throbber
Trials@uspto.gov
`Tel: 571-272-7822
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` Paper 19
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` Entered: March 4, 2014
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`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
`_______________
`
`CBM2013-00054
`Patent 7,908,304 B2
`_______________
`
`
`
`Before HOWARD B. BLANKENSHIP, SALLY C. MEDLEY, and
`KEVIN F. TURNER, Administrative Patent Judges.
`
`MEDLEY, Administrative Patent Judge.
`
`
`DECISION
`Institution of Covered Business Method Patent Review
`37 C.F.R. § 42.208
`
`
`
`

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`CBM2013-00054
`Patent 7,908,304 B2
`
`
`I. INTRODUCTION
`Callidus Software, Inc. (“Petitioner”) filed a corrected petition on September
`17, 2013, requesting an inter partes review of claims 1, 12-25, 30-32, 42, and 43 of
`U.S. Patent No. 7,908,304 (Ex. 1001, “the ’304 patent”). Paper 6 (“Pet.”).
`Petitioner challenges all of claims 1, 12-25, 30-32, 42, and 43 of the ’304 patent as
`unpatentable under 35 U.S.C. § 101. In response, Versata Development Group,
`Inc. and Versata Software, Inc. (“Patent Owner”) filed a patent owner preliminary
`response on December 12, 2013. Paper 18 (“Prelim. Resp.”). We have jurisdiction
`under 35 U.S.C. § 324. See Section 18(a) of the Leahy-Smith America Invents
`Act, Pub. L. No. 112-29, 125 Stat. 284, 329 (2011) (“AIA”).
`The standard for instituting 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.
`
`Pursuant to 35 U.S.C. § 324, the Board authorizes a covered business
`method patent review to be instituted as to claims 1, 12-25, 30-32, 42, and 43 of
`the ’304 patent.
`
`A. The ’304 Patent
`The specification of the ’304 patent describes a method and system for
`managing contracts between manufactures of a product and the distributors of the
`product. One described embodiment provides a system that enables financial
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`Patent 7,908,304 B2
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`services companies to track information, provide incentive based compensation to
`their sales force, and calculate compensation based on certain variables. Ex. 1001,
`4:43-51.
`A Distributor Management System Suite (DMSS) comprises applications
`that provide tracking information, “such as contact points, payment methods, and
`organizational hierarchies on all parties in the system, managing regulatory
`information and ensuring that distributors are licensed and appointed to sell the
`products manufactured by the provider.” Id. at 4:52-58. The DMSS comprises
`management modules, a backbone, one or more data processing engines, databases,
`and storage management components. Id. at 5:10-13.
`
`
`B. Exemplary Claims
`Of the challenged claims, claims 1, 12, and 32 are independent claims.
`Those claims are reproduced as follows:
`1.
` A system for managing relationships between a first party and
`a second party comprising:
`
`
`
`at least one processor;
`
`memory coupled to said at least one processor;
`
`said memory comprising a plurality of modules configured to
`manage distributor information;
`
`said plurality of modules comprising a selling agreements
`module configured to generate a selling agreement;
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`Patent 7,908,304 B2
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`said plurality of modules comprising a commission module
`configured to determine commission amounts associated with a
`sales transaction based on said selling agreement;
`
`said plurality of modules comprising a licensing module
`configured to determine if a party associated with said sales
`transaction has a valid license to sell products associated with
`the sales transaction; and
`
`said plurality of modules comprising a payment module for
`determining payment associated with said sales transaction to
`said party in accordance with (i) a determination of said
`commission amounts determined by said commission module
`and (ii) a determination by said licensing module of whether
`said party has a valid license to sell the products associated with
`said sales transaction.
`
`12. A system for managing relationships between parties to a
`selling agreement, the system comprising:
`
`a database source comprising a plurality of data objects
`representative of at least one distributing party, at least one
`selling agreement, and at least one license or appointment
`associated with said at least one distributing party; and
`
` distributor management engine configured to obtain at least
`one of said plurality of data objects from said database source
`and determine whether said at least one distributing party
`conforms with said at least one selling agreement and said at
`least one license or appointment is valid to allow the at least
`one distributing party to sell one or more products of the first
`party in accordance with the selling agreement.
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` a
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`Patent 7,908,304 B2
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`32. A system for managing relationships between a first party and a
`second party comprising:
`
`
`
`an interface for obtaining a plurality of business rules defining
`relationships between a product provider and at least one
`distributor;
`
` a
`
` database source comprising a plurality of data objects
`representative of said at least one distributor, at least one selling
`agreement and at least one license or appointment associated
`with said at least one distributor;
`
` commission engine configured to determine a commission
`amount associated with said at least one distributor by
`evaluating said at least one selling agreement data object;
`
` a
`
` a
`
` plurality of modules comprising, a distributor administration
`module for managing said plurality of data objects;
`
`said plurality of modules comprising, a licensing and
`appointment module configured to determine if said at least one
`license or appointment data object associated with said at least
`one distributor is in compliance with a set of industry
`regulations;
`
`said plurality of modules comprising, a selling agreements
`module configured to enable said product provider to define
`and create a selling agreement with said at least one distributor;
`and
`
`said plurality of modules comprising, a payment module
`configured to determine said commission amount to said at
`least one distributor.
`
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`C. Alleged Ground of Unpatentability
`Petitioner challenges the patentability of claims 1, 12-25, 30-32, 42, and 43
`as failing to recite patentable subject matter under 35 U.S.C. § 101. The Petition
`does not assert any other challenges to the patentability of the claims of the ’304
`patent.
`
`D. Related Proceedings
`In compliance with 37 C.F.R. § 42.302(a), Petitioner certifies that it has
`been sued for infringement of the ’304 patent. Pet. 5. The identified related case
`is Versata Software, Inc. v. Callidus Software, Inc., No. 1:12-cv-931-SLR (D.
`Del.).
`
`E. Covered Business Method Patent
`A covered business method patent means “a patent that 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). For purposes of determining whether a patent is eligible for a covered
`business method patent review, the focus is on the claims. A patent need have only
`one claim directed to a covered business method patent to be eligible for review.1
`
`
`1 Transitional Program for Covered Business Method Patents – Definitions of
`Covered Business Method Patent and Technological Invention; Final Rule, 77 Fed.
`Reg. 48734, 48736 (Aug. 14, 2012) (Response to Comment 8).
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`Petitioner has shown that the ’304 patent is a patent that 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. Pet.
`7-9. Claim 12, reproduced above, recites a distributor management engine
`configured to obtain data objects from a database source and determine whether
`certain criteria are met so as to allow a distributing party to sell one or more
`products for a first party. The products covered by the invention include those of
`financial services companies. Ex. 1001, 5:63-65. A sale of a product is a financial
`activity, and selling an asset on behalf of another party amounts to providing a
`financial service. Moreover, claim 12 covers financial services products. As such,
`claim 12 is directed to an apparatus for performing data processing or other
`operations used in the practice, administration, or management of a financial
`service (allowing a distributing party to sell one or more products for another
`party, such as a financial services company). Patent Owner does not dispute that
`its 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.
`
`
`Technological Invention
`To determine whether a patent is for a technological invention, we
`
`consider “[w]hether the claimed subject matter as a whole recites a
`technological feature that is novel and unobvious over the prior art; and
`solves a technical problem using a technical solution.” 37 C.F.R.
`
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`§ 42.301(b).
`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 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.
`
`Petitioner, in its petition, asserts that the ’304 patent claims fail to
`recite any technological feature that is novel and unobvious over the prior
`art. Pet. 10. In particular, Petitioner argues that the ’304 patent does not
`disclose any particular software or hardware configurations that are key to
`the claimed subject matter. Pet. 12-13. The specification of the ’304 patent
`describes that the invention is related to the field of computer technology,
`and describes a general purpose computer. Ex. 1001, Fig. 4; 13:46-15:3.
`Moreover, the specification of the ’304 patent describes modules and
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`engines understood to include software, but no specific software computer
`program is disclosed. Indeed, the ’304 patent describes that “the invention
`may be implemented in any type of computer system or programming or
`processing environment.” Id. at 15:5-8. General purpose computers and
`generic software programs were known in the art at the time of the
`invention, and we agree with the Petitioner that the patent does not claim any
`technological improvement of those devices. Accordingly, Petitioner has
`shown that the claims fail to recite any technological feature that is novel
`and unobvious over the prior art.
`Patent Owner does not contend that the’304 patent claims fall within
`the “technological inventions” exception.
`
`
`Conclusion
`
`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
`12 means that the ’304 patent is a covered business method patent under AIA
`§ 18(d)(1).
`
`F. 35 U.S.C. 325(a)(1)
`Patent Owner urges that the Board decline to institute review of the ’304
`patent because Petitioner is statutorily barred 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 validity of the ’304 patent before the
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`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 ’304 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 also 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:
`(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.
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`Under the cited rule, Petitioner, in its Petition, 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. 5.
`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. The Board Of Trustees of the University
`of Illinois, IPR2013-00401, Paper No. 17 at 11-12 (PTAB December 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. The Procter & Gamble Co., IPR2013-00438, Paper No. 9 at
`6-9 (PTAB January 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
`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
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`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.
`
`II. ANALYSIS
`
`A. Claim Construction
`In a covered business method patent review, claim terms in an unexpired
`patent are given their broadest reasonable construction in light of the specification
`of the patent in which they appears. 37 C.F.R. § 42.300(b). Under the broadest
`reasonable construction standard, claim terms are given their ordinary and
`customary meaning, as would be understood by one of ordinary skill in the art in
`the context of the entire disclosure. In re Translogic Tech., Inc., 504 F.3d 1249,
`1257 (Fed. Cir. 2007). Any special definition for a claim term must be set forth
`with reasonable clarity, deliberateness, and precision. In re Paulsen, 30 F.3d 1475,
`1480 (Fed. Cir. 1994).
`The following claim construction applies.
`
`Module/modules
`Independent claims 1 and 32 recite a module or modules. Claims 23, 24, 25,
`30, and 43 ultimately depend from independent claim 12 and also claim a module
`or modules. The specification of the ’304 patent describes that the DMSS
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`comprises a suite of multiple engines and modules each configured to provide
`functionality that helps manage the flow of information between distributors and
`suppliers. Ex. 1001, 6:16-19. The modules are described by their corresponding
`function. For example, the specification of the ’304 patent describes “a distributor
`administration module 115, a license and appointment module 116, a selling
`agreements module 117, a debt management module 118, and a payment module.”
` Id. at 9:26-33.
`Taking into consideration the above descriptions provided in the
`specification, Petitioner construes a module as “software application that performs
`a stated function” and modules as “software applications that perform a stated
`function.” Pet. 21-22. Patent Owner argues that all of the constructions provided
`by the Petitioner are inconsistent with the broadest reasonable interpretation, but
`does not explain, with respect to the terms module and modules, why that is so.
`Prelim. Resp. 27-28. Patent Owner’s argument does not overcome the construction
`proposed by the Petitioner, which we determine is reasonable in light of the
`specification. Accordingly, a “module” means “a software application that
`performs a stated function.” The term “modules” means “software applications
`that perform a stated function.”
`
`To generate a selling agreement/to define and create a selling agreement
`Claim 1 recites “a selling agreements module” configured “to generate a
`selling agreement.” Claim 32 recites “a selling agreements module” configured to
`enable said product provider “to define and create a selling agreement.” Petitioner
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`proposes a construction of “to generate a selling agreement” and to “define and
`create a selling agreement” to mean “to create a selling agreement contract
`comprising templates or reusable components.” Pet. 22-23.
`Petitioner directs attention to the specification examples of the type of
`information that can be found in a selling agreement or contract: “A selling
`contract defines a hierarchy of sales people that can sell products under that
`contract and it defines what products can be sold under that agreement. The selling
`contract also specifies commission schedules and identifies which sales people
`participate under a particular commission schedule.” Ex. 1001, 3:48-53. Petitioner
`further explains that the selling agreement is generated from contract kits. The
`specification of the ’304 patent describes that the agreements are put together from
`contract kits and that a contract kit contains a set of commission schedules (also
`referred to as compensation components) that can be used within an agreement. Id.
`at 7:28-38. Each agreement is created from one contract kit, and when the
`agreement is created a user can select the components from the kit to include in the
`agreement. Id. at 7:35-38.
`Patent Owner argues that Petitioner’s construction is not a reasonable
`interpretation because Petitioner omits from the construction that the selling
`agreements are customized during negotiations. Prelim. Resp. 27, citing Ex. 1001,
`10:47-49. Because either construction would result in the same analysis for
`purposes of the 101 analysis, we adopt Petitioner’s construction and modify that
`construction to include that the selling agreements are customized. Therefore, “to
`generate a selling agreement” or “to define and create a selling agreement” means
`
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`“to create a customized selling agreement contract comprising templates or
`reusable components.”
`
`
`
`Engine
`Claims 12-18, 20-22, and 32 recite an engine. For example, claim 12 recites
`a distributor management engine and claim 15, which ultimately depends from
`claim 12, recites a commission engine. Petitioner argues that the “engine” in every
`instance means “software that processes data for a stated function.” Pet. 23-24.
`Petitioner points to various descriptions in the specification of the ’304 patent that
`describes the engines as “data processing engines” (Abstract) and that the various
`engines function “to draw information from the DMSS database, process the
`information, and store the result in a database for further use by the DMSS
`modules and engines.” Ex. 1001, 5:18-22.
`Patent Owner argues that all of the constructions provided by the Petitioner
`are inconsistent with the broadest reasonable interpretation, but does not explain,
`with respect to the term engine, why that is so. Prelim. Resp. 27-28. Patent
`Owner’s argument does not overcome the construction proposed by the Petitioner,
`which we determine is reasonable in light of the specification. Accordingly, an
`“engine” means “software that processes data for a stated function.”
`
`Backbone
`Claim 13 depends from independent claim 12 and recites “a backbone
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`coupled to said distributor management engine, said backbone configured to
`transport said at least one of said plurality of data objects.” Petitioner argues that
`the claimed “backbone” means “software through which engines, modules, and
`databases can exchange information.” Pet. 24-25. Petitioner argues that the
`specification of the ’304 patent demonstrates that a “backbone” is software. Id.
`Petitioner points to various descriptions in the specification of the ’304 patent that
`describes the backbone as facilitating communication between modules, engines,
`and databases. For example, the specification of the ’304 patent describes that as
`the “modules perform their tasks and functions, the backbone communicates
`changes and updates to the rest of the applications.” Ex. 1001, 8:39-41. The
`specification further describes that the DMSS and other applications 110, engines
`140, and databases 130 may execute bidirectional requests and responses across
`backbone 120. Id. at 8:43-45. Petitioner further argues that the specification
`discloses that the “backbone” is a framework for serving as an object request
`broker and that this framework only applies if the backbone itself is software
`mediating application and/or module requests for objects. Pet. 25.
` Patent Owner argues that the term “backbone” may include hardware as
`well as software. Prelim. Resp. 26. We agree with Petitioner that the backbone
`described in the specification at least refers to software. There is no indication that
`the backbone includes or excludes hardware as well. For purposes of the § 101
`analysis it does not matter whether the backbone includes hardware. Accordingly,
`for purposes of the decision the term “backbone” means “software, and may
`include hardware, through which engines, modules, and databases can exchange
`
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`information.”
`
`Interface
`Independent claim 32 recites “an interface for obtaining a plurality of
`business rules defining relationships between a product provider and at least one
`distributor.” Claim 14 depends from independent claim 12 and recites a similar
`limitation. Petitioner argues that an “interface” means “browser-based gateway for
`a user to manage the DMSS applications.” Pet. 26. Petitioner argues that the
`specification of the ’304 patent supports this construction, citing to column 11, line
`65 to column 12, line 7. Id. The description there includes that the user interface
`comprises a browser-based system for managing the DMSS applications and that
`the browser-based user interface is a common gateway interface or any application
`capable of accessing the databases and producing intangible data than can be
`rendered by a client browser. Ex. 1001, 11:65-12:7.
`Patent Owner argues that the specification of the ’304 patent does describe
`browser-based user interfaces, but that the specification also describes a
`“communication interface” which provides a two-way data communication
`coupling via a network link. Prelim. Resp. 26. Patent Owner argues that
`Petitioner’s proposed construction does not include the possibility of a
`communication interface. However, Patent Owner has not shown that the interface
`in claims 14 and 32 is directed to the communication interface. We agree with
`Petitioner that the interface is directed to the user interface described in the
`specification. Accordingly, for purposes of the decision the term “interface”
`
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`means “browser-based gateway for a user to manage the DMSS applications.”
`All remaining claim terms of phrases recited in claims 1, 12-25, 30-32, 42,
`and 43 are given their ordinary and customary meaning, as would be understood by
`one with ordinary skill in the art, and need not be construed explicitly at this time.
`
`B. 35 U.S.C. § 101 Ground of Unpatentability
`Petitioner contends that claims 1, 12-25, 30-32, 42, and 43 are directed to
`non-statutory subject matter under 35 U.S.C. § 101. Pet. 27-69. Patent Owner
`presents no arguments with respect to the § 101 ground of unpatentability. Prelim.
`Resp. Upon reviewing Petitioner’s analysis and supporting evidence, we
`determine that Petitioner has established that claims 1, 12-25, 30-32, 42, and 43
`are, more likely than not, directed to non-statutory subject matter under § 101.
`Section 101 of Title 35, United Stats Code, provides that: “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.”
`The Supreme Court recognizes three exceptions to these statutory classes:
`“laws of nature, natural phenomena, and abstract ideas.” Bilski v. Kappos, 130 S.
`Ct. 3218, 3220 (2010). Although an abstract idea by itself is not patentable, a
`practical application of an abstract idea may be deserving of patent protection.
`Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1293-94
`(2012); Bilski, 130 S. Ct. at 3230; Diamond v. Diehr, 450 U.S. 175, 187 (1981). In
`making this determination, the claim must be considered as a whole, as it is
`“inappropriate to dissect the claims into old and new elements and then to ignore
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`the presence of the old elements in the analysis.” Diehr, 450 U.S. at 176.
`Nonetheless, to be patent-eligible, a claim cannot simply state the abstract idea and
`add the words “apply it.” See Mayo, 132 S. Ct. at 1294. The claim must
`incorporate enough meaningful limitations to ensure that it claims more than just
`an abstract idea and is not merely a “drafting effort designed to monopolize the
`[abstract idea] itself.” See id. at 1297. A scientific principle cannot be made
`patentable by limiting its use “to a particular technological environment” or by
`adding “insignificant post-solution activity.” See Bilski, 130 S. Ct. at 3230; Diehr,
`450 U.S. at 191-92; Parker v. Flook, 437 U.S. 584, 595 n.18 (1978).
`
`Claim 12
`Petitioner argues that claim 12 contains nothing more than the abstract idea
`of validating a distributor to begin selling products. Pet. 29. Petitioner argues that
`nowhere does claim 12 recite a particular way or algorithm to perform the
`determination of whether a distributor conforms to a selling agreement, and that
`likewise, there is no particular way to validate a distributor’s license or
`appointment that is claimed. Id. at 30.
`Petitioner relies on the testimony of two declarants, with extensive
`experience in either the insurance or the financial industry, to support Petitioner’s
`assertion that validating a distributor to begin selling products was well known
`prior to the date of the invention and was known to be accomplished by hand. Pet.
`36-39. In particular, the testimony is submitted to demonstrate that insurance and
`financial services companies have had (for several years prior to the claimed
`
`
`
`19
`
`

`
`CBM2013-00054
`Patent 7,908,304 B2
`
`invention) systems in place for validating a distributor to begin selling products
`without the use of a computer. Ex. 1011, Declaration of Joseph E. Dehaven, ¶¶ 25,
`32; Ex. 1012, Declaration of Janis McGuffey, ¶¶ 17, 21, 25. We have reviewed the
`supporting evidence and conclude that that evidence supports Petitioner’s
`assertions that the claim 12 functional limitations (“purely mental processes”) were
`known in the art to be performed without the use of a computer prior to the date of
`the invention.
`We also have considered Petitioner’s arguments that claim 12 fails the
`machine-or-transformation test. Pet. 39. Although not dispositive, the machine-or-
`transformation test is a useful and “important clue [or] an investigative tool” for
`determining whether a claimed invention is patent-eligible under § 101. Bilski v.
`Kappos, 130 S. Ct. at 3227. We agree that claim 12 is not tied to any particular
`machine for practicing the system. Nor does claim 12 transform or reduce an
`article into a different state or thing, because claim 12, at best, is limited to
`gathering data and making a determination based on the gathered data.
`We agree with Petitioner that the information provided, which has not been
`rebutted, demonstrates that it is more likely than not that claim 12 recites the
`abstract idea of validating a distributor to begin selling products. Moreover, we are
`persuaded by the information provided by Petitioner that the remaining limitations
`are insufficient to prevent claim 12 from covering the abstract idea itself. Claim 12
`recites a database source comprising a plurality of data objects representative of the
`distributing party and a license or appointment associated with the distributing
`party. Claim 12 also recites a distributor management engine that obtains objects
`
`
`
`20
`
`

`
`CBM2013-00054
`Patent 7,908,304 B2
`
`from the database source to make a determination of whether a distributor
`conforms to a selling agreement so that the distributor is allowed to begin selling
`products. The database source and the distributor management engine are
`software. These components do not impose meaningful limits on the challenged
`claim’s scope.
`Even assuming that the claim 12 system implements a computer, or is
`applied in a computer environment, limiting the application of an abstract idea to
`one field of use does not necessarily guard against preempting all uses of the
`abstract idea. Bilski, 130 S. Ct. at 3231. Similar to the system claims in Accenture,
`the system claim 12 recites no “additional substantiv

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