Visa International Service Association

Patent Trials and Appeals Board

Sep 25, 2020

2020002578 (P.T.A.B. Sep. 25, 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.
14/100,690 12/09/2013 BRAD NIGHTENGALE 79900-894940
(064710USC1)
3973
66945 7590 09/25/2020
KILPATRICK TOWNSEND & STOCKTON LLP/VISA
Mailstop: IP Docketing - 22
1100 Peachtree Street
Suite 2800
Atlanta, GA 30309
EXAMINER
KALINOWSKI, ALEXANDER G
ART UNIT PAPER NUMBER
3691
NOTIFICATION DATE DELIVERY MODE
09/25/2020 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):
KTSDocketing2@kilpatrick.foundationip.com
ipefiling@kilpatricktownsend.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
________________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
________________

Ex parte BRAD NIGHTENGALE, KARL NEWLAND, KEVIN SIEGEL,
ZHONGXIAO JIANG, and SHARON ROWBERRY
________________

Appeal 2020-002578
Application 14/100,690
Technology Center 3600
________________

Before ERIC S. FRAHM, JASON J. CHUNG, and
JOYCE CRAIG, Administrative Patent Judges.

CHUNG, Administrative Patent Judge.

DECISION ON APPEAL
Pursuant to 35 U.S.C. § 134(a), Appellant1 appeals the Final Rejection
of claims 1–20. We have jurisdiction under 35 U.S.C. § 6(b).
We AFFIRM.
INVENTION
The invention relates to analyze fraud and other risks in transactions.
Spec. ¶ 3. Claim 1 is illustrative of the invention and is reproduced below:
1. A method comprising steps including:
receiving, by a service provider computer system, from a
merchant terminal an authorization request message for a

1 We use the word “Appellant” to refer to “applicant” as defined in
37 C.F.R. § 1.42. According to Appellant, Visa International Service
Association is the real party in interest. Appeal Br. 2.
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payment from a first payment account for a transaction, the
authorization request message indicating a transaction value;
forwarding, by the service provider computer system, the
authorization request message to an issuer of the first payment
account;
receiving, by the service provider computer system, an
authorization approval message from the issuer in response to
the authorization request message with the transaction value;
determining, by the service provider computer system, a
rate of purchases of the first payment account;
determining, by the service provider computer system,
that the first payment account is associated with a second
payment account;
determining, by the service provider computer system,
that the second payment account is associated with an elevated
risk of fraud;
calculating, by the service provider computer system,
notwithstanding the authorization approval message from the
issuer, using a processor operatively coupled to a memory, a
fraud risk score based on at least the rate of purchases in the first
payment account and the elevated risk of fraud associated with
the second payment account, and wherein the calculating
comprises weighting a first risk based on the rate of purchases
in the first payment account and a second risk based on the
elevated risk of fraud associated with the second payment
account;
inserting, by the service provider computer system, the
fraud risk score in the authorization approval message; and
sending, by the service provider computer system, the
authorization approval message with the fraud risk score to the
merchant terminal in response to the authorization request
message, wherein the merchant terminal automatically denies
the transaction based on the fraud risk score when the fraud risk
score exceeds a threshold, notwithstanding the authorization
approval message from the issuer.
Appeal Br. 13–14 (Claims Appendix) (emphases added).

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REJECTION
The Examiner rejects claims 1–20 under 35 U.S.C. § 101 as being
directed to patent ineligible subject matter. Final Act. 5–9.

ANALYSIS
A. Principles of Law
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 U.S. Supreme Court has long interpreted 35 U.S.C. § 101 to
include implicit exceptions: “[l]aws of nature, natural phenomena, and
abstract ideas” are not patentable. 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 Court’s two-part 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
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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 waterproof cloth, vulcanizing India
rubber, smelting ores” (id. at 182 n.7 (quoting Corning v. Burden, 56 U.S.
252, 267–68 (1853))); and manufacturing flour (Benson, 409 U.S. at 69
(citing Cochrane v. Deener, 94 U.S. 780, 785 (1876))).
In Diehr, the claim at issue recited a mathematical formula, but the
Court held that “a claim drawn to subject matter otherwise statutory does not
become nonstatutory simply because it uses a mathematical formula.”
Diehr, 450 U.S. at 187; see also id. at 191 (“We view respondents’ claims as
nothing more than a process for molding rubber products and not as an
attempt to patent a mathematical formula.”). Having said that, the Court
also indicated that a claim “seeking patent protection for that formula in the
abstract . . . is not accorded the protection of our patent laws, and this
principle cannot be circumvented by attempting to limit the use of the
formula to a particular technological environment.” Id. (citation omitted)
(citing Benson and Flook); see, e.g., id. at 187 (“It is now commonplace that
an application of a law of nature or mathematical formula to a known
structure or process may well be deserving of patent protection.”).
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
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ensure ‘that the [claim] is more than a drafting effort designed to
monopolize the [abstract idea].’” Id. (alterations in original) (quoting Mayo,
566 U.S. at 77). “[M]erely requir[ing] generic computer implementation[]
fail[s] to transform that abstract idea into a patent-eligible invention.” Id.
B. USPTO Section 101 Guidance
In January 2019, the U.S. Patent and Trademark Office (USPTO)
published revised guidance on the application of § 101. 2019 Revised Patent
Subject Matter Eligibility Guidance, 84 Fed. Reg. 50 (Jan. 7, 2019)
(“2019 Revised Guidance”).2 “All USPTO personnel are, as a matter of
internal agency management, expected to follow the guidance.” Id. at 51;
see also Update at 1.
Under the 2019 Revised Guidance and the Update, 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) (“Step 2A, Prong One”); and
(2) additional elements that integrate the judicial exception into a
practical application (see MPEP § 2106.05(a)–(c), (e)–(h) (9th ed.
Rev. 08.2017, Jan. 2018)) (“Step 2A, Prong Two”).3

2 In response to received public comments, the Office issued further
guidance on October 17, 2019, clarifying the 2019 Revised Guidance.
USPTO, October 2019 Update: Subject Matter Eligibility (the “Update”)
(available at
https://www.uspto.gov/sites/default/files/documents/peg_oct_2019_update.p
df).
3 This evaluation is performed by (a) identifying whether there are any
additional elements recited in the claim beyond the judicial exception, and
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2019 Revised Guidance, 84 Fed. Reg. at 52–55.
Only if a claim (1) recites a judicial exception and (2) does not
integrate that exception into a practical application, do we then look, under
Step 2B, 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.
2019 Revised Guidance, 84 Fed. Reg. at 52–56.
C. The Examiner’s Rejection and Appellant’s Arguments
The Examiner concludes the present claims recite certain methods of
organizing human activity. Ans. 5–6; Final Act. 3–6. The Examiner
concludes the present claims are not integrated into a practical application.
Ans. 6–7; Final Act. 6–7. The Examiner determines the present claims
recite an abstract idea using additional elements that are well-understood,
routine, and conventional. Final Act. 3–4, 9 (citing Parker v. Flook, 437
U.S. at 594–95).
Appellant argues that the present claims do not recite human activity
because the claims recite a combination of steps that includes transmission
of data between multiple machines. Appeal Br. 6–7; Reply Br. 2. Appellant

(b) evaluating those additional elements individually and in combination to
determine whether the claim as a whole integrates the exception into a
practical application. See 2019 Revised Guidance - Section III(A)(2), 84
Fed. Reg. 54–55.
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argues the present claims recite an improvement in computer technology
because transactions will not be completed if the risk of the transaction is
unacceptable to the merchant. Appeal Br. 8–9 (citing Dr. Ianakiev
Declaration ¶ 9); Reply Br. 3–4. Appellant argues the present claims are
similar to the patent eligible claims of Example 42 in the 2019 Revised
Guidance. Appeal Br. 9–10; Reply Br 5. Appellant argues that the
Examiner fails to provide sufficient evidence to support the finding that the
additional elements implementing the abstract idea are well-understood,
routine, and conventional. Appeal Br. 10–11 (citing Berkheimer v. HP Inc.,
881 F.3d 1360 (Fed. Cir. 2018)); Reply Br. 4. We disagree with Appellant.
D. Step 2A, Prong 1
Patent eligibility under 35 U.S.C. § 101 is a question that we resolve
pursuant to the 2019 Revised Guidance. The emphasized portions of claim
1, reproduced above (see supra at 1–2), recite fundamental economic
practices (including mitigating risk) because they recite not completing a
transaction if the risk of the transaction is unacceptable to a merchant. Ans.
5–6; Final Act. 3–6; see 2019 Revised Guidance, 84 Fed. Reg. at 52 n.14.
Fundamental economic practices (including mitigating risk) fall into the
category of certain methods of organizing human activity. 2019 Revised
Guidance, 84 Fed. Reg. at 52 n.14. Certain methods of organizing human
activity are a type of abstract idea. Id.
We also conclude the italicized “determining” limitations and the
“calculating” limitation can be performed by the human mind with the
assistance of pen and paper. See 2019 Revised Guidance, 84 Fed. Reg. at 52
n.14. Concepts performed in the human mind (including an observation,
evaluation, judgment, opinion) fall into the category of mental processes. Id.
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Mental processes are a type of abstract idea. Id.; see also FairWarning IP,
LLC v. Iatric Systems, Inc., 839 F.3d 1089, 1094–1095, 1097 (Fed. Cir.
2016) (collecting and analyzing information to detect fraud or misuse and
notifying a user when fraud or misuse is detected is an abstract idea).
We, therefore, disagree with Appellant’s argument that the present
claims do not recite human activity. Appeal Br. 6–7; Reply Br. 2. The
additional elements (i.e., the non-emphasized portions of claim 1 recited
supra at 1–2) are generic computer components for the reasons discussed
infra.
We must still determine whether the abstract idea is integrated into a
practical application, namely whether the claim applies, relies on, or uses the
abstract idea in a manner that imposes a meaningful limit on the abstract
idea, such that the claim is more than a drafting effort designed to
monopolize the abstract idea. See 2019 Revised Guidance, 84 Fed. Reg. at
54–55. We therefore (1) identify whether there are any additional recited
elements beyond the abstract idea, and (2) evaluate those elements both
individually and collectively to determine whether they integrate the
exception into a practical application. See id.
Accordingly, we proceed to Prong 2.
E. Step 2A, Prong 2
Here, the only elements in the claims beyond the abstract idea (i.e.,
the additional elements) are “service provider computer system,”4
“processor,” “memory,” and “merchant terminal.” See 2019 Revised
Guidance, 84 Fed. Reg. at 52. The additional elements of the present claims

4 This additional element appears only in claim 1 and its dependent claims.
See Claims App.
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do not integrate the abstract idea into a practical application because they do
not impose any meaningful limits on practicing the abstract idea for the
following reasons.
Appellant does not identify persuasively how the Specification sets
forth an improvement in technology. The Update addresses how we
consider evidence of improvement that is presented to us. The Update
states:
the evaluation of Prong Two requires the use of the
considerations (e.g. improving technology, effecting a particular
change treatment or prophylaxis, implementing with a particular
machine, etc.) identified by the Supreme Court and the Federal
Circuit, to ensure that the claim as a whole “integrates [the]
judicial exception into a practical application [that] will apply,
rely on, or use the judicial exception in a manner that imposes a
meaningful limit on the judicial exception, such that the claim is
more than a drafting effort designed to monopolize the judicial
exception.”
Update, 11 (emphases added). The Update further states:
[d]uring examination, the examiner should analyze the
“improvements” consideration by evaluating the specification
and the claims to ensure that a technical explanation of the
asserted improvement is present in the specification, and that the
claim reflects the asserted improvement. Generally, examiners
are not expected to make a qualitative judgment on the merits of
the asserted improvement. If the examiner concludes the
disclosed invention does not improve technology, the burden
shifts to applicant to provide persuasive arguments supported by
any necessary evidence to demonstrate that one of ordinary skill
in the art would understand that the disclosed invention improves
technology. Any such evidence submitted under 37 C.F.R.
§ 1.132 must establish what the specification would convey to
one of ordinary skill in the art and cannot be used to supplement
the specification. For example, in response to a rejection under
35 U.S.C. § 101, an applicant could submit a declaration under
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§ 1.132 providing testimony on how one of ordinary skill in the
art would interpret the disclosed invention as improving
technology and the underlying factual basis for that conclusion.
Id. at 13 (emphasis added).
Here, the Examiner concludes the present claims are not integrated
into a practical application. Ans. 6–7; Final Act. 6–7. Appellant presents
testimonial evidence from Dr. Ianakiev. Appeal Br. 8–9 (citing Dr. Ianakiev
Declaration ¶ 9).
However, we disagree with Appellant’s argument that the present
claims recite an improvement in computer technology because transactions
will not be completed if the risk of the transaction is unacceptable to the
merchant. Appeal Br. 8–9 (citing Dr. Ianakiev Declaration ¶ 9); Reply Br.
3–4; see also FairWarning IP, LLC v. Iatric Systems, Inc., 839 F.3d at
1094–1095, 1097 (collecting and analyzing information to detect fraud or
misuse and notifying a user when fraud or misuse is detected is an abstract
idea).
In particular, Dr. Ianakiev states “I believe that, as of the earliest
priority date for the present application (March 23, 2010, relating to U.S.
provisional application no. 61/316,483), no specific information regarding
fraud was passed back to the merchant in an authorization response message
during a transaction in conventional systems” (emphasis added). Dr.
Ianakiev Declaration ¶ 9 (cited at Appeal Br. 8–9). To the extent that
Appellant and Dr. Ianakiev are arguing that the present claims recite an
improvement in computer technology because there is no prior art rejection,
we disagree. Appellant improperly conflates the requirements for patent-
eligible subject matter (§ 101) with the independent requirements of novelty
(§ 102) and non-obviousness (§ 103). “The ‘novelty’ of any element or
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steps in a process, or even of the process itself, is of no relevance in
determining whether the subject matter of a claim falls within the § 101
categories of possibly patentable subject matter.” Diehr, 450 U.S. at 188–
89; see also Genetic, 818 F.3d at 1376 (stating that, “under the Mayo/Alice
framework, a claim directed to a newly discovered law of nature (or natural
phenomenon or abstract idea) cannot rely on the novelty of that discovery
for the inventive concept necessary for patent eligibility”).
Furthermore, although Dr. Ianakiev states there is an improvement in
computer technology because transactions will not be completed if the risk
of the transaction is unacceptable to the merchant, we view this as an
improvement to the abstract idea (i.e., an improvement to certain methods of
organizing human activity or an improvement to mental processes) rather
than an improvement to computer technology for the reasons discussed in
§§ D. and E. In addition, “a claim for a new abstract idea is still an abstract
idea.” Synopsys, Inc. v. Mentor Graphics Corp., 839 F.3d 1138, 1151 (Fed.
Cir. 2016). Also, we have weighed the declaration against the facts on
record and considered it as legally required by case precedent, and have
concluded that the declaration was not persuasive to prove integration into a
practical application.
Appellant argues the present claims are similar to the patent eligible
claims of Example 42 in the 2019 Revised Guidance is unpersuasive.
Appeal Br. 9–10; Reply Br 5. The claims in Example 42 pertained to storing
medical records and sharing updated information on a patient’s medical
conditions with other medical providers, whereas the present claims recites
not completing a transaction if the risk of the transaction is unacceptable to a
merchant. See also FairWarning IP, LLC v. Iatric Systems, Inc., 839 F.3d at
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1094–1095, 1097 (collecting and analyzing information to detect fraud or
misuse and notifying a user when fraud or misuse is detected is an abstract
idea).
Moreover, the additional elements in the present claims, namely
“service provider computer system,” “processor,” “memory,” and “merchant
terminal” do not, either individually or in combination, integrate the abstract
idea into a practical application. Appellant’s Specification discloses that
these elements encompass generic computer components, such as service
provider computer system (Spec. ¶¶ 52, 53, 55, 56, 62), processor (id. ¶¶ 14,
16, 17, 64–66, 70), memory (id.), and merchant terminal (id. ¶¶ 45, 47–49,
51, 57, 60). Merely adding generic computer components to perform
abstract ideas does not integrate those ideas into a practical application. See
2019 Revised Guidance, 84 Fed. Reg. at 55 (identifying “merely includ[ing]
instructions to implement an abstract idea on a computer” as an example of
when an abstract idea has not been integrated into a practical application).
Appellant does not make any other arguments pertaining to Step 2A,
Prong 2. Because the present claims recite an abstract idea that is not
integrated into a practical application, we proceed to Step 2B.
F. Step 2B
The additional elements, either individually or in combination, do not
amount to an inventive concept. An inventive concept “cannot be furnished
by the unpatentable law of nature (or natural phenomenon or abstract idea)
itself.” Genetic, 818 F.3d at 1376; see also 2019 Revised Guidance; Alice,
573 U.S. at 217 (explaining that, after determining a claim is directed to a
judicial exception, “we then ask, ‘[w]hat else is there in the claims before
us?”’ (alteration in original) (quoting Mayo, 566 U.S. at 78)). Instead, an
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“inventive concept” is furnished by an element or combination of elements
that is recited in the claim in addition to the judicial exception and sufficient
to ensure the claim as a whole amounts to significantly more than the
judicial exception itself. Alice, 573 U.S. at 218–19 (citing Mayo, 566 U.S. at
72–73); see BSG Tech LLC v. BuySeasons, Inc., 899 F.3d 1281, 1290 (Fed.
Cir. 2018) (explaining that the Supreme Court in Alice “only assessed
whether the claim limitations other than the invention’s use of the ineligible
concept to which it was directed were well-understood, routine and
conventional” (emphasis added)).
We agree with the Examiner’s determination that the present claims
recite an abstract idea using additional elements that are well-understood,
routine, and conventional. Final Act. 3–4, 9 (citing Parker v. Flook, 437
U.S. at 594–95). The Specification supports the Examiner’s determination
in this regard, because it explains that service provider computer system
(Spec. ¶¶ 52, 53, 55, 56, 62), processor (id. ¶¶ 14, 16, 17, 64–66, 70),
memory (id.), and merchant terminal (id. ¶¶ 45, 47–49, 51, 57, 60) are
generic computer components. Appellant’s Specification indicates these
additional elements were well-understood, routine, and conventional
components because it describes them at a high level of generality and in a
manner that indicates that they are sufficiently well-known. Id. ¶¶ 14, 16,
17, 45, 47–49, 51–53, 55–57, 60, 62, 64–66, 70.
We, therefore, disagree with Appellant’s argument that the Examiner
fails to provide sufficient evidence to support the finding that the additional
elements implementing the abstract idea are well-understood, routine, and
conventional. Appeal Br. 10–11 (citing Berkheimer v. HP Inc., 881 F.3d
1360 (Fed. Cir. 2018)); Reply Br. 4.
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Appellant does not argue claims 1–20 separately with particularity.
Appeal Br. 6–11. For at least the reasons above, we conclude, under the
2019 Revised Guidance, that each of the present claims, considered as a
whole, is directed to a patent-ineligible abstract idea that is not integrated
into a practical application, and does not include an inventive concept. We
therefore sustain the Examiner’s rejection of: (1) independent claims 1, 17,
and 19; and (2) dependent claims 2–16, 18, and 20 under 35 U.S.C. § 101.
We have only considered those arguments that Appellant actually
raised in the Briefs. Arguments Appellant could have made, but chose not to
make, in the Briefs have not been considered and are deemed to be waived.
See 37 C.F.R. § 41.37(c)(1)(iv).

CONCLUSION

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

AFFIRMED

Claim(s)
Rejected
35 U.S.C.
§
Reference(s)/Basis Affirmed Reversed
1–20 101 Eligibility 1–20