KUDELSKI, Henri

Patent Trials and Appeals Board

Feb 12, 2020

12572804 - (D) (P.T.A.B. Feb. 12, 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.
12/572,804 10/02/2009 Henri KUDELSKI 516615US 4678
157616 7590 02/12/2020
OBLON/KUDELSKI
1940 DUKE STREET
ALEXANDRIA, VA 22314
EXAMINER
KANERVO, VIRPI H
ART UNIT PAPER NUMBER
3691
NOTIFICATION DATE DELIVERY MODE
02/12/2020 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):
OBLONPAT@OBLON.COM
iahmadi@oblon.com
patentdocket@oblon.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

Ex parte HENRI KUDELSKI
____________

Appeal 2018-004932
Application 12/572,804
Technology Center 3600
____________

Before BRUCE T. WIEDER, AMEE A. SHAH, and
MATTHEW S. MEYERS, Administrative Patent Judges.

SHAH, Administrative Patent Judge.

DECISION ON APPEAL

STATEMENT OF THE CASE
Pursuant to 35 U.S.C. § 134(a), the Appellant1 appeals from the
Examiner’s decision to reject claims 1–25. The Appellant’s representative
appeared for Oral Argument on February 4, 2020. We have jurisdiction
under 35 U.S.C. § 6(b).
We AFFIRM.

1 We use the word “Appellant” to refer to “applicant” as defined in
37 C.F.R. § 1.42. The Appellant identifies the real party in interest as
“Nagravision, S.A.” Appeal Br. 3.
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CLAIMED SUBJECT MATTER
The Appellant’s invention “concerns the prepaid service distribution
field, particularly toll or pay television services.” Spec. 1, ll. 7–8. More
specifically, “[t]he goal of the [Appellant’s] . . . invention is to secure a
prepaid device for access to audio/video content having the possibility of
reimbursement of the unused balance upon presentation of the . . . device to
a control center.” Id. at 3, ll. 9–11.
Claims 1 and 12 are the independent claims on appeal. Claim 1 is
illustrative of the subject matter on appeal and is reproduced below (with
added bracketing for reference):
1. A method for securely managing an account value
stored in a prepaid device for controlling paid access to data, the
method comprising:
[(a)] receiving, with a prepaid device computer of the
prepaid device, a request for access to data;
[(b)] using, with the prepaid device computer, a prepaid
account value stored in the prepaid device to pay an amount
corresponding to a cost for the access to the data, the prepaid
account value being set during an initialization of the prepaid
device;
[(c)] calculating, with the prepaid device computer, a new
account value for the prepaid account value by modifying a
current account value of the prepaid account value by the amount
corresponding to the cost for the access to the data, a new
remaining balance being equal to a difference between the
prepaid account value and the cost;
[(d)] calculating, with the prepaid device computer, a non-
negative integer number of steps based on a difference between:
a first value obtained by performing at least a first
predetermined function on the new account value; and
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a second value obtained by performing at least the
first predetermined function on the current account value;
[(e)] executing, with the prepaid device computer, at least
one one-way function on a control value stored in the prepaid
device a number of times equal to the number of steps, wherein
the control value is initialized during the initialization, is specific
to the prepaid device, and corresponds to a device identification
stored in the prepaid device, thereby producing a new control
value specific to the prepaid device and corresponding to the
device identification, the new control value providing a
verification that the new account value corresponds to the new
remaining balance when a reimbursement of the new account
value is sought; and
[(f)] replacing, with the prepaid device, the stored control
value by the new control value.
Appeal Br. 16–17 (Claims App.).
THE REJECTION
Claims 1–25 stand rejected under 35 U.S.C. § 101 as being directed to
a judicial exception without significantly more.

OPINION
The Appellant argues the claims as a group. See Appeal Br. 15. We
select claim 1 as representative of the group, with claims 2–25 standing or
falling therewith. See 37 C.F.R. § 41.37(c)(1)(iv) (2017).
35 U.S.C. § 101 Framework
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
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ideas” are not patentable. Alice Corp. Pty. Ltd. 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,
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, 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
Supreme Court held that “[a] claim drawn to subject matter otherwise
statutory does not become nonstatutory simply because it uses a
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mathematical formula.” Diehr, 450 U.S. at 176; 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.” Id. (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.”).
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.
After the Appellant’s briefs were filed and the Examiner’s Answer
mailed, the U.S. Patent and Trademark Office (“USPTO”) published revised
guidance on the application of § 101. 2019 REVISED PATENT SUBJECT
MATTER ELIGIBILITY GUIDANCE, 84 Fed. Reg. 50 (Jan. 7, 2019) (“2019
Revised Guidance”). That guidance revised the USPTO’s examination
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procedure with respect to the first step of the Mayo/Alice framework by
(1) providing groupings of subject matter that are considered an abstract
idea; and (2) clarifying that a claim is not “directed to” a judicial exception
if the judicial exception is integrated into a practical application of that
exception. Id. at 50. The 2019 Revised Guidance, by its terms, applies to all
applications, and to all patents resulting from applications, filed before, on,
or after January 7, 2019. Id.2 Under the 2019 Revised 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 (see MANUAL OF PATENT EXAMINING
PROCEDURE (“MPEP”) §§ 2106.05(a)–(c), (e)–(h) (9th Ed., Rev.
08.2017, Jan. 2018)).
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 2019 Revised Guidance, 84 Fed Reg. at 54, 56.

2 The 2019 Revised Guidance supersedes MPEP § 2106.04(II) and also
supersedes all versions of the USPTO’s “Eligibility Quick Reference Sheet
Identifying Abstract Ideas.” See 2019 Revised Guidance, 84 Fed. Reg. at 51
(“Eligibility-related guidance issued prior to the Ninth Edition, R–08.2017,
of the MPEP (published Jan. 2018) should not be relied upon.”).
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Step One of the Mayo/Alice Framework
Reciting a Judicial Exception
Under the first step of the Mayo/Alice framework and Step 1 of Office
Guidelines (see 2019 Revised Guidance, 84 Fed. Reg. at 53–54), we
determine that claims 1–11, 18, 20, 21, and 24 are directed to a process, and
claims 12–17, 19, 22, 23, and 25 are directed to a device, i.e., a machine,
two of the categories of statutory subject matter.
Under the first step of the Mayo/Alice framework and Step 2A,
Prong 1 of the 2019 Revised Guidelines, 84 Fed. Reg. at 54, the Examiner
determines that claim 1 is “directed to an abstract idea of managing an
account value in a prepaid device.” Non-Final Act. 4. When viewed
through the lens of the 2019 Revised Guidance, the Examiner’s analysis
depicts the claimed subject matter as a “[m]ental process[]—[a] concept[]
performed in the human mind (including an observation, evaluation,
judgment, opinion)” involving mathematical concepts. 2019 Revised
Guidance, 84 Fed. Reg. at 52 (footnotes omitted).
The Appellant disagrees and contends that “Claim 1 is directed to a
method for use, for example, in a system where a smartcard is used as a
prepaid device” and “provide[s] a way to prevent the user from making a
fraudulent claim for reimbursement of unused credit remaining on the device
(e.g., interfering with the value of the current balance of credit to make it
look like less credit has been used up than is actually the case).” Appeal
Br. 11.
Before determining whether the claim at issue is directed to an
abstract idea, we first determine to what the claim is directed. The Federal
Circuit has explained that “the ‘directed to’ inquiry applies a stage-one filter
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to claims, considered in light of the specification, based on whether ‘their
character as a whole is directed to excluded subject matter.’” Enfish, LLC v.
Microsoft Corp., 822 F.3d 1327, 1335 (Fed. Cir. 2016) (quoting Internet
Patents Corp. v. Active Network, Inc., 790 F.3d 1343, 1346 (Fed. Cir.
2015)). It asks whether the focus of the claims is on a specific improvement
in relevant technology or on a process that itself qualifies as an “abstract
idea” for which computers are invoked merely as a tool. See id. at 1335–36.
Here, it is clear from the Specification, and the claim language, that the
focus of claim 1 is on an abstract idea, and not on any improvement to
technology and/or a technical field.
The Specification provides for a “VALUE MANAGEMENT
METHOD IN A PREPAID DEVICE.” Spec., Title. In the “Background”
section, the Specification discusses the prior art way of paying for streamed
information using security modules or value cards with credits. See, e.g.,
Spec. 1, ll. 10–15, 2, ll. 18–28. “For reasons of security and financial
management, these value cards have an expiry date after which they no
longer function.” Id. at 2, ll. 27–28. However, “after the expiry date, these
cards may still have a non-negligible credit for which the user may claim a
reimbursement,” making them “very attractive for malicious third parties
looking to eliminate any debits from the card in order to obtain a
reimbursement for all or part of the audio/video content already consumed.”
Id. at 3, ll. 1–7. Thus, “[t]he goal of the present invention is to secure a
prepaid device for access to audio/video content having the possibility of
reimbursement of the unused balance upon presentation of the
aforementioned device to a control center.” Id. at 3, ll. 9–11. “This goal is
achieved by a method for managing a debit value (V1) in a prepaid device
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and comprising an identifier (UA) specific to each device and a control
value (CT).” Id. at 3, ll. 12–14. This method “suggests using characteristics
of a one-way function to change a control value in such a way as to make
any return to a previous control value impossible. At each new calculation
of this control value, the old value is replaced by the new one.” Id. at 4,
ll. 8–11. “[T]his one-way function is a mathematical mapping H of a source
subset towards an object subset in which each element x of the source subset
is mapped to a target H(x),” and is “particularly useful when . . , [it is] of
type known as Hash functions.” Id. at 4, ll. 12–15.
Consistent with the disclosure, claim 1 recites “[a] method for
securely managing an account value stored in a prepaid device for
controlling paid access to data,” comprising the steps of: (1) receiving a
request for access to data, i.e., limitation (a):
receiving, with a prepaid device computer of the prepaid
device, a request for access to data;
(2) using a stored value to pay an amount for the access, i.e., limitation (b):
using, with the prepaid device computer, a prepaid account
value stored in the prepaid device to pay an amount
corresponding to a cost for the access to the data, the prepaid
account value being set during an initialization of the prepaid
device;
(3) performing calculations for a new account value and a number of steps,
i.e., limitations (c) and (d):
calculating, with the prepaid device computer, a new
account value for the prepaid account value by modifying a
current account value of the prepaid account value by the amount
corresponding to the cost for the access to the data, a new
remaining balance being equal to a difference between the
prepaid account value and the cost;
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calculating, with the prepaid device computer, a non-
negative integer number of steps based on a difference between:
a first value obtained by performing at least a first
predetermined function on the new account value; and
a second value obtained by performing at least the first
predetermined function on the current account value;
(4) executing a one-way function, i.e., a mathematical mapping such as a
hash function, on a control value, i.e., limitation (e):
executing, with the prepaid device computer, at least one
one-way function on a control value stored in the prepaid device
a number of times equal to the number of steps, wherein the
control value is initialized during the initialization, is specific to
the prepaid device, and corresponds to a device identification
stored in the prepaid device, thereby producing a new control
value specific to the prepaid device and corresponding to the
device identification, the new control value providing a
verification that the new account value corresponds to the new
remaining balance when a reimbursement of the new account
value is sought; and
(5) replacing the stored value with the new value, i.e., limitation (f):
replacing, with the prepaid device, the stored control value
by the new control value.
Appeal Br. 16–17 (Claims App).
When considered collectively and under the broadest reasonable
interpretation, the limitations of claim 1 recite a method for securely
managing an account value stored in a prepaid device by receiving,
calculating, mapping, and replacing data,3 which is an abstract idea of a

3 We note that “[a]n abstract idea can generally be described at different
levels of abstraction.” Apple, Inc. v. Ameranth, Inc., 842 F.3d 1229, 1240
(Fed. Cir. 2016). The Board’s “slight revision of its abstract idea analysis
does not impact the patentability analysis.” Id. at 1241.
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“[c]ertain method[] of organizing human activity— . . . commercial or legal
interactions (including agreements in the form of contracts; legal
obligations; advertising, marketing or sales activities or behaviors; business
relations).” 2019 Revised Guidance, 84 Fed. Reg. at 52
The courts have held similar concepts to be abstract. For example, the
Federal Circuit has held abstract the concepts of forming financial
transactions using a bankcard to pay fares in Smart Systems Innovation, LLC
v. Chicago Transit Authority, 873 F.3d 1364, 1371–72 (Fed. Cir. 2017),
detecting credit card fraud based on information relating to past Internet
transactions to by obtaining, mapping, and analyzing information in
CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1372–73 (Fed.
Cir. 2011), and identifying and characterizing errant files by selecting a file,
generating a value, comparing that value to other values, and characterizing
based on the comparison in Intellectual Ventures I LLC v. Erie Indemnity
Co., 711 F. App’x 1012, 1014–16 (Fed. Cir. 2017)
Having concluded that claim 1 recites a judicial exception, i.e., an
abstract idea, in determining whether the claim is directed to this abstract
idea, we next consider whether the claim recites additional elements that
integrate the judicial exception into a practical application.
Integration into a Practical Application
Under Step 2A, Prong 2 of the 2019 Revised Guidance, 84 Fed. Reg.
at 54, we look to 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,” i.e., “integrates a judicial exception
into a practical application.” Here, the only additional element recited in
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claim 1 beyond the abstract idea is a “prepaid device computer” — an
element that, as the Examiner observes (Non-Final Act. 4), is described in
the Specification as a generic component. The Specification does not
contain the term “prepaid device computer,” but does discuss that the
prepaid device can be in “the most known form . . . [of] the ISO 7816
smartcard, . . . [but] may take other forms such as PCMCIA card, RFID or
USB dongle, the interface to which may be electrical or contactless.”
Spec. 6, ll. 3–5. The Specification, in the originally filed claims, provides
for a prepaid device having a processor and memory. Id. at 18 (claim 12).
We find no indication in the Specification, nor does the Appellant direct us
to any indication, that the operations recited in claim 1 require any
specialized prepaid device hardware or other inventive computer
components, i.e., a particular machine, invoke any asserted inventive
programming, or that the claimed invention is implemented using other than
the generic device components to perform the generically claimed functions.
See DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245, 1256 (Fed. Cir.
2014) (“[A]fter Alice, there can remain no doubt: recitation of generic
computer limitations does not make an otherwise ineligible claim patent-
eligible.”); see also Smart Systems, 873 F.3d at 1372 (“[t]he Asserted Claims
are not directed to a new type of bankcard”).
The Appellant contends that “[t]he claim[] provide[s] a technical
solution to a technical problem” (Appeal Br. 11) and has a “technical nature”
(id. at 12). See also Reply Br. 2–3. When viewed through the lens of the
2019 Revised Guidance, the Appellant contends that under Prong Two, the
elements of claim 1 integrate the abstract idea into a practical application
because the combination of the elements “reflects an improvement in the
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functioning of a computer, or an improvement to other technology or
technical field.” 84 Fed. Reg. at 55 (citing DDR Holdings, 773 F.3d at
1258–59. We disagree.
In DDR Holdings, the Federal Circuit determined that the claims
addressed the problem of retaining website visitors who, if adhering to the
routine, conventional functioning of Internet hyperlink protocol, would be
transported instantly away from a host’s website after clicking on an
advertisement and activating a hyperlink. DDR Holdings, 773 F.3d at 1257.
The Federal Circuit, thus, held that the claims were directed to statutory
subject matter because they claim a solution “necessarily rooted in computer
technology in order to overcome a problem specifically arising in the realm
of computer networks.” Id. The court cautioned that “not all claims
purporting to address Internet-centric challenges are eligible for patent.” Id.
at 1258. And the court contrasted the claims to those at issue in
Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709 (Fed. Cir. 2014), in that, in
DDR Holdings, the computer network was not operating in its “normal,
expected manner” and the claims did not “recite an invention that is . . .
merely the routine or conventional use of the Internet.” Id. at 1258–59.
The Appellant contends that the problem being solved is “that a
prepaid device computer can be tampered with to create artificial value,”
such as “by computer hacking activity or other computer fraud.” Appeal
Br. 11–12. However, preventing fraud or redeeming expired value (e.g.,
coupons, cards, etc.) is not a problem rooted in computer technology. The
Specification does not specifically discuss hacking, but discusses that non-
negligible credit remaining on an expired card makes the card “very
attractive for malicious third parties looking to eliminate any debits from the
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card in order to obtain a reimbursement for all or part of the audio/video
content already consumed.” Spec. 3, ll. 1–7. Hacking, as used here, is
simply fraud in the particular technological field of smartcards, which are
“reputed to be tamper-proof.” Id. at 1, l. 25.
Also, unlike DDR Holdings, the purported solution here is not a
technical solution, i.e., it is not necessarily rooted in computer technology.
Rather, the purported solution uses the device computer operating in its
ordinary capacity to replace a prepaid device’s stored control value with a
newly calculated control value after using the stored account value to pay for
data access. The claim does not recite a way to “provide independent
verification of the true value of the prepaid device that cannot be tampered
with through computer hacking activity or other computer fraud” (Appeal
Br. 12) in that claim 1 does not recite any steps for verifying the control
value nor does it specify how the device “cannot be tampered with” due to
the updating (replacing) of the control value. At best, it may make
tampering more difficult. That the claimed technique is performed in the
field of prepaid devices or smartcards simply limits the use of the abstract
idea to a particular technological environment. “The Supreme Court and
[the Federal Circuit] have repeatedly made clear that merely limiting the
field of use of the abstract idea to a particular existing technological
environment does not render the claims any less abstract.” Affinity Labs of
Texas, LLC v. DIRECTV, LLC, 838 F.3d 1253, 1259 (Fed. Cir. 2016), citing
Alice, 573 U.S. at 222; Mayo, 566 U.S. at 71; Bilski, 561 U.S. at 612,
buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1355 (Fed. Cir. 2014). The
Appellant does not direct our attention to, and we do not see, where the
Specification describes the prepaid device computer acting in an
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unconventional manner to further the desired solution of securely managing
a prepaid device by replacing a stored control value with a newly calculated
control value.
The Appellant also does not direct our attention to anything in the
Specification to indicate that the invention provides a technical improvement
to the prepaid device. For example, the Appellant does not claim using a
specific structure or process to identify hackers. Cf. SRI Int’l., Inc, v. Cisco
Syst., Inc., 930 F.3d 1295, 1303 (Fed. Cir. 2019) (claim 1 recited an
improvement to computer technology by “providing a network defense
system that monitors network traffic in real-time to automatically detect
large-scale attacks.”). Nor does the claim provide a non-abstract
improvement by employing a new way, a new kind of structure, or a new
arrangement of elements to enable a system to do something it could not do
before. Cf. Koninklijke KPN N.V. v. Gemalto M2M GmbH, 942 F.3d 1143,
1150–51 (Fed. Cir. 2019) (claim was directed to “a non-abstract
improvement because it employ[ed] a new way of generating check data that
enable[d] the detection of persistent systematic errors in data transmissions
that prior art systems were previously not equipped to detect.”); Finjan, Inc.
v. Blue Coat Syst., Inc., 879 F.3d 1299, 1304–05 (Fed. Cir. 2018) (claim was
directed to “a non-abstract improvement in computer functionality” because
it employed “a new kind of file that enable[d] a computer security system to
do things it could not do before”); BASCOM Global Internet Svcs., Inc. v.
AT&T Mobility LLC, 827 F.3d 1341, 1350 (Fed. Cir. 2016) (claim’s
particular design of a “non-conventional and non-generic arrangement of
known, conventional pieces” was a technical improvement). The claim also
does not specifically identify how a non-abstract improvement to the
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computer’s functionality “is effectuated in an assertedly unexpected way.”
Ancora Techs., Inc. v. HTC Am., Inc., 908 F.3d 1343, 1348–50 (Fed. Cir.
2018) (claim improved security by moving a software-verification structure
to a location not previously used for this purpose, thereby altering how the
security verification function is performed).
The Appellant argues that the claim is like McRO, Inc. v. Bandai
Namco Games Am. Inc., 837 F.3d 1299, 1324 (Fed. Cir. 2016), because the
claim “use[s] ‘a combined order of specific rules that renders information
into a specific format that is then used and applied to create desired results.’”
Appeal Br. 13; see also Reply Br. 4. Specifically, the Appellant argues that
“the system uses a prepaid device computer to pay for a purchase and then
executes a specific, complex series of steps to create a new control value that
serves as an independent verifier of the value remaining on the prepaid
device computer.” Appeal Br. 13. In McRO, the claims were directed to a
specific improvement in computer animation and used rules to automate a
subjective task of humans to create a sequence of synchronized, animated
characters. See McRO, 837 F.3d at 1314–15. Unlike Flook, Bilski, and
Alice, it was not the use of the computer, but the incorporation of the rules
that improved an existing technological process. Id. at 1314. Here, there is
no such improvement to technology or a technological process. Any
improvement lies in the creation of the new control value by employing
mathematical algorithms and updating the previous value. See Appeal
Br. 13 (“The new control value replaces an old control value in the prepaid
device computer's memory . . .). This alleged improvement lies in the
abstract idea itself, not to any technological improvement. See BSG Tech
LLC v. BuySeasons, Inc., 899 F.3d 1281, 1287–88 (Fed. Cir. 2018). The
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Appellant does not direct our attention to anything in the Specification to
indicate that the invention provides a technical improvement in the
calculating or updating of that data or that claim 1 incorporates rules to
create “something physical—namely, the display of ‘lip synchronization and
facial expressions’ of animated characters on screens for viewing by human
eyes.” SAP Am., Inc. v. Investpic, LLC, 898 F.3d 1161, 1167 (Fed. Cir.
2018) (quoting McRO, 837 F.3d at 1313).
The Appellant also argues that the claim is similar to the claims of
Amdocs (Israel) Ltd. v. Openet Telecom, Inc., 841 F.3d 1288 (Fed. Cir.
2016), because “the specific relationships of the claimed device elements
similarly yield an unconventional technical solution.” Appeal Br. 14. In
Amdocs, the Federal Circuit held the claim was patent eligible because the
claim entailed an unconventional technological solution (enhancing data in a
distributed fashion) to a technological problem (massive record flows which
previously required massive databases). Although the solution required
generic components, the court adopted the district court’s interpretation of
the claim term “enhance,” stating, it approved “reading the ‘in a distributed
fashion’ and the ‘close to the source’ of network information requirements
into the term ‘enhance,’” and determined that “the claim’s enhancing
limitation necessarily requires that these generic components operate in an
unconventional manner to achieve an improvement in computer
functionality” and that the “enhancing limitation depends not only upon the
invention’s distributed architecture, but also depends upon the network
devices and gatherers––even though these may be generic––working
together in a distributed manner.” Amdocs, 841 F.3d at 1300–01. Here,
there is no similar evidence that the “computer[’s] use[] [of] specific
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calculations and functions to create new data” is comparable to the
components in Amdocs or otherwise establishes that the computer operates
in an unconventional manner. And, as discussed above, the claim does not
recite step(s) to “provide[] an independent verification of prepaid device
value to solve the technical problem of guarding against computer fraud.”
Appeal Br. 14.
We likewise disagree that the claim is similar to those of Thales
Visionix Inc. v. United States, 840 F.3d 1343 (Fed. Cir. 2017), because the
mathematical equation “does not doom the claim[] to abstraction.” Appeal
Br. 14 (quoting Thales, 840 F.3d at 1349). In Thales, the improvement was
to a physical tracking system that used mathematical equations that were
“dictated by the placement of the inertial sensors and application of laws of
physics” to determine the orientation of a tracked object relative to a moving
platform. Thales, 850 F.3d at 1348. Thus, the claims were directed to
“systems and methods that use inertial sensors in a non-conventional manner
to reduce errors in measuring the relative position and orientation of a
moving object on a moving reference frame.” Id. at 1349. In other words,
“the improvement was in a physical tracking system. The use of
mathematics to achieve an improvement no more changed the conclusion[s]
that improved physical things and actions were the subject of the claimed
advance than it did in Diamond v Diehr.” SAP Am., 898 F.3d. at 1168.
Here, however, “the focus of the claim[] is not to a physical-realm
improvement but an improvement in wholly abstract ideas”—the generation
of a new value using mathematical algorithms, followed by a
replacing/updating of data with the result. Id. That the invention is related
to a prepaid device or computer hacking does not necessarily make the claim
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not abstract. See Ultramercial, 772 F.3d at 716 (limiting the use of the
abstract idea “to a particular technological environment” does not make the
abstract idea patent-eligible) (citation omitted).
Accordingly, we conclude claim 1 does not contain an element that
imposes a meaningful limit on the abstract idea that integrates the abstract
idea into a practical application.
Thus, we are not persuaded of error in the Examiner’s determination
that claim 1 is directed to an abstract idea.
Step Two of the Mayo/Alice Framework
Under the second step in the Mayo/Alice framework (corresponding to
Step 2B of the 2019 Revised Guidance), we find supported the Examiner’s
determination that the limitations of claim 1, taken individually and as an
ordered combination, do not amount to significantly more than the judicial
exception. See Non-Final Act. 4–5.
The Appellant does not offer additional reasoning or argument why
the claim “[a]dds a specific limitation or combination of limitations that [is]
not well-understood, routine, conventional activity in the field, which is
indicative that an inventive concept may be present.” 2019 Revised
Guidance, 84 Fed. Reg. at 56. The claimed generic device computer
operates in its ordinary and conventional capacity to perform the well-
understood, routine, and conventional functions of receiving and
transmitting data (i.e., receiving a request for access and using stored data to
pay for and thus allow access), calculating data by using mathematical
algorithms (i.e., calculating a new account value and a number of steps, and
executing a function a number of time equal to that number of steps to
produce a new control value), and performing an action based on the
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calculation (i.e., replacing the stored control value with the new value). See
Spec. 6, ll. 1–5; 9, ll. 9–11 (describing a generic prepaid device of a card);
SAP Am., 898 F.3d at 1170 (carrying out mathematical calculations is well-
understood, routine, and conventional); Smart Systems, 873 F.3d at 1369–70,
1374–75 (claims reciting receiving data, generating a hash identifier,
verifying the bankcard, denying access if not verified and reciting storing
data, receiving data, and updating data to apply a fare did not transform the
abstract idea into a patent-eligible invention); Alice, 573 U.S. at 226
(“Nearly every computer will include a ‘communications controller’ and
‘data storage unit’ capable of performing the basic calculation, storage, and
transmission functions required by the method claims.”).
Considered as an ordered combination, the components of the
Appellant’s claim 1 add nothing that is not already present when the steps
are considered separately. The sequence of receiving and transmitting data,
performing calculations to generate data, and performing an action based on
the calculation (i.e., replacing a stored value) is equally generic and
conventional or otherwise held to be abstract. See SAP Am., 898 F.3d
at 1169–70 (holding that the sequence of storing data, receiving data,
performing a mathematical analysis to generate data, and providing the
generated data was abstract); Smart Systems, 873 F.3d at 1369–70, 1374–75
(storing, receiving, and updating data was abstract), and FairWarning IP,
LLC v. Iatric Syst., Inc., 839 F.3d 1089, 1095 (Fed. Cir. 2016) (holding that
sequence of generating a rule related to accessing information, applying the
rule, and storing and announcing the results was abstract). The ordered
combination of the steps is, therefore, ordinary and conventional.
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Thus, we are not persuaded of error in the Examiner’s determination
that the limitations of claim 1 do not transform the claim into significantly
more than the abstract idea. We therefore sustain the Examiner’s rejection
under 35 U.S.C. § 101 of claim 1 and of claims 2–25, the rejection of which
stands with claim 1.

CONCLUSION
The Examiner’s decision to reject claims 1–25 is sustained.
In summary:
Claims
Rejected
35 U.S.C. § Reference(s)/Basis Affirmed Reversed
1–25 101 Eligibility 1–25
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)(l)(iv).

AFFIRMED