GRAVIC, INC.

Patent Trials and Appeals Board

Oct 16, 2020

2020004340 (P.T.A.B. Oct. 16, 2020)

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.
13/752,967 01/29/2013 Bruce D. HOLENSTEIN 9203-78US 7409
570 7590 10/16/2020
PANITCH SCHWARZE BELISARIO & NADEL LLP
TWO COMMERCE SQUARE
2001 MARKET STREET, SUITE 2800
PHILADELPHIA, PA 19103
EXAMINER
NIQUETTE, ROBERT R
ART UNIT PAPER NUMBER
3696
NOTIFICATION DATE DELIVERY MODE
10/16/2020 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):
usptomail@panitchlaw.com
PTOL-90A (Rev. 04/07)

UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

Ex parte BRUCE D. HOLESTEIN, DYLAN HOLENSTEIN,
PAUL J. HOLENSTEIN, and WILBUR H. HIGHLEYMAN
____________

Appeal 2020-004340
Application 13/752,967
Technology Center 3600
____________

Before BIBHU R. MOHANTY, NINA L. MEDLOCK, and
MATTHEW J. McNEILL, and Administrative Patent Judges.

MOHANTY, Administrative Patent Judge.

DECISION ON APPEAL
STATEMENT OF THE CASE
Pursuant to 35 U.S.C. § 134(a), Appellant1 appeals from the
Examiner’s decision to reject claims 6–10, 18–20, 27–29, 31–35, 37, and 39-
41. We have jurisdiction under 35 U.S.C. § 6(b). Oral arguments were
presented on October 6, 2020 by telephone.2

1 We use the word Appellant to refer to “applicant” as defined in 37 C.F.R.
§ 1.42(a). Appellant identifies the real party in interest as Gravic, Inc.
Appeal Br. 5.
2 We note that the Exhibit “Oral Hearing Outline” was received on the date
of the oral hearing but after the oral hearing was completed. This paper
cannot be entered into the record as an official paper but we have considered
the document in light of the arguments presented by the Appellant.
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SUMMARY OF THE DECISION
We AFFIRM.
CLAIMED SUBJECT MATTER
The Appellant’s claimed invention relates to a method to reduce or
eliminate the time that a merchant is exposed to a fraudulent or disputed
transaction (Spec., page 13, lines 5, 6). Claim 27, reproduced below with
the italics added, is representative of the subject matter on appeal.

27. A method of automatically suspending delivery of a good or
service associated with a previous transaction by a merchant after
completion of the previous transaction when a payment instrument
used for the previous transaction has been identified as being suspect
as a result of suspect activity regarding the payment instrument that is
unrelated to the previous transaction, wherein the merchant has an
acquiring bank, and payment instruments used for merchant
transactions are from issuing banks that process chargebacks on
transactions, and wherein the payment instruments have payment
instrument indicia including a primary account number (PAN) of the
payment instrument, the method comprising:
(a) encrypting the PAN of any payment instrument indicia
which was used for completion of a previous transaction by the
merchant;
(b) receiving at a reporting processor from the merchant's
payment instrument terminal or from the merchant's acquiring bank
payment instrument indicia regarding the payment instrument which
was used for completion of the previous transaction by the merchant,
including the encrypted PAN of the payment instrument indicia;
(c) receiving at the reporting processor from one or more
transaction authorization networks or directly or indirectly from
payment instrument issuing banks payment instrument indicia
regarding payment instruments which have been identified as being
suspect as a result of activity regarding the payment instruments
which have been identified as being suspect, the activity being
unrelated to the previous transaction;
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(d) comparing in the reporting processor the payment
instrument indicia regarding the payment instrument that was
received in step (b) with the payment instrument indicia regarding
payment instruments that were received in step (c) to identify any
matching payment instrument indicia, the matching payment
instrument indicia being associated with the payment instrument used
by the merchant for completion of the previous transaction, wherein
the comparison uses the encrypted PAN of the payment instrument
indicia received in step (b) and PANs of the payment instrument
indicia received in step (c); and
(e) automatically suspending delivery of a good or service
associated with the previous transaction, prior to the merchant
receiving a chargeback on the previous transaction, for any matching
payment instrument identified in step (d).

THE REJECTION
The following rejection is before us for review:
Claims, 6–10, 18–20, 27–29, 31-35, 37, and 39–413 are rejected under
35 U.S.C. § 101 as being directed to patent-ineligible subject matter.

3 The Final Office Action Summary (PTOL-326) lists the pending and
rejected claims as both being claims 2, 6–10, 13, 17–20, 27–35, and 37–41
as does the status of claims at page 2 of that document. The Final Office
Action at page 4, however, lists the rejected claim set as being claims 1, 3–5,
11, 12, 14–16, 21–26, 36, and 42. Thus, the citation of the cancelled claims
as being rejected is considered a typographical error and the rejected claims
are considered the claim set that is currently pending. The Claims Appendix
of the Appeal Brief lists the claim pending as claims 6–10, 18–20, 27–29,
31–35, 37, and 39-41. The Appeal Brief at page 10 indicates that the
Appellant considers independent claims 27, 28, 29, and 37 rejected which is
in alignment with these being the rejected set of claims.
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FINDINGS OF FACT
We have determined that the findings of fact in the Analysis section
below are supported at least by a preponderance of the evidence.4

ANALYSIS
Rejection under 35 U.S.C. § 101
The Appellant argues that the rejection of claim 27 is improper
because the claim is not directed to an abstract idea (App. Br. 12–27; Reply
Br. 2–6). The Appellant argues further that the claim recites “significantly
more” than the alleged abstract idea (App. Br. 27–37; Reply Br. 3, 4, 6, 7).
In contrast, the Examiner has determined that the rejection of record is
proper (Final Action 2–18; Ans. 5–12).
We agree with the Examiner. An invention is patent eligible if it
claims a “new and useful process, machine, manufacture, or composition of
matter.” 35 U.S.C. § 101. However, the 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. E.g., 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 Supreme Court’s two-step framework, described in Mayo
and Alice. Id. at 217–18 (citing Mayo Collaborative Servs. v. Prometheus
Labs., Inc., 566 U.S. 66, 75–77 (2012)). In accordance with that framework,
we first determine what concept the claim is “directed to.” See Alice,

4 See Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1427 (Fed. Cir. 1988)
(explaining the general evidentiary standard for proceedings before the
Patent Office).
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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’ 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, 69 (1972)). Concepts
determined to be patent eligible include physical and chemical processes,
such as “molding rubber products” (Diamond v. Diehr, 450 U.S. 175, 192
(1981)); “tanning, dyeing, making waterproof cloth, vulcanizing India
rubber, smelting ores” (id. at 182 n.7 (quoting Corning v. Burden, 56 U.S.
252, 267–68 (1854))); and manufacturing flour (Benson, 409 U.S. at 69
(citing Cochrane v. Deener, 94 U.S. 780, 785 (1876))).
In Diehr, the claim at issue recited a mathematical formula, but the
Supreme 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 Supreme 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.”
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Id. (internal citation omitted) (citing Benson and Flook); see, 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.”).
In January 2019, the USPTO published revised guidance on the
application of § 101. 2019 Revised Patent Subject Matter Eligibility
Guidance, 84 Fed. Reg. 50 (Jan. 7, 2019) (“Guidance”). Under the
Guidance, we first look to whether the claim recites:
(1) any judicial exceptions, including certain groupings of
abstract ideas (i.e., mathematical concepts, certain methods of
organizing human activity such as a fundamental economic
practice, or mental processes); and
(2) additional elements that integrate the judicial exception into
a practical application, i.e., evaluate whether the claim
“appl[ies], rel[ies] on, or use[s] 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.” (see Guidance, 84 Fed. Reg.
at 54; see also MPEP § 2106.05(a)–(c), (e)–(h)).
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, conventional” in the field (see
MPEP § 2106.05(d)); or
(4) simply appends well-understood, routine, conventional
activities previously known to the industry, specified at a high
level of generality, to the judicial exception.
See Guidance, 84 Fed. Reg. at 56.
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
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concept’ sufficient to ‘transform’ the claimed abstract idea into a patent-
eligible application.” Alice, 573 U.S. at 221 (citation 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.
The Specification at page 13, lines 5, 6 states that the invention
generally relates to a method to reduce or eliminate the time that a merchant
is exposed to a fraudulent or disputed transaction. Here, the Examiner has
determined that claim 27 sets forth “a method reducing the time to notify a
merchant of a potentially fraudulent transaction” (Ans. 6). We substantially
agree with the Examiner. We determine that the claim sets forth the subject
matter in italics above, which describes the concept of: [1] “(a) encrypting
the PAN of any payment instrument indicia”; [2] “(b) receiving . . . indicia
regarding the payment instrument which was used for completion of the
previous transaction by the merchant, including the encrypted PAN of the
payment instrument indicia”; [3] “(c) receiving at the reporting processor
from one or more transaction authorization networks . . . indicia regarding
payment instruments which have been identified as being suspect as a result
of activity regarding the payment instruments which have been identified as
being suspect”; [4] “(d) comparing in the reporting processor the payment
instrument indicia regarding the payment instrument that was received in
step (b) with the payment instrument indicia regarding payment instruments
that were received in step (c) to identify any matching payment instrument
indicia, the matching payment instrument indicia being associated with the
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payment instrument used by the merchant for completion of the previous
transaction, wherein the comparison uses the encrypted PAN of the payment
instrument indicia received in step (b) and PANs of the payment instrument
indicia received in step (c)”; and [5] “(e) automatically suspending delivery
of a good or service associated with the previous transaction, prior to the
merchant receiving a chargeback on the previous transaction, for any
matching payment instrument identified in step (d),” which is a certain
method of organizing human activities and fundamental economic practice,
i.e. a judicial exception.
In Inventor Holdings, LLC v. Bed Bath & Beyond Inc., 876 F.3d 1372,
1378 (Fed. Cir. 2017), claims directed to the local processing of payments
for remotely purchased goods were held to be directed to an abstract idea. In
Fairwarning IP, LLC v. Iatiric Systems, Inc., 839 F.3d 1089, 1094 (Fed. Cir.
2016), it was held that claims directed to collecting and analyzing
information to detect misuse and notifying a user when misuse is detected
were directed to an abstract idea. See also Elec. Power Grp., LLC v. Alstom
S.A., 830 F.3d 1350 (Fed. Cir. 2016) (collecting information, analyzing it,
and displaying results from certain results of the collection and analysis was
held to be an abstract idea).
We next determine whether claim 27 recites additional elements that
integrate the judicial exception into a practical application. See Guidance,
84 Fed. Reg. at 54–55. The Revised Guidance references the MANUAL OF
PATENT EXAMINING PROCEDURE (“MPEP”) § 2106.05(a)–(c) and (e)–(h).
Here, the claim does not improve computer functionality, improve
another field of technology, utilize a particular machine, or effect a
particular physical transformation. Rather, we determine that nothing in the
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claim imposes a meaningful limit on the judicial exception, such that the
claim is more than a drafting effort to monopolize the judicial exception.
For example, in the claim, the additional elements beyond the abstract
idea are the recited “reporting processor,” “payment instrumental terminal,”
and “transaction authorization networks.” These are considered to be
generic computer components. The claimed limitations of “encrypting,”
“receiving,” and “comparing,” as claimed, “do not purport to improve the
functioning of the computer itself,” do not improve technology or a technical
field, and do not require a “particular machine.” Rather, they are performed
using generic computer components. Further, the claim as a whole fails to
effect any particular transformation of an article to a different state. The
recited steps in the claim fail to provide meaningful limitations to limit the
judicial exception. In this case, the claim merely uses the claimed computer
elements as a tool to perform the abstract idea.
Considering the elements of the claim both individually and as “an
ordered combination” the functions performed by the computer system at
each step of the process are purely conventional. Each step of the claimed
method does no more than require a generic computer to perform a generic
computer function. Thus, the claimed elements have not been shown to
integrate the judicial exception into a practical application as set forth in the
Revised Guidance which references the MANUAL OF PATENT EXAMINING
PROCEDURE (“MPEP”) § 2106.05(a)–(c) and (e)–(h).
Turning to the second step of the Alice and Mayo framework, we
determine that the claim does not contain an inventive concept sufficient to
“transform” the abstract nature of the claim into a patent-eligible application.
Considering the claim elements, both individually and as an ordered
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combination, fails to add subject matter beyond the judicial exception that is
not well-understood, routine, and conventional in the field. Rather, the
claim uses well-understood, routine, and conventional activities previously
known in the art and they are recited at a high level of generality. The
Specification at page 25, for example, describes using conventional
computer components such as a desktop, laptop, tablet computer, and
networks in a conventional manner. The claim specifically includes
recitations for computers to implement the method but these computer
components are all used in a manner that is well-understood, routine, and
conventional in the field. Here, the claimed generic computer components,
which are used to implement the claimed method are well understood,
routine, or conventional in the field. Here, the claim has not been shown to
be “significantly more” than the abstract idea.
We note the point about pre-emption (App. Br. 32, 33). Although pre-
emption “‘might tend to impede innovation more than it would tend to
promote it,’ thereby thwarting the primary object of the patent laws” (Alice,
573 U.S. at 216 (quoting Mayo, 566 U.S. at 71)), “the absence of complete
preemption does not demonstrate patent eligibility.” 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)
(“[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.”).
For these above reasons the rejection of claim 27 is sustained. The
same arguments have been presented for the remaining claims, which are
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drawn to similar subject matter and the rejection of these claims is sustained
for the same reasons given above.

CONCLUSIONS OF LAW
We conclude that Appellant has not shown that the Examiner erred in
rejecting claims 6–10, 18–20, 27–29, 31–35, 37, and 39-41are rejected under
35 U.S.C. § 101
DECISION SUMMARY
Claims
Rejected
35 U.S.C. § Reference(s)/Basis Affirmed Reversed
6–10, 18–
20, 27–29,
31–35, 37,
39-41
101 Eligibility 2, 6–10, 13,
17–20, 27–
35, 37–41

TIME PERIOD FOR RESPONSE
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.
§ 1.136(a)(1)(iv).
AFFIRMED