Richard Burdett et al.

Patent Trials and Appeals Board

Oct 31, 2019

12982951 - (D) (P.T.A.B. Oct. 31, 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.
12/982,951 12/31/2010 Richard Burdett P00677-US-UTIL 9346
98665 7590 10/31/2019
Otterstedt, Wallace & Kammer, LLP
P.O. Box 381
Cos Cob, CT 06807
EXAMINER
POLLOCK, GREGORY A
ART UNIT PAPER NUMBER
3695
MAIL DATE DELIVERY MODE
10/31/2019 PAPER
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.
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte RICHARD BURDETT and COLIN TANNER
Appeal 2018-008672
Application 12/982,951
Technology Center 3600
Before MURRIEL E. CRAWFORD, PHILIP J. HOFFMANN, and
BRADLEY B. BAYAT, Administrative Patent Judges.
CRAWFORD, Administrative Patent Judge.
DECISION ON APPEAL
STATEMENT OF THE CASE
Pursuant to 35 U.S.C. § 134(a), Appellant, Richard Burdett et al.,
appeals from the Examiner’s decision to reject claims 1–31 and 38. We
have jurisdiction under 35 U.S.C. § 6(b).
We AFFIRM.
CLAIMED SUBJECT MATTER
The claims are directed to “apparatus and methods for electronic
payment.” Spec. 1 lines 4–53. Claim 1, reproduced below, is illustrative of
the claimed subject matter:
Appeal 2018-008672
Application 12/982,951

2
1. A method comprising:
detecting a payment device in a special spending
environment;
responsive to said detection, obtaining, by one or more
processors of a local authorization platform, from an issuer of
said payment device, an authorization and guarantee for a
predetermined amount of funds spendable with said local
authorization platform that is associated with said special
spending environment and that is separate from said issuer of
said payment device and from said payment device, wherein a
payment processing network and at least one acquiring entity are
disposed between said local authorization platform and said
issuer, and facilitate communication between said local
authorization platform and said issuer;
establishing, by said one or more processors, a pre-
authorized balance, based on said predetermined amount of
funds, on said local authorization platform;
authorizing, by one or more processors, a series of
purchases with said payment device within said special spending
environment;
adjusting, by one or more processors, said pre-authorized
balance to reflect a value of said series of purchases;
determining that said series of purchases is ended;
communicating, by said one or more processors, a
payment request to said issuer, causing said issuer to perform
clearing and settlement of an aggregation of said series of
purchases authorized by said one or more processors for a portion
of said predetermined amount of funds actually spent in said
series of purchases subsequent to determining that said series of
purchases is ended; and
facilitating, by said one or more processors, an immediate
release, by said issuer, of said guarantee as to that portion of said
predetermined amount of funds not actually spent in said series
of purchases, said immediate release being subsequent to said
determining that said series of purchases is ended.
Appeal 2018-008672
Application 12/982,951

3
REJECTIONS
The Examiner rejected claims 1–31 and 38 under 35 U.S.C. § 101 as
directed to ineligible subject matter in the form of abstract ideas.
The Examiner rejected claims 1–8, 13–18, 22, 23, 28, 29, and 311
under 35 U.S.C. § 103(a) as unpatentable over Fiebiger et al. (US
2008/0033880 Al, published Feb. 7, 2008) (“Fiebiger”), Reany et al. (US
2010/0318463 A1, published Dec. 16, 2010) (“Reany”), and Keresman, III
et al. (US 7,742,967 B1, issued June 22, 2010) (“Keresman”).
The Examiner rejected claim 9 under 35 U.S.C. § 103(a) as
unpatentable over Fiebiger, Reany, Keresman, and Yuan et al. (US
2010/0153249 A1, published June 17, 2010) (“Yuan”).
The Examiner rejected claim 10 under 35 U.S.C. § 103(a) as
unpatentable over Fiebiger, Reany, Keresman, Yuan, and Grellier (US
7,324,975 B1, issued Jan. 29, 2008).
The Examiner rejected claim 11 under 35 U.S.C. § 103(a) as
unpatentable over Fiebiger, Reany, Keresman, Yuan, Grellier, and Singhal
(US 2010/0229245 Al, published Sept. 9, 2010).
The Examiner rejected claims 19–21 under 35 U.S.C. § 103(a) as
unpatentable over Fiebiger, Reany, Keresman, and Weiss et al. (US
2005/0216373 A1, published Sept. 29, 2005) (“Weiss”).

1 The Examiner indicates that claims 9–12 and 38 are not rejected over the
prior art. Final Act. 6. However, claims 9–11 are addressed and
individually rejected. Final Act. 13–15. We interpret the statement that
claims 9–11 are not rejected as harmless error. Thus, only claims 12 and 38
do not have rejections pending over prior art.
Appeal 2018-008672
Application 12/982,951

4
The Examiner rejected claims 24 and 25 under 35 U.S.C. § 103(a) as
unpatentable over Fiebiger, Reany, Keresman, and Reid et al. (US
2010/0205092 Al, published Aug. 12, 2010) (“Reid”).
The Examiner rejected claims 26 and 27 under 35 U.S.C. § 103(a) as
unpatentable over Fiebiger, Reany, Keresman, and Tozzoli et al. (US
5,717,989, issued Feb. 10, 1998) (“Tozzoli”).
The Examiner rejected claim 30 under 35 U.S.C. § 103(a) as
unpatentable over Fiebiger, Reany, Keresman, and Williams (US
2005/0055316 A1, published Mar. 10, 2005).

OPINION
Rejection under § 101
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, 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
Appeal 2018-008672
Application 12/982,951

5
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, 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 (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.” 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
Appeal 2018-008672
Application 12/982,951

6
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 (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. (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 PTO recently 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 (see Manual of Patent Examining
Procedure (“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
Appeal 2018-008672
Application 12/982,951

7
(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.
The Examiner finds the claims are directed to “electronic payment
(smartcard).” Final Act. 2; see also id. 3 (“payment by credit/debit or alike
card” and “payment and authorizing of spending”).
The Specification indicates the “present invention relates . . .
particularly to apparatus and methods for electronic payment,” and
“techniques for local management of payment transactions.” Spec. 1
lines 4–27. More specifically, the Specification describes “allow[ing]
multiple sales transactions to be conducted with a payment device without
the need for obtaining authorization from an outside entity, such as the issuer
of the payment device, for each transaction.” Spec. 11 lines 21–23. As
such, the claim is directed to the performance of financial transactions, a
type of commercial interaction, which is a fundamental economic practice:
processing payments. MPEP § 2106.04(a)(2)(I)(A).
The claim language bears this out, because claim 1 recites using a
“payment device,” receiving “authorization and guarantee for a
predetermined amount of funds spendable,” establishing a “balance” from
the authorization, authorizing purchases in a “special spending
environment,” adjusting the balance affected by the purchases, and “clearing
and settlement of an aggregation of said series of purchases,” and release of
funds authorized, but “not actually spent,” once the “series of purchases is
ended.” The claim is thus directed to making payment for purchases, which
is central to any economic system.
Appeal 2018-008672
Application 12/982,951

8
Under Prong One of Revised Step 2A of the Guidance, we agree with
the Examiner that claim 1 is directed to an abstract idea: processing
payments. Guidance 52.
Turning to Prong Two of the Guidance, we determine if the claim is
integrated into a practical application of the abstract idea.
Claim 1 calls for a “local authorization platform,” a “payment
device,” a “payment processing network,” as well as an “acquirer” and an
“issuer.”
The Specification describes that the “payment device” encompasses
“a contact device such as card 102,” “other types of devices in lieu of or in
addition to ‘smart’ or ‘chip’ cards,” “a conventional card 150 having a
magnetic stripe,” as well as “an appropriately configured cellular telephone
handset, personal digital assistant (PDA), and the like.” Spec. 5 lines 17–31.
As noted above, the Specification describes that “embodiments of the
invention allow multiple sales transactions to be conducted with a payment
device without the need for obtaining authorization from an outside entity,
such as the issuer of the payment device, for each transaction.” Spec. 11
lines 21–23. By aggregating authorizations for multiple transactions, in
response to first detecting a payment device, into a single authorization that
is in effect for a series of transactions, the claimed invention alters the flow
of data, so that the payment device need not communicate end-to-end with
an issuer via the payment network for each, and every, transaction. In
contrast, the Specification describes:
During a conventional credit authorization process, the
cardholder 2002 pays for the purchase and the merchant 2004
submits the transaction to the acquirer (acquiring bank) 2006.
The acquirer verifies the card number, the transaction type and
Appeal 2018-008672
Application 12/982,951

9
the amount with the issuer 2010 and reserves that amount of the
cardholder's credit limit for the merchant. At this point, the
authorization request and response have been exchanged,
typically in real time.
Spec. 10 lines 26–31. Thus, the claimed invention provides an
improvement to the technical field of how payment networks permit a
payment device to function, which is an improvement to a technological
process. See MPEP § 2106.05(a)(II). The claimed payment device, as
described above, is not a generic computer on which an abstract idea is
applied, because the payment devices encompass different, specialized
devices. Spec. 5 lines 17–31. Although the method is not actually
implemented on the payment device, but instead takes place at the “local
authorization platform,” the claimed method permits the use of the
payment device in “special environments.” These “special
environments” are where network delays, and the previously necessary
involvement of both acquirer and issuer computer systems, remote from
the payment device, handling and passing along every transaction, made
the use of the payment device impractical in those environments. The
Specification describes:
Some spending environments are characterized by
frequent cardholder transactions, most of which are relatively
low in value. These environments also typically demand high
transaction speeds and solution reliability. . . . Proprietary
“closed loop” systems that do not involve interbank fund
transfers provide for the local processing of transactions.
Authorization from an issuer such as a bank or credit union is not
required by such systems. In “open loop” systems, balances are
ordinarily held on the card issuer’s server or as a pre-authorized
balance on the actual payment card.
Appeal 2018-008672
Application 12/982,951

10
Spec. 1 lines 13–23; see also id. 19 lines 11–19 (“some embodiments
may be useful in connection with transit applications”).
Therefore, under Prong Two of Revised Step 2A of the Guidance, the
claimed method integrates the abstract idea into a practical application, by
altering the flow of data to improve another technology: using payment
devices in payment networks. See Guidance 55. The payment network here
is broadly defined to include credit and debit card networks (Spec. 10 line 16
to 11 line 4), but may broadly encompass payment to a cellular phone
account using the phone for purchase of goods, gift card, and event payment
networks (Spec. 11 lines 9–15; see also id. 12 line 9 to 13 line 2). As a
result, we do not sustain the rejection of claims under 35 U.S.C. § 101 as
directed to ineligible subject matter.
Rejections of Claims 1–11, 13–21, and 23–31 under § 103(a)
We are not persuaded by the Appellant’s argument that “the claimed
invention can be distinguished from the proposed combination of references
based on the claimed local authorization platform.” Appeal Br. 15
(emphasis omitted). Specifically, Appellant argues “No interpretation of the
proposed combination of Fiebiger, Reany, and Keresman includes a device
analogous to the clamed local authorization platform,” because “no device or
platform is taught or suggested by the cited art having the features of the
claimed local authorization platform.” Appeal Br. 17.
In response, the Examiner cites paragraph 48 of Fiebiger as disclosing
the claimed “local authorization platform.” Answer 8–9. Fiebiger discloses
the “active file manager can process the transaction against the active file.”
Fiebiger ¶ 48. Fiebiger further discloses “making a fast decision, using the
same criteria as in normal credit card authorization, but on a high-speed,
Appeal 2018-008672
Application 12/982,951

11
transit-specific platform (or platform specific to other applications with fast
transaction time requirements). The aforementioned AFM [active file
manager] may function as a gateway to a payment processing network.” Id.
¶ 61 (cited at Final Act. 8).
However, in response to this clarification, Appellant argues “the
Office does not articulate a reasoning about why or how such a limited
authorization (i.e., parsing an RCL [restricted control list]) can be extended
to the claimed operation of the local authorization platform in obtaining
authorization for a predetermined amount of funds from an issuer in
response to detecting a device.” Reply Br. 22.
This new argument about an additional function of the local
authorization platform, to check a restricted control list, is irrelevant to the
issue of whether the prior art discloses a “local authorization platform,”
raised in the Appeal Brief. As noted above, Fiebiger discloses a computer
that functions as claimed, which thus meets the language of the claimed
“local authorization platform.”
For this reason, we sustain the rejection of claim 1, as well as
dependent claims 2–11, 13–21, and 23–31, which were not argued with
specificity. See Appeal Br. 17–18.
Rejection of Claim 22 under § 103(a)
Dependent claim 22 recites, “The method of claim 1, further
comprising: buffering issuer scripting commands in a memory of said local
authorization platform; and delivering said issuer scripting commands,
buffered in said memory, to said payment device upon presentation of said
payment device to a payment terminal in said special spending
environment.”
Appeal 2018-008672
Application 12/982,951

12
We are not persuaded by Appellant’s argument that Fiebiger fails to
“teach or suggest a download of scripting commands to a ‘payment device’
as claimed.” Appeal Br. 18. This, according to Appellant, is because “the
downloads of Fiebiger are to the host or terminal, which are distinct from the
cards being presented to the terminal.” Reply Br. 23.
We note first that in the pending claims, there is no function expressed
for the “scripting commands” that are delivered to the payment device.
Therefore, the content of the data that is downloaded to the payment
terminal in claim 22 is merely non-functional data within the scope of the
claims. As such, the downloaded data has no functional relationship to the
underlying substrate payment device, and is non-functional descriptive
material, such as printed matter. The claim thus recites downloading data to
a payment device.
Fiebiger discloses an embodiment involving “cards that are enhanced
with a special transit application.” Fiebiger ¶ 120. The cards’ application
“records real-time rider activity and a shadow pre-funded balance.” Id.
Further still, “turnstiles 1130/readers 1132 are configured to read and update
a rider activity record stored on the card.” Fiebiger ¶ 120 (cited at Final
Act. 10). By configuring a turnstile to update data on the payment device
(card), Fiebiger thus discloses downloading data to a payment device, thus
meeting the language of claim 22. For this reason, we sustain the rejection
of claim 22.

DECISION
The Examiner’s rejection under 35 U.S.C. § 101 is REVERSED.
Appeal 2018-008672
Application 12/982,951

13
The Examiner’s rejections of claims 1–11 and 13–31 under
35 U.S.C. § 103(a) are AFFIRMED.

DECISION SUMMARY
Claims
Rejected
35 U.S.C.
§
Basis Affirmed Reversed
1–31, 38 § 101 Eligibility 1–31, 38
1–8, 13–18,
22, 23, 28,
29, 31
§ 103(a) Fiebiger, Reany,
Keresman
1–8, 13–18, 22,
23, 28, 29, 31

9 Fiebiger, Reany,
Keresman, Yuan
9
10 Fiebiger, Reany,
Keresman, Yuan,
Grellier
10
11 Fiebiger, Reany,
Keresman, Yuan,
Grellier, Singhal
11
19–21 Fiebiger, Reany,
Keresman, Weiss
19–21
24, 25 Fiebiger, Reany,
Keresman, Reid
24, 25
26, 27 Fiebiger, Reany,
Keresman, Tozzoli
26, 27
30 Fiebiger, Reany,
Keresman, Williams
30

Overall Outcome

1–11, 13–31

12, 38

Appeal 2018-008672
Application 12/982,951

14
FINALITY AND 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