When is Computer Software Patentable?


Software is patentable when and if it can meet the following two part test:

  1. Does the claim recite (expressly state or inherently infer) that the software pertains to a method of organizing human activity (including satisfying legal obligations), mathematical formulas or mental processes?  If no, then the software claim is patent eligible.  If yes, then go to the second part of the test.
  2. If yes, does the claim add elements that create a limitation of specific practical application of the human activity, mathematical formula or mental process?  If the answer to this second part is also yes, then the claim still is patent eligible

Note the “specific practical application” of part B is sometimes also referred to whether the claims recite “significantly more”.  See for example, Ex parte Rockwell and Ex parte Marcus discussed below.

Note that the test is written in terms of the claims of the patent application.  Therefore how you write your application (how you describe your invention), including the claims is critical.  Remember each claim constitutes a description of your invention.  This requires forethought.

Introduction

I have written on this topic before.  See my July blog here.  Also see my February blog regarding Computer Business Methods here.  I have returned to this topic in view of the further guidance from the USPTO issued in October 2019.  Let me emphasize again that creating a patent application for computer software requires forethought.  The written specification (application description) must be coordinated with the text of the claims.  If part B of the test is at issue, the claims should clearly state the limitations that comprise the specific practical applications.  

Background

As I have previously written, natural laws, natural phenomena, and abstract ideas are not eligible for patent protection.

Most frequently, software is rejected by the USPTO patent examiners as comprising only an abstract idea.

Although the courts have never provided a definition of an abstract idea, the USPTO guidelines create three categories of abstract ideas.  The categories are:

  • Mathematical concepts
  • Methods of organizing human activity; or
  • Mental processes.

Discussion

The guidelines now require the examiner to do more that simply reject the applicant’s claim based upon the assertion that the claim comprises an abstract idea.  Now the examiner has the burden of classifying the nature of the abstract idea and supply justification for this determination.

I think understanding whether a software is merely controlling a human activity (and therefore probably not patentable subject) is perhaps the most difficult.  This may be attributable to many computer applications are intended to facilitate human activity, e.g., improve shopping, business transactions or product selection.  Also the analysis tends to blend into whether the claim subject matter is a mental process. 

The USPTO guidelines state the human activity classification as: “certain methods of organizing human activity – fundamental economic principles or practices (including hedging, insurance, mitigating risk); commercial or legal interactions (including agreements in the form of contracts; legal obligations; advertising, marketing or sales activities or behaviors; business relations); managing personal behavior or relationships or interactions between people (including social activities, teaching, and following rules or instructions)”.

This appears very broad.  A short hand expression of the exception has sometimes appeared as “a method of organizing human activity, such as a fundamental economic concept or managing interactions between people.”

The USPTO has provided a detailed example where the software would still be patentable under the part B of the two part test.  (Remember part B is reached if the answer to part A is “yes”, i.e., the claim recites (expressly state or inherently infer) that the software pertains to a method of organizing human activity (including satisfying legal obligations), mathematical formulas or mental processes.)  

Example

The example provides a claim stating 

A method comprising:

a) storing information in a standardized format about a patient’s condition in a plurality of network-based non-transitory storage devices having a collection of medical records stored thereon;

b) providing remote access to users over a network so any one of the users can update the information about the patient’s condition in the collection of medical records in real time through a graphical user interface, wherein the one of the users provides the updated information in a non-standardized format dependent on the hardware and software platform used by the one of the users;

c) converting, by a content server, the non-standardized updated information into the standardized format,

d) storing the standardized updated information about the patient’s condition in the collection of medical records in the standardized format;

e) automatically generating a message containing the updated information about the patient’s condition by the content server whenever updated information has been stored; and

f) transmitting the message to all of the users over the computer network in real time, so that each user has immediate access to up-to-date patient information.

In its guidance, the USPTO acknowledges the above to be merely controlling human activity, i.e., likely steps previously performed manually by humans but now utilizing computer devices (generic computer devices?).  The USPTO example analysis under part A of the two part test concludes:  

“The claim as a whole recites a method of organizing human activity. The claimed invention is a method that allows for users to access patients’ medical records and receive updated patient information in real time from other users which is a method of managing interactions between people. Thus, the claim recites an abstract idea.”

However the USPTO concludes under part B, that the claim integrates the abstract idea into a practical application.  Specifically, the USPTO looks to the combination of additional elements such storing information, providing remote access, converting updated information.  Specifically, the additional elements recite specific improvements over the prior art system.  Remote access is permitted in real time in a standardized format. These additional claim limitations achieve a practical application of an abstract idea.  

Spoiler alert:  Some commentators believe the USPTO example is overly optimistic and appears contrary to a similar real case decided by the US Court of Appeals for the Federal Circuit.  The Federal Circuit invalidated a 7,062,251 patent owned by the University of Florida Research Foundation.  The patent was titled “Managing Critical Care Physiologic Data Using Data Synthesis Technology.”  See the National Law Review article here.

See also the analysis of the Electric Power Group v Alstom S.A., 830 F.3d 1350 (Fed. Cir. 2016). The case has been applied by examiners prior to the recent USPTO guidelines to routinely reject claims comprising collecting data, processing the data and providing the results of the processing.  See Patent Docs article here.

At issue in Electric Power Group v. Alstom was a claim stating:

A method of detecting events on an interconnected electric power grid in real time over a wide area and automatically analyzing the events on the interconnected electric power grid, the method comprising:

  1. receiving a plurality of data streams, each of the data streams comprising sub-second, time stamped synchronized phasor measurements wherein the measurements in each stream are collected in real time at geographically distinct points over the wide area of the interconnected electric power grid, the wide area comprising at least two elements from among control areas, transmission companies, utilities, regional reliability coordinators, and reliability jurisdictions;
  2. receiving data from other power system data sources, the other power system data sources comprising at least one of transmission maps, power plant locations, EMS/SCADA systems;
  3. receiving data from a plurality of non-grid data sources;
  4. detecting and analyzing events in real-time from the plurality of data streams from the wide area based on at least one of limits, sensitivities and rates of change for one or more measurements from the data streams and dynamic stability metrics derived from analysis of the measurements from the data streams including at least one of frequency instability, voltages, power flows, phase angles, damping, and oscillation modes, derived from the phasor measurements and the other power system data sources in which the metrics are indicative of events, grid stress, and/or grid instability, over the wide area;
  5. displaying the event analysis results and diagnoses of events and associated ones of the metrics from different categories of data and the derived metrics in visuals, tables, charts, or combinations thereof, the data comprising at least one of monitoring data, tracking data, historical data, prediction data, and summary data;
  6. displaying concurrent visualization of measurements from the data streams and the dynamic stability metrics directed to the wide area of the interconnected electric power grid;
  7. accumulating and updating the measurements from the data streams and the dynamic stability metrics, grid data, and non-grid data in real time as to wide area and local area portions of the interconnected electric power grid; and
  8. deriving a composite indicator of reliability that is an indicator of power grid vulnerability and is derived from a combination of one or more real time measurements or computations of measurements from the data streams and the dynamic stability metrics covering the wide area as well as non-power grid data received from the non-grid data source.

The court concluded that the claim comprised merely an abstract idea and that merely selecting information by content or source does not do anything to separate it from a normal mental process. Also all of the functions could be performed utilizing “off the shelf” computer components (hence generic computers). 

This claim may have been salvageable with forethought and resulting editing and inclusion of elements and justifications in the specification.  Such added factors could have been included with the claim with the result that the claim was not merely a product of 8 functional steps.  It may have been beneficial to identify in the claim that the method solved a demonstrable problem and that it was analyzed complex variables within in a time faster than could be performed by an individual or collection of individuals.  Perhaps some structural limitations could have been added.  With that thought, perhaps Alstom demonstrates what is too bare of a claim description.  Again, more forethought is needed.  Get the examiner on board (agreement) that you have a real improvement.

For example the patented claim could have incorporated “computer-functionality improvements . . . a particular database technique—in how computers could carry out one of their basic functions of storage and retrieval of data.”  See the prior case entitled Enfish LLC v. Microsoft Corp. 822 F.3d 1327 (Fed. Cir. 2016). 

It is useful to review recent decision where the examiner’s rejection of claims has been challenged, particularly since the issuance of the USPTO guidelines.  One case is Ex parte Fanaru.  In its recent decision, the Patent Trial and Appeal Board (PTAB) used the newly issued guidelines and reversed an examiner’s rejection of the following claim:

A method for providing services corresponding to productivity applications comprising

  1. collecting usage information from devices connected to a computing system in response to inputs to the devices, the usage information including occurrences of usage events generated by the devices, the usage events being associated with activities related to content encoded on a data store; 
  2. providing an interface for configuring the usage events and to provide the usage information; 
  3. receiving by an analytics engine the usage information and aggregating the usage information for a specified period of time; and 
  4. automatically altering operations of the computing system based on the aggregated usage information, the operations including at least one of a retention time of the content, a crawl policy of the content, a backup policy of the content, a restore schedule of the content, and one or more storage tier levels of the content. 

The PTAB board found that the examiner failed to identify the basis of determining the claim as an abstract idea.  The board stated the claim pertained to collecting usage data and as such was not a method of organizing human activity, mathematical concept or mental process.  The board agreed with the patent applicant that the claim comprised a technological solution to a technical problem.  

Please note the reference in the claim to an analytics engine and the step of automatically altering computer operations.  Although not stated by the board, these appear to be controlling steps of an operation akin to the decision of Diamond v. Diehr (a case I have often cited and in which the software was deemed to be patentable subject matter). 

See also the decision of Ex parte Carr wherein the examiner’s rejections of the following claims were challenged:

1. A method of surfing the Internet comprising: 

a. selecting information on a web page; 

b. clicking on the information as it resides on the web page; and 

c. in response to the clicking, conducting a web search on the information. 

10. A method comprising: 

a. clicking on information; and 

b. in response to the clicking, conducting a web search on the information. 

14. A method of surfing the Internet comprising: 

a. positioning a cursor over information to be searched; and 

b. initiating a web search by clicking on the information 

Surprisingly, the board deemed the claims to be patentable subject matter.  (The board was not favorably impressed with the examiner’s apparent sloppy job of justifying the rejection.)  The board was persuaded by the applicant’s argument from Enfish (mentioned above) that the claims are not a method of organizing human activity but rather directed to either improving the functioning of the computer itself or improving an existing technological process, i.e., improving internet searching technology.

Frankly, I do not agree with the board and consider the decision an outlier.  Note further that the Enfishdecision is cited for the position that the Supreme Court has suggested that claims “purporting to improve the functioning of the computer itself” or “improving an existing technological process” might not succumb to the abstract idea exception to patentability.  

Note that as stated in the beginning of this blog, it is important that the specification and claims be well thought out to provide justification and clearly point out facts that will refute a rejection based upon the invention merely being an abstract idea.  

Another PTAB board decision is Ex parte Herbst wherein the board overturned the examiner’s rejection of the following claim:

One or more computer storage devices having computer- executable instructions embodied thereon, that when executed, perform a method of prepopulating clinical events with image based documentation, the method comprising: 

a) receiving, by a medical information system, an image of a patient and metadata associated with the image, the image captured by an image capturing device communicatively coupled with the medical information system; 

b) extracting the metadata, the metadata comprising an identification of the patient and clinical documentation associated with the image; 

c) creating a tag describing a body part associated with the image, wherein the tag is selectable; 

d) storing the imagethe corresponding metadata, and the tag in an electronic medical record for the patient, wherein the electronic medical record for the patient is within the medical information system and is identified based on the identification of the patient; 

e) embedding the tag, the image, and the corresponding metadata at a location on a silhouette of a human body corresponding to the body part described by the tag, wherein the silhouette of the human body is a graphical representation of the human body and is included in the electronic medical record for the patient; 

f) providing, via the electronic medical record, the silhouette of the human body to a clinician device; 

g) receiving, on the clinician device, a selection of the tag; and 

h) displaying the image and the associated clinical documentation on the clinician device. 

The Board note that at least one of the claim steps required activity of a processor and could not be performed by the human mind.  (See step e.)  Also the board determine that the claim steps did not constitute a method of organizing human activity, i.e., it was not a fundamental economic concept or managing interactions between people.  

Another interesting case wherein the board reversed an examiner’s rejection of a software that was asserted to be managing human activity is Ex parte Boding.  The claim at issue stated: 

An authentication analysis system, comprising: 

  1. a processor;
    b) an external interface coupled to the processor; and
    c) a non-transitory computer-readable storage medium coupled to the processor, comprising code executable by the processor for implementing a method comprising: 
  2. receiving, by the processor over a network at the external interface, user access pattern data generated by a user client computer, where the user client computer is used to request an authentication process, wherein the user access pattern data corresponds to user interactions of a user with one or more input devices of the user client computer, the user interactions detected by the one or more input devices; 
  3. receiving, by the processor over the network, device fingerprint data associated with the user client computer; 
  4. determining, by the processor, a type of device for the user client computer by using the device fingerprint data to access a list of device types; 
  5. calculating, by the processor, a quantity of user interactions with the user client computer based on the user access pattern data; 
  6. determining, by the processor, a likelihood that the request is fraudulent by comparing the quantity to a previously measured quantity of user interactions associated with the user utilizing a user device that is of the same type of device as the user client computer
  7. declining, by the processor, authentication of the user if the likelihood indicates that the user access pattern data is inconsistent with the type of device determined based on the device fingerprint data; and 
  8. sending, by the processor over the network, an instruction to a server computer indicating that authentication of the user was declined, wherein the instruction causes the server computer to end the authentication process with the user client computer. 

The Board states that the review of the claims for part A of the two part test may comprise a review of the focus of the claim as a whole and the part B may consist of looking more precisely at the individual claim elements.  The more detail review may consider whether the elements add an “inventive concept” to the claim (citing Electric Power Group LLC v Alstom S.A.).  The board also again acknowledges there is no definition of an abstract idea.  

The Board’s discussion focused upon part A of the test and noted that the claim did not recite subject matter that falls within the three enumerated groups of abstract ideas, i.e., organizing human activity, mental processes or mathematical formulas. 

As stated by the Board: 

“In other words, Appellants’ claim recites an authentication analysis system designed to address the problem of fraudulent activities associated with transactions between a user client computer and a server computer over a network by way of (1) determining “a type of device for the user client computer by using the device fingerprint data to access a list of device types;” (2) calculating “a quantity of user interactions with the user client computer based on the user access pattern data;” and (3) determining “a likelihood that the request is fraudulent by comparing the quantity to a previously measured quantity of user interactions associated with the user utilizing a user device that is of the same type of device as the user client computer” before declining or accepting authentication of a user. As such, we are persuaded by Appellants’ arguments that claim 1 “solves the technical issue of authenticating a person using a computer that is remote from the authentication computer and communicating information to the authentication computer over a network,” similarly to the claims in DDR and also “provides a specific solution to a technical problem” similar to the claims in Enfish.”  (Emphasis added)

See for example elements (i) & (v) of the claim (highlighted).  These are clearly not steps or functions that could readily be performed as a mental process. 

As in all of the above examples, the board did not find the claims recited one of the three enumerated classes of abstract ideas.  Therefore there was no reason to proceed to part B of the test.  

Abstract Idea but Something More . . . 

In the following recent decisions, the board looked at part B after finding that the claim did, in fact, recite one of the elements of an abstract idea, i.e., (a) Mathematical concepts; (b) Methods of organizing human activity; or (c) Mental processes.

Ex parte Rockwell, the board reversed the examiner’s rejection in spite of indication that the claim recited organizing human activity.  For example, claim 1 states:

A system comprising:
a) a processor of a vehicle configured to communicate with an update server hosting software updates; and 

  • a software update management module connected to the processor and vehicle modules over a vehicle bus and configured to 

determine that a software update is an optional software update based on a data indicator associated with the software update, wherein the software update is configured to at least one of add an additional feature to a vehicle module or adjust a configuration of an existing feature of a vehicle module, 

provide, in a head unit display of the vehicle, an indication of an optional status of the software update and a request for consent from a user to install the optional software update,* 

invoke a software update mode responsive to receipt of a message indicating user consent to install the software update,* 

send an update command over the vehicle bus to invoke the software update mode for the vehicle module identified by the software update, 

apply the software update to the vehicle module by installing the update to a memory of the vehicle module, and 

display an indication as an icon within a gauge cluster of the vehicle responsive to lack of receipt of the user consent. 

Arguably, many of the steps performed by the system could be performed by human activity but have been automated with computer components.  However the board determined that even if the claim recited one of the three exceptions, i.e., organization of human activity, mental process or mathematical formula, that the claim contained sufficient limitations or elements that integrate the asserted abstract idea into a practical application of updating software specifically for a for a motor vehicle, in which user consent is required and in which lack of receipt of user consent is communicated to a user via an icon within the gauge cluster of the vehicle.

*The examiner asserted these steps constituted organizing human activity.  

Note that the claim is drafted as a system in contrast to a series of method steps.

Ex parte Marcus pertains to a proof of performance verification system.  The claim is long and states as follows:  

1. A proof-of-performance verification system for providing purchase incentives to customers over a computerized telecommunications-based system utilizing electronic transmission of images of paper purchase receipts, the system comprising: 

a) a selected-offers storage facility, storing a plurality of reward offers selected by a registered user of the verification system, each of said selected reward offers being selected at a respective time of selection; 

b) a receipt processing facility that receives a receipt image, the receipt image being an image representing a paper receipt issued to the registered user in a product or service purchase transaction as a record of said transaction, the receipt processing facility being operative to convert the receipt image to a text representation of the receipt image, and to match the text representation of the receipt image to a product or service description maintained in a terminology database, the image having been captured by the registered user via an imaging facility of a handheld device, the receipt image including a representation of a date and time of the purchase transaction; 

c) the receipt processing facility receiving, in association with said receipt image, device-specific information that identifies said handheld device, the device-specific information associated with the registered user; the receipt processing facility identifying said registered user from the device-specific information;

d) a proof processor that electronically matches one of said stored reward offers selected by the identified registered user against the product or service description to facilitate offer redemption, the proof processor verifying that the date and time of the purchase transaction as represented by the received image is later than the respective time of selection of the matched one of said stored reward offers selected by the identified registered user; 

e) said proof processor informing the identified registered user of all offers matched to the receipt image; 

f) said proof processor receiving an indication from the identified registered user as to at least one selected offer that should have been matched to the receipt image but was not matched to the receipt image, said indication including an identification of a receipt item in the receipt image that should have been matched to one of said at least one selected offer; 

g) said proof processor including a database of images of paper purchase receipts; 

h) at least one of: 

a payment facility that distributes the offer redemption funds; and 

a rewards facility that communicates incentive rewards to a central location; 

  1. said proof processor further operative to: 

identify a retail store that issued the paper receipt; and 

detect a font and/or printed art element in the paper receipt as represented in the receipt image to ensure validation against a known font and/or printed art element utilized by the identified retail store. 

The Board stated: 

“For the sake of argument, we agree with the Examiner that the claims are directed to “electronic coupon redemption and verification,” which reasonably may be characterized as a combination of abstract ideas including fundamental economic practices, commercial and legal interactions, advertising, marketing, and sales activities, and mental processes, such as forming an observation, evaluation, judgment, or opinion.” 

However the Board reversed the examiner’s rejection stating that the examiner failed to provide sufficient evidence that the combined elements of the claim did not create a specific practical application.  (Note the board is placing an affirmative duty upon the examiner to rationalize the rejection.)  

The Board further makes assertions, including but not limited to, the claim goes beyond merely comparing input data in a conventional manner or performing a scan and OCR operations on a printed receipt.  The OCR function is combined with an evaluation of the font or other indicia to validate the receipt.  In this example, the board has placed the burden upon the examiner to show that the printed-art-validation limitation merely is a generically recited computer performing generic computer functions that were well understood and routine, and conventional activities previously known in the industry.  

Note that it is my point that the applicant should, using foresight, clarify that these steps are not performed by generic “off the shelf” computers but have been specifically programed and integrated into the system to perform this function, etc.  This information should be in the specification and recited in the claims.  Also that this system is a unique solution to an existing problem or provides a novel method distributing and verifying rewards. 

A further example is provided by the Board’s action in Ex parte Scheer.  The following claim was rejected by the examiner as comprising an abstract idea.  The claim states:

A system for monitoring a location, the system comprising: 

a local agent device at the location; and 

at least one sub-system at the location, wherein the at least one sub-system is in communication with the local agent device, 

wherein the local agent device is configured to detect and respond to a standard event occurring at or within the at least one sub-system according to a standard procedure in which the local agent device automatically performs a standard task with respect to the at least one sub-system, 

wherein the local agent device is configured to detect and respond to an alarm event occurring at or within the at least one sub-system according to an alarm procedure in which the local agent device automatically performs an alarm task with respect to the at least one sub system and contacts a monitoring center that is remotely located from the location, and 

wherein the local agent device is configured to detect and respond to an emergency event occurring at or within the at least one sub-system according to an emergency procedure in which the local agent device contacts emergency personnel.

Note the claim is very broadly worded.  Note the “local agent device is configured to detect and respond to an alarm event . . . . according to an alarm procedure . . .”  These terms are not defined and the claim is to be read in accordance with its broadest reasonable meaning.

In its decision, the Board stated the examiner’s position was that the claim was directed to an abstract idea of detecting events and responding to events according to procedures.  I would agree with this assessment.  The claim is described in a high level of generality and are recited as performing generic computer functions routinely used in computer applications.  

The Board however found that the “claim recites additional elements including a local agent device, a sub-system at the location which is in communication with the local agent device, contacting a remote monitoring center in response to detecting an alarm event at or within the sub-system, and contacting emergency personnel in response to detecting an emergency event at or within the sub-system.  These additional limitations integrate the judicial exceptions, namely the mental processes and human organizing activity identified above, into a practical application.

I think the Board was generous with the applicant.  I do not believe the claim, as drafted with such general language, provided the necessary specificity and it is therefore not a good model for patenting software. 

In Ex parte Borucki, the board evaluated the following claim:  

A processor-implemented method programmed in a non-transitory processor-readable medium and to execute on one or more processors configured to execute the method, comprising: 

  1. identifying a customer interacting with a self-service device via a customer identifier; 
  2. requesting, via a network, a transaction profile for a transaction commencing with the customer on the self-service device, the transaction profile requested of a cloud-transaction processing service located remotely over the network, the customer identifier also supplied to the cloud-transaction processing service, wherein requesting further includes providing an interface type to the cloud-transaction processing service, the customer identifier and the interface type used by the cloud-transaction processing service to locate the transaction profile; 
  3. receiving the transaction profile from the cloud- transaction processing service, wherein receiving further includes acquiring the transaction profile from the cloud- transaction processing service as an executable script; and 
  4. automatically completing the transaction on the self- service device for the customer by processing settings and options defined as preferences within the transaction profile and at least some of the preferences providing information for automatically answering-questions on behalf of the customer that are being asked by a cloud interface for the cloud- transaction processing service during the transaction that the customer is engaged in at the self-service device, and wherein automatically completing the transaction further includes processing the transaction profile as multiple profiles arranged hierarchically with at least one of the multiple profiles providing a global profile processed to partially populate values for the transaction defined in other ones of the multiple profiles, wherein automatically completing further includes executing the executable script to interact with an interface of the self- service device, the script when executed providing the settings and the options to the interface to automatically complete the transaction on behalf of the customer. 

Note that this claim is also rather broadly worded such that giving the claim terms their broadest reasonable interpretation, the claim can be viewed as encompassing an abstract idea.  The Board agreed.  This was viewed as a method of organizing human behavior.  

The applicant asserts the claim outlines unconventional processing steps that confine the claim to a particular application.  However the board determined that the claim as a whole recites a method of organizing human activity by facilitating sales and other commercial transactions at self service devices.

Nonetheless, the board decided that the claim integrates the judicial exception (abstract idea) into a practical application. The board found the claim recites a combination of additional elements including requesting and receiving a client’s transaction profile from a cloud-transaction processing service, and automatically completing the client’s transaction on the self-service device/kiosk by executing the profile’s executable script on the self-service device. The board found the additional elements integrate the method of organizing human activity into a practical application. 

Ex parte Kamath, the board dealt with a claim that clearly comprised a method of organizing human behavior, i.e., developing a bidding strategy.  The only hope would be for the applicant (Adobe) to have provided sufficient claim limitations that the claim would apply to a distinct and specific application. 

The claim stated: 

A method for determining a bidding strategy for placing a plurality of bids for a plurality of marketing options, the method comprising: 

  1. performing, by one or more computing devices: 
  2. determining empirical data associated with marketing options based on performance metrics of the marketing options and based on observation of web site traffic from user devices to computing resources that expose the user devices to the marketing options; 
  3. generating a predictive model that comprises one or more statistical models, wherein the predictive model is generated based on the empirical data
  4. determining at least one modeling parameter for the predictive model, wherein the at least one parameter is variable and is associated with at least one of a user characteristic or a marketing option characteristic; 
  5. determining at least one objective for the predictive model to optimize; 
  6. receiving a trigger event to optimize the predictive model, the trigger event associated with web site traffic to a set of web sites; 
  7. optimizing the predictive model by solving an objective function based in part on the at least one modeling parameter, and the at least one objective, and at least one constraint; and 
  8. determining, in real time relative to the trigger event, the bidding strategy based on the optimization of the predictive model, wherein the bidding strategy comprises a set of the marketing options that results in the optimization in accordance with the at least one modeling parameter, the at least one objective, and the at least one constraint, the set of marketing options used in connection with subsequent web site traffic to the set of web sites. 

The Board found that the claim subject matter was akin to offer based price optimization which is a well known method of organizing human activity.  However the board also found under part B of the two part test that the claim requires generating, optimizing, and using a predictive model to determine a set of marketing options that are applied to website traffic for a plurality of websites. These limitations implement the recited abstract idea with the particular computing device that is integral to the claim and apply or use the recited abstract idea in a meaningful way beyond generally linking the use of the abstract idea to a particular technological environment, such that the claim as a whole is more than a drafting effort designed to monopolize the exception. 

Note the applicant’s specificity outlined in the method steps and the linkage to predictive modeling, etc.  

Abstract Idea and No Cigar

In the following cases, the PTAB upheld the examiner’s determination that the invention was not patentable using the two part test.  

A. Does the claim recite (expressly state or inherently infer) that the software pertains to a method of organizing human activity (including satisfying legal obligations), mathematical formulas or mental processes?  If no, then the software claim is patent eligible.  If yes, then go to the second part of the test.

  • If yes, does the claim add elements that create a limitation of specific practical application of the human activity, mathematical formula or mental process?  If the answer to this second part is also yes, then the claim still is patent eligible

In the appeal to the PTAB, the board affirmed Ex parte Seid that the software claim was unpatentable.  First the Board agreed that the claim failed part A of the test and, under part B, was determined that there was not “substantially more” or direction to a “specific practical application”. 

The claim in Ex parte Seid stated: 

A method for determining a valuation of a subject item, the method being implemented by one or more processors and comprising: 

  1. analyzing a listing of a subject item to determine a set of characteristics for the subject item; 
  2. determining, based at least in part on data retrieved from a third party online source via a network connection, comparable criteria for the subject item based on the set of characteristics; 
  3. determining multiple comparable transactions conducted through an online marketplace, based at least in part on a search of a transaction log of the online marketplace using the comparable criteria; and 
  4. calculating the valuation for the subject item based on the multiple comparable transactions, wherein calculating the valuation includes providing an indicator of valuation elasticity based on a set of unsuccessful offers recorded in the transaction log of one or more of the comparable transactions. 

Under part A, the Board determined the claim was directed to instructing how to value a subject item, which is a fundamental economic practice and therefore an abstract idea, i.e., a method of organizing human activity.  

Considering the claim under part B, the Board found the reference to use of processors and computer networks to be unpersuasive.  The board stated the method steps could be performed by a person with pencil and paper.  Receipt of data via the Internet was also unpersuasive.

Ex parte Hertenstein

In this matter, the examiner rejected the applicant’s claims under Section 101 as merely an abstract idea.  The claim, stated below, involved (i) inputting of insurance claim information, (ii) comparing the information submitted with the insurance claim to verified historical information using a mobile computing device, (iii) flagging discrepancies between the compared data utilizing a server, and (iv) generating a confidence score.

Sample claim:

  1. A method for verifying insurance claim submissions comprising: 

receiving, by a server computer coupled to a network and including a processor executing software instructions within a memory, an insurance claim incident data from a software application executing within a mobile computing device, the insurance claim incident data including a vehicle registration data, a driver identification data or an address data; 

executing, by the server computer, a query selecting a verified data stored within a database coupled to the network; 

comparing, by the server computer: 

a historical insurance data, within the verified data and associated with an operator of the mobile computing device, with the insurance claim incident data to identify a discrepancy including a missing data or an incorrect data within the insurance claim incident data; or 

a second insurance claim incident data, within the verified data and received from a second mobile computing device operated by a second user, with the insurance claim data to identify the discrepancy; 

flagging, by the server computer, the discrepancy, when identified, as inconsistent data between the insurance claim incident data and the historical insurance data or the second insurance claim incident data; 

generating, by the server computer, a verification report, including an electronic document including: 

an insurance claim identifier; and 

a calculated score indicating a degree of confidence in the insurance claim incident data according to the missing data or the incorrect data; and 

transmitting, by the server computer, the verification report to a second server computer operated by an insurance carrier. 

The claim was rejected as an abstract idea, i.e., it was an idea alone or by itself.  (Compare this claim and decision to In re Boding discussed above.)  The decision making process then looked to whether the claim contained additional elements that transformed it into patent eligible subject matter.  (Was there an inventive concept?)  The PTAB cited case law stating that an inventive concept could not be created by limiting the use of the abstract idea to a particular technological environment or insignificant post solution activity.  

The PTAB considered the claim a merely receiving, analyzing and outputting data.  There are no technological implementation details but only broad functional language.  Specifically, the absence of an algorithm for calculating the score was noted.  More specifically, the claim was deemed to apply to insurance, which is a well established method of controlling human activity.  It was also something that could be performed by the human mind.  

Further, there was no finding of technological development.  The claim merely required use of a generic computer.  Contrast this with the finding of Enfish by the Court of Appeals.  Enfish involved improvements to computer functionality (improved database technique and organization).  The instant case is simply utilizing generic computers with common functionality.  There is nothing “significantly more”.

Also note the applicant argued that the claim described a method of handling the data without foreclosing other methods of handling insurance claim information.

Ex parte Leber

In this decision, the PTAB determined a specified payment method merely comprised an abstract idea.  This decision is incorrect in my opinion.  The sample claim states as follows:

  1. A method for facilitating at least a portion of a secure electronic financial transaction, the method comprising: 
  2. prior to receiving an electronic transaction request, defining a transaction template that comprises a set of established transaction specifications that define contents of acceptable digital instruments, the digital instrument further comprising payment instructions that define how payments to payees are authorized, wherein only electronic transaction requests that correspond to the transaction template are available for authorization; 
  3. generating a unique payee identifier that represents a payee; 
  4. combining, by a payor device, the unique payee identifier with a digital instrument that has been digitally signed to create a secure instrument that cannot be surreptitiously presented to an electronic transaction processing system by any other party; 
  5. receiving an electronic transaction request from the payor device over a secure application programming interface, the electronic transaction request comprising the unique payee identifier and the secure instrument that has been digitally signed by at least one payor, the digital signature being encrypted using an encryption type that is selected by a payment processor; 
  6. verifying an identity of at least one of the payor and the payee using a digital security protocol
  7. verifying the digital signature using the selected encryption type; 
  8. comparing the electronic transaction request to the transaction template; and 
  9. authorizing a payment to the payee according to payment instructions included in the secure instrument if the electronic transaction request corresponds with the transaction template. 

First the PTAB agreed with the applicant that the claim and specification met the Section 112 requirements, i.e., the applicant’s claims and specification demonstrated “possession” of the invention.

The PTAB found that the invention comprised at the first step an abstract idea, i.e., method of organizing human activity by creating a secure payment arrangement.  

The PTAB first looked at whether the claims focus on an improvement of the relevant technology or are merely directed to an abstract idea invoking generic process and machinery.  If patent ineligible subject matter, then the second step is to look for an inventive concept, or stated differently, is there a combination of elements to ensure that the patent in practice amounts to significantly more than, e.g., an abstract idea.  Limitation to a particular environment or adding insignificant post solution activity does not constitute “substantially more”.  “Only if a claim recites a judicial exception and does not integrate that exception into a practical application, do we then look to whether the claim adds a specific limitation beyond the judicial exception that is not “well-understood, routine, conventional” in the field.” (See revised guidelines) 

The PTAB found the claim directed to an abstract idea, i.e., a fundamental economic practice such as a secure method of payment.  The PTAB (incorrectly) determined that the multiple steps, including creation of a payment request template, were standard or foundational economic practice.  If the PTAB analysis is to be accepted, then any methodology pertaining to contractual relationships would be deemed an abstract idea.  Looking at the PTAB’s stress that there exist no improvement to computer technology and that the method utilizes standard computer hardware, perhaps the applicant could have had more success if greater specificity of the template was provided, along with specificity between the template and payment request. 

The PTAB decision states:

“Further, in view of Appellant’s Specification, and consistent with the Examiner’s findings, the claims do not recite an additional element that: applies or uses an abstract idea to effect a particular treatment or prophylaxis; implements an abstract idea with, or uses the abstract idea in conjunction with a particular machine; effects a transformation of a particular article; uses the abstract idea in some other meaningful way beyond generally linking the use of the abstract idea to a particular technological environment; or otherwise integrates the abstract idea into a practical application. See Memorandum at 55.” 

Perhaps statements of transformation of the payment instrument to a conforming and authenticated document as disclosed in the specification would be sufficient.  Also it would be advisable to more clearly specify the problem being solved by the combination of the method steps, i.e., prior creation of the template and use of authentication. 

Conclusion

First, congratulations if you have read through this post.  Second, you can see that the patentability of software and business methods in highly nuanced.  Third, the application must do more than explain the invention and how it works.  The applicant must establish through both the specification and the claims that the invention is more than an abstract idea.  

She must create an application (obviously using fore thought) that show the invention solves a real and specific practical application.  She must show the invention accomplishes substantially more than merely organizing a human activity, perform a mental process or involve a mathematical computation.  Note that this test is independent of whether the invention is novel or is a nonobvious improvement.

Software and computerized business methods CAN be patented.  The patents may be very valuable and provide superior protection rather than trying to maintain the method or device a trade secret.  However, you have to think about how you are going to convince the examiner of patentability over an assumed knee jerk response of “mere abstract idea”.

Copyright David McEwing, 2019