Trials@uspto.gov Paper 21
`571-272-7822
`
`Date Entered: March 4, 2014
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`_____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`CALLIDUS SOFTWARE, INC.
`Petitioner
`
`v.
`
`VERSATA SOFTWARE, INC. and
`VERSATA DEVELOPMENT GROUP, INC.
`Patent Owner
`____________
`
`Case CBM2013-00052
`Patent 7,904,326 B2
`____________
`
`
`Before HOWARD B. BLANKENSHIP, SALLY C. MEDLEY, and
`KEVIN F. TURNER, Administrative Patent Judges.
`
`BLANKENSHIP, Administrative Patent Judge.
`
`
`
`
`
`
`DECISION
`Institution of Covered Business Method Patent Review
`37 C.F.R. § 42.208
`
`
`
`
`
`
`

`

`CBM2013-00052
`Patent 7,904,326 B2
`
`
`SUMMARY
`Petitioner Callidus Software, Inc. filed a petition seeking a covered
`business method patent review of Patent Owner Versata Development Group,
`Inc. and Versata Software, Inc.’s 7,904,326 patent (“the ’326 patent”) (Ex.
`1001) pursuant to section 18 of the Leahy-Smith America Invents Act (AIA).1
`The Petition (“Pet.”) challenges all the claims (1-22) of the ’326 patent as
`unpatentable under 35 U.S.C. § 101. Patent Owner filed a preliminary response
`opposing institution of the review. Paper 20 (“Prelim. Resp.”). We have
`jurisdiction under 35 U.S.C. § 324.
`The standard for instituting a covered business method patent review is
`set forth in 35 U.S.C. § 324(a), which provides as follows:
`THRESHOLD.—The Director may not authorize a post-grant review
`to be instituted unless the Director determines that the information
`presented in the petition filed under section 321, if such
`information is not rebutted, would demonstrate that it is more
`likely than not that at least 1 of the claims challenged in the
`petition is unpatentable.
`We determine that the ’326 patent is a covered business method patent.
`Petitioner has demonstrated that it is more likely than not that claims 1-22 are
`directed to non-statutory subject matter and, thus, unpatentable under 35 U.S.C.
`§ 101. Therefore, we institute a covered business method patent review for
`claims 1-22 of the ’326 patent based upon Petitioner’s challenge that the claims
`are unpatentable under § 101.
`
`
`THE CHALLENGED PATENT
`The ’326 patent “has applicability in industries that require sales agents
`or those related to the distribution of a certain product to be credentialed (e.g.,
`
`1 Pub. L. No. 112-29, 125 Stat. 284 (2011).
`
`2
`
`

`

`CBM2013-00052
`Patent 7,904,326 B2
`
`licensed and/or appointed) when selling certain products” such as life insurance.
`Ex. 1001, Abstract. In the financial services sector, distributors and sales
`representatives may require certain licenses and appointments in order legally
`to sell certain financial instruments. Id. at col. 1, ll. 30-33. For example, in
`order to sell a certain financial instrument, a sales representative might be
`required to have a state and/or federal license to sell that type of instrument. Id.
`at col. 4, ll. 11-14. According to the patent, pre-existing systems did not have a
`mechanism for processing the required data in such a way that minimizes the
`time required to process license and appointment data and validate a sales
`agent’s credentials before distributing compensation to the sales agent for the
`transaction. Id. at col. 1, ll. 44-49.
`A distributor data object model 230 (Fig. 2) defines the data that are
`associated with a distributor and that is utilized to manage the credential
`information (relevant licensing and appointments). Id. at col. 8, ll. 39-49. Once
`the credential information is defined, the system may process transaction data
`associated with the sale of different products. The system may ensure that the
`terms of a selling agreement (e.g., an agreement between the parties involved)
`are followed and that the credential (e.g., licensing and/or appointment or other
`agreed-upon constraints) requirements are not violated with respect to each
`transaction. Sales transaction data comprise the information associated with the
`sale of one or more products. Id. at col. 7, ll. 31-42.
`
`
`3
`
`

`

`CBM2013-00052
`Patent 7,904,326 B2
`
`
`Illustrative Claim
`1. In a computer system, a method for collectively
`performing validation of credential information of one or more
`product distributors associated with one or more product
`distribution transactions, the method comprising:
`
`obtaining a set of available credential information of each of
`the one or more product distributors associated with the one or
`more product distribution transactions;
`
`storing the set of credential information in the computer
`system, wherein the credential information is stored in a form that
`can be processed by the computer system;
`
`loading from at least one data source a set of credential
`validation rule data;
`
`obtaining the one or more product distribution transactions
`associated with the one or more product distributors; and
`
`processing in the computer system the one or more product
`distribution transactions and the credential validation rule data to
`validate the obtained one or more product distribution transactions
`associated with the one or more product distributors in accordance
`with predetermined validation criteria to determine if the one or
`more transactions can be used for compensating one or more
`product distributors, to validate the obtained credential information
`of one or more product distributors associated with one or more
`transactions to determine whether the one or more product
`distributors meet eligibility requirements for compensation
`associated with each of the obtained product distribution
`transactions for the one or more product distributors, and to
`generate results data representing at least any validated
`transactions and determined-eligible product distributors; and
`
`generating compensation data from the results data for each
`of the one or more product distributers to be compensated for the
`one or more product distribution transactions.
`
`4
`
`

`

`CBM2013-00052
`Patent 7,904,326 B2
`
`
`
`
`COVERED BUSINESS METHOD PATENT
`Related Litigation
`In compliance with 37 C.F.R. § 42.302(a), Petitioner certifies that it has
`been sued for infringement of the ’326 patent. Pet. 4. Patent Owner does not
`challenge the certification. The identified related case is Versata Software, Inc.
`v. Callidus Software, Inc., No. 1:12-cv-931-SLR (D. Del.).
`
`35 U.S.C. § 325(a)(1)
`Patent Owner urges that the Board decline to institute review of the ’326
`patent because Petitioner is barred by statute from seeking such review. Prelim.
`Resp. 6. Patent Owner argues that 35 U.S.C. § 325(a)(1) bars Petitioner
`because Petitioner filed a civil action challenging the validity of the ’326 Patent
`before the filing of the Petition. Id. Patent Owner includes a copy of the
`complaint filed by Petitioner against Patent Owner seeking declaratory
`judgment that several of Patent Owner’s patents are invalid, including the ’326
`Patent. Ex. 2001. Patent Owner alleges that Petitioner failed to identify the
`civil action in its Petition (Prelim. Resp. 7) and acknowledges that Petitioner
`voluntarily dismissed that action. Id. at 8. Patent Owner distinguishes InVue
`Sec. Prods., Inc. v. Merch. Techs., Inc., No. IPR2013-00122, Paper No. 17
`(PTAB June 27, 2013), where inter partes review was instituted although a
`declaratory judgment action was filed by the petitioner, but was involuntarily
`dismissed without prejudice by the District Court. Id. at 17-20. For the reasons
`that follow, Patent Owner’s arguments are not persuasive.
`First, we cite 37 C.F.R. § 42.302, which details who may petition for a
`covered business method patent review:
`
`5
`
`

`

`CBM2013-00052
`Patent 7,904,326 B2
`
`
`(a) A petitioner may not file with the Office a petition to
`institute a covered business method patent review of the patent
`unless the petitioner, the petitioner’s real party-in-interest, or a
`privy of the petitioner has been sued for infringement of the patent
`or has been charged with infringement under that patent. Charged
`with infringement means a real and substantial controversy
`regarding infringement of a covered business method patent exists
`such that the petitioner would have standing to bring a declaratory
`judgment action in Federal court.
`(b) A petitioner may not file a petition to institute a covered
`business method patent review of the patent where the petitioner,
`the petitioner’s real party-in-interest, or a privy of the petitioner is
`estopped from challenging the claims on the grounds identified in
`the petition.
`Under the cited rule, Petitioner indicates that it is not estopped from
`challenging the claims on the grounds identified in the Petition, and, therefore,
`its Petition complies with that rule. Pet. 4.
`Second, Patent Owner argues that “[s]ignificantly, no panel of the Board
`has stated that dismissal without prejudice nullifies the prior, and otherwise
`barring, act of filing (with proper standing) of a civil action challenging
`validity, i.e., the act chosen by Congress as a statutory bar to institution.”
`Prelim. Resp. 22. The Board, however, has determined that dismissal without
`prejudice does not trigger the statutory bar. See Cyanotech Corp. v. Bd. of Trs.
`of the Univ. of Ill., IPR2013-00401, Paper No. 17 at 11-12 (PTAB Dec. 19,
`2013) (“Excluding an action that de jure never existed from the scope of
`§ 315(a)(1) is consistent with both relevant case law and legislative history.”).
`See also Clio USA, Inc. v. Procter & Gamble Co., IPR2013-00438, Paper No. 9
`at 6-9 (PTAB Jan. 9, 2014). Patent Owner has acknowledged that 35 U.S.C.
`§§ 315(a)(1) and 325(a)(1) are parallel provisions, Prelim. Resp. 16, and we are
`persuaded that it would not be appropriate to differentiate their application with
`
`6
`
`

`

`CBM2013-00052
`Patent 7,904,326 B2
`
`respect to dismissed declaratory judgment actions. Accordingly, Petitioner’s
`voluntary dismissal of the declaratory judgment action clears the way for
`consideration of its Petition and does not act as a bar.
`Lastly, although Petitioner failed to identify the civil action seeking
`declaratory judgment in its Petition, as noted by Patent Owner, Prelim. Resp. 7,
`37 C.F.R. § 42.8(b)(2) requires only the identification of any “judicial or
`administrative matter that would affect, or be affected by, a decision in the
`proceeding.” Given the dismissal without prejudice, that action would not be
`affected by this proceeding, and, as discussed above, there is no effect of that
`action on the instant proceeding. Accordingly, we are not persuaded of any
`deficiency in the Petition because the notice of the declaratory judgment action
`was omitted by Petitioner.
`
`
`Used in the Practice, Administration, or Management
`of Financial Products or Services
`A covered business method patent “claims a method or corresponding
`apparatus for performing data processing or other operations used in the
`practice, administration, or management of a financial product or service,
`except that the term does not include patents for technological inventions.”
`AIA § 18(d)(1). The legislative history of the AIA “explains that the definition
`of covered business method patent was drafted to encompass patents ‘claiming
`activities that are financial in nature, incidental to a financial activity or
`complementary to a financial activity.’” 77 Fed. Reg. 48,735 (Aug. 14, 2012)
`(quoting 157 CONG. REC. S5432 (daily ed. Sept. 8, 2011) (statement of Sen.
`Schumer)).
`
`7
`
`

`

`CBM2013-00052
`Patent 7,904,326 B2
`
`
`Petitioner points out that the ’326 patent explicitly states that the
`invention can be used “when selling certain products” such as “life insurance”
`and “financial instruments.” Pet. 5; Ex. 1001, Abstract; col. 1, ll. 54-67. The
`patent also discusses problems relating to compensating distributors “in the
`financial services business” and “in the financial services sector,” and relating
`to selling “certain financial instruments.” Pet. 5; Ex. 1001, col. 1, ll. 20-33; col.
`4, ll. 7-14.
`Claim 1 of the ’326 patent recites a method in a computer system for
`collectively performing validation of credential information of product
`distributors associated with product distribution transactions, which includes
`generating compensation data for each of the product distributors for the
`product distribution transactions. The steps are not limited in application to any
`particular product. Thus, at least one claim covers data processing or other
`operations that are financial in nature, incidental to a financial activity, or
`complementary to a financial activity (e.g., sales of life insurance or financial
`instruments and determining compensation of the sales agents).
`
`Not a Technological Invention
`In view of the “technological inventions” exception of AIA
`§ 18(d)(1), the legislative history of § 18(d)(1), and the definition of
`“technological invention” under 37 C.F.R. § 42.301(b), the Office Patent Trial
`Practice Guide provides the following guidance with respect to claim content
`that typically would not render a patent a technological invention:
`(a) Mere recitation of known technologies, such as computer
`hardware, communication or computer networks, software,
`memory, computer-readable storage medium, scanners, display
`
`8
`
`

`

`CBM2013-00052
`Patent 7,904,326 B2
`
`
`devices or databases, or specialized machines, such as an ATM or
`point of sale device.
`(b) Reciting the use of known prior art technology to
`accomplish a process or method, even if that process or method is
`novel and non-obvious.
`(c) Combining prior art structures to achieve the normal,
`expected, or predictable result of that combination.
`77 Fed. Reg. 48,763-64 (Aug. 14, 2012).
`Petitioner submits that the ’326 patent does not recite a technological
`feature that is novel and non-obvious over the prior art. Pet. 8. As Petitioner
`indicates, the ’326 patent does not disclose any particular structure for a
`computer or computer system. According to the patent, the invention “relates”
`to the field of computer technology, but the “specific objects [i.e., object
`models of Fig. 2] described herein are provided for illustrative purposes only
`and the reader should note that the invention also contemplates other software
`or hardware configurations that provide the functionality described herein.” Ex.
`1001, col. 1, ll. 7-10; col. 8, ll. 40-46.
`In any event, ’326 patent claim 1 recites the use of known prior art
`technology — a “computer system” — to accomplish the method, regardless of
`whether the method could be deemed novel and non-obvious. Thus, claim 1 is
`not seen as being directed to a technological invention.
`
`Conclusion -- A Covered Business Method Patent
`A single claim is sufficient to institute a covered business method patent
`review. In view of the foregoing, we conclude that the presence of at least
`claim 1 determines that the ’326 patent is a covered business method patent
`under AIA § 18(d)(1).
`
`
`9
`
`

`

`CBM2013-00052
`Patent 7,904,326 B2
`
`
`CLAIM INTERPRETATION
`During a review before the Board, we construe the claims in accordance
`with the broadest reasonable interpretation in light of the specification. 37
`C.F.R. § 42.300(b); 77 Fed. Reg. 48,697-98 (Aug. 14, 2012). The claim
`language should be read in light of the specification as it would be interpreted
`by one of ordinary skill in the art. In re Am. Acad. of Sci. Tech Ctr., 367 F.3d
`1359, 1364 (Fed. Cir. 2004). The Office must apply the broadest reasonable
`meaning to the claim language, taking into account any definitions presented in
`the specification. Id. (citing In re Bass, 314 F.3d 575, 577 (Fed. Cir. 2002)).
`There is a “heavy presumption” that a claim term carries its ordinary and
`customary meaning. CCS Fitness, Inc. v. Brunswick Corp., 288 F.3d 1359,
`1366 (Fed. Cir. 2002).
`Petitioner submits proposed constructions for the terms “credential
`information” and “denormalizing.” Pet. 15-20. Patent Owner disagrees with
`the constructions without offering its own. Prelim. Resp. 25-26.
`However, the sole challenge in this proceeding is on the basis of non-
`statutory subject matter under 35 U.S.C. § 101. Neither party asserts that
`construction of the terms is necessary in determining whether Petitioner has
`made the showing that, more likely than not, the claims are directed to non-
`statutory subject matter. Nor do we find such construction necessary in making
`our present determinations. The ’326 patent contains examples of credential
`information — relevant licensing and appointments (e.g., Ex. 1001, col. 8, ll.
`39-49) — the examples being sufficient for our present task of determining
`whether Petitioner has met its burden in the § 101 challenge. Further,
`“denormalizing” is a term known to the artisan as a conventional database
`operation. Pet. 19-20; Prelim. Resp. 26-27. The precise meaning of the term is
`
`10
`
`

`

`CBM2013-00052
`Patent 7,904,326 B2
`
`not material to our § 101 review of the claims, infra, because the operation is
`acknowledged by both parties as being conventional in the art. Accordingly,
`we see no reason, at this time, to determine the scope of the terms “credential
`information” and “denormalizing.” For the remainder of the terms in the
`claims, we will apply the plain and ordinary meaning of the words in the claims
`in the context of the ‘326 patent as understood by one of ordinary skill in the
`art.
`
`
`
`SECTION 101 CHALLENGE
`35 U.S.C. § 101 -- Principles of Law
`“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. Supreme Court precedents provide three
`specific exceptions to the broad categories of § 101: laws of nature, physical
`phenomena, and abstract ideas. Bilski v. Kappos, 130 S. Ct. 3218, 3225 (2010).
`In Gottschalk v. Benson, 409 U.S. 63 (1972), the claims were directed to
`a method for converting binary-coded-decimal (BCD) numerals into pure
`binary numerals for use with a general-purpose digital computer of any type.
`Benson, 409 U.S. at 64. The method steps in the body of the claim incorporated
`portions of a computer (a reentrant shift register) into the steps. The question
`before the Court was “whether the method described and claimed is a ‘process’
`within the meaning of the Patent Act.” Id. The Court characterized the claimed
`invention as “a generalized formulation for programs to solve mathematical
`problems of converting one form of numerical representation to another.” Id. at
`65. The Court held that the claimed method was directed to non-statutory
`
`11
`
`

`

`CBM2013-00052
`Patent 7,904,326 B2
`
`subject matter because “[t]he mathematical formula involved here has no
`substantial practical application except in connection with a digital computer,
`which means that if the judgment below is affirmed, the patent would wholly
`pre-empt the mathematical formula and in practical effect would be a patent on
`the algorithm itself.” Id. at 71-72.
`“To salvage an otherwise patent-ineligible process, a computer must be
`integral to the claimed invention, facilitating the process in a way that a person
`making calculations or computations could not.” Bancorp Servs., L.L.C. v. Sun
`Life Assurance Co., 687 F.3d 1266, 1278 (Fed. Cir. 2012). “[T]he relevant
`inquiry is whether a claim, as a whole, includes meaningful limitations
`restricting it to an application, rather than merely an abstract idea.”
`Ultramercial, Inc. v. Hulu, LLC, 722 F.3d 1335, 1344 (Fed. Cir. 2013). When a
`general purpose computer is employed only for its most basic function, such as
`the performance of repetitive calculations, such claim recitations do not impose
`meaningful limits on claim scope. Bancorp, 687 F.3d at 1278. When
`insignificant computer-based limitations are set aside from claims that contain
`such limitations, the question under § 101 reduces to an analysis of what
`additional features remain in the claims. Id. at 1279. Using a computer to
`accelerate an ineligible mental process does not make that process patent-
`eligible. Id.
`
`Petitioner’s Challenge
`I. Claim 1
`
`Claim 1 is the sole independent claim in the ‘326 patent. Petitioner
`submits that the claim is directed to the abstract idea of generating
`
`12
`
`

`

`CBM2013-00052
`Patent 7,904,326 B2
`
`compensation data using validated transactions and validated distributors’
`credentials. Pet. 22.
`Petitioner proffers two declarations from individuals having extensive
`experience relating to compensation in insurance and financial services
`companies. According to the declaration of Janis McGuffey, insurance
`companies employed human beings to validate transactions and credentials, and
`to calculate compensation for sales agents manually, before the filing of the
`’326 patent. Ex. 1003 ¶¶ 18-29. According to the declaration of Joseph E.
`DeHaven, employees of an insurance company manually calculated a
`manager’s override commission (compensation) based on the manual validation
`of transactions and credentials, well before the filing of the ’326 patent. Ex.
`1004 ¶¶ 22-34.
`In view of the declarations, Petitioner presents a scenario of prior manual
`(human) processing of credentials, validations, and compensation, as it relates
`to the subject matter of ’326 patent claim 1.
`Humans can and have also manually processed distributors’
`credential information and generated “results data” representing
`those distributors with validated
`transactions and validated
`distributors determined eligible to receive compensation. For
`example, assume an employee had to review a stack of 50 paper
`transactions on her desk. She determines that five of the
`transactions could not be validated because the underlying
`application for insurance was not properly signed. Those five
`transactions would go into a separate pile on the desk. She then
`checks to see if the agent listed on the remaining 45 transactions
`were properly licensed to sell business in the state in which the
`application was signed.
` She determines that five of the
`transactions were for agents who were not licensed. Those five
`transactions go into another pile on the desk. The three piles of
`transactions (five rejected transactions, five rejected agents, and 40
`
`13
`
`

`

`CBM2013-00052
`Patent 7,904,326 B2
`
`
`for calculation) are “results data.” Id. [Ex. 1003], ¶ 22; Exh. 1004,
`¶ 25.
`
`
`. . . .
`
`
`
`[T]he employee would calculate the commission amount for the 40
`validated transactions by multiplying the dollar value of the
`transaction by a percentage specified
`in a rate
`table for
`compensation for the given distributor. Exh. 1003, ¶ 22; Exh.
`1004, ¶ 26-27. This is a matter of simple arithmetic calculated
`either in the human mind or with pen and paper.
`Pet. 33-34.
`Thus, it appears that all of the actions recited in the “obtaining,”
`“processing,” and “generating” steps of ’326 patent claim 1 could be performed
`in the human mind, with provision of relevant books and papers that were used
`by human beings prior to the invention. Further, the recitations of the claim
`that relate to a general purpose computer impose scant limitations on the
`machine and do not serve as meaningful limitations on the scope of the claim.
`The machine must be able to load and store data in electronic form, compare
`data with pre-defined rules to generate other data — “results” data — and to
`generate additional data — “compensation” data — from the “results” data.
`What the data might be deemed to represent to the human mind — e.g.,
`“credential information” and “product distribution transactions” — does not
`affect the underlying structure or function of the machine. The recitation of
`computer functions in the claims does not confine the preemptive effect of the
`claims because the underlying method has “no substantial practical application
`except in connection with a digital computer.” Benson, 409 U.S. at 71. The
`conventional computer operations, such as loading data, storing data, and
`comparing data with rules, do not transform the abstract idea into a patent-
`
`14
`
`

`

`CBM2013-00052
`Patent 7,904,326 B2
`
`eligible application of the idea. Cf. Mayo Collaborative Servs. v. Prometheus
`Labs., Inc., 132 S. Ct. 1289, 1298 (2012) (purely “conventional or obvious”
`limitations are “normally not sufficient to transform an unpatentable law of
`nature into a patent-eligible application of such a law.”).
`Petitioner also submits that claim 1 fails the machine-or-transformation
`test. The Supreme Court instructs us that the “Court’s precedents establish that
`the machine-or-transformation test is a useful and important clue, an
`investigative tool, for determining whether some claimed inventions are
`processes under § 101.” Bilski, 130 S. Ct. at 3227. According to Petitioner,
`“claim 1 is not tied to any particular machine for performing the recited method
`steps.” Pet. 35. Consistent with Petitioner’s position, the ’326 patent disclosure
`does not describe any particular hardware to perform the steps recited in claim
`1, but refers merely in broad terms to generic computer hardware and software.
`For example, the Specification, in reference to the Data Object Model of Figure
`2, states that “[t]he specific objects described herein are provided for illustrative
`purposes only and the reader should note that the invention also contemplates
`other software or hardware configurations that provide the functionality
`described herein.” Ex. 1001, col. 8, ll. 42-46. Claim 1 itself refers, in the most
`general terms, to a “computer system.”
`Further, Petitioner submits that “the method of claim 1 does not
`transform or reduce an article into a different state or thing.” Pet. 36. Petitioner
`has provided papers from the prosecution history of the ’326 patent application
`where, in response to a § 101 rejection for lacking statutory subject matter, what
`is now patent claim 1 was amended with the following language:
`[and] to generate results data representing at least any validated
`transactions and determined-eligible product distributors; and
`
`15
`
`

`

`CBM2013-00052
`Patent 7,904,326 B2
`
`
`generating compensation data from the results data for each of the
`one or more product distributers to be compensated for the one or
`more product distribution transactions.
`Ex. 1002 at 535 (emphases omitted). Applicant’s counsel cited In re Bilski, 545
`F.3d 943 (Fed. Cir. 2008) (en banc), aff’d on other grounds sub nom. Bilski v.
`Kappos, 130 S. Ct. 3218 (2010). Counsel argued that the Federal Circuit
`therein stated that “‘X-ray attenuation data [in In re Abele2] clearly represented
`physical and tangible objects.’” Id. at 536 (quoting Bilski, 545 F.3d at 962-63).
`“The Federal Circuit further noted that ‘the electronic transformation of the data
`itself into a visual depiction in Abele was sufficient’ to render the process in
`Abele ‘patent-eligible’ under 35 U.S.C. § 101.” Id. (quoting Bilski, 545 F.3d at
`963). Counsel submitted that the claim 1 “results data” represented “a physical
`and tangible object”; namely, “any validated transactions and determined-
`eligible product distributors.” Id. The “results data” recitation was argued to
`represent a “particular article.” Id. Because claim 1 further recited “generating
`compensation data from the results data,” transformation of a particular article
`was alleged, “as the visual depiction in In re Abele was generated from the X-
`ray data and held to be a transformation . . . sufficient to render the process”
`patent-eligible. Id.
`Initially, we observe that claim 1 of the ’326 patent does not require the
`“visual depiction” or the display of anything. In any event, as Petitioner notes,
`the claimed “results data” is merely a compilation of two sets of data: (1) any
`validated transactions, and (2) any determined-eligible product distributors.
`Pet. 39. In Abele, the Court determined that the “X-ray attenuation data” was
`available only when an X-ray beam was produced by a computerized axial
`tomography (CAT) scanner, passed through an object, and detected upon its
`
`2 684 F.2d 902 (CCPA 1982), abrogated by Bilski, 545 F.3d at 958-59.
`
`16
`
`

`

`CBM2013-00052
`Patent 7,904,326 B2
`
`exit. The “X-ray attenuation data” was, thus, used in an algorithm that
`improved a conventional CAT-scan process, comparable to the improved
`process for curing synthetic rubber in the Supreme Court case of Diamond v.
`Diehr, 450 U.S. 175 (1981). See Abele, 684 F.2d at 907-09. The generation of
`“compensation data” from the “results data” as recited in ’326 patent claim 1 is
`more similar to the method found to be non-statutory in Abele, which
`constituted calculating and displaying values. See id. at 908. The generation of
`data as claimed is also more similar to obtaining and comparing intangible data
`pertinent to business risks, which is “insufficient to meet the transformation
`prong of the test.” CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366,
`1370 (Fed. Cir. 2011).
`On this record, we conclude that Petitioner has demonstrated that it is
`more likely than not that claim 1 is directed to non-statutory subject matter and,
`thus, unpatentable under 35 U.S.C. § 101.
`
`II. Dependent Claims 2-22
`
`We agree with Petitioner that, on this record, each of the dependent
`claims fails to impose meaningful limitations on the scope of base claim 1. Pet.
`40-53. The steps or functions that require computer hardware or software —
`that is, more than mental steps — again, require at most a general purpose
`computer performing conventional tasks. In order for a machine to impose a
`meaningful limitation on the scope of a method claim, it must play a significant
`part in permitting the claimed method to be performed, rather than function
`solely as an obvious mechanism for permitting a solution to be achieved more
`quickly, such as utilization of a computer for performing calculations. SiRF
`Tech., Inc. v. Int’l Trade Comm’n, 601 F.3d 1319, 1333 (Fed. Cir. 2010).
`
`17
`
`

`

`CBM2013-00052
`Patent 7,904,326 B2
`
`
`Claims 3, 4, and 14 relate to loading the set of credential rule data from a
`standard format (conventional) data file, such as Extensible Markup Language
`(XML) format. Claims 9 through 17 relate to performing conventional database
`operations on the rules and data.
`Claims 2, 9, 11, 12, and 17 recite operations relating to a “denormalized”
`database table. Patent Owner contests Petitioner’s definition of
`“denormalizing” as “creating a redundant copy.” Prelim. Resp. 26-27.
`However, Patent Owner does not offer its own definition. In any event, Patent
`Owner submits that “denormalizing” is a technical term of art in database
`design and implementation. Id. at 26. Using a general purpose computer only
`for its basic, conventional uses such as the processing of conventional database
`functions does not impose meaningful limits on claim scope. Cf. Bancorp, 687
`F.3d at 1278.
`Claim 22 recites “batch processing” the rule data for multiple product
`distribution transactions. Batch processing was performed in the past by human
`beings (Ex. 1003 ¶ 24; Ex 1004 ¶ 33). Moreover, batch processing by general
`purpose computers was a well-known means of increasing efficiency in
`processing of data. Using a computer to accelerate an ineligible mental process
`does not make that process patent-eligible. Bancorp, 687 F.3d at 1279.
`On this record, we conclude that Petitioner has demonstrated that, more
`likely than not, the dependent claims are directed to non-statutory subject
`matter and, thus, unpatentable under 35 U.S.C. § 101.
`
`
`18
`
`

`

`CBM2013-00052
`Patent 7,904,326 B2
`
`
`Conclusion -- Non-Statutory Subject Matter
`We conclude that Petitioner has demonstrated that it is more likely than
`not that claims 1-22 are unpatentable under 35 U.S.C. § 101 as being directed to
`non-statutory subject matter.
`The Board has not made a final determination on the patentability of any
`challenged claim.
`
`
`ORDER
`
`It is:
`ORDERED that pursuant to 35 U.S.C. § 324(a) and § 18(a) of the AIA, a
`covered business method patent review is instituted as to claims 1-22 of the
`’326 patent;
`FURTHER ORDERED that the trial is limited to § 101 and no other
`grounds are aut