In two recent instances, a transformation of data has been recognized as potentially sufficient to satisfy the patent eligibility test under 35 U.S.C. \u00a7101.<\/p>\n
In the Board’s decision in PNC Bank v. Secure Axcess<\/span>, CBM2014-0100 (PTAB Sept. 9, 2014) (available\u00a0[here<\/a>]), the Board noted that the particular transformation of data under consideration was (1) not an abstract idea and (2) satisfied the “machine or transformation test”:<\/p>\n <\/p>\n <\/p>\n Petitioner challenges claims 1-32 of the ‘191 patent as directed to patent-ineligible subject matter under 35 U.S.C. \u00a7 101. Pet. 72-77. Patent\u00ad eligible subject matter is defined in 35 U.S.C. \u00a7 101:<\/span><\/p>\n Whoever \u00a0invents \u00a0or \u00a0discovers \u00a0any \u00a0new \u00a0and \u00a0useful \u00a0process, machine, \u00a0manufacture, \u00a0or \u00a0composition \u00a0of matter, \u00a0or any \u00a0new\u00a0and useful \u00a0improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.<\/span><\/p>\n There are, however, three limited, judicially-created \u00a0exceptions to the broad categories of patent-eligible subject matter in \u00a7.101: \u00a0laws of nature; natural phenomena; and abstract ideas. \u00a0Mayo Collaborative Servs. v.Prometheus Labs., Inc., <\/em>132 S. Ct. 1289, 1293 (2012). \u00a0The Supreme Court has made clear that the test for patent eligibility under \u00a7 101 is not amenable to bright-line categorical rules. \u00a0See Bilski v. Kappos, <\/em>130 S. Ct. 3218, 3222 (2010).<\/span><\/p>\n 1. Whether the Claims Are Directed to an Abstract Idea<\/span><\/em><\/p>\n Petitioner challenges each claim of the ‘191 patent as failing to recite patentable subject matter under \u00a7 101, because the claims fall within the judicially created exception encompassing abstract ideas. Pet. 73-76. In Alice Corp. Pty, Ltd. v. CLS Bank International, <\/em>134 S. Ct. 2347 (2014), the Supreme Court reiterated the framework set forth previously in Mayo, <\/em>“for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of these concepts.” Alice, <\/em>134 S. Ct. at 2355. The first step in the analysis is to “determine whether the claims at issue are directed to one of those patent\u00ad ineligible concepts.” Id. <\/em>If they are directed to a patent-ineligible concept, the second step in the analysis is to consider the elements of the claims “individually and ‘as an ordered combination'” to determine whether there are additional elements that ‘”transform the nature of the claim’ into a\u00a0patent-eligible application.” Id. <\/em>(quoting Mayo, <\/em>132 S. Ct. at 1291, 1297).\u00a0In other words, the second step is to “search for an ‘inventive concept’- i.e., <\/em>an element or combination of elements that is ‘sufficient to ensure that the patent in practice amounts to significantly more than a patent on the [ineligible concept] itself.”‘ Id. <\/em>(alteration in original) (quoting Mayo, <\/em>132\u00a0S. Ct. at 1294).<\/span><\/p>\n Turning to the Petition, Petitioner, relying on the framework set forth in Mayo <\/em>and followed in Alice, <\/em>asserts that claims 1-32 are unpatentable under \u00a7 101, because the claims are drawn to patent-ineligible “abstract ideas, with only insignificant, well-known subject matter added.” Pet. 73; see also <\/em>Pet. 73-76. Patent Owner disagrees. Prelim. Resp. 56-65.<\/span><\/p>\n In determining whether a method or process claim recites an abstract idea, we must examine the claim as a whole. Alice, <\/em>134 S. Ct. at 2355 n. 3. Claim 1, as a whole, relates to a computer-implemented method to transform data in a particular manner-by inserting an authenticity key to create formatted data, enabling a particular type of computer file to be located and from which an authenticity stamp is retrieved. On its face, there is nothing immediately apparent about these physical steps that would indicate the claim is directed to an abstract idea.<\/span><\/p>\n Moreover, claim 1, as a whole, is distinguishable from the patent\u00ad ineligible abstract concepts found in Alice <\/em>or Bilski. Alice <\/em>involved “a method of exchanging financial obligations between two parties using a third-party intermediary to mitigate settlement risk.” Alice, <\/em>134 S. Ct. at 2356. Bilski <\/em>involved the concept of hedging risk, which the Court deemed “a method of organizing human activity.” Bilski, <\/em>130 S. Ct. at 3222. Like the concept of hedging risk in Bilski, Alice’s <\/em>“concept of intermediated settlement” was held to be “‘a fundamental economic practice long prevalent in our system of commerce.”‘ Alice, <\/em>134 S. Ct. at 2356. Similarly, the\u00a0Court in Alice <\/em>found that “[t]he use of a third-party intermediary . . . is also a building block of the modem economy.” Id. <\/em>“Thus,” the Court held, “intermediated settlement . . . is an ‘abstract idea’ beyond the scope of\u00a0\u00a7 101.” Id.<\/em><\/span><\/p>\n Petitioner asserts that claim 1 is an abstract idea, because it is nothing more than computerizing a purported centuries old practice of placing a trusted stamp or seal on a document to indicate the authenticity of the document. Pet. 74. Petitioner’s position is unpersuasive, because as indicated by Patent Owner (Prelim. Resp. 64-65), Petitioner does not tie adequately the claim language to the purported abstract concept of placing a trusted stamp or seal on a document. Although the claim recites retrieving\u00a0an authenticity stamp, the claim does not recite placing the stamp, much less. doing so on a paper document, presumably as “centuries-old” practices have done. \u00a0Similarly, the claim does not recite a paper document. \u00a0Moreover,\u00a0claim 2, which depends from claim 1, additionally recites that the formatted data is a web page, not a paper document.<\/span><\/p>\n We also find that Petitioner does not provide sufficient persuasive evidentiary support that the placing of a trusted stamp or seal on a document is “a fundamental economic practice” or a “building block of the modern economy.” See Alice, <\/em>134 S. Ct. at 2356 (citing various references concerning the concept of intermediated settlement, including an 1896 reference).<\/strong><\/span><\/p>\n Petitioner further asserts claim 1 is patent-ineligible abstract idea, because it “relates to nothing more than manipulating and collecting data.” Pet 73 (citing CyberSource Corp. v. Retail Decisions, Inc., <\/em>654 F.3d 1366, 1370 (Fed. Cir. 2011); In re Grams, <\/em>888 F.2d 835, 840 (Fed. Cir. 1989)). \u00a0Patent Owner disagrees, indicating that claim 1 recites (1) transforming at an authentication host computer, received data (a) by inserting an authenticity key (b) _to create formatted data; and (2) returning, from the authentication host computer, the formatted data (a) to enable the authenticity key to be\u00a0retrieved fro the formatted data and (b) to locate a preferences file. \u00a0Prelim. \u00b7 Resp. 58-59.<\/span><\/p>\n Petitioner’s reliance on CyberSource <\/em>and Grams <\/em>is unpersuasive. In CyberSource, <\/em>the Federal Circuit indicated that mere collection and organization of data does not satisfy the transformation prong in the machine-or-transformation \u00a0test \u00a0See CyberSource, <\/em>654 F.3d at 1370. \u00a0The Federal Circuit also indicated that the mere manipulation or reorganization of data also did not satisfy the transformation prong. \u00a0See id. <\/em>at 1375. The\u00a0Federal Circuit concluded, however, that the claims at issue were to a patent\u00ad ineligible abstract idea, not merely because of the collection, organization, and manipulation of data, but because all the claimed steps could be performed in the human mind, which is not the case here. \u00a0See id. <\/em>at 1373, 1376-77. \u00a0Rather, the challenged claims specifically recite “transforming . . . received data by inserting an authenticity key to create formatted data,” thereby authenticating a web page with an authenticity stamp. \u00a0Thus, the claims require a fundamental change to the data; a change that cannot be performed in the human mind.<\/span><\/p>\n Although the Federal Circuit in Grams <\/em>held that data gathering steps cannot make an otherwise nonstatutory claim statutory, the court did not indicate that a claim with only data gathering steps and a mathematical algorithm necessarily always would be nonstatutory. Grams, <\/em>888 F.3d at 840 (quoting In re Meyer, <\/em>688 F.2d 789, 794 (CCPA 1982)).<\/span><\/p>\n Claim 1 of the ‘191 patent recites “transforming . . . at an authentication host computer” and “returning . . . from the authentication host computer,” which are not immediately apparent as being limited to data gathering. As such, on this record, claim 1 can be distinguished from claims in Grams, <\/em>which rely on data gathering as the recited physical steps. \u00a0Petitioner does not provide further arguments specifically addressing limitations in claims 2-32 (see generally <\/em>Pet. 73-76).<\/span><\/p>\n For these reasons, we are not persuaded by Petitioner’s assertion that claims 1-32 are patent-ineligible abstract ideas. As such, we need not tum to the second step in the Mayo <\/em>framework to look for additional elements that can transform the nature of the claim into a patent-eligible application of an abstract idea.<\/span><\/p>\n 2. Whether the Claims Satisfy the Machine-or-Transformation Test<\/span><\/em><\/p>\n Petitioner also contends that claims 1-32 are unpatentable under\u00a0\u00a7 101, because the claims are not tied to any particular machine and transform no article into a different state or thing, and thus do not satisfy the machine-or-transformation \u00a0test. \u00a0We understand that the machine-or\u00ad transformation test is a useful tool, but is not sole test for whether an\u00a0invention is a patent-eligible process under \u00a7 101. See Bilski <\/em>130 S. Ct. at 3227.<\/span><\/p>\n Petitioner asserts claim 1 does not transform an article into a different state or thing. Pet 76. Rather, according to Petitioner, the transforming limitation in claim 1 is merely manipulation or reorganization of data, which is not patent eligible. Pet. 76-77 (citing CyberSource, <\/em>654 F.3d 1375).<\/span><\/p>\n We are not persuaded that “transforming . . . received data by inserting an authenticity key to create formatted data” fails to satisfy the transformation prong. The claim language recites “transforming” one thing (“received data”) “to create” something else (“formatted data”) and further recites a particular manner of transforming (“by inserting an authenticity key”).<\/span><\/p>\n Petitioner does not provide persuasive argument or supporting evidence to support its position that the transforming limitation is merely manipulation or reorganization of data.<\/strong> Because Petitioner has not persuaded us that claim 1 does not meet the transformation prong of the machine-or-transformation test, we need not consider Petitioner’s other assertions that claim 1 does not meet the machine prong of the test.\u00a0Furthermore, Petitioner does not provide further arguments regarding\u00a0claims 2-32 (see generally <\/em>Pet. 76-77), thus, we are not persuaded claims 1- 32 fail to satisfy the machine-or-transformation \u00a0test.<\/p>\n Therefore, having considered the information provided in the Petition, as well as Patent Owner’s Preliminary Response, we are not persuaded Petitioner has demonstrated that it is more likely than not that the claims challenged in the Petition are unpatentable under 35 U.S.C. \u00a7 101.<\/span><\/p>\n (emphasis added).<\/span><\/p>\n \n<\/blockquote>\n \n In addition to noting that transformation of data can satisfy the test for patent eligibility in some circumstances, this decision is also important for noting that the determination of an abstract idea is sometimes grounded in underlying factual determinations \u2014 that is the determination of an abstract idea sometimes requires factual evidence. \u00a0See also<\/span> Arrhythmia Research Technology v. Corazonix Corp.<\/span>, 958 F. 2d 1053 (Fed. Cir. \u00a01992)(“Whether a claim is directed to statutory subject matter is a question of law. Although <\/span>determination of this question may require findings of underlying facts specific to the particular subject matter and its mode of claiming<\/span>“).<\/p>\n Providing factual evidence of what is an abstract idea implicates In re Zurko<\/span> and the associated \u00a0procedural requirements for evidencing a factual finding:<\/p>\n Finally, the deficiencies of the cited references cannot be remedied by the Board’s general conclusions about what is “basic knowledge” or “common sense” to one of ordinary skill in the art. As described above, the Board contended that even if the cited UNIX and FILER2 references did not disclose a trusted path, “it is basic knowledge that communication in trusted environments is performed over trusted paths” and, moreover, verifying the trusted command in UNIX over a trusted path is “nothing more than good common sense.” <\/span>Ex parte Zurko,<\/em> slip op. at 8. We cannot accept these findings by the Board. This assessment of basic knowledge and common sense was not based on any evidence in the record and, therefore, lacks substantial evidence support. As an administrative tribunal, the Board clearly has expertise in the subject <\/span>1386<\/a>*1386<\/a> matter over which it exercises jurisdiction. This expertise may provide sufficient support for conclusions as to peripheral issues. With respect to core factual findings in a determination of patentability, however, the Board cannot simply reach conclusions based on its own understanding or experience \u2014 or on its assessment of what would be basic knowledge or common sense. Rather, the Board must point to some concrete evidence in the record in support of these findings.<\/span><\/p>\n See<\/span> In re Zurko<\/span>,\u00a0258 F.3d 1379, 1385-86 (Fed. Cir. 2001).<\/p>\n <\/p><\/blockquote>\n Thus, PNC \u00a0Bank v. Secure Axcess<\/span> reminds us of several important points:<\/p>\n (1) \u00a0the assessment of 35 U.S.C. \u00a7101 is a question of law grounded in underlying factual findings;<\/p>\n (2) \u00a0the assessment of whether something is an abstract idea can be based on factual findings — failure to provide sufficient evidence of facts with respect to an abstract idea can cause an abstract idea challenge to fail;<\/p>\n (3) with respect to core factual findings in a determination of patentability . . . the Board must point to some concrete evidence in the record in support of [its] findings.<\/p>\n \n The second recent decision of note is from \u00a0Card Verification v. Citigroup, Docket No. 13 C 6339<\/em> (N.D. Ill. \u00a0Sept. 29, 2014), where a district court stated in response to a 12(b)(6) motion:<\/p>\n<\/div>\n <\/p>\n <\/p>\n But the claims may be sufficiently limited by the plausible transformation that occurs when the randomly-generated tag is added to the piece of confidential information. Typically, transforming data from one form to another does not qualify as the kind of transformation regarded as an important indicator of patent eligibility. See CyberSource<\/em>, 654 F.3d at 1375 (\u201c[T]he mere manipulation or reorganization of data \u2026 does not satisfy the transformation prong.\u201d). But here, the claimed invention goes beyond manipulating, reorganizing, or collecting data by actually adding a new subset of numbers or characters to the data, thereby fundamentally altering the original confidential information. Contra id. <\/em>at 1372 (process of constructing \u201cmap\u201d of credit card numbers was no different than writing down a list of numbers and compiling information).<\/span><\/p>\n The use of a credit card number provides an illustrative example. Once the computer in the process splits up the credit card number into two separate pieces, randomly generated tags are added to the two pieces. The addition of the tag transforms what was once a credit card number into an identifier for use by the verifying party. The verifying party then matches up the two pieces of the information solely because the randomly-generated tag is affixed to both. At least one of the objects of the \u2018245 Patent process is to transform data from one form into another \u201cthat will be recognized by the intended recipient but secure against decryption by unintended recipients.\u201d See, e.g., TQP Dev., LLC v. Intuit, Inc., N<\/em>o. 2:12 CV 180 WCB, 2014 WL 651935, at *5 (E.D. Tex. Feb. 19, 2014). The claim requiring the addition of the tags plausibly does just that. The patent not only recites a process for verifying transaction information, it also involves a protocol for making the communication system itself more secure. (\u2018245 Patent, 2:14-20). Therefore, even though the method does not result in the physical transformation of matter, see Diehr, 4<\/em>50 U.S. 175, it utilizes a system for modifying data that may have a concrete effect in the field of electronic communications. Accordingly, when viewing the patent in the light most favorable to Card Verification, it plausibly recites a patent-eligible application of the abstract idea of verifying a transaction. Citigroup\u2019s Motion to Dismiss is therefore denied without prejudice. Citigroup is free to challenge the validity of the \u2018245 Patent after discovery and claim construction are completed in this case.<\/span><\/p>\n<\/blockquote>\n Notably, in both of these decisions, the transformation of data occurred by adding an additional piece of data to an original piece of data so as to create a new piece of data. <\/p>\n","protected":false},"excerpt":{"rendered":" In two recent instances, a transformation of data has been recognized as potentially sufficient to satisfy the patent eligibility test under 35 U.S.C. \u00a7101. In the Board’s decision in PNC Bank v. Secure Axcess, CBM2014-0100 (PTAB Sept. 9, 2014) (available\u00a0[here]), the Board noted that the particular transformation of data under consideration was (1) not an […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.717madisonplace.com\/index.php?rest_route=\/wp\/v2\/posts\/6992"}],"collection":[{"href":"https:\/\/www.717madisonplace.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.717madisonplace.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.717madisonplace.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.717madisonplace.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6992"}],"version-history":[{"count":29,"href":"https:\/\/www.717madisonplace.com\/index.php?rest_route=\/wp\/v2\/posts\/6992\/revisions"}],"predecessor-version":[{"id":7022,"href":"https:\/\/www.717madisonplace.com\/index.php?rest_route=\/wp\/v2\/posts\/6992\/revisions\/7022"}],"wp:attachment":[{"href":"https:\/\/www.717madisonplace.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6992"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.717madisonplace.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6992"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.717madisonplace.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6992"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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