Patents & the Financial Services Industry

In the Federal Circuit decision In re Henry Gleizer, an applicant appealed a BPAI decision that had affirmed the examiner’s decision to reject all pending claims as being obvious.  The appellant, Henry Gleizer, represented himself pro se.

The invention relates to systems and methods for electronically facilitated transactions.  Claim 89 reads:

89. An automated transaction method for enabling a transaction of electronic funds and physical goods between a buyer and a seller, said automated transaction method comprising:

a. accessing information comprising:

(1) an electronic funds payment instrument information corresponding to said transaction of said electronic funds, and

(2) a shipping information corresponding to said transaction of said physical goods, said shipping information comprising a shipping address;

b. receiving said electronic funds using said electronic funds payment instrument information;

c. printing a shipping label comprising said shipping information, and a shipment tracking information;

d. checking a delivery status of said physical goods using said shipment tracking information; and

e. disbursing said electronic funds to a party comprising a customer selected from the group consisting of said seller and said buyer.

On appeal one of the Appellant’s arguments was that even if the prior art disclosed every limitation in claim 89, the prior art failed to show the specific sequence of steps required by the claim.

This can be powerful argument for financial services patent applications when demonstrating to the PTO that claims are not rendered obvious; often times a financial services innovation may appear – at least facially – to be obvious when compared to prior art, and the differences may appear too subtle to convince an examiner of patentability, except for the particular order or sequence in which the claimed steps of the innovation are performed.  In other words, sometimes the innovative features of financial services inventions are not appreciated by examiners until it is explained to them how certain steps of a process may or must be performed in a different order than is taught in the prior art.

This “temporal relationship” of steps may be achievable in a new electronic commerce method or other financial system/process due to a variety of reasons, such as processing or receiving certain data earlier or later (relative to other steps) than what occurred in the prior art.  In this case, the Appellant argued that the electronic funds must be received from the buyer prior to shipping the purchased goods and that such sequence was not shown in the prior art.  On its face, this may not seem like an overwhelming argument for non-obviousness, but in the overarching context of the invention it plays better when put into context.

Although such “order” arguments can have merit, unfortunately for the Appellant in this case, the Federal Circuit found that the requirement of receiving electronic funds prior to shipping the goods was disclosed only in the specification and is not an actual requirement of the claims:

We have held that unless the steps of a method actually recite or implicitly necessitate a specific order, the steps are not ordinarily construed to require one. Interactive Gift Express, Inc. v. Compuserve Inc., 256 F.3d 1323, 1342–43 (Fed. Cir. 2001). We agree with the Board that Gleizer has failed to show how a sequence of steps described in one embodiment mandates a narrow construction of the claim. See In re Bigio, 381 F.3d 1320, 1325–26 (Fed. Cir. 2004) (“Absent claim language carrying a narrowing meaning, the PTO should only limit the claim based on the specification or prosecution history when those sources expressly disclaim the broader definition.”). We therefore agree that the Board properly affirmed the examiner’s rejection of claim 89.

This of course does detract from the strength of non-obviousness based on the order claim steps are performed; it just means – as always – make sure the limitations that distinguish an invention over the prior art are in the claims.

Ex parte Dang, Appeal 2009-000984 (BPAI 2009)

The application is directed towards a computer-implemented method relating to medical claims, and the only issue on appeal was whether the Appellant established that the Examiner erred by rejecting claim 1 under § 103.  The Examiner cited a single reference as the basis of the § 103 rejection and asserted that the remaining limitations would have been obvious to a person with ordinary skill in the art.

As an initial matter, the Board reversed the Examiner’s obviousness rejection because the Examiner failed to articulate how the prior art rendered obvious one of the claimed features:

Claim 1 specifically requires that the later presented medical claim data fall within the first clean period. This does not occur in Cave. Cave discloses that once the later presented claim is ascertained, a new DEC is formed for it and a new period is started for the associated later presented claim. While the Examiner provides an articulated reasoning for why resetting the new DEC in Cave would be obvious (FF 4,6), the reasoning does not address how the prior art discloses or makes obvious Cave’s mandating a new Dec for the later presented claim. Such a feature relates to a core factual finding determinative of patentability, which needs to be established by a teaching(s) in the prior art. See In re Zurko, 258 F.3d 1379, 1385 (Fed. Cir. 2001).  Accordingly we cannot sustain the rejection of claim 1.

Perhaps a more salient discussion for financial services patents is the Board’s introduction of a new §101 rejection.  Claim 1, which is reproduced below, recites a computer-implemented method for grouping medical claims data and recites a “computer” in the preamble.  The Board first found that there was no “transformation” because the step of “resetting” a time period could be a mental step.  The Board further found that the invention was not tied to a particular machine.  In making this latter finding, the Board noted that although the “computer” was recited in the preamble of the method claim, such limitation is merely a field of use recitation and as such it would only be given weight in accordance with whether it is “intimately meshed with the ensuing language of the claim . . .”  Because the “computer” was not recited in the body of the claim, claim 1 is not tied to a particular machine and is therefore not eligible subject matter.

Claim 1 fails to transform an article into a different state in that it only resets a period which can be a metal step. Second, although the claim preamble recites the method as being computer implemented, we considered it to be merely a field of use recitation, and the weight given it “[depends upon if] that statement is intimately meshed with the ensuing language in the claim. Pitney Bowes, Inc. v. Hewlett-Packard Co., 182 F.3d 1298, 1305-1306 (Fed. Cir. 1999). Since the reference to a computer is not again mentioned in the claim, we find that claim 1 fails to be tied to a particular machine or apparatus. Thus, claim 1 recites non-patent eligible subject matter

The fact that the Board’s decision seemed to turn on the failure to recite the “computer” in the body of the claim would appear to put form over substance, particularly when this could be easily fixed with a very simple amendment to the claim that would not meaningfully affect its scope.  On the other hand, it also provides a good claim drafting reminder about the importance of reciting and incorporating “particular machine” language in the body of method  claims such that they are sufficiently integrated with the claimed steps that it would be difficult for an Examiner or the Board to use the same reasoning as it did in Ex parte Dang to issue or affirm a §101 rejection.

Claim 1 recites:

1. A computer-implemented method for grouping medical claims data, comprising the steps of:

a.    grouping a plurality of medical claim data records to an episode of care having at least one defining characteristic;

b.    assigning a first clean period to the episode of care, the first clean period defined by a predefined time duration during which there is an absence of medical claim data having the at least one defining characteristic of the episode treatment group; and

c.    resetting the first clean period to define a second clean period, the second clean period defining a second predefined time duration, wherein the first clean period is reset to the second clean period when later presented medical claim data having the at least one characteristic of the episode of care and falling within the first clean period is added to the episode of care.

Ex Parte Verhaegh, Appeal 2009-000128 (BPAI 2009)

This application describes a method of determining a schedule for executing a plurality of tasks requiring a plurality of resources, and the claims are directed towards creating a schedule for tasks using project management techniques.  The Examiner interpreted the means-plus-function claims as a process and rejected them under §101.

Claim 6 recites the scheduler with means-plus-function construction:

A scheduler for determining a schedule for executing a plurality of tasks requiring a plurality of resources, comprising

constructing means for constructing a set of constraints from given requirements of each task and from given limitations on each resource;

ordering means for determining for each task a relative starting time, a relative ending time and an assignment of resources, based on the constraints from said set;

timing means for determining for each task an absolute starting time, an absolute ending time and a collection of times and associated task processing speeds, based on the determined relative starting time, relative ending time and assignment of resources for said task, minimizing any violation of the constraints from said set; and

scheduling means for determining the schedule, comprising for each task the determined absolute starting time, absolute ending time, collection of times and associated task processing speeds and assignment of resources to said task.

The Examiner found that the scheduler did not fall within one of the four enumerated categories of patentable subject matter and that it is no more than a software module that is not embedded on a computer readable medium or executable by a computer, and accordingly the Examiner interpreted this claim as a process.  The Board disagreed that claim 6 is a process claim.

The BPAI sided with the Appellants, who argued that the Specification links the scheduler to various systems and that it determines a schedule for executing tasks.  After presuming that each of the “means” elements require construction § 112, ¶6, the Board reasoned that (1) none of the means-plus-function elements recited any structural limitations, and (2) the claim as a whole is directed to a scheduler and the Specification describes it as part of a digital video transmission  system, which is a “particular machine.”  Thus, the Board found that claim 6 is directed to a “machine” and the Examiner erred in rejecting the claim under § 101 as being directed to non-statutory subject matter.

Claim 6 . . . recites four elements in means plus function format. Thus, each of these means are presumed to require construction under 35 U.S.C. § 112, sixth paragraph. None of the four elements recite structural limitations to the means in the claims. Thus we conclude these elements are to be construed as means plus function, implying the claim is directed to a machine. Looking at the claim as a whole, the claim is directed to a scheduler. The Specification discloses a scheduler as being part of a digital video transmission system (FF 01). Thus the claim is directed to a particular machine, viz. a digital video transmission system.

The Board did, however, find claim 1 as being directed to a non-statutory process.  Claim 1 is a method claim directed to determining a schedule for executing a plurality of tasks.

The Decision is a worthwhile read for prosecution practitioners, as it discusses 35 U.S.C. §§ 101, 102, 103, 112 ¶2, ¶6 all in the context of hardware and software technologies.

In re Baggett (Fed. Cir. 2009) (nonprecedential):  A brief reminder of how detail-oriented patent prosecution is, particularly with intricate terminology that appears in software-related arts that are common for financial services patents.  In the Baggett application:

1)      The Examiner read the claimed word “memoization,” which appeared in four claims, as “memorization” and rejected those four claims with art showing “memorization” not the claimed “memoization,”

2)      The Applicant failed to point this out in its Appeal Brief,

3)      The BPAI failed to notice this in its Decision on Appeal (indeed, the BPAI stated “Claim 9 further requires determining if any entry in a construction table was memorized before accessing the construction table . . . The Appellant contends that Gardner does not describe a memorization procedure”, despite the fact that nowhere in the claims nor the Appellant’s arguments does “memorized” or “memorization” appear)

4)      When Appellant pointed out this error in its Request for Reconsideration of the BPAI’s Decision, the Appellant requested reversal on this ground for only one of the four claims that recited the term “memoization,” and

5)      In its Decision on Request for Rehearing, the BPAI acknowledged that it, along with the Examiner, misread the term “memoization,” but then the BPAI only withdrew the rejection from one of the four claims that recited the term.  The other three claims containing the term remained rejected.

In the end, the PTO agreed that the proper remedy was remand, and that is exactly what the Federal Circuit decided.  But this seems like an expensive venue to resolve such issues (although numerous other unrelated obviousness rejections were appealed to the CAFC, and so the case was likely to be appealed anyhow), and it is a reminder of the value of careful prosecution at all stages.  Appellant also probably didn’t win any brownie points with the BPAI with this gem that just might have been construed as sarcasm: “The Board applies a novel approach to analyzing whether a claim is obvious.” (emphasis added)

And for those who do not use “memoization” in their daily vernacular:

Memoization is a computing term relating to an optimization for speeding up computer programs by having function calls avoid repeating the calculation of results for previously-processed inputs.  The applicant defined “memoization” in the Specification as:

Memoization is a technique for speeding up certain kinds of algorithms. If an expensive procedure is called many times, and if the procedure’s output depends only on the input (i.e., the answer is not dependent on any external factors, such as the current time), then memoization can be used. To memoize PO2 retrieval, the PO2 procedure call 80 forms a query 82 involving the constructed fare. The memoization retrieval process 80 has a store 88 of past queries and associated answers. If the memoization retrieval process 80 determines that the query has been stored, it is retrieved from the store 92. Otherwise, a procedure call for the PO2 record is produced and used to access the record from a remote database. The answer from the remote database is stored in the memoization store 88 for future references.