Examining USPTO Business Method Patent Eligibility Examples

By Kris Rhu & Paul Gurzo
March 20, 2017

On December 15, 2016, the USPTO published three subject matter eligibility examples focusing on business method claims.  The purpose of these examples is to give guidance on how claims should be analyzed using the 2014 Interim Guidance on Subject Matter Eligibility, recent Supreme Court and Federal Circuit decisions, and recent Memorandums published by the USPTO.  These examples seem to indicate that the power of §101 to restrict patentability has been whittled down since Alice and that the USPTO would like to reduce the number of §101 rejections for technological claims in light of court decisions post-Alice.  Below, we describe each example provided by the USPTO and explain the USPTO guidance for each example to assist practitioners with reducing and overcoming §101 rejections.

Example 34

This example is based on the Federal Circuit decision in BASCOM Global Internet v. AT&T Mobility LLC, 119 USPQ2d 1236 (Fed. Cir. 2016) regarding U.S. Patent No. 5,987,606.  The background section of the example includes an explanation of the technological problem being addressed, which is “a need to block access to certain web sites for certain end users” and a description of prior solutions for this problem (e.g., installing filtering software on an end user’s computer, a local server, or a remote server) and the disadvantages of these prior solutions.

Representative Claim (eligible):

  1. A content filtering system for filtering content retrieved from an Internet computer network by individual controlled access network accounts, said filtering system comprising:

a local client computer generating network access requests for said individual controlled access network accounts;

at least one filtering scheme;

a plurality of sets of logical filtering elements; and

a remote ISP server coupled to said client computer and said Internet computer network, said ISP server associating each said network account to at least one filtering scheme and at least one set of filtering elements, said ISP server further receiving said network access requests from said client computer and executing said associated filtering scheme utilizing said associated set of logical filtering elements.

Alice – Step 2A Analysis:

The claim above is found to be directed to an abstract idea of “organizing human behavior” because “the focus of the claim and its character as a whole is on the idea of filtering content.”  Interestingly, the USPTO notes that the Federal Circuit found Bascom to be a “close call” as to the subject matter to which the claim is directed.  If an examiner found the claim to be directed to an Internet-centric problem or to an improvement in the computer technology of filtering, it would “be appropriate to find that the claim, while ‘involving’ an abstract idea, is not ‘directed’ to that idea standing alone.”

Alice – Step 2B Analysis:

The additional features, when viewed individually, are merely “generic computer and networking components performing generic computer and networking functions.”  However, “an inventive concept can be found in the unconventional and non-generic combination of known elements, and more specifically ‘the installation of a filtering tool at a specific location, remote from the end-users, with customizable filtering features specific to each end user’ where the filtering tool at the ISP is able to ‘identify individual accounts that communicate with the ISP server, and to associate a request for Internet content with a specific individual account.’”  In addition, “these limitations confine the abstract idea to a particular, practical application of the abstract idea and, as explained in the specification, this combination of limitations is not well-understood, routine or conventional activity” (emphasis added).

Example 35

This example gives three hypothetical claims based on a hypothetical application that describes an explanation of current ATM technology and problems associated with current ATM technology – e.g. PINs can be stolen, magnetic stripes can be skimmed, and smart/RFID tags can be skimmed.

Claim 1 (ineligible):

  1. A method of conducting a secure automated teller transaction with a financial institution by authenticating a customer’s identity, comprising the steps of:

obtaining customer-specific information from a bank card,

comparing, by a processor, the obtained customer-specific information with customer information from the financial institution to verify the customer’s identity, and

determining whether the transaction should proceed when a match from the comparison verifies the authenticity of the customer’s identity.

Alice – Step 2A Analysis:

Claim 1 is found to be directed to the abstract idea of “a method of fraud prevention by verifying the authenticity of the customer’s identity prior to proceeding with a banking transaction, which is a ‘long prevalent’ business practice that bank tellers have used for many years.”

Alice – Step 2B Analysis:

The additional features, either viewed individually or in combination, do not show an inventive concept because they are viewed as “nothing more than mere automation of verification steps that were in years past performed mentally by tellers when engaging with a bank customer.”

Claim 2 (eligible):

  1. A method of conducting a secure automated teller transaction with a financial institution by authenticating a customer’s identity, comprising the steps of:

obtaining customer-specific information from a bank card,

comparing, by a processor, the obtained customer-specific information with customer information from the financial institution to verify the customer’s identity, by

generating a random code and transmitting it to a mobile communication device that is registered to the customer associated with the bank card,

reading, by the automated teller machine, an image from the customer’s mobile communication device that is generated in response to receipt of the random code, wherein the image includes encrypted code data,

decrypting the code data from the read image, and

analyzing the decrypted code data from the read image and the generated code to determine if the decrypted code data from the read image matches the generated code data, and

determining whether the transaction should proceed when a match from the analysis verifies the authenticity of the customer’s identity.

Claim 3 (eligible):

  1. A method of conducting a secure automated teller transaction with a financial institution by authenticating a customer’s identity, comprising the steps of:

obtaining customer-specific information from a bank card,

comparing, by a processor, the obtained customer-specific information with customer information from the financial institution to verify the customer’s identity, by

generating a random code and visibly displaying it on a customer interface of the automated teller machine,

obtaining, by the automated teller machine, a customer confirmation code from the customer’s mobile communication device that is generated in response to the random code, and

determining whether the customer confirmation code matches the random code, and

automatically sending a control signal to an input for the automated teller machine to provide access to a keypad when a match from the analysis verifies the authenticity of the customer’s identity, and to deny access to a keypad so that the transaction is terminated when the comparison results in no match.

Alice – Step 2A Analysis:

For the same reasons given above with respect to claim 1, claims 2 and 3 are found to be directed to an abstract idea.

Alice – Step 2B Analysis:

Just like in claim 1, the additional features in claims 2 and 3, when viewed individually, are found to be generic components performing generic functions.  However, when the additional features are viewed in combination, both claims 2 and 3 are found to operate “in a non-conventional and non-generic way to ensure that the customer’s identity is verified in a secure manner that is more than the conventional verification process employed by an ATM alone.”  Further, the claims are found to “describe a process that differs from the routine and conventional sequence of events normally conducted by ATM verification, such as entering a PIN, similar to the unconventional sequence of events in DDR.”

Example 36

This example also gives three hypothetical claims based on a hypothetical fact pattern.  The background includes an explanation of problems associated with current technology being used to track inventory in a warehouse.

Claim 1 (ineligible):

  1. A system for managing an inventory record comprising a memory and processor configured to perform the steps of:

(a) creating an inventory record for an item of inventory comprising acquired images of the item;

(b) adding classification data relating to the acquired images to the inventory record;

(c) adding location data relating to each acquired image to the inventory record; and

(d) updating the inventory record with a physical location of each item of inventory in the warehouse to thereby manage the items of inventory.

Alice – Step 2A Analysis:

Claim 1 is found to be directed to the abstract idea of “data collection, recognition, and storage.”  Although the claim describes the type of information that is acquired, stored, and analyzed, a “mere selection and manipulation of particular information by itself does not make an abstract concept any less abstract.”  Further, the claim is found to merely use a computer as a tool to perform the abstract concept rather than focus on a specific improvement in how the computer functions.

Alice – Step 2B Analysis:

The additional features, even when they are viewed in combination, fail to amount to significantly more than the abstract idea.

Claim 2 (eligible)

  1. A system for managing an inventory record by tracking the location of items of inventory in a warehouse:

a high resolution video camera array, each video camera positioned at pre-determined locations with overlapping views, for acquiring at least one high resolution image sequence of each item of inventory;

a memory and processor configured to perform the steps of:

(a) creating an inventory record for an item of inventory comprising the acquired image sequence of the item from the video camera array;

(b) adding classification data relating to the acquired image sequence to the inventory record;

(c) adding location data relating to each acquired image to the inventory record, the location data providing a position of the item of inventory in the image sequence;

(d) reconstructing the 3D coordinates of an item of inventory using the location data from multiple overlapping images and prior knowledge of the location and field of view of the camera(s); and

(e) automatically updating the inventory record with the 3D coordinates of each item of inventory in the warehouse to thereby manage the items of inventory.

Claim 3 (eligible)

  1. A system for managing inventory by tracking the location of items of inventory in a warehouse using image recognition, comprising:

a high-resolution video camera array for acquiring at least one high resolution image sequence of each item;

a memory for storing the acquired image sequences, classification and location data relating to the acquired image sequences, and a recognition model representing contour information and character information of each item; and

a processor that is configured to manage inventory by performing, for each item, the steps of:

(a) creating an inventory record for the item comprising the acquired image sequence(s) of the item;

(b) extracting characteristics from the acquired image sequence(s) of an item to form feature vectors, the characteristics comprising contour information and character information that is stored in the inventory record as classification data relating to the acquired image sequence(s);

(c) recognizing and tracking the position of item in the image sequence as classification and location data by processing the feature vectors using the stored recognition model and adding the classification and location data to the inventory record;

(d) determining a physical location of the item in the warehouse using the location data relating to the item in the image sequence(s); and

(e) automatically updating the inventory record with the physical location of the item.

Alice – Step 2A Analysis:

For the same reasons given above with respect to claim 1, claims 2 and 3 are found to be directed to an abstract idea.

Alice – Step 2B Analysis:

Like in claim 1, the memory and the processor in claims 2 and 3, when viewed individually, are found to be merely generic components performing their conventional functions of storing and processing information.  The high-resolution video camera array is merely performing its typical function of acquiring images.

However, when the additional features of claim 2 are viewed in combination, they provide significantly more than the abstract idea because the use of a high-resolution video camera array with overlapping views to track items of inventory was described in the specification as not being a well-understood, routine, conventional activity to those in the field of inventory control, and the claimed solution is necessarily rooted in computer technology to address a problem specifically arising in the realm of computer vision systems.

Regarding claim 3, the additional features, when viewed in combination, are found to provide “a hardware and software solution that improves upon previous inventory management techniques by avoiding the cumbersome use of RFID and GPS transmitters and the inaccuracy issues that plagued previous computer vision solutions.”  Thus, the combination is found to “integrate the abstract idea into a particular application that uses character and contour information from high resolution images to recognize items of inventory.”

Conclusion

It is clear that the USPTO Memorandums from May 2016 and November 2016 and corresponding court decisions seem to clarify the bounds of a reasonable §101 rejection.  The above examples show that a good specification can be a practitioner’s friend in this regard, and can be a powerful tool to prevent or overcome §101 rejections.  The USPTO also hinted that another memorandum is forthcoming that addresses §101 from the perspective of preemption.

The Author

Kris Rhu

Kris Rhu is a patent attorney with Harrity & Harrity specializing in the preparation and prosecution of patent applications. His practice focuses primarily on electrical and computer technologies, including computer networking, telecommunications, computer hardware, computer software, and security systems. Prior to joining Harrity & Harrity, LLP, he was a Primary Patent Examiner at the USPTO, where he examined patent applications directed to electrical and computer technologies, including input/output interfaces and devices, computer memory, computer networking, processors, and software development. He also worked at the Patent and Trial Appeals Board helping Administrative Patent Judges write opinions for Ex Parte Appeals. While working full-time at the USPTO, Kris attended The George Washington University National Law Center.

Kris Rhu

Paul Gurzo is a patent attorney with Harrity & Harrity with nearly 15 years of experience in client counseling and preparing and prosecuting patent applications. He handles domestic and foreign patent applications at all stages of prosecution. Paul’s practice focuses primarily on electrical and electromechanical technologies, including telecommunications, computer hardware and software, computer networking, optical systems, Internet-related systems, and business methods. Paul frequently speaks on different areas of patent practice, with a focus on strategically preparing and prosecuting applications, and ways companies can maximize the value of their portfolios.

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There are currently 1 Comment comments.

  1. Dr. Yesno March 28, 2017 9:02 am

    Bascom, claim 1 as I see it is a system claim that includes a method step of “generating”,which might be invalid under IPXL v. Amazon. Isn’t also a “filtering scheme” a method step ??