UNITED STATES PATENT AND TRADEMARK OFFICE
`
`_______________
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`_______________
`
`
`SAP AMERICA, INC. ET AL.
`Petitioner
`v.
`
`Patent of VERSATA DEVELOPMENT GROUP, INC.
`Patent Owner
`_______________
`
`
`Case CBM2012-00001
`Patent 6,553,350
`
`_______________
`
`
`PATENT OWNER VERSATA’S RESPONSE
`
`
`
`
`
`
`Mail Stop PATENT BOARD
`Patent Trial and Appeal Board
`U.S. Patent & Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
`
` 
`
` 
`
`

`

`
`
`TABLE OF CONTENTS
`
`B. 
`
`TABLE OF AUTHORITIES ..................................................................................... v 
`EXHIBIT LIST .......................................................................................................... x 
`I. 
`PRELIMINARY STATEMENT ..................................................................... 1 
`II. 
`STATEMENT OF THE PRECISE RELIEF REQUESTED .......................... 2 
`III. 
`STATEMENT IDENTIFYING MATERIAL FACTS IN DISPUTE ............. 2 
`IV.  STATEMENT OF REASONS WHY CLAIMS 17 AND 26-29 OF THE
`‘350 PATENT ARE NOT UNPATENTABLE UNDER 35 U.S.C. § 101 ..... 3 
`A.  Applicable Law -- Patent-Eligible Subject Matter Under 35 U.S.C.
`§ 101 ...................................................................................................... 3 
`1. 
`Section 101 statutory categories and judicial exceptions ........... 3 
`2. 
`Claim interpretation and considering claim as a whole .............. 5 
`3. 
`Abstract ideas .............................................................................. 7 
`4. 
`Practical application of an abstract idea ..................................... 8 
`5. 
`Preemption ................................................................................ 11 
`6.  Machine-or-transformation test ................................................ 12 
`Claim 17 recites patent eligible subject matter under 35 U.S.C.
`§ 101 .................................................................................................... 13 
`1. 
`The subject matter of claim 17 .................................................. 13 
`2. 
`The “method” of claim 17 is a statutory “process” under
`§ 101 .......................................................................................... 15 
`Claim 17 is not directed to an abstract idea .............................. 16 
`a) 
`Claim 17 must be considered as a whole in
`determining whether it is or is not directed to an
`abstract idea .................................................................... 16 
`Claim 17 is directed to a specific, practical and
`advantageous way to determine a product price
`using hierarchical groups of customers and products .... 18 
`Versata’s claim 17 does not preempt any abstract idea ............ 26 
`
`3. 
`
`4. 
`
`b) 
`
` 
`
`ii
`
`

`

`5. 
`
`The method of claim 17 satisfies the machine-or-
`transformation test..................................................................... 27 
`Claim 26 recites patent eligible subject matter under 35 U.S.C.
`§ 101 .................................................................................................... 31 
`1. 
`The subject matter of claim 26 .................................................. 31 
`2. 
`The “computer readable storage media” of claim 26 is a
`statutory “machine” and “article of manufacture” under
`§ 101 .......................................................................................... 31 
`Claim 26 is not directed to an abstract idea .............................. 32 
`3. 
`Claim 27 recites patent eligible subject matter under 35 U.S.C.
`§ 101 .................................................................................................... 34 
`1. 
`The subject matter of claim 27 .................................................. 34 
`2. 
`The “computer implemented method” of claim 27 is a
`statutory “process” under § 101 ................................................ 35 
`Claim 27 is not directed to an abstract idea .............................. 36 
`Versata’s claim 27 does not preempt any abstract idea ............ 38 
`The “computer implemented method” of claim 27 satisfies
`the machine-or-transformation test ........................................... 38 
`Claim 28 recites patent eligible subject matter under 35 U.S.C.
`§ 101 .................................................................................................... 39 
`1. 
`The subject matter of claim 28 .................................................. 39 
`2. 
`The “computer readable storage media” of claim 28 is a
`statutory “article of manufacture” under § 101 ........................ 39 
`Claim 28 is not directed to an abstract idea .............................. 40 
`3. 
`Claim 29 recites patent eligible subject matter under 35 U.S.C.
`§ 101 .................................................................................................... 42 
`1. 
`The subject matter of claim 29 .................................................. 42 
`2. 
`The “apparatus” of claim 29 is a statutory “machine” under
`§ 101 .......................................................................................... 43 
`Claim 29 is not directed to an abstract idea .............................. 43 
`Claim 29 satisfies the machine-or-transformation test ............. 44 
`
`3. 
`4. 
`5. 
`
`3. 
`4. 
`
`iii
`
`C. 
`
`D. 
`
`E. 
`
`F. 
`
` 
`
`

`

`G. 
`
`H. 
`
`I. 
`
`2. 
`
`3. 
`
`Claims 17 and 26-29 recite patent eligible subject matter under 35
`U.S.C. § 101 ........................................................................................ 45 
`Evidence that SAP withheld from the Board and its witness Dr.
`Siegel further supports the determination that claims 17 and 26-29
`recite patent eligible subject matter under 35 U.S.C. § 101................ 49 
`The Board’s claim construction .......................................................... 51 
`1. 
`The “sorting” step of claim 17 is performed after the
`“retrieving” step ........................................................................ 52 
`The broadest reasonable interpretation standard is not
`applicable in this proceeding and thus the Board should
`apply the District Court’s claim construction for which both
`SAP and Versata advocated ...................................................... 61 
`The modified claim construction further supports the
`patent-eligibility of claims 17 and 26-29 under 35 U.S.C.
`§ 101 .......................................................................................... 66 
`The testimony of SAP’s witness Dr. Siegel should be given no
`weight .................................................................................................. 67 
`CONCLUSION .............................................................................................. 71 
`
`
`J. 
`
`V. 
`
` 
`
`
`
` 
`
`iv
`
`

`

`TABLE OF AUTHORITIES
`
`Cases 
`American Fruit Growers, Inc. v. Brogdex Co.,
`283 U.S. 1 (1931) ........................................................................................... 32, 40
`
`Aro Mfg. Co., Inc. v. Convertible Top Replacement Co., Inc.,
`365 U.S. 336 (1961) ......................................................................................... 6, 15
`
`Arrhythmia Research Tech., Inc. v. Corazonix Corp.,
`958 F.2d 1053 (Fed. Cir. 1992) ............................................................. 5, 9, 34, 42
`
`Bancorp Services, L.L.C. v. Sun Life Assurance Co. of Canada,
`687 F.3d 1266 (Fed. Cir. 2012) ......................................................... 10, 11, 48, 51
`
`Bilski v. Kappos,
`130 S. Ct. 3218 (2010) .................................................................................. passim
`
`Burr v. Duryee,
`68 U.S. (1 Wall.) 531 (1863) .................................................................................. 8
`
`CyberSource Corp. v. Retail Decisions,
`654 F.3d 1366 (Fed. Cir. 2011) ..................................................................... 20, 46
`
`Dealertrack, Inc. v. Huber,
`674 F.3d 1315 (Fed. Cir. 2012) ............................................................................ 47
`
`Diamond v. Chakrabarty,
`447 U.S. 303 (1980) ................................................................................................ 3
`
`Diamond v. Diehr,
`450 U.S. 175 (1981) ...................................................................................... passim
`
`Edwards Lifesciences LLC v. Cook Inc.,
`582 F.3d 1322 (Fed. Cir. 2009) ............................................................................ 60
`
`Fort Properties v. American Master Lease,
`671 F.3d 1317 (Fed. Cir. 2012) ............................................................................ 47
`
`Gottschalk v. Benson,
`409 U.S. 63 (1972) ..................................................................................... 7, 11, 13
`
` 
`
`v
`
`

`

`In re Abbott Diabetes Care Inc.,
`696 F.3d 1142 (Fed. Cir. 2012) ............................................................................ 57
`
`In re Alappat,
`33 F.3d 1526 (Fed. Cir. 1994) ...................................................................... passim
`
`In re Bilski,
`545 F.3d 943 (Fed. Cir. 2008) .............................................................................. 13
`
`In re Grams,
`888 F.2d 835 (Fed. Cir. 1989) .............................................................................. 20
`
`In re Iwahashi,
`888 F.2d 1370 (Fed. Cir. 1989) ..........................................................................4, 8
`
`In re Nuijten,
`500 F.3d 1346 (Fed. Cir. 2007) .............................................................................. 8
`
`In re Skvorecz,
`580 F.3d 1262 (Fed. Cir. 2009) ..................................................................... 62, 64
`
`In re Warmerdam,
`33 F.3d 1354 (Fed. Cir. 1994) ................................................................................ 8
`
`Kraft Foods Inc. v. Int'l Trading Co.,
`203 F.3d 1362 (Fed. Cir. 2000) ............................................................................ 61
`
`Lee v. Dryja,
`Interference No. 105,264,
`2005 WL 3121465 (BPAI 2005 ............................................................................ 68
`
`Mantech Envtl. Corp. v. Hudson Envtl. Servs., Inc.,
`152 F.3d 1368 (Fed. Cir. 1998) ............................................................................ 55
`
`Markman v. Westview Instr.,
`517 U.S. 370 (1996) .............................................................................................. 65
`
`Mayo Collaborative Servs., et al. v. Prometheus Labs.,
`566 U.S. __, 132 S.Ct. 1289 (2012) .............................................................. passim
`
`Nat’l Org. of Veterans’ Advocates, Inc. v. Sec’y of Veterans Affairs,
`260 F.3d 1365 (Fed. Cir. 2001) ............................................................................ 65
`
` 
`
`vi
`
`

`

`Nat’l Steel Car, Ltd. v. Canadian Pac. Ry., Ltd.,
`357 F.3d 1319 (Fed. Cir. 2004) .............................................................................. 5
`
`Nystrom v. Trex Co.,
`424 F.3d 1136 (Fed. Cir. 2005) ............................................................................ 60
`
`OIP Techs., Inc. v. Amazon.com, Inc.,
`No. 12-1233, 2012 U.S. Dist. LEXIS 129396 (N.D. Cal. Sept. 11, 2012) ........... 20
`
`Ortho Pharm. Corp. v. Smith,
`959 F.2d 936 (Fed. Cir. 1992) ................................................................................ 6
`
`Parker v. Flook,
`437 U.S. 584 (1978) .............................................................................................. 11
`
`Phillips v. AHW Corp.,
`415 F.3d 1303 (Fed. Cir. 2005) ..................................................................... 12, 59
`
`Research Corp. Techs. v. Microsoft Corp.,
`627 F.3d 859 (Fed. Cir. 2010) ..................................................................... passim
`
`Retractable Techs., Inc. v. Becton, Dickinson and Co.,
`653 F.3d 1296 (Fed. Cir. 2011) ............................................................................ 61
`
`Rohm and Haas Co. v. Brotech Corp.,
`127 F.3d 1089 (Fed. Cir. 1997) ............................................................................ 68
`
`Seachange Int'l, Inc. v. C-COR, Inc.,
`413 F.3d 1361 (Fed. Cir. 2005) ............................................................................ 61
`
`Shafer v. Omura,
`Interference No. 105,834 (SCM),
`2012 WL 4078892 (BPAI 2012) .......................................................................... 68
`
`SiRF Tech., Inc., v. Int’l Trade Comm.,
`601 F.3d 1319 (Fed. Cir. 2010) ..................................................................... 34, 42
`
`Steffel v. Schofield,
`Interference No. 105,736 (SCM),
`2011 WL 1576590 (BPAI 2011) .......................................................................... 68
`
`Tafas v. Doll,559 F.3d 1345 (Fed. Cir. 2009) .......................................................... 62
`
` 
`
`vii
`
`

`

`Thorner v. Sony Computer Entm’t. America L.L.C.,
`669 F.3d 1362 (Fed. Cir. 2012) ..................................................................... 57, 58
`
`Tuna Processor, Inc. v. Hawaii Int'l Seafood, Inc.,
`327 F. App'x 204, 2009 WL 1084197 (Fed. Cir. 2009) ....................................... 55
`
`Westinghouse v. Boyden Power Brake Co.,
`170 U.S. 537 (1898) ................................................................................. 32, 40, 43
`
`Statutes 
`
`35 U.S.C. § 100(b) ................................................................................................... 16
`
`35 U.S.C. § 1003. ..................................................................................................... 36
`
`35 U.S.C. § 101 ................................................................................................ passim
`
`35 U.S.C. § 102 .......................................................................................................... 2
`
`35 U.S.C. § 145 ........................................................................................................ 65
`
`35 U.S.C. § 146 ........................................................................................................ 65
`
`35 U.S.C. § 2(b)(2) ................................................................................................... 62
`
`35 U.S.C. § 326(e) ................................................................................................... 63
`
`Administrative Procedure Act, 5 U.S.C. §§ 701-706 .............................................. 65
`
`Other Authorities 
`
`“Evaluating Subject Matter Eligibility Under 35 USC § 101: August 2012
`Update,”
`Office of Patent Legal Administration –
`United States Patent and Trademark Office .................................................... 6, 12
`
`77 Fed. Reg. 157 (August 14, 2012) ........................................................................ 61
`
`Rules 
`
`37 C.F.R. § 41.158(a) ............................................................................................... 68
`
`37 C.F.R. § 42.207(a) ................................................................................................. 1
`
`37 C.F.R. § 42.300(b) ....................................................................................... 62, 65
`viii
`
` 
`
`

`

`37 C.F.R. § 42.5(b) .................................................................................................. 65
`37 CPR. § 42.5(b) .................................................................................................. 65
`
`37 C.F.R. § 42.65(a) .......................................................................................... 67, 70
`37 CPR. § 42.65(a) .......................................................................................... 67, 70
`
`37 C.F.R.§ 42.5(a) .................................................................................................... 64
`37 C.F.R.§ 42.5(a) .................................................................................................... 64
`
`
`
` 
`
`ix
`
`ix
`
`

`

`EXHIBIT LIST
`
`The evidence supporting Patent Owner Versata’s Response is listed in the
`
`Exhibit List being filed concurrently herewith.
`
` 
`
` 
`
`x
`
`

`

`Pursuant to the Board’s Decision – Conduct of the Proceeding (Paper 45),
`
`entered February 21, 2013, and 37 C.F.R. § 42.220(a), Patent Owner, Versata
`
`Development Group, Inc. (“Versata”), submits this Response in opposition to the
`
`Petition for Post-Grant Review of U.S. Patent No. 6,553,350 (“‘350 patent”) filed
`
`by SAP America, Inc. and SAP AG (“SAP”) and the Board’s Decision – Institution
`
`of Covered Business Method Review (Paper 36) (“Institution Decision”).
`
`I.
`
`PRELIMINARY STATEMENT
`
`The Board should issue judgment that claims 17 and 26-29 of the ‘350
`
`patent are patent eligible under 35 U.S.C. § 101. The evidence shows that each of
`
`claims 17, 26, 27, 28, and 29, considered as a whole, is directed to a specific,
`
`practical and advantageous way to determine product price using hierarchical
`
`groups of customer and products. The “very specific way to determine a price of a
`
`product using a computer,” as SAP represented it to the Federal Circuit, that the
`
`elements of these claims in combination recite cannot be considered abstract, mere
`
`field-of-use limitations, tangential references to technology, insignificant pre- or
`
`post-solution activity, ancillary data-gathering steps, or the like.
`
`The evidence proves that the claimed combination and sequence of elements
`
`in claims 17 and 26-29 were, at the time of the invention, an unconventional, non-
`
`routine and not well-known way of determining the price of a product and
`
`represented a significant improvement over prior processes and systems for
`
` 
`
`1
`
`

`

`pricing. Moreover, each of the claims also satisfies the machine-or-transformation
`
`test.
`
`These claims, considered as a whole, are directed statutory categories of
`
`patentable subject matter and do not recite or preempt any abstract idea. On
`
`balance, weighing all of the various factors that bear on the evaluation of whether
`
`the subject matter of claims 17 and 26-29 is or is not abstract, these factors tip
`
`decidedly in favor of a determination that claims 17 and 26-29 are patent eligible
`
`under § 101. Thus, for at least the reasons detailed herein, the Board should issue
`
`judgment that claims 17 and 26-29 are patent eligible.
`
`II.
`
`STATEMENT OF THE PRECISE RELIEF REQUESTED
`
`Patent Owner respectfully requests that the Board issue judgment that claims
`
`17 and 26-29 of the ‘350 patent are patent eligible under 35 U.S.C. § 101.
`
`III. STATEMENT IDENTIFYING MATERIAL FACTS IN DISPUTE
`Versata’s identification of material facts in dispute directed to the § 101
`
`issue is set forth in Appendix 1. While Versata disputes the material facts asserted
`
`in support of the alleged unpatentability of the claims under § 102, that issue has
`
`been withdrawn from this proceeding and, thus, has not been addressed. See
`
`Decision – Conduct of Proceeding (Paper 45).
`
` 
`
`2
`
`

`

`IV. STATEMENT OF REASONS WHY CLAIMS 17 AND 26-29 OF THE
`‘350 PATENT ARE NOT UNPATENTABLE UNDER 35 U.S.C. § 101
`A. Applicable Law -- Patent-Eligible Subject Matter Under 35 U.S.C.
`§ 101
`1.
`
`Section 101 statutory categories and judicial exceptions
`
`Section 101 sets forth the categories of subject matter that are eligible for
`
`patent protection: “Whoever invents or discovers any new and useful process,
`
`machine, manufacture, or composition of matter, or any new and useful
`
`improvement thereof, may obtain a patent therefor, subject to the conditions and
`
`requirements of this title.” 35 U.S.C. § 101 (emphasis added). “Section 101
`
`emphasizes that ‘any’ subject matter in the four independent categories...
`
`qualif[ies] for [patent] protection.” Research Corp. Techs. v. Microsoft Corp., 627
`
`F.3d 859, 867 (Fed. Cir. 2010). The “expansive terms.., modified by the
`
`comprehensive ‘any’” in section 101 reflect the “‘wide scope’” of patent
`
`eligibility. Bilski v. Kappos, 130 S. Ct. 3218, 3225 (2010) (quoting Diamond v.
`
`Chakrabarty, 447 U.S. 303, 308 (1980)).
`
`The Supreme Court has identified only “three specific exceptions to § 101’s
`
`broad patent-eligibility principles: ‘laws of nature, physical phenomena, and
`
`abstract ideas.’” Bilski, 130 S. Ct. at 3225(internal citation omitted). Only the third
`
`exception is in dispute here. When appropriately applied, this exception renders
`
`ineligible any claim that is directed to nothing more than an “abstract idea.” Yet it
`
` 
`
`3
`
`

`

`applies only in limited circumstances, as a claim’s abstract nature must “exhibit
`
`itself so manifestly as to override the broad statutory categories” set out by
`
`Congress before it may be held invalid as drawn to abstract subject matter.
`
`Research Corp., 627 F.3d at 868.
`
`Under section 101, the proper analysis of each of Versata’s claims 17 and
`
`26-29 must begin with an inquiry into whether the claim describes a “machine,”
`
`“manufacture,” “composition of matter,” or “process”-- the four categories of
`
`subject matter that are statutorily patent-eligible. 35 U.S.C. § 101. If the claim is
`
`in a statutory category, the next question is whether any of the narrow judicially
`
`created exceptions to patent eligibility applies.
`
`If a claimed invention falls within a statutory category, and falls outside the
`
`three exceptions, the analysis ends: the claim meets the “threshold test” of section
`
`101 and claims patent-eligible subject matter. Research Corp., 627 F.3d at 868.
`
`As the Federal Circuit has emphasized, the analysis under section 101 is a narrow
`
`one, focused only on whether a patent claims subject matter that is eligible to be
`
`considered for a patent. In re Iwahashi, 888 F.2d 1370, 1373 (Fed. Cir. 1989).
`
`Under the “coarse filter” of section 101, the judicially created exceptions exclude
`
`only laws of nature, physical phenomena, and “manifestly” abstract claims. See.,
`
`e.g., Research Corp., 627 F.3d at 868.
`
` 
`
`4
`
`

`

`2.
`
`Claim interpretation and considering claim as a whole
`
`While the ultimate determination of whether a claim is directed to statutory
`
`subject matter is a question of law, “determination of this question may require
`
`findings of underlying facts specific to the particular subject matter and its mode of
`
`claiming ….” Arrhythmia Research Tech., Inc. v. Corazonix Corp., 958 F.2d
`
`1053, 1055-56 (Fed. Cir. 1992); see also VX 2095 (Brief for the United States as
`
`Amicus Curiae on Rehearing En Banc in Support of Neither Party, CLS Bank Int’l
`
`v. Alice Corp. Pty. Ltd., Appeal No. 2011-1301 (reh’g en banc) (Fed. Cir.)), p. 18
`
`(“[T]he abstract idea question may turn on whether persons skilled in the art would
`
`necessarily employ the claimed steps in order to make use of a particular abstract
`
`idea. In addition, claim construction can have underlying factual elements.”).
`
`In evaluating whether a claim meets the requirements of 35 U.S.C. § 101,
`
`the claim must be considered as a whole to determine whether it is for a particular
`
`application of an abstract idea, physical phenomenon or law of nature, and not for
`
`the abstract idea, physical phenomenon or law of nature itself. Diamond v. Diehr,
`
`450 U.S. 175, 188 (1981).
`
`It is fundamental that the validity of a claim depends on the particular
`
`limitations -- all of the limitations -- of that claim. See Nat’l Steel Car, Ltd. v.
`
`Canadian Pac. Ry., Ltd., 357 F.3d 1319, 1334 (Fed. Cir. 2004); Ortho Pharm.
`
`Corp. v. Smith, 959 F.2d 936, 942 (Fed. Cir. 1992). The Supreme Court has made
`
` 
`
`5
`
`

`

`clear that a claim may not be stripped down to some supposed “‘essential’ element,
`
`‘gist,’ or ‘heart’ of the invention,” but rather must be viewed as a whole, with all of
`
`its limitations given effect. Aro Mfg. Co., Inc. v. Convertible Top Replacement
`
`Co., Inc., 365 U.S. 336, 345 (1961). See also VX 2096 (“Evaluating Subject
`
`Matter Eligibility Under 35 USC § 101: August 2012 Update,” Office of Patent
`
`Legal Administration – United States Patent and Trademark Office), p. 21
`
`(“Determine whether the claim as a whole is directed to a judicial exception (law
`
`of nature, natural phenomenon, or abstract idea). – Analyze the claim taking into
`
`account all of the elements or steps, to determine whether the exception has been
`
`practically applied. A claim directed to a practical application may be eligible.”)
`
`(emphasis in the original).
`
`Accordingly, it is irrelevant that a claim may contain, as part of the whole,
`
`subject matter which would not be patentable by itself, because the dispositive
`
`inquiry is whether the claim as a whole is directed to statutory subject matter. See
`
`Alappat, 33 F.3d at 1543. Further, it is improper to paraphrase a claim in
`
`simplistic generalities in assessing whether the claim falls under the limited
`
`“abstract ideas” exception. Patent eligibility must be evaluated based on what the
`
`claims recite, not merely on the ideas upon which they are premised. As explained
`
`above, in assessing patent eligibility, a claim must be considered as a whole. See
`
`e.g., Diehr, 450 U.S. at 188 (“claims must be considered as a whole”); Aro Mfg.
`
` 
`
`6
`
`

`

`Co., 365 U.S. at 344-345; W.L. Gore & Assocs., Inc. v. Garlock, Inc., 721 F.2d
`
`1540, 1548 (Fed. Cir. 1983) (“In determining obviousness, there is ‘no legally
`
`recognizable or protected essential, gist, or heart of the invention.’ A court's
`
`restriction of a claimed multi-step process to one step constitutes error . . . .”)
`
`(quoting Aro Mfg. Co., 365 U.S. at 345).
`
`3.
`
`Abstract ideas
`
` “[A]bstract ideas constitute disembodied concepts or truths which are not
`
`‘useful’ from a practical standpoint standing alone, i.e., they are not ‘useful’ until
`
`reduced to some practical application.” In re Alappat, 33 F.3d 1526, 1542 n.18
`
`(Fed. Cir. 1994) (en banc). “[A]ll inventions at some level embody, use, reflect,
`
`rest upon, or apply laws of nature, natural phenomena, or abstract ideas.” Mayo
`
`Collaborative Servs. v. Prometheus Labs., 566 U.S. __, 132 S.Ct. 1289, 1293
`
`(2012). Inventions incorporating and relying upon even a well-known abstract
`
`idea do not lose eligibility because several steps of the process use that abstract
`
`idea. See Research Corp., 627 F.3d at 869.
`
`Although the Supreme Court has stated that the exceptions to subject matter
`
`eligibility apply equally to all four categories of statutory subject matter,
`
`Gottschalk v. Benson, 409 U.S. 63, 67-68 (1972), as a practical matter, it is hard to
`
`conceive of a claim to a “concrete thing, consisting of parts” that is simultaneously
`
`a claim to an “abstract idea.” In re Nuijten, 500 F.3d 1346, 1355 (Fed. Cir. 2007)
`
` 
`
`7
`
`

`

`(quoting Burr v. Duryee, 68 U.S. (1 Wall.) 531, 570 (1863)); see In re
`
`Warmerdam, 33 F.3d 1354, 1360-61 (Fed. Cir. 1994) (observing that a claim to “a
`
`machine having a memory” containing specified data “is for a machine, and is
`
`clearly patentable subject matter”). And, in the particular context of computer
`
`systems, the Federal Circuit has expressly held that “a computer operating pursuant
`
`to software may represent patentable subject matter, provided, of course, that the
`
`claimed subject matter meets all of the other requirements of Title 35. In any case,
`
`a computer, like a rasterizer, is apparatus not mathematics.” In re Alappat, 33 F.3d
`
`at 1545; see also, e.g., Iwahashi, 888 F.2d at 1375. Such a claim is “not a
`
`disembodied.., concept which may be categorized as an ‘abstract idea,’” Alappat,
`
`33 F.3d at 1544, but rather describes a “concrete thing.” Nuijten, 500 F.3d at 1355.
`
`Simply put, there is no authority for the proposition that in a validity
`
`analysis (under section 101 or any other statutory provision), claim limitations
`
`requiring machine components may be ignored because the components’ function
`
`is to carry out method steps -- whether or not the method steps, in the absence of
`
`the limitations, would be considered abstract. See, e.g., Iwahashi, 888 F.2d at
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`1375; Diehr, 450 U.S. at 188.
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`4.
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`Practical application of an abstract idea
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`In Bilski, the Supreme Court reiterated that for a process claim to be
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`statutory under 35 U.S.C. § 101, it must be limited to a particular practical
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`application. See Bilski, 130 S. Ct. at 1330(citing Diehr, 450 U.S. at 187). In doing
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`so, Bilski reaffirmed Diehr’s holding that, while an abstract idea could not be
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`patented, an application of an abstract idea to a structure or process may well be
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`deserving of patent protection. See Bilski, 130 S. Ct. at 3230 (quoting Diehr, 450
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`U.S. at 187); VX 2096, pp. 21, 64 (“Analyze the claim taking into account all of
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`the elements or steps, to determine whether the exception has been practically
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`applied. A claim directed to a practical application may be eligible.” ***
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`“Determine eligibility by weighing factors that indicate whether the claim
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`represents a practical application of an abstract idea or the abstract idea itself.”)
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`(emphasis added); Arrhythmia Research Tech, 958 F.2d at 1056-1057 (“As the
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`jurisprudence developed, inventions that were implemented by the mathematically-
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`directed performance of computers were viewed in the context of the practical
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`application to which the computer-generated data were put.”); Alappat, 33 F.3d at
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`1544 (citing Diehr, 450 U.S. at 185) (“certain types of mathematical subject
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`matter, standing alone, represent nothing more than abstract ideas until reduced to
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`some type of practical application.”).
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`A practical application relates to how a judicially recognized exception is
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`applied in a real world product or a process, and not merely to the result achieved
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`by the invention. Bancorp, 687 F.3d at 1279; Research Corp., 627 F.3d at 869;
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`VX 2096, p. 67 (“Factors that Weigh Towards Eligibility – The claim is more than
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`a mere statement of a concept. The claim describes a particular solution to a
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`problem to be solved. The claim implements a concept in some tangible way. The
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`performance of the steps is observable and verifiable.”). The claimed practical
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`application is evidence that the subject matter is not abstract (e.g., not purely
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`mental) and does not encompass substantially all uses (preemption) of a law of
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`nature or a physical phenomenon. See, e.g., Diehr, 450 U.S. at 187 (finding that
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`claims did not “pre-empt use of that equation,” but “only foreclose[d] from others
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`the use of that equation in conjunction with all of the other steps in the [] claimed
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`process; Alappat, 33 F.3d at 1544 (stating that the claim “is not a disembodied
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`mathematical concept which may be characterized as an ‘abstract idea,’ but rather
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`a specific machine to produce a useful, concrete, and tangible result”).
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`More recently, in Mayo, the Supreme Court further clarified that the claimed
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`method steps, to the extent applied to laws of nature, natural phenomena, or
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`abstract ideas, should be evaluated to determine if those steps are or are not “well-
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`understood, routine, conventional activity.” Mayo, 132 S.Ct. at 1299-1302.
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`Evidence that the claimed steps are non-routine, unconventional or not well-known
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`supports patent eligibility of the claimed process. Id.
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`The recitation of some structure, such as a machine, or the recitation of some
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`transformative component will in most cases limit the claim to such an application.
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`“‘[I]nventions with specific applications or improvements to technologies in the
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`marketplace are not likely to be so abstract’ as to be ineligible for patent
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`protection.” Bancorp, 687 F.3d at 1279; Research Corp., 627 F.3d at 869.
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`5.
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`Preemption
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`For purposes of section 101, “preemption” refers to the premise that the
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`patent system should not be used to monopolize basic concepts, which “are not the
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`kind of ‘discoveries’ that the [patent] statute was enacted to protect.” Parker v.
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`Flook, 437 U.S. 584, 593 (1978). As the Supreme Court has explained:
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`“Phenomena of nature, though just discovered, mental processes, and abstract
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`intellectual concepts are not patentable, as they are the basic tools of scientific and
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`technological work.” Benson, 409 U.S. at 67; see also Bilski, 130 S.Ct. at 3231
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`(observing that the “basic concept of hedging” is not patentable).
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`Preemption does not apply where a claim does not involve a fundamental
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`principle in the first place, nor does such a claim raise the sorts of concerns that
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`underlie this doctrine. Every patent claim, at its most basic level, involves some
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`idea that can be phrased in an abstract way if viewed at a high enough level of
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`generality. Mayo, 132 S.Ct. at 1293. The purpose of a patent claim is to
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`“preempt” practical uses by others o