Patents & the Financial Services Industry

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.

MasterCard gift card retailer PrivaCash, which offers a pre-paid debit card having a pre-set spending limit but without using an actual credit card for retail purchases, filed a complaint on June 19, 2009, in the U.S. District Court for the Western District of Wisconsin, asserting that it’s U.S. Patent 7,328,181 is infringed.

Specifically, PrivaCash alleges that certain prepaid gift cards provided by American Express Company, and its subsidiaries American Express Incentive Services and American Express Travel Related Services, infringe the patent entitled “Method and System for Transacting an Anonymous Purchase Over the Internet.”  The patent covers a method for transacting anonymous Internet purchases.

It will be interesting to see whether there are any “multiple actor” issues in this case, given that the claimed steps (see representative claim 1 below) recite distributing a plurality of unfunded purchase cards, issuing one of those cards to a cardholder, and making a purchase with that card at an unassociated retailer.  The current Federal Circuit law holds that a method claim is only infringed when a single party performs each step of the asserted claim, unless a single party exercises “control or direction” over the entire infringement.

BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007) (where steps of a method claim are performed by multiple parties, the entire method must be performed at the control or direction of the alleged direct infringer);

Muniauction, Inc. v. Thompson Corp., 532 F.3d 1318 (Fed. Cir. 2008) (“where the actions of multiple parties combine to perform every step of a claimed method, the claim is directly infringed only if one party exercises ‘control or direction’ over the entire process such that every step is attributable to the controlling party, i.e., the mastermind.’ . . . the control or direction standard is satisfied in situations where the law would traditionally hold the accused direct infringer vicariously liable for the acts committed by another party that are required to complete performance of a claimed method”)

Claim 1     A method of transacting a purchase, comprising:

distributing a plurality of unfunded purchase cards from a purchase card provider to a plurality of purchase card outlets, wherein each of the purchase cards is a bearer instrument having an associated account number issued by a major branded credit card organization, an expiration date and a non-personalized cardholder name selected by the purchase card provider printed thereon, wherein the purchase card does not include information identifying the specific perspective cardholder, wherein information associated with each of the purchase card accounts is maintained in a software implemented application operated by the purchase card provider;

issuing a purchase card to a cardholder at the a purchase card outlet;

contacting the purchase card provider to fund and activate the purchase card account of specific purchase card issued with a software implemented application or via the telephone; and

transacting a cardholder purchase at any one of a number of retailers not associated with the purchase card outlet which accepts credit cards of the major branded credit card organization, wherein the cardholder presents the purchase card and the retailer contacts the purchase card provider over a network connection to interface with the software implemented application transmitting the purchase amount and the purchase card account number without requiring the retailer to collect and transmit personalized cardholder identifying information, to verify using the software implemented retail application that the purchase card is unexpired and that the purchase amount does not exceed the cardholder’s funding limit, whereupon the purchase card account information will be debited by the amount of the purchase and the account of the retailer will be electronically credited completing the purchase transaction.

Normally I’m not one to seek out the occasional offbeat patent, but sometimes you come across a patent where you just can’t help yourself.  This week I bring you U.S. Patent 7,552,070, “System and method of planning a funeral.”

The invention relates to arranging and funding a funeral or other memorial service.  The program receives user input requesting information associated with funeral products, services and homes, and then it associates the user input with a budgetary, profile, home locator, or step-based parameter.

The assignee is aptly named “Forethought Financial Services, Inc.”

Claim 1 reads:

A computer-implemented method for creating an online funeral plan, the method comprising:

generating a profile including a plurality of profile parameters, wherein the plurality of profile parameters are related to a personal funerary preference and a lifestyle of a decedent, and the lifestyle of the decedent is associated with a profession of the decedent;

generating a plurality of groupings of products and services each associated with a profile parameter of the plurality of profile parameters;

receiving user input associated with a grouping of products and services of the plurality of groupings of products and services to obtain requested pricing information on a product or service offered by a selected funeral service provider among a plurality of funeral service providers;

retrieving in response to the user input the requested pricing information by accessing a database storing pricing information associated with the grouping of products and services associated with the profile parameter and offered by the plurality of funeral service providers, wherein the grouping of products and services are preselected to complement each other and complete aspects of funeral planning, and to individually and collectively accord with the profile parameter that relates to the personal funerary preference and the lifestyle of the decedent, wherein each funeral service provider is associated with a distinct set of products and services from the plurality of products and services, and wherein the database maintains pricing information for the set of products and services associated with each funeral service provider;

steering generation of the funeral plan according to the profile parameter that relates to the personal funerary preference and the lifestyle of the decedent by prompting user selections from the grouping of products and services associated with the profile parameter;

outputting the requested pricing information to the user; and

wherein the generating the profile, generating the plurality of groupings, receiving user input, retrieving, steering, and outputting steps are implemented by executable software stored in a computer.

Ex Parte Roberts, Appeal 2009-004444 (BPAI 2009)

The invention at issue relates to a method for performing tax-deferred real estate transactions, and Claim 42 recites a method of creating a real estate investment instrument adapted for performing tax-deferred exchanges comprising creating a real estate portfolio, subjecting real property in the real estate portfolio to a master agreement, and issuing a plurality of deedshares to a plurality of holders.

The Board held that Claim 42 recites a process but that it “is not tied to a machine nor does it transform a particular article into a different state or thing.”  Accordingly it is drawn to nonpatentable subject matter.  The Board cited Bilski extensively:

“[T]he proper inquiry under § 101 is not whether the process claim recites sufficient “physical steps,” but rather whether the claim meets the machine-or-transformation test. As a result, even a claim that recites “physical steps” but neither recites a particular machine or apparatus, nor transforms any article into a different state or thing, is not drawn to patent-eligible subject matter. Conversely, a claim that purportedly lacks any “physical steps” but is still tied to a machine or achieves an eligible transformation passes muster under § 101.” In re Bilski, 545 F.3d 943, 961 (Fed. Cir. 2008) (en banc) footnote omitted).

 

Claim 42 reads as follows:

42. A method of creating a real estate investment instrument adapted for performing tax-deferred exchanges comprising:

creating a real estate portfolio from at least one real property;

subjecting the real property in the real estate portfolio to a master agreement;

creating a plurality of deedshares by dividing title in the real estate portfolio into a plurality of tenant-in-common deeds, each of the plurality of deedshares subject to a provision in the master agreement for later reaggregating the plurality of tenant-in-common deeds; and

issuing the plurality of deedshares to a plurality of holders, at least one of the holders receiving deedshares in exchange for relinquishing title to a real property not in the real estate portfolio;

wherein the master agreement does not establish a partnership among the plurality of holders and wherein said exchange by said at least one of the holders is a tax-deferred exchange under IRC § 1031.

David Kappos, the assistant general counsel for IP law and strategy at IBM, was chosen by the Obama administration to be the next director of the Patent and Trademark Office.  Many patent practitioners will be watching closely to see whether IBM’s position on business method patents and the Bilski test will permeate from Kappos to the rest of the PTO.  Here is a quote from the BNA “Patent, Trademark & Copyright Law Daily” about Kappos’ opposition to business method patents:

On Jan. 15, 2007, Kappos published an opinion piece on the Web site of the Intellectual Property Owners Association suggesting that allowing patents on business methods has not served the public.

 

He left no doubt of his feelings on the topic a year later, at a Jan. 14 Brookings Institution conference (13 PTD, 1/23/09), saying that IBM looked at State Street Bank & Trust Co. v. Signature Financial Group Inc., 149 F.3d 1368, 47 USPQ2d 1596 (Fed. Cir. 1998), as initiating an “experiment” in allowing patenting of business methods that, after ten years, can now be seen as having failed.

 

In further remarks at that conference, Kappos was particularly critical of business method patents “untethered to any particular application.” He could see “no sound innovation policy that supports abstract, non-technical patents” given to business methods. These patents are now covering results, and not how the results are achieved, he said, and this discourages rather than encourages innovation.

 

Kappos saw “a good piece of work” in the line drawn by the U.S. Court of Appeals for the Federal Circuit in In re Bilski, 545 F.3d 943, 88 USPQ2d 1385 (Fed. Cir. 2008) (211 PTD, 10/31/08). At least it is clear that legal obligations and business risk do not meet the subject matter test, he said. Lots more work needs to be done, though, he added, suggesting that further clarification should be along the lines of the “technical contribution” requirement for patentability used in Japan and the European Union. We should be considering a global perspective in our line-drawing, he said; harmonization is a good thing.

 

However, it is worth noting that IBM’s amicus brief on Bilski, which Kappos coauthored, included a recognition of “important technological advances” in the financial field, so it is likely his definition of “business method” is not as broad as some might think (see also David J. Kappos, John R. Thomas, & Randall J. Bluestone, A Technological Contribution Requirement for Patentable Subject Matter: Supreme Court Precedent and Policy, 6 Nw. J. Tech & Intell. Prop. 152 (2008)).

 

In another development, Kappos was also in the news after the PTO published its rules changes for continuation and claiming practice that led to the still-ongoing Tafas v. Doll litigation. 559 F.3d 1345, 90 USPQ2d 1129 (Fed. Cir. 2009) (53 PTD, 3/23/09). However, in a declaration in support of an amicus brief on the case, Kappos confined his complaints to the retroactivity terms of the PTO’s rules, and did not directly contest the changes for future patent applications (http://pub.bna.com/ptcj/KapposDecl.pdf).

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.

On June 16, 2009, U.S. Patent 7,546,945 issued to Capital One Financial Corp.  The patent, entitled “System and method for managing transactions,” is directed to managing transactions associated with an individual’s financial accounts.

The idea is pretty simple.  Whereas it is common for individuals to have multiple financial accounts, there isn’t always an easy way to automatically manage transactions to/from one of those accounts based upon terms of other another account or based on events occurring with respect to other accounts.  Representative claim 1 recites the straightforward process by which transitions for an individual’s accounts may be configured to be automatically processed in such a way to maximize the benefits associated with the accounts for their owner:

A method for managing transactions associated with accounts of an individual, comprising:

receiving information associated with the individual;

receiving information associated with a first account of the individual;

receiving information associated with a second account of the individual;

processing the received information associated with the individual, the received information associated with the first account, and the received information associated with the second account; and

automatically performing a transaction based upon a result of the processing, wherein

the processing is based upon comparisons of one of terms and events of the first and second accounts to maximize a benefit to the individual.

In June 4, 2009, LML Patent Corporation, a wholly-owned indirect subsidiary of LML Payment Systems Inc. from Vancouver, filed a complaint in the Easter District of Texas Marshall Division against several banks for infringement of U.S. Patent RE40,220 for “Check writing point of sale system ”.  The defendants include National Bank of Daingerfield TX, PlainsCapital Bank, Southside Bank, First Bank, The American National Bank of Texas, and American Bank of Texas.

The patent, which is part of family that dates back to 1996, is directed to a POS system that reads information from a consumer’s check and then debits the consumer’s account and credits the merchant’s account for the goods or services provided.  The parent patent had only four claims, all of which were system claims, including only a single independent claim.  During the reissue, LML added 100 claims, including numerous method claims.  Representative claim 5 recites:

A method for electronic processing of consumer payment for goods or services comprising:

• receiving account information from a bank check;
• receiving a transaction amount;
• receiving authorization for an electronic funds transfer, the authorization being for the transaction amount;
• transmitting the account information and the transaction amount;
• annotating the bank check; and
• submitting the account information and the transaction amount for electronic settlement.

Though it’s true that the Eastern District of Texas has become the jurisdiction of choice for many patent suits, at least there is a plausible rationale in this case: LML asserted the patent against defendants that are based in Texas.  Each named defendant has its principal place of business in Texas, except for First Bank which is based in Saint Louis.

LML is represented by Melissa Richards Smith at Gillam & Smith, a two-person shop in Marshall, and the case has been assigned to Judge T. John Ward.

U.S. Patent 7,542,921 issued today to JPMorgan Chase Bank for a “Network-Based Financial Planning System and Method.”

Abstract: “A method and information processor are provided which allow a user of a user terminal to receive a list of credit financing opportunities based on the user’s financing objectives in which credit data is received from the user terminal. The credit data includes the user’s objective and a credit profile. Credit financing opportunities are determined based on the credit data and one or more predetermined decision rules. An output is generated and provided to the user terminal which includes a comparison of at least part of the credit profile with the determined credit financing opportunities.”