graphical user interface,” “electronic display,” and
“memory”) are nothing more than generic computer components. Spec.
¶¶ 16, 18, 21, 29, Figs. 4B–4D, 5C. Appellant’s Specification indicates
these additional elements were well-understood, routine, and conventional
components because it describes them at a high level of generality and in a
manner that indicates that they were sufficiently well-known. Id.
The additional elements, either individually or in combination, do not
amount to an inventive concept. Final Act. 3. An inventive concept “cannot
be furnished by the unpatentable law of nature (or natural phenomenon or
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abstract idea) itself.” Genetic, 818 F.3d at 1376; see also 2019 Revised
Guidance; Alice, 573 U.S. at 217 (explaining that, after determining a claim
is directed to a judicial exception, “we then ask, ‘[w]hat else is there in the
claims before us?”’ (alteration in original) (quoting Mayo, 566 U.S. at 78)).
Instead, an “inventive concept” is furnished by an element or combination of
elements that is recited in the claim in addition to the judicial exception and
sufficient to ensure the claim, as a whole, amounts to significantly more than
the judicial exception itself. Alice, 573 U.S. at 218–19 (citing Mayo, 566
U.S. at 72–73); see BSG Tech LLC v. BuySeasons, Inc., 899 F.3d 1281, 1290
(Fed. Cir. 2018) (explaining that the Supreme Court in Alice “only assessed
whether the claim limitations other than the invention’s use of the ineligible
concept to which it was directed were well-understood, routine and
conventional” (emphasis added)).
For at least the above reasons, we conclude that each of the present
claims, considered as a whole, is directed to a patent-ineligible abstract idea
that is not integrated into a practical application, and does not include an
inventive concept. We, therefore, sustain the Examiner’s rejection of:
(1) independent claims 1, 7, 13, and 25; and (2) dependent claims 2–6, 8–12,
and 14–18 under § 101.
We have only considered those arguments that Appellant actually
raised in the Briefs. Arguments Appellant could have made, but chose not to
make, in the Briefs have not been considered and are deemed to be waived.
See 37 C.F.R. § 41.37(c)(1)(iv).

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CONCLUSION

No time period for taking any subsequent action in connection with
this appeal may be extended under 37 C.F.R. § 1.136(a)(1)(iv). See
37 C.F.R. § 1.136(a)(1)(iv).

AFFIRMED

Claim(s)
Rejected
35 U.S.C.
§
Reference(s)/Basis Affirmed Reversed
1–18, 25 101 Eligibility 1–18, 25