Hideki Komatsu

Patent Trials and Appeals Board

Aug 27, 2019

14680470 - (D) (P.T.A.B. Aug. 27, 2019)

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.
14/680,470 04/07/2015 Hideki KOMATSU CU-71916 AVL 2788
26530 7590 08/27/2019
LADAS & PARRY LLP
224 SOUTH MICHIGAN AVENUE
SUITE 1600
CHICAGO, IL 60604
EXAMINER
MANSFIELD, THOMAS L
ART UNIT PAPER NUMBER
3623
NOTIFICATION DATE DELIVERY MODE
08/27/2019 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):
ChicagoUSPTO@ladas.net
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

Ex parte HIDEKI KOMATSU1
____________

Appeal 2018-006371
Application 14/680,470
Technology Center 3600
____________

Before TONI R. SCHEINER, RICHARD M. LEBOVITZ, and
DEBORAH KATZ, Administrative Patent Judges.

LEBOVITZ, Administrative Patent Judge.

DECISION ON APPEAL
The claims in this appeal are directed to a stock management system.
The Examiner rejected the claims under 35 U.S.C. § 101 as reciting patent
ineligible subject matter and under 35 U.S.C. § 103 as obvious. Pursuant to
35 U.S.C. § 134, Appellant appeals the Examiner’s determination that the
claims are unpatentable. We have jurisdiction for the appeal under
35 U.S.C. § 6(b). The Examiner’s decision is affirmed.

1 The Appeal Brief (“Br.”), entered Nov. 27, 2017 lists R Five Corporation
as the Real Party in Interest. Br. 2.
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STATEMENT OF THE CASE
The Examiner finally rejected the claims as follows:
Claims 1–4 and 6–13 under 35 U.S.C. § 101 because the claimed
invention is directed to a judicial exception to patent eligibility. Ans. 3.
Claims 1–4 and 6–13 under 35 U.S.C. § 103 as obvious over, SAS
Inst. Inc., 1999 SAS/ETS® User’s Guide, Version 8. Cary, NC, (“SAS”), in
view of Dvorak et al. (US 7,092,929 B1, issued Aug. 15, 2006) (“Dvorak”).
Ans. 8.
Independent claim 1 is representative. The claim is reproduced below
(bracketed numbering added for reference):
1. A stock management system, including [1] a fluctuation
value forecasting unit configured to output a future forecasting
value from time series data of fluctuation values by using a
plurality of ARIMA models,
wherein the time series data includes time series data of
actual values representing sales quantities of predetermined
goods,
wherein the actual values representing sales quantities are
received via a network,
wherein the fluctuation value forecasting unit executes a
process by a CPU, to calculate the forecasting values for data
series obtained for each of the ARIMA models, by
(1) defining multiple degree patterns of the model of the
obtained data series,
(2) estimating ARIMA parameters for each of the degree
patterns,
(3) calculating an AICC (Akaike Information Criterion
with Correction) and an error index for each of the degrees
having the parameters determined,
(4) selecting an optimum degree pattern based on the
AICCs and the error indices, and
(5) based on the ARIMA parameters of the selected
degree pattern, using a predetermined formula, calculating
forecasting value series and residual series to
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calculate the forecasting values, comprising:
[2] a first forecasting unit configured to have the
fluctuation value forecasting unit calculate, by the CPU, first
forecasting values, by using the plurality of the ARlMA
models, respectively, the ARIMA models being determined by
using the time series data stored in a predetermined storage
area;
[3] an index value calculation unit configured to
calculate, by the CPU, a first index value and a second index
value, for each of the ARIMA models, by using the first
forecasting values calculated by the first forecasting unit;
[4] a model selection unit configured to select, by the
CPU, one ARIMA model among the plurality of ARlMA
models, based on the fast index values and the second index
values calculated by the index value calculation unit; and
[5] a second forecasting unit configured to have the
fluctuation value forecasting unit calculate, by the CPU, a
second forecasting value as the future forecasting value of the
time series data, by using the one ARIMA model selected by
the model selection unit,
wherein the first index value is a first average stock
calculated by an accumulated error method, based on an error
between the first forecasting value and the corresponding actual
value in the time series data,
wherein the accumulated error method is a method for
delivering, ordering, and producing the goods,
wherein the second index value is a second average stock
calculated by an error adjustment method, based on an error
between the first forecasting value and the corresponding actual
value in the time series data, and a lead time of the goods,
wherein the lead time of the goods is a period that is
required from order to delivery of the goods.

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SECTION 101 REJECTION
The Examiner rejected claims 1–4 and 6–13 under 35 U.S.C. § 101 as
directed to a judicial exception to patent eligibility. Ans. 3. The Examiner
found that the claims are directed to an abstract idea and organizing human
activity. Final Act. 7; Ans. 3, 7.
Under 35 U.S.C. § 101, an invention is patent-eligible if it claims a
“new and useful process, machine, manufacture, or composition of matter.”
However, not every discovery is eligible for patent protection. Diamond v.
Diehr, 450 U.S. 175, 185 (1981). “Excluded from such patent protection are
laws of nature, natural phenomena, and abstract ideas.” Id. The Supreme
Court articulated a two-step analysis to determine whether a claim falls
within an excluded category of invention. Alice Corp. v. CLS Bank Int’l,
573 U.S. 208, 216 (2014); Mayo Collaborative Servs. v. Prometheus Labs,
Inc., 566 U.S. 66, 75–77 (2012).
In the first step, it is determined “whether the claims at issue are
directed to one of those patent-ineligible concepts.” Alice, 566 U.S. at 217.
If it is determined that the claims are directed to an ineligible concept, then
the second step of the two-part analysis is applied in which it is asked
“[w]hat else is there in the claims before us?” Id. The Court explained that
this step involves
a search for an “inventive concept” – i.e., an element or
combination of elements that is “sufficient to ensure that the
patent in practice amounts to significantly more than a patent
upon the [ineligible concept] itself.”

Alice, 566 U.S. at 217–18 (alterations in original) (citing from Mayo, 566
U.S. at 75–77).
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Alice, relying on the analysis in Mayo of a claim directed to a law of
nature, stated that in the second part of the analysis “the elements of each
claim both individually and ‘as an ordered combination’” must be
considered “to determine whether the additional elements ‘transform the
nature of the claim’ into a patent-eligible application. Alice, 566 U.S. at
217.
The PTO recently published revised guidance on the application of
§ 101. USPTO’s January 7, 2019 Memorandum, 2019 Revised Patent
Subject Matter Eligibility Guidance, 84 Fed. Reg. 50, 51–57 (Jan. 7, 2019)
(“2019 Eligibility Guidance”). This guidance provides direction on how to
implement the two-part analysis of Mayo and Alice.
Step 2A, Prong One, of the 2019 Guidelines, looks at the specific
limitations in the claim to determine whether the claim recites a judicial
exception to patent eligibility. In Step 2A, Prong Two, the claims are
examined to identify whether there are additional elements in the claims that
integrate the exception in a practical application, namely, is there a
“meaningful limit on the judicial exception, such that the claim is more than
a drafting effort designed to monopolize the judicial exception.” 84 Fed.
Reg. at 53 (“2. Prong Two”).
If the exception is not integrated into a practical application, then as in
the Mayo/Alice framework, Step 2B of the 2019 Guidelines asks whether
there is an inventive concept to ensure that the patent is significantly more
than a patent on the ineligible concept, itself. In making this determination,
it must be considered whether there are specific limitations or elements are
recited in the claim “that are not well-understood, routine, conventional
activity in the field, which is indicative that an inventive concept may be
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present” or whether the claim “simply appends well-understood, routine,
conventional activities previously known to the industry, specified at a high
level of generality, to the judicial exception, indicative that an inventive
concept may not be present.” 84 Fed. Reg. at 56.
With these guiding principles, we proceed to determine whether the
claimed subject matter in this appeal is eligible for patent protection under
35 U.S.C. § 101. As explained in more detail below, we conclude that the
claims are directed to patent-ineligible subject matter.

Step 2A, Prong One
In Step 2A, Prong One, of the 2019 Guidelines, the specific
limitations in the claim are examined to determine whether the claim recites
a judicial exception to patent eligibility, namely whether the claim recites an
abstract idea, law of nature, or natural phenomenon. The Examiner found
that the claims recite an abstract idea. Final Act. 7.
The 2019 Eligibility Guidance identifies three groupings identified as
abstract ideas. 84 Fed. Reg. 52. As explained in more detail below, the
subject matter of the claim fits into grouping “(a) Mathematical concepts–
mathematical relationships, mathematical formulas or equations,
mathematical calculation” and “(c) Mental processes.”
Claim 1 is directed to a “stock management system.” The system
comprises:
[1] “a fluctuation value forecasting unit”;
[2] “a first forecasting unit”;
[3] “an index value calculation unit”;
[4] “a model selection unit”; and
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[5] “a second forecasting unit.”
The claim does not define expressly what is being forecasted by the
ARIMA model, but it would be understood from the claim preamble (“stock
management system”) and Specification that the claim is forecasting a
quantity of goods. Consistently, the Specification discloses:
The stock management system 10 in the present embodiment
includes a fluctuation value forecasting system as a part that
forecasts change of a future fluctuation quantity based on time
series data of the fluctuation quantity in the past. Therefore, the
stock management system 10 in the present embodiment is a
system that is suitable for forecasting future sales quantities of
multiple goods at a supermarket, a department store, a
convenience store or the like, by using a result of sales quantities
in the past as time series data, and based on this forecasting
result, estimating optimum quantities to be additionally bought
(delivery quantities or production quantities) to manage the
stock.
Spec. 6:5–19 (emphasis added).
The [1] “fluctuation value forecasting unit” of claim 1 is configured
“to output a future forecasting value from time series data of fluctuation
values by using a plurality of ARIMA models.” ARIMA is shorthand for
“Auto-Regressive Integrated Moving Average” model. Spec. 1:13–16.
ARIMA is described in the Background section of the Specification as a
model “based on finite difference equations” with its “core part” represented
by a formula for estimating optimal parameters. Spec. 1:13–31. The “time
series data” is recited in the claim to correspond to “sales quantities of
predetermined goods.”
The fluctuation value forecasting unit “executes a process by CPU, to
calculate the forecasting values for data series obtained for each of the
ARIMA models.” The subsequent process comprises five steps which
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comprise (3) “calculating” an AICC and error index, (4) “selecting” optimal
patterns, and (5) “calculating forecasting values.” Each of these steps
accomplish mathematical operations for the purpose of outputting future
forecasting values for quantities of predetermined goods. While the
operations are performed for the purpose stock management, Appellant has
not identified a step executed by the CPU of the [1] fluctuation value
forecasting unit that is anything other than mathematical operations applied
to sale quantities data “received via a network” as recited in the claim.
The [2] “first forecasting unit” is configured “to have the fluctuation
value forecasting unit calculate, by the CPU, first forecasting values.” The
claimed unit therefore performs calculations which are mathematical
operations on sales quantities. All the operations are mathematical in nature.
The [3] “index value calculation unit” is configured “to calculate, by
the CPU, a first index value and a second index value, for each of the
ARIMA models. The claim further defines both the index values in terms of
calculations which are performed:
[T]he first index value is a first average stock calculated by an
accumulated error method, based on an error between the first
forecasting value and the corresponding actual value in the time
series data.
The second index value is a second average stock calculated by
an error adjustment method, based on an error between the first
forecasting value and the corresponding actual value in the time
series data, and a lead time of the goods
The operations performed by this unit are calculations and therefore also
represent ineligible mathematical concepts.
The [4] “model selection unit” selects one ARIMA model “based on
the first index values and the second index values calculated by the index
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value calculation unit.” The claim does not specify how the selection is
performed. However, dependent claim 4 further limits the [4] “model
selection unit” by reciting how the selection is performed: “the one ARIMA
model having a lowest value of the first index value or the second index
value, among the first index values and the second index values of the
plurality of ARIMA models.” This step falls in the third category of abstract
ideas set forth in the 2019 Guidelines, “(c) Mental processes” because, while
it is performed on a CPU, it is an “observation, evaluation” capable of being
“performed in the human mind.” 84 Fed. Reg. at 52.
The [5] “second forecasting unit” is configured to have the fluctuation
value forecasting unit calculate, by the CPU, a second forecasting value as
the future forecasting value of the time series data, by using the one ARIMA
model selected by the model selection unit.” The unit calculates a second
forecasting value using the selected ARIMA model. This step is therefore
also a mathematical concept because it performs a calculation.
In sum, claim 1 comprises five different processing units, four of
which perform mathematical operations and one of which performs a mental
process. The steps in the claim result in the selection of a single ARIMA
model, which is a mathematical model (Spec. 1:12–31), that is subsequently
used by the [5] “second forecasting unit” to calculate a “second forecasting
value.” Accordingly, we conclude that the claim recites an abstract idea.

Step 2A, Prong Two
Prong Two of Step 2A under the 2019 Guidance asks whether there
are additional elements that integrate the exception into a practical
application. As in the Mayo/Alice framework, we must look at the claim
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elements individually and “as an ordered combination” to determine whether
the additional elements integrate the recited abstract idea into a practical
application.
As explained above, the steps of the claim recite mathematical
calculations and a mental process which result in a second forecasting value,
for forecasting future sales quantities of multiple goods at a supermarket, a
department store, a convenience store, and the like (Spec. 6:5–23). The
claim performs several of these calculations using, or based on, a “time
series data of actual values representing sales quantities of predetermined
goods . . . received via a network.” Claim 1 (first and second “wherein”
clauses). The claimed mathematical operations are therefore performed on
data which is obtained from actual sales of goods. The key question is
whether performing these mathematical concepts on “actual values
representing sale quantities of predetermined goods” is sufficient to confer
patent eligibility on the claim. In our opinion, it is not.
Claim 1 does not include a step in which the forecasting value
produced as a result of the [5] mathematical operations performed by the
second forecasting unit is used to physically manage the stock. While we
agree with Appellant that the claimed stock management system “deals with
existing and physical goods,” Appellant has not identified a step in the claim
where the “forecasting value” derived in the claim is used in a practical way
to manage the stocked goods. Br. 6. The improvement is to the
mathematical operations to forecast the quantity of physical goods that
should be stocked in a store, but not to the process, itself, of stocking the
store. Parker v. Flook, 437 U.S. 584 (1978) clearly held that it is the
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process, itself, which must be improved not merely the mathematical
operations performed in the claim.
In Flook, 437 U.S. at 594–95, claims to updating alarm limits were
found to be ineligible for patent, despite providing “a new and presumably
better method for calculating alarm limit values.” In Flook, the claim was
directed to a “method for updating the value of at least one alarm limit on at
least one process variable involved in a process comprising the catalytic
chemical conversion of hydrocarbons.” Flook, 437 U.S. at 596–97
(Appendix to Opinion). The steps comprised determining a new alarm base
using a mathematical algorithm, using the alarm base to update an alarm
limit, and then adjusting the alarm limit to the updated value. Id. The Court
found the claim to be a judicial exception to subject matter ineligibility. The
Court held that “[t]he process itself, not merely the mathematical algorithm,
must be new and useful.” Id. at 591.
Similarly, the rejected claims in this appeal are to updating a stocking
forecasting value using a series of mathematical equations. As in Flook,
while the method is being applied to a physical process – catalytic chemical
conversion in Flook and stock management in the instant claims – the
technological improvement is to the math, not to the physical process or how
it is applied to the physical process.
The recitation of mathematical operations in a claim does not
necessarily make the claim ineligible for a patent. In Diamond v. Diehr, 450
U.S. 175 (1981), the claims were directed to a method of operating a rubber-
molding press to mold a compound by curing it in a mold cavity.
Application of Diehr, 602 F.2d 982, 983–84 (CCPA 1979) (“Application of
Diehr”; lower court decision; Diehr did not reproduce the claims, but
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Application of Diehr did.). The temperature in the mold during the rubber-
molding process was constantly determined and provided to a digital
computer. Id. The computer calculated the Arrhenius equation for the
reaction time during the cure to determine when the compound was cured
and to automatically open the press. Id. Although the claim recited a
mathematical algorithm, the Arrhenius equation, the Court held that the
claim was eligible for a patent.
[W]hen a claim containing a mathematical formula implements
or applies that formula in a structure or process which, when
considered as a whole, is performing a function which the
patent laws were designed to protect (e.g., transforming or
reducing an article to a different state or thing), then the claim
satisfies the requirements of § 101.

Diehr, 450 U.S. at 192–93.
In this case, the mathematical concepts recited in claim 1 are not used
to control a physical process in the same way they were in Diehr. While the
mathematical steps in the rejected claims instruct how much of a good to
place in inventory, it does not change how the stocking process in carried
out in a physical way as it did in Diehr by informing the skilled worker
when to open the mold to obtain the cured product.
Appellant argues that the claimed stocking system is an improvement
to a technology used in the marketplace which is therefore eligible for a
patent. Br. 5–6.
We do not disagree with Appellant that the recited “stock
management system” is a technology which is not per se ineligible for a
patent under Section 101. However, the pertinent question is narrower and
asks whether the claim as a whole integrates the abstract idea into a practical
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application. Here, the math does not change how the process is
accomplished as it did in Diehr where the mathematical formula was used to
determine that the rubber compound was cured to know when to open the
mold. Rather, the stocking process in the rejected claims is not improved or
changed. The only change is to the quantity of goods that must be stocked
to conform to a forecasted value. The improvement is therefore not to how
the goods are stocked, or to the process of stocking, but in how to determine
an amount of goods to meet a certain need, which is a mathematical and
abstract concept. Indeed, stocking is not even required by the claim.
We have considered the declaration under 37 C.F.R. § 1.132 by
Hideki Komatsu (“Decl.”), the inventor of the claimed subject matter, in
which he provided “experimental results of the claimed invention.” Decl.
¶ 2. Mr. Komatsu stated:
FIG. 25 on page 57 illustrates that the inventory at a home
center Shop D has reduced to the objective inventory in
approximately six months, whereas the sales at the shop have
been maintained as illustrated in FIG. 26. Thus, unnecessary
inventory has been successfully reduced.

Decl. ¶ 3. See also Decl. ¶ 4. (“As can be seen, for all of the goods, the real
inventory can be reduced to the forecasted inventory by applying the
presently claimed invention.”)
It is evident from Mr. Komatsu’s declaration that the “claimed
invention” is an improvement to the mathematical concepts used to
determine how to maintain sales, while reducing unnecessary inventory.2

2 This statement about the invention relating to “sales” supports the
Examiner’s determination that the claim is ineligible for a patent as being a
business method (see Ans. 5), the second category of ineligible concepts,
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Appellant cites to McRO, Inc. v. Bandai Namco Games Am. Inc., 837
F.3d 1299, 1313 (Fed. Cir. 2016) (Br. 9), but the rejected claims in this
appeal are clearly distinguishable from those in McRO. In McRO, the court
found that, while the McRO claims involved the manipulation of data, e.g.,
generating morph weight sets to animate lip and facial expressions of three
dimensional characters, the claimed “automation goes beyond merely
‘organizing [existing] information into a new form’ or carrying out a
fundamental economic practice.” McRO, 837 F.3d at 1315 (citation
omitted). Instead, the court found that the “claimed process uses a combined
order of specific rules that renders information into a specific format that is
then used and applied to create desired results: a sequence of synchronized,
animated characters.” Id. The rejected claims in this case are different
because the specific rules are used to determine the quantity of goods to
store in an inventory to meet a specific need; the only result accomplished
by the claim is a mathematical solution to stock management.
Claim 1 recites that the first index value is “calculated by an
accumulated error method” and is “a method for delivering, ordering, and
producing the goods.” (See “wherein” clauses which follow [5] second
forecasting unit.) Appellant identified this step in their Appeal Brief at page
6, but did not explain how this step is carried out. Neither does the
Specification. Spec. 20:20–25. Figure 7 is referenced in the Specification as
illustrating “the accumulated error method” which “is a method for
delivering, ordering and producing goods.” Id. Figure 7, however, shows

namely 9b. “Certain methods of organizing human activity–fundamental
economic principles or practices.” 84 Fed. Reg. 52. However, we have not
addressed the business method aspect of the claim.

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calculations based on “Stock Quantity” and “Delivered Goods Quantity,”
indicating that the method is a mathematical calculation as is the rest of
claim 1. Thus, we do not see how this recited step confers a practical
application on the mathematical concepts performed in claim 1 to determine
the quantities of gods to be stocked.
Appellant argues:
The present claims 1, 9, and 10 are tied to a specific structure of
various components (networks, gatherer of actual sales
quantities of predetermined goods, a fluctuation value
forecasting calculator, a central database, and terminals to send
actual sales quantities of predetermined goods) akin to claim 1
of the ’065 patent which “tied to a specific structure of various
components (network devices, gatherers, ISMs, a central event
manager, a central database, a user interface server, and
terminals or clients).” Amdocs (Israel) Ltd. v. Openet Telecom,
Inc., 841 F.3d 1288, 1301 (Fed. Cir. 2016).
Br. 7.
We do not agree that Amdocs is pertinent to the rejected claims. In
Amdocs, the claims were found to be patent eligible under 35 U.S.C. § 101
because “the claim’s enhancing limitation necessarily requires that these
generic components [network devices, etc.] operate in an unconventional
manner to achieve an improvement in computer functionality.” Amdocs,
841 F.3d at 1300–01. However, here the improvement asserted by
Appellant is not to the CPU, but rather to the mathematical steps used to
select the best ARIMA model, which is acknowledged in the Specification
to be a mathematical model (Spec. 1:11–31) and then to calculate a
forecasting value to manage goods based on the model.

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Step 2B
As discussed above, if the exception is not integrated into a practical
application, then Step 2B of the 2019 Guidelines, as in the Mayo/Alice
framework, asks whether there is an inventive concept. To determine
whether an unpatentable law of nature has been transformed “into a patent-
eligible application of such law,” the Court in Mayo held that the claim as a
whole must be examined to determine whether it “also contain[s] other
elements or a combination of elements, sometimes referred to as an
‘inventive concept,’ sufficient to ensure that the patent in practice amounts
to significantly more than a patent upon the natural law itself.” Mayo, 566
U.S. at 72–73. As explained in Flook:
Even though a phenomenon of nature or mathematical formula
may be well known, an inventive application of the principle
may be patented. Conversely, the discovery of such a
phenomenon cannot support a patent unless there is some other
inventive concept in its application.

Flook, 437 U.S. at 594.
In this step, we also consider whether the elements recited in the claim
constitute “well-understood, routine, conventional activities previously
known to the industry, specified at a high level of generality.” 84 Fed. Reg.
56.
Appellant argues that the claims “achieve a technological solution by
reducing actual stock to a technological problem.” Br. 7. This argument
does not persuade us that the Examiner erred in rejecting the claims. As
discussed above, Appellant has not identified a specific step in the claim
which requires the abstract idea recited in the claims to be applied to actually
changing the amount of stock to deliver to a store based on the forecasted
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value. The claim therefore does not necessarily achieve a reduction in stock
as asserted by Appellant, but rather is broad enough to include an
improvement to the forecasting model, alone.
To the extent that the claims include embodiments that would alter the
quantity of goods delivered to a store, we consider this to be the same type
of “post-solution activity” of adjusting an alarm that the Court in Flook
found to be insufficient to establish patent eligibility to the claim because the
claim as a whole was not “an inventive application of the principle.” Flook,
437 U.S. at 594. The Court found:
The chemical processes involved in catalytic conversion of
hydrocarbons are well known, as are the practice of monitoring
the chemical process variables, the use of alarm limits to trigger
alarms, the notion that alarm limit values must be recomputed
and readjusted, and the use of computers for “automatic
monitoring alarming.” Respondent’s application simply
provides a new and presumably better method for calculating
alarm limits.
Flook, 437 U.S. at 594 (footnote omitted).
Here, adjusting the quantity of goods based on the forecasting value is
not “an inventive application of the principle” because the improvement is to
the mathematical concepts, not to the stocking process itself. Appellant’s
characterization of the claims in the Brief does not even identify a physical
step in the claim.3 The actual stocking of goods does not make the claim
patentable because it is “well-understood, routine, conventional activities

3 “Rather, the claimed invention at least includes carefully selecting one
ARIMA model based on the first and second index values; calculating the
first and second index values based on different methods using a first
forecasting value, actual sales quantities, and physical delivery time of the
goods; and having the fluctuation value forecasting unit calculate a second
forecasting value.” Br. 9–10.
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previously known to the industry, specified at a high level of generality.” 84
Fed. Reg. 56. As Flook put it: “Very simply, our holding today is that a
claim for an improved method of calculation, even when tied to a specific
end use, is unpatentable subject matter under § 101.” Flook, 437 U.S. at 594
n.18.
Summary
For the foregoing reasons, we conclude that the Examiner’s
determination that claim 1 recites an abstract idea and thus is ineligible for a
patent under 35 U.S.C. § 101. Appellant’s argument for claim 9 and 10 are
the same as those for claim 1, and thus these claim are unpatentable for the
same reasons. Claims 2–4, 6–8, and 11–13 fall with claims 1, 9, and 10
because separate reasons for their patentability were not provided. 37 C.F.R.
41.37(c)(1)(iv).
SECTION 103 REJECTION
The Examiner found that SAS describes a stock management system
comprising the specific units and programmed instructions recited in claims
1, 9, and 10 (Final Act. 10–13), but found that SAS does not describe a
CPU, “lead time of the goods is a period that is required from order to
delivery of the goods,” or “wherein the accumulated error method is a
method for delivering, ordering, and producing the goods,” each of which is
required by the claims (id. at 14–15) (emphasis omitted). To meet these
deficiencies, the Examiner further cited in the disclosure in Dvorak and
explained why these limitations would have been obvious to one of ordinary
skill in the art. Id.
Appellant does not challenge the Examiner’s findings regarding
Dvorak. Consequently, we considered this issue waived as no arguments
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were presented to challenge the obviousness of applying Dvorak to SAS.
(See In re Berger, 279 F.3d 975, 984 (Fed. Cir. 2002) (in which the Board
affirmed an uncontested rejection of claims under 35 U.S.C. § 112, second
paragraph, and on appeal the Federal Circuit affirmed the Board’s decision
and found that the Appellant had waived his right to contest the
indefiniteness rejection by not presenting arguments as to error in the
rejection on appeal to the Board.))
Appellant argues:
page 25 of SAS does not disclose the first average stock
calculated by an accumulated error method and the second
average stock calculated by an error adjustment method.
page 544 of SAS does not also disclose the first average stock
calculated by an accumulated error method and the second
average stock calculated by an error adjustment method.
SAS does not disclose the specific ways to calculate the average
stocks such as the error adjustment method and the accumulated
error method.
Br. 11–12.
Appellant’s contention about the deficiency of SAS is based on the
Examiner’s finding on page 13 of the Final Action citing pages 25 and 544
of SAS for describing the recited first and second average stock values.
However, on page 12 of the Final Action, the Examiner had also cited to
other disclosure in SAS for these limitations:
an index value calculation unit configured to calculate a
first index value (Smoothing Methods; time ID variables; Root
Mean Square Error; R-Square) and a second index value
(Smoothing Weights; SERIES; Mean Absolute Error), for each
of the AR/MA models, by using the first forecasting values
calculated by the first forecasting unit (Display 23.19 shows the
default simple format. This form of the forecast data set
contains time ID variables and the variables that you forecast.
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The forecast variables contain actual values or predicted values,
depending on whether the date of the observation is within the
range of data supplied in the input data set; The system
provides many measures of fit that you can use as the model
selection criterion) (see at least pages 1243-1245, 1256-1257,
Display 25.25).
Final Act. 12.
As pointed about by the Examiner, Appellant did not address the
disclosure reproduced above which explained how the first and second index
values are calculated in SAS utilizing error measurements. Although this
disclosure was specifically cited in the Final Action, Appellant did not
distinguish it in the Appeal Brief nor explain how the error measurements
the Examiner cited from SAS do not meet or make obvious the claimed
“error adjustment method” and “accumulated error method.”
With respect to the disclosures on pages 25 and 544 of SAS which
Appellant distinguished, the Examiner responded to these arguments by
explaining the significance of the disclosures. Ans. 9. As indicated by the
Examiner, they were not cited for the error methods, but rather for other
aspects of the claim. Id. Thus, Appellant’s arguments regarding SAS’s lack
of a teaching about average stock values is unavailing.
Appellant also argues that “the claimed invention not only uses the
error adjustment method and the accumulated error method but also uses the
error adjustment method and the accumulated error method based on
particular variables.” Br. 12. Appellant contends that these specific
variables are not disclosed by SAS, i.e., “an error between the first
forecasting value and the corresponding actual value in the time series data”
and “an error between the first forecasting value and the corresponding
actual value in the time series data . . . and a lead time of the goods.” Id.
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This argument is not persuasive. The Examiner explained where the
disputed variables are described in SAS. Final Act 10. Appellant makes
broad statements that the Examiner’s rejection is deficient in not disclosing
the recited variables, but did not address the specific statements in the
rejection that such variables are described in SAS. The Examiner also cited
Dvorak for disclosing a “lead time of the goods” and explained why it would
have been obvious to one of ordinary skill in the art to use this variable in
SAS. Final Act. 14–15. Appellant did not identify a deficiency in this
argument.
For the foregoing reasons, the obviousness rejection of claims 1, 9,
and 10 is affirmed. Appellant argues that the subject matter in claims 2–4,
6–8, and 11–13 are not disclosed or suggested by SAS and Dvorak, but did
provide additional reasons as to why the Examiner’s rejection of them of
them is deficient. Accordingly, we affirm the rejection of these claims as
well for reason described above and those of the Examiner.

TIME PERIOD
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).

AFFIRMED