Covered Business Method Patent Review United States Patent No. 8,630,942 IN THE UNITED STATES PATENT TRIAL AND APPEAL BOARD

Transcription

1 IN THE UNITED STATES PATENT TRIAL AND APPEAL BOARD In re Post-Grant Review of: ) ) U.S. Patent No. 8,630,942 B2 ) U.S. Class: 705 ) Issued: January 14, 2014 ) ) Inventors: David Felger ) ) Application No. 12/255,899 ) ) Filed: October 22, 2008 ) ) FILED ELECTRONICALLY For: METHOD OF BILLING A ) PER 37 C.F.R. 42.6(b)(1) PURCHASE MADE OVER ) A COMPUTER NETWORK ) Mail Stop Patent Board Patent Trial and Appeal Board U.S.P.T.O. P.O. Box 1450 Alexandria, VA PETITION FOR POST-GRANT REVIEW UNDER 35 U.S.C. 321 AND 18 OF THE LEAHY-SMITH AMERICA INVENTS ACT Pursuant to 35 U.S.C. 321 and 18 of the Leahy-Smith America Invents Act ( AIA ) and pursuant to 37 C.F.R et seq., MaxMind, Inc. ( Petitioner ) hereby request post-grant review of claims 1-30 of U.S. Patent No. 8,630,942 B2 ( the 942 patent, attached as Petition Exhibit 1001), now purportedly assigned to Fraud Control Systems.Com Corporation ( Patent Owner ). 1

2 An electronic payment in the amount of $40, for the post-grant review fee specified by 37 C.F.R (b)(1), 42.15(b)(3), 42.15(b)(4) comprising the $14, request fee (including $2, request fee for 10 claims in excess of 20), $26,250 post-institution fee (including $8, post-institution fee for 15 claims in excess of 15) is being paid at the time of filing this petition. If there are any additional fees due in connection with the filing of this paper, please charge the required fees to our deposit account no

3 TABLE OF CONTENTS Covered Business Method Patent Review I. INTRODUCTION... 9 II. MANDATORY NOTICES A. Real Party-in-Interest B. Related Matters C. Lead and Back-Up Counsel and Service Information III. OVERVIEW OF THE 942 PATENT AND ITS PROSECUTION HISTORY A. The Specification Discloses a Method and System for Determining Whether a User Passes Fraud Control Before Effecting a Sale Over a Computer Network B. Challenged Claims C. Prosecution History IV. GROUNDS FOR STANDING A. At Least One Challenged Claim Is Unpatentable B. The 942 Patent Is a Covered Business Method Patent C. Claims 1-30 Are Not Directed to a Technological Invention D. Petitioner Has Been Sued for Infringement of the 942 Patent and Are Not Estopped V. STATEMENT OF PRECISE RELIEF REQUESTED FOR EACH CLAIM CHALLENGED A. Claims for which Review is Requested B. Statutory Grounds of Challenge C. Claim Construction VI. CLAIMS 1-30 OF THE 942 PATENT ARE UNPATENTABLE

4 A. Claims Reciting Abstract Ideas Implemented Using General- Purpose Computer Components are Not Patent-Eligible The Alice/Mayo framework sets a much higher standard for patentability than the guidelines used to examine the 942 patent The challenged claims are unpatentable because they are directed to nothing more than the abstract idea of fraud prevention in non-face-to-face transactions The challenged claims implicate the pre-emption concerns that undergird the Alice/Mayo framework Claims directed to the same abstract idea were found unpatentable by the Federal Circuit in CyberSource VII. CONCLUSION

5 TABLE OF AUTHORITIES Covered Business Method Patent Review Page(s) Federal Cases Alice Corp. v. CLS Bank Int l, 134 S. Ct (2014)...passim Bilski v. Kappos, 561 U.S. 593 (2010)...passim CCS Fitness, Inc. v. Brunswick Corp., 288 F.3d 1359 (Fed. Cir. 2002) CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366 (Fed. Cir. 2011)...passim DDR Holdings, LLC v. Hotels.com, L.P., (Fed. Cir., Dec. 5, 2014) (slip op. )...passim Gottschalk v. Benson, 409 U.S. 63 (1972) Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct (2012)...passim Ultramercial, Inc. v. Hulu, LLC, et al., (Fed. Cir., Nov. 14, 2014) (slip op.)...passim Federal Statutes 35 U.S.C passim 35 U.S.C. 321 et seq....passim Regulations 37 C.F.R et. seq....passim Other Authorities 77 FR FR , 18, FR

6 18 CBM , Paper 36 at 23 (P.T.A.B. Jan. 9, 2013)... 16, 19 CBM , Paper 10 at 7 8 (P.T.A.B. Jan. 25, 2013) A Guide to the Legislative History of the America Invents Acts; Part II of II, 21 Fed. Cir. Bar J. 539, 634 (2013) (quoting statement of Senator Kyl in 157 Cong. Rec. S1363, 1379 (daily ed. Mar. 8, 2011))

7 LIST OF EXHIBITS Covered Business Method Patent Review Exhibit Description 1001 U.S. Pat. No. 8,630,942 ( 942 patent ) 1002 Prosecution History of the 942 patent ( 942 Pros. Hist. ) 1003 The Future of Money: Hearings Before the Subcomm.on Domestic and International Monetary Policy of the House Comm. on Banking and Financial Services, 101st Cong., 1st Sess. (1995) ( Hearings ) 1004 U.S. Pat. No. 3,920,908 to Kraus ( Kraus ) 1005 U.S. Pat. No. 5,313,463 to Gore, et al. ( Gore ) 1006 E.P. Pat. Pub. No A2 to Fraser, et al. ( Fraser ) 1007 U. S. Pat. No. 5,311,594 to Penzias ( Penzias ) 1008 Internet Eng g Task Force, RFC1122 Requirements for Internet Hosts: Communications Layers (Oct. 1989) ( RFC1122 ) 1009 Internet Eng g Task Force, RFC1366 Guidelines for Management of IP Address Space (Oct. 1992) ( RFC1366 ) 1010 Internet Eng g Task Force, RFC1531 Dynamic Host Configuration Protocol (Oct. 1993) ( RFC1531 ) 1011 USPTO Interim Examination Instructions for Evaluations Subject Matter Eligibility under 35 U.S.C. 101, Aug ( Guidelines ) 1012 U. S. Pat. No. 6,029,154 to Pettitt ( 154 patent ) 1013 Declaration of Michael Shamos, Ph.D., J.D. ( Shamos Decl. ) 1014 Curriculum Vitae of Michael Shamos, Ph.D., J.D Appendix A to Declaration of Michael Shamos 1016 Original Complaint in action captioned Credit Card Fraud Control Corporation v. MaxMind, Inc., No. 3:14-cv (N.D. Tex.) ( MaxMind suit ) 7

8 1017 Original Complaint in action captioned Credit Card Fraud Control Corporation v. Elavon, Inc., No. 3:14-cv (N.D. Tex.) ( Elavon suit ) 1018 Original Complaint in action captioned Credit Card Fraud Control Corporation v. Chase Paymentech Solutions LLC., No. 3:14-cv (N.D. Tex.) ( Chase suit ) 1019 Original Complaint in action captioned Credit Card Fraud Control Corporation v. First Data Corporation, No. 3:14-cv (N.D. Tex.) ( First Data suit ) 1020 Original Complaint in action captioned Credit Card Fraud Control Corporation v. TCSP, Inc., No. 3:14-cv (N.D. Tex.) ( TCSP suit ) 8

9 I. INTRODUCTION Covered Business Method Patent Review The 942 Patent, entitled Method of Billing a Purchase Made Over a Computer Network, is purportedly assigned to Fraud Control Systems.Com Corporation. Credit Card Fraud Control Corporation purports to be the exclusive licensee of the 942 Patent; Credit Card Fraud Control Corporation asserts that its exclusive license gives it all substantial rights in the 942 Patent, including the right to exclude others and to enforce, sue and recover damages for past and future infringement. The 942 Patent claims a method and system for detecting potential fraud in electronic transactions that does nothing more than automate well-known fraud detection techniques using generic computer components; methods which can also be performed mentally by humans. When the claims of the 942 patent are considered in view of recent guidance from the courts, particularly the current, more rigorous Alice/Mayo analytical framework, they are plainly invalid under 35 U.S.C The 942 Patent allegedly solves a need for an efficient payment authorization and billing arrangement for products, services and telephony-based services purchased over a computer network. Ex at 022 ( 942 patent at 4:17-20). The challenged claims are directed to the longstanding and well-known commercial and fundamental economic practice of fraud prevention in non-face-toface transactions, which is nothing more than an abstract idea. Independent 9

10 method claim 1 generally requires: (1) receiving a transaction request, the transaction request comprising an Internet address associated with the user; and (2) evaluating the Internet address to determine whether the transaction may be fraudulent. Independent system claim 16 is substantially identical to independent method claim 1. Moreover, the claims merely add generic computer functionality, e.g., computer[s], user computer, computerized, computer network, and processor, and apply the abstract idea in a routine or conventional use of the Internet. Further, dependent claims 2-15 and add nothing more than functionality that can be performed mentally or with the use of generic computers. For these reasons, and as discussed in more detail below, Petitioner submits that no claim of the 942 Patent is patentable under 35 U.S.C As these grounds for invalidity easily meet the more likely than not standard for instituting a covered business method ( CBM ) patent post-grant review, Petitioner requests that this Petition be granted. II. MANDATORY NOTICES A. Real Party-in-Interest The real party-in-interest is MaxMind, Inc. B. Related Matters The 942 patent is currently the subject of separate lawsuits against the Petitioner in the Northern District of Texas, in actions captioned Credit Card Fraud Control Corporation v. MaxMind, Inc., No. 3:14-cv (N.D. Tex.) (Ex. 1016). 10

11 In addition to the lawsuits against Petitioner, Credit Card Fraud Control Corporation also asserted the 942 patent in the following lawsuits: Credit Card Fraud Control Corporation v. Elavon, Inc., No. 3:14-cv (N.D. Tex.) (Ex. 1017); Credit Card Fraud Control Corporation v. Chase Paymentech Solutions LLC., No. 3:14-cv (N.D. Tex.) (Ex. 1018); Credit Card Fraud Control Corporation v. First Data Corporation, No. 3:14-cv (N.D. Tex.) (Ex. 1019); and Credit Card Fraud Control Corporation v. TCSP, Inc., No. 3:14-cv (N.D. Tex.) (Ex. 1020). C. Lead and Back-Up Counsel and Service Information Lead Counsel - Anthony H. Son, Reg. No. 46,133; Andrews Kurth LLP, 1350 I Street, N.W., Suite 1100, Washington, D.C ; Tel: ; Fax: ; AnthonySon@andrewskurth.com. Backup Counsel Sean S. Wooden, Reg. No. 43,997; Andrews Kurth LLP, 1350 I Street, N.W., Suite 1100, Washington, D.C ; Tel: ; Fax: ; SeanWooden@andrewskurth.com; and Lloyd L. Davis, Reg. No. 67,713; Andrews Kurth LLP, 600 Travis Street, Suite 4200, Houston, Texas 77002; Tel ; Fax: ; LeeDavis@andrewskurth.com. 11

12 III. Covered Business Method Patent Review OVERVIEW OF THE 942 PATENT AND ITS PROSECUTION HISTORY A. The Specification Discloses a Method and System for Determining Whether a User Passes Fraud Control Before Effecting a Sale Over a Computer Network. The alleged invention of the 942 Patent is a method and system for using an Internet address to verify an electronic payment transaction. The alleged invention provides a method of effecting a sale over a computer network in which it is determined whether a user passes fraud control before effecting the sale. Ex at 023 ( 942 patent at 5:38-41). An initial fraud control step verifies that the user s Internet address is not stored in a negative database of known bad Internet addresses, e.g., from insufficient payment of a credit card charge, or refusal of payment relating to a disputed charged from a previous purchase of a product or service. Id. at 034 ( 942 patent col. 28, ll ). An additional fraud control step likewise compares information given by the user against information stored in a database of information related to each respective user, and verifies that the user s credit card or debit card number has not been in a negative database for delinquent payment. Id. at 035 ( 942 patent col. 30, ll ). B. Challenged Claims The 942 patent includes thirty (30) claims, two of which (claims 1 and 16) are independent. Petitioner requests cancellation of every claim. The independent claims recite the following: 12

13 1. A method for computerized fraud control for a transaction initiated over the Internet by a user at a user computer comprising: receiving, over a computer network, a transaction request at a fraud control system, wherein the fraud control system comprises one or more computers adapted to receive the transaction request, the transaction request comprising: a method of payment, an account identifier, an amount of the transaction, and an Internet address associated with the user; and evaluating, by at least one of the one or more computers of the fraud control system, the Internet address to determine whether the transaction may be fraudulent. 16. A computerized fraud control system for a transaction initiated over the Internet by a user at a user computer comprising: a fraud control system adapted to receive, over a computer network, a transaction request, wherein the fraud control system comprises one or more computers, each including at least one processor, and the transaction request comprises: a method of payment, an account identifier, an amount of the transaction, and an Internet address associated with the user, wherein the fraud control system further evaluates, by at least one of the one or more computers, the Internet address to determine whether the transaction may be fraudulent. 13

14 C. Prosecution History Covered Business Method Patent Review The 942 patent was filed as a continuation of Appl. No. 10/422,758, now abandoned, which claims benefit of Appl. No. 09/432,811, filed on Nov. 4, 1999, now U.S. Pat. No. 7,555,458, which further claims benefit through multiple continuations-in-part of Appl. No. 08/658,378, filed on Jun. 5, 1996, now U.S. Pat. No. 5,802,156. Ex at 001 ( 942 patent Related U.S. Application Data). After a preliminary amendment, the examiner initially rejected pending claims as claiming unpatentable subject under 101 because there is no device in the claim and as invalid over various prior art references under 103. Ex at 315, 319 (Aug. 17, 2010 Off. Act. at 2, 6). In response, the applicant amended the claims to include various instances of over the Internet and to the Internet and argued distinctions over the prior art. Id. at 296, 303 (Nov. 17, 2010 Resp. at 2, 9). The examiner maintained the rejections in a final action, reiterating that: there is no device in the claim. A network appears to be moving information back and forth which the consumer could do by hand. Id. at 287 (Jan. 4, 2011 Off. Act. at 6). The applicant then amended the claims to include obtaining results of fraud control at at least one computer and argued distinctions over the prior art. Id. at 260, 267 (Jan. 29, 2011 Resp. at 2, 9). The examiner again maintained the 101 rejections, stating that: 14

15 the device in the claim is not involved in significant activity for transformation [under the Machine-or-Transformation test]. A network appears to be moving information back and forth which the consumer could do by hand. The applicant should consider including an analysis by the computer (not at the computer ). Id. at 218 (Aug. 23, 2011 Off. Act. at 8). Yet again, the examiner maintained the 101 rejection after an insubstantial amendment by the applicant, Id. at 182 (Oct. 26, 2011 Off. Act. at 7), and in response to applicant s request for continued examination (RCE). Id. at 151(May 22, 2012 Off. Act. at 7). The applicant cancelled all pending claims and added new claims directed to a computerized fraud control screening method and system, including a fraud control system, that were substantially similar to the challenged claims. Id. at (Nov. 19, 2012 Resp. at 2-6). The 101 issue was not addressed in the Nov. 26, 2012 Office Action, applicant s Mar. 28, 2013 Response, nor the Jun. 18, 2013 Office Action. In a Sep. 4, 2013 applicant-initiated interview, however, the applicant and examiner discussed amending claim 83 [issued claim 1] to include by the computer to overcome the 35 USC 101 rejection [and] [d]iscussed Internet address is used as being the basis for fraud control. Id. at 054 (Examiner summary of applicant-initiated interview). The applicant amended the claims in accordance with the interview to have substantially identical language as the issued claims. Id. at (Sep. 30, 2013 Resp. at 2-6). The examiner subsequently indicated the amendments had 15

16 overcome the 101 rejection but maintained rejections on other grounds. Id. at 062 (Oct. 9, 2013 Advisory Act.). After correction of informalities, the examiner allowed the amended claims. Id. at 016, 022 (Nov. 8, 2013 Notice of Allowance). IV. GROUNDS FOR STANDING A. At Least One Challenged Claim Is Unpatentable. As further detailed below, claims 1-30 of the 942 patent are unpatentable under 35 U.S.C The claims are directed to a method or system for using an Internet address to verify a payment transaction (e.g., a credit card transaction). In fact, the claims in the 942 patent cover the same subject matter as the claims that were at issue, and found to be unpatentable under 101, in CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1368 (Fed. Cir. 2011) ( the claims of the 154 patent are broad and essentially purport to encompass any method or system for detecting credit card fraud which utilizes information relating credit card transactions to particular Internet address[es] ). Consequently, it is more likely than not that at least one of the claims of the 942 patent is also unpatentable. 35 U.S.C. 324(a). B. The 942 Patent Is a Covered Business Method Patent. The AIA defines a CBM patent as 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

17 AIA 18(d)(1); see also 37 C.F.R (a). The USPTO noted that the AIA s legislative history demonstrates that financial product or service should be interpreted broadly, encompassing patents claiming activities that are financial in nature, incidental to a financial activity or complementary to a financial activity. 77 FR 48733, This Board explained that, based on the legislative history, [t]he term financial is an adjective that simply means relating to monetary matters. CBM , Paper 36 at 23 (P.T.A.B. Jan. 9, 2013). Each of the 942 Patent claims 1-30 are directed to a method or corresponding system for performing data processing or other operations used in the practice, administration, or management of a financial product or service. The challenged claims are directed to financial services, namely, a method or system for detecting fraud which utilizes information relating transactions (e.g., credit card transactions) to particular Internet address[es]. It cannot be disputed that the asserted claims cover 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. AIA 18(d)(1). In addition, according to the USPTO, patents subject to covered business method patent review are anticipated to be typically classifiable in Class FR 48679, The 942 Patent is classified in both Classes 705/38 and 705/39, which are the specific subclasses for subject matter drawn to computerized 17

18 arrangement for evaluation of risk factors in a loan determination and computerized arrangement for transferring funds by debiting one account and crediting another by the same amount, respectively. See Patents classified in 705/38 and 705/39 are, by definition, precisely the kinds of patents Congress intended the CBM provisions to address, namely patents covering activity that is financial in nature, incidental to financial activity or complementary to a financial activity. 77 FR 48733, (quoting legislative history). As a result, because the 942 Patent (i) belongs to the class where CBM patents are expected to be found and (ii) plainly claims subject matter that is financial in nature, the 942 patent is a CBM patent subject to Section 18 review. C. Claims 1-30 Are Not Directed to a Technological Invention. The AIA excludes patents for technological inventions from the definition of CBM patents. AIA 18(d)(1); see also 37 C.F.R (a). To determine whether a patent is for a technological invention, the following will be considered on a case-by-case basis: whether 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 (b). To institute a CBM post-grant review, a patent need only have one claim directed to a covered 18

19 business method that is not a technological invention, even if the patent includes additional claims. 77 FR 48733, 48736; see also CBM , Paper 36 at 26. Although the failure of even a single challenged claim to meet this requirement is sufficient to institute CBM post-grant review, here, none of the 942 patent s claims recite a novel and nonobvious technological feature and none recite a technical solution to a technical problem. First, the 942 patent does not even purport to recite a technological feature that is novel and nonobvious over the prior art. Instead, the challenged claims recite only the Internet, user computer, a computer network, and fraud control system, all of which the 942 patent admits were all well-known, conventional types of computer components. No interrelationship or configuration of these conventional elements is recited, and no improvement to the computer art is recited or even disclosed. Ex at 014 (Shamos Decl ). Indeed, nothing in the 942 patent even attempts to suggest that the claims include a novel, nonobvious technological feature. Merely reciting 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, or [r]eciting the use of known prior art technology to accomplish a process or method, even if that process or method is novel and nonobvious will not 19

20 typically render a patent a technological invention. See, e.g., 77 FR 48755, 48764; see also CBM , Paper 10 at 7-8 (P.T.A.B. Jan. 25, 2013). Second, the allegedly inventive change determining whether an electronic transaction might be fraudulent is not a technological one, as the means by which these methods are carried out use, at most, existing technology to implement the fraud detection methods, and the 942 patent describes no unconventional computer equipment, tools, or processing capabilities. [A]bstract business concepts and their implementation, whether in computers or otherwise, are not included in the definition of technological inventions. A Guide to the Legislative History of the America Invents Acts; Part II of II, 21 Fed. Cir. Bar J. 539, 634 (2013) (quoting statement of Senator Kyl in 157 Cong. Rec. S1363, 1379 (daily ed. Mar. 8, 2011)). Indeed, the 942 patent explicitly states that [t]he concepts of the present invention are fully applicable to all forms of telephony, whether circuitswitched based telephony or computer-network telephony, such as packet-switched telephony. Ex at 024 ( 942 patent at 8:50-53). The 942 patent specification makes clear that the number and type of computers and the method by which they communicate are unimportant. Ex at 022 (Shamos Decl. 73). Nor does the 942 patent provide any guidance as to what specific hardware, software, or combination thereof are being disclosed. On the contrary, the 20

21 specification makes clear that no special computer or software is needed. Ex at 022 (Shamos Decl. 74). Accordingly, because at least claim 1 of the 942 patent covers a business method for determining whether an electronic transaction might be fraudulent, does not recite a novel and nonobvious technological feature, and does not solve a technical problem with a technical solution, CBM patent post-grant review is appropriate for the 942 patent. D. Petitioner Has Been Sued for Infringement of the 942 Patent and Are Not Estopped. Petitioner has been sued for infringement of one or more claims of the 942 patent. Ex (Maxmind suit at 10). Petitioner is not estopped from challenging the claims on the grounds identified in the petition. 37 C.F.R (b). Petitioner has not been party to any other post-grant review of the challenged claims. V. STATEMENT OF PRECISE RELIEF REQUESTED FOR EACH CLAIM CHALLENGED A. Claims for which Review is Requested Petitioner respectfully requests review under 35 U.S.C. 321 and AIA 18 of claims 1-30 of the 942 patent, and the cancellation of these claims as unpatentable. 21

22 B. Statutory Grounds of Challenge Covered Business Method Patent Review Petitioner requests cancellation of claims 1-30 as unpatentable under 35 U.S.C. 101, as detailed below. C. Claim Construction A claim of an unexpired patent subject to post-grant review receives the broadest reasonable construction in light of the specification of the patent in which it appears. See 37 C.F.R (b). 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). No claim construction is required when the asserted claims disclosed no more than an abstract idea garnished with accessories and there was no reasonable construction that would bring them within patentable subject matter. Ultramercial, Inc. v. Hulu, LLC, et al., (Fed. Cir., Nov. 14, 2014) (slip op.) (Mayer, J. concurring) (citing Ultramercial, LLC v. Hulu, LLC, No. 09-CV-6918, 2010 WL , at *6 (C.D. Cal. Aug. 13, 2010). For the purposes of this petition, because the sole grounds for unpatentability sought by petitioner is that the asserted claims disclose no more than an abstract idea, no claim construction is necessary. To the extent that any claim construction is necessary, the plain and ordinary meaning of words in their 22

23 common usage, taken in the context of the disclosure of the 942 patent, should apply. 1 VI. CLAIMS 1-30 OF THE 942 PATENT ARE UNPATENTABLE A. Claims Reciting Abstract Ideas Implemented Using General- Purpose Computer Components are Not Patent-Eligible. The Supreme Court has long held that under 101, laws of nature, natural phenomena, and abstract ideas are not patentable. Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1293 (2012) (citations omitted). Nevertheless, the Court has recognized that at some level, all inventions embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas. Id. Accordingly, to be patent-eligible, a claim must recite an application of an abstract idea to a new and useful end. Alice Corp. v. CLS Bank Int l, 134 S. Ct. 2347, 2354 (2014). In Alice, the Court applied the two-step framework for determining patent-eligibility that it previously articulated in Mayo: First, we determine whether the claims at issue are directed to one of those patent-ineligible concepts. If so, we then ask, what else is there in the claims before us? To answer that question, we consider the elements of each claim both individually and as an ordered combination to determine whether the additional elements transform the nature of the claim into a patent eligible application. We have described step two of this analysis as a search for an inventive concept i.e., an element or combination of elements that is sufficient 1 Petitioner reserves the right to present different constructions in the related litigation, which applies a different claim construction standard. 23

24 Id. at Covered Business Method Patent Review to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself. In the first step of the Alice/Mayo framework, in evaluating whether a claim is directed to one of those patent-ineligible categories, the Court described the concern that drives this exclusionary principle as one of pre-emption. Id. at 2354 (citing Bilski v. Kappos, 561 U.S. 593, (2010)). The Court reasoned that monopolization of the basic tools of scientific and technological work would tend to impede innovation more than it would tend to promote it, thereby thwarting the primary object of the patent laws. Id. (citing Mayo, 132 S. Ct. at 1293). While the Court did not endorse a specific approach for evaluating whether a claimed invention implicates the pre-emption concern that undergirds the Court s 101 jurisprudence, it compared the claims at issue in Alice to those it had previously evaluated to find that it follows from our prior cases, and Bilski in particular, that the claims at issue here are directed to an abstract idea. Id. at The realm of concepts that can be considered abstract ideas under step one of the Alice/Mayo framework is very broad. Not all abstract ideas need to rise to the level of pre-existing, fundamental truths that exist in principle apart from any human activity. Id. at 2356 (citing Mayo, 132 S. Ct. at 1297). Courts have found methods of organizing human activity, methods that can be performed mentally without a computer, and longstanding commercial or fundamental economic 24

25 practices to be abstract ideas. Id. at (citing Bilski, 561 U. S. at 599, 611); Gottschalk v. Benson, 409 U.S. 63, 67 (1972). Any novelty or particularity in the implementation is irrelevant to determining whether a concept is an abstract idea in step one of the Alice/Mayo framework. Ultramercial, slip op. at 10. For the second step of the Alice/Mayo framework, the Court explained that, to survive a patentability challenge, a claim that recites an abstract idea must include additional features to ensure that the claim is more than a drafting effort designed to monopolize the abstract idea. Alice, 134 S. Ct. at The additional features must transform that abstract idea into a patent eligible invention. Id. at The second step of the Alice/Mayo inquiry can be considered a search for an inventive concept in the additional features or limitations. Id. at Simply appending conventional steps, specified at a high level of generality is not enough to supply an inventive concept. Id. at In particular, the second step cannot be satisfied by reciting the use of generic computers to perform conventional steps. In other words, merely stating an abstract idea while adding the words apply it with a computer is insufficient. Id. at 2358 (citing Mayo, 132 S. Ct. at 1294). Indeed, [g]iven the ubiquity of computers... wholly generic computer implementation is not generally the sort of additional feature that prevents monopolization of the abstract idea itself. Id. at

26 Likewise, applying an otherwise unpatentable abstract idea in the routine, technological environment of the Internet is also insufficient to create patentable subject matter. Ultramercial, slip op. at (citing CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1370 (Fed. Cir. 2011)). Claims that address a business challenge particular to the Internet or provide an inventive concept for resolving [a] particular Internet-centric problem may rise to the level of patentability. DDR Holdings, LLC v. Hotels.com, L.P., (Fed. Cir., Dec. 5, 2014) (slip op. at 19, 23). However, attempting to broadly and generically claim use of the Internet to perform an abstract business practice (with insignificant added activity) or merely recit[ing] the performance of some business practice known from the pre-internet world along with the requirement to perform it on the Internet will not satisfy step two of the Alice/Mayo framework. Id. at 20, 22. The Court has also found that system and method claims directed to the same abstract idea should rise and fall together when the system claims are no different from the method claims in substance. Alice, 134 S. Ct. at This is the case, for example, when the system claims recite a handful of generic computer components configured to implement the same idea, include hardware limitations that are purely functional and generic or fail to offer[] a meaningful limitation beyond generally linking the use of the method to a particular 26

27 technological environment, or merely recite what computers do. Id.; see also Ultramercial, slip op. at The Alice/Mayo framework sets a much higher standard for patentability than the guidelines used to examine the 942 patent. During examination of the 942 patent, the examiner applied the machineor-transformation test when issuing rejections under 101. In several office actions, the examiner repeatedly cited with emphasis the following language from the examination guidelines that were in force at that time: Using the terms within the machine-or-transformation test: A particular machine or apparatus or transformation of a particular article means that the method involves a specific machine or article, not any and all machines or articles.... For computer implemented processes, the general purpose computer may be sufficiently particular when programmed to perform the process steps. Such programming creates a new machine because a general purpose computer, in effect, becomes a special purpose computer once it is programmed to perform particular functions pursuant to instructions from program software. To qualify as a particular machine under the test, the claim must clearly convey that the computer is programmed to perform the steps of the method because such programming, in effect, creates a special purpose computer limited to the use of the particularly claimed combination of elements (i.e., the programmed instructions) performing the particularly claimed combination of functions. See, e.g., Ex. 1002, 942 Pros. Hist. at (Aug. 23, 2011 Off. Act. at 6-7) (emphasis in original); see also Ex at (Guidelines at 5-6). Using these Guidelines, the examiner advised that Applicant should consider including an analysis by the computer or granting by the computer to 27

28 overcome the 101 rejections. Ex. 1002, 942 Pros. Hist. at 218 (Aug. 23, 2011 Off. Act. at 8). Ultimately, the applicant followed the examiner s guidance to include by the computer to overcome the 35 USC 101 rejection. Id. at 054 (Examiner summary of Sep. 4, 2013 interview); id. at 062 (Oct. 9, 2013 Advisory Act.) (indicating amendment had overcome 101 rejection of claim 83). But in Alice, the Court made clear that merely programming a generic computer to perform the method steps of an abstract idea does not make it patent-eligible: Stating an abstract idea while adding the words apply it is not enough for patent eligibility. Nor is limiting the use of an abstract idea to a particular technological environment. Stating an abstract idea while adding the words apply it with a computer simply combines those two steps, with the same deficient result. Thus, if a patent's recitation of a computer amounts to a mere instruction to implemen[t] an abstract idea on... a computer, that addition cannot impart patent eligibility. Alice, 134 S. Ct. at 2358 (internal citations omitted). Regardless of whether the examiner s guidance to add by a computer was correct when given, it does not pass muster under the current, more rigorous Alice/Mayo analytical framework. 2. The challenged claims are unpatentable because they are directed to nothing more than the abstract idea of fraud prevention in non-face-to-face transactions. As discussed below, the challenged claims are directed to the long-standing commercial and fundamental economic practice of fraud prevention in non-face-toface transactions and can be performed mentally by humans. Since the claims merely add generic computer functionality and apply the abstract idea in a routine 28

29 or conventional use of the Internet, they are unpatentable. DDR Holdings, slip op. at 23. a. Fraud prevention in non-face-to-face transactions is a long-standing commercial and fundamental economic practice. The 942 patent discloses a method for effecting a sale over a computer network in which it is determined whether a user passes fraud control before effecting a sale over a computer network. Ex at 001 ( 942 patent Abstract). Furthermore, claim 1 is directed at a method for computerized fraud control for a transaction initiated over the Internet. The particular implementation environment is irrelevant for determining whether a claim recites an abstract idea under step one of the Alice/Mayo framework. Ultramercial, slip op. at 10. As such, ignoring the irrelevant terms of over a computer network or over the Internet shows that the 942 patent is directed at the concept of fraud prevention in non-face-to-face transactions. Checking for fraud was a well-known business practice that long predated the 942 Patent. Ex at 016 (Shamos Decl. 49). The deployment of computers in the early 1960 s improved the ability of banks to maintain and quickly check information about individuals and their credit histories and led to a new financial product the credit card that was quickly adopted by a large number of consumers. Ex at 067 (Hearings at 61 (submission in support of 29

30 the remarks of D. Van Lear)). The familiar face-to-face credit card transaction between a purchaser and a merchant initially incorporated fraud prevention by, e.g., requiring a signature of the cardholder to match the signature on the card. Later generations of credit cards incorporated a photo of the cardholder, which the merchant could use to prevent fraudulent use of the credit card by the purchaser. Id. at Credit card companies circulated to merchants printed lists of the numbers of stolen or cancelled credit cards (a negative database ). A merchant who accepted a transaction involving a listed card number would not be paid for the transaction. Ex at 016 (Shamos Decl. 49). Similar fraud prevention measures were used in some of the first non-faceto-face financial transactions that took place over 100 years ago. One of the first wide-spread examples of non-face-to-face ( electronic ) commerce was wire transfers via the Western Union Telegraph Company, in which an individual delivered currency to a Western Union office, an instruction was sent to a second location to disburse an equal amount to a named recipient, who could receive the currency upon properly identifying or authenticating himself at the second location. Id. at 60. Even at this early stage, prevention of fraud by proper authentication of a party was an integral part of non-face-to-face transactions in electronic commerce. 30

31 Fraud prevention has also played a fundamental role in more recent stages of electronic commerce. In the 1970s and 1980s, consumers began using credit, debit, and ATM cards to transfer money, pay bills, and make purchases from merchants remotely via telephone. Id. at Fraud prevention was a conventional part of these telephone-based transactions: Modern merchandising techniques are designed to permit a person to obtain a copy of an item, purchase an article or a personal service or the like on credit in a simple manner in a face-to-face transaction by merely presenting a valid credit card in place of cash. In situations where the buyer and seller are geographically separated as in a telephone system, a problem heretofore has been to provide the called seller at the moment with adequate information regarding the credit integrity of the calling buyer attempting to make a purchase on credit. The availability of such information to the called seller is imperative for the latter in order for him to make a quick decision at the moment whether to accept or reject the telephone purchase on credit. A further object is to minimize for a seller the possibility of financial loss arising from a purchase requiring credit for the buyer in a telephone sales transaction. Ex at 005 (Kraus at 1:13-57). For example, credit card numbers, personal identification numbers (PINs), passwords, and voice matching were conventionally used to authenticate cardholders and prevent fraud in these transactions. Ex at 005 (Gore at 1:10-17); Ex at 007 (Kraus at 6:32-44); Ex at (Hearings at 64-65). Caller-identifying information provided by the telephone network (e.g., ANI, also known as caller ID) was also conventionally used to authenticate purchasers and prevent fraud in telephone transactions. See, e.g., Ex at 007 (Gore at 5:45-56); Ex at 003, 007 (Fraser at 3:38-48, 11:9-17). 31

32 Internet Protocol (IP) addresses were used to authenticate users attempting to purchase goods or services in electronic commerce in 1999, prior to the earliest effective filing date of the 942 Patent. Electronic commerce systems for managing sale and distribution of products over the Internet commonly analyzed users IP addresses in connection with stored and associated user information in order to determine the likelihood that an order was an attempt at fraud. Ex at (Shamos Decl ). For example, during user logon, the IP address of the client workstation was validated against a list of valid IP addresses. The logon was rejected if the IP address of the client was not in the list. Id. at 012 (Shamos Decl. 38). In a similar vein, it was conventional in 1999 to detect fraud by examining the geographic origin of a transaction, or by examining the number of transactions initiated by a user during a given time period (known as velocity ), or by checking for repeated requests to the same network address. Id. at (Shamos Decl. 39, 40, 42). Furthermore, negative databases, also known as blacklists were long known in the payment card industry. Databases of acceptable numbers were called whitelists. Id. at 013 (Shamos Decl. 41). A variety of comparisons were well known in the financial art for detecting potentially fraudulent transactions, such as blacklists, whitelists, transaction velocity, and physical location. Id. at 017 (Shamos Decl. 50). 32

33 Accordingly, fraud prevention in non-face-to-face and/or electronic commerce transactions is both a long-standing commercial practice and a fundamental economic practice. b. The claimed methods can be performed mentally with pen and paper. There is absolutely nothing in the 942 patent claims that must be done by a computer or that would preclude performance of the claimed method steps manually, and business methods that can be performed without a computer, like those claimed in the 942 patent, are plainly unpatentable abstract ideas. Cybersource, 654 F.3d at Here, even accounting for the token reference to computerized, Internet, computer network, computer storage and database, nothing prevents a user from performing the entire claimed method by receiving a transaction request and evaluating the nature of the information in the transaction request to determine whether the transaction may be fraudulent. Ex at (Shamos Decl. 53, 55). Indeed, as discussed in more detail below, this is exactly the same method of detecting fraud that merchants have been manually performing for years. Id. at 017 (Shamos Decl. 51). The first limitation of claim 1 of the 942 patent is receiving, over a computer network, a transaction request at a fraud control system, wherein the fraud control system comprises one or more computers adapted to receive the transaction request. Ex at 037 ( 942 patent at 33:35-38). A human being 33

34 could play the role of the one or more computers and the request could be received over the telephone network, which itself is a computer network. Listening to a transaction request is a mental process. Ex at 017 (Shamos Decl. 53). The second limitation of claim 1 is the transaction request comprising: a method of payment, an account identifier, an amount of the transaction, and an Internet address associated with the user. Ex at 037 ( 942 patent at 33:38-43). This is drawn merely to the nature of the information in the transaction request. Ex at (Shamos Decl. 54). The third and last limitation of claim 1 of the 942 patent is evaluating, by at least one of the one or more computers of the fraud control system, the Internet address to determine whether the transaction may be fraudulent. Ex at 037 ( 942 patent at 33:44-46). This can also be performed by a human visually inspecting a paper document and comparing the data elements to a list of suspicious Internet addresses, or in the embodiment in which telephone numbers are being used, to a blacklist of telephone numbers. This is a purely mental process that does not even require pen or paper. Ex at 018 (Shamos Decl. 55). In fact, the 942 patent itself contemplates that the entire claimed fraud detection and control method can be performed by human operators: 34

35 In an alternative embodiment, a non-service representative may assist, supplement or replace an automated system regarding call limiting, call blocking, fraud control, collecting form of payment information and obtaining payment authorization. Ex at 026 ( 942 patent at 11:53-57) (emphasis added). As such, the claims of the 942 patent are directed to nothing more than an abstract idea under step one of the Alice/Mayo analytical framework. Alice, 134 S. Ct. at c. Generic computer components do not provide the inventive concept needed to transform the abstract idea into a patent eligible application. Given that the challenged claims are directed to an abstract idea, step two of the Alice/Mayo framework must determine whether the claim elements, considered separately or in an ordered combination, amount to significantly more than an instruction to apply the abstract idea of fraud prevention in non-face-toface transactions using some unspecified, generic computer performing purely conventional functions, that is, search for an inventive concept. Alice, 134 S. Ct. at 2360 (citing Mayo, 132 S. Ct. at 1298). As discussed below, the challenged claims do not meet this requirement. Claim 1, shown below, includes various computer-related terms that have been highlighted. These terms purport to be limiting but in fact are no more than a drafting effort designed to monopolize the abstract idea itself. Mayo, 132 S.Ct. at For example, the claim terms computerized, at a user computer, and over a computer network amount to nothing significantly more than an 35

36 instruction to apply the abstract idea on an unspecified, generic computer connected to an unspecified, generic network. Alice, 134 S. Ct. at 2360 (citing Mayo, 132 S. Ct. at 1298). No interrelationship or configuration of these conventional elements is recited, and no improvement to the computer art is recited or even disclosed in the 942 Patent. Ex at 016 (Shamos Decl. 46, 47). Furthermore, the term over the Internet is nothing more than an instruction to apply the otherwise abstract idea in a generic, conventional manner using the well-known, world-wide computer network that was prevalent long before the 942 patent. Ultramercial, slip op. at 12 (citing Mayo, 132 S.Ct. at 1297). Considering the prevalence and importance of the Internet, implementation of an abstract idea on the Internet in this case is not sufficient to provide any practical assurance that the process is more than a drafting effort designed to monopolize the [abstract idea] itself. Ultramercial, slip op. at 12 (citing Mayo, 132, S. Ct. at 1297). Rather, claim 1 as a whole merely recite[s] the performance of some business practice known from the pre-internet world along with the requirement to perform it on the Internet. Id. at 20; see also Alice, 134 S. Ct. at 2358 ( Stating an abstract idea while adding the words 'apply it' is not enough for patent eligibility. Nor is limiting the use of an abstract idea to a particular technological environment. ). Further, since fraud prevention in non-face-to-face transactions including over telecommunications networks is a longstanding commercial practice, claim 1 36

37 does not address a challenge particular to the Internet. DDR Holdings, slip op. at 19. Claim 1 also requires that the receiving and evaluating steps are performed by a fraud control system. The term itself appears to describe nothing more than a generic system for implementing the abstract idea of fraud prevention. The only purported limitation of the fraud control system is that it includes one or more computers adapted to receive the transaction request and that are capable of evaluating the Internet address. However, this is nothing more than a purely functional and generic requirement that the computer be capable of performing the basic calculation, storage, and transmission functions required by the method claims. Alice, 134 S. Ct. at In other words, the functions performed by the fraud control system at each method step are purely conventional. Id. at 2359 (citing Mayo, 132 S. Ct. at 1299). 37

38 Covered Business Method Patent Review United States Patentt No. 8,630,942 As shown, Claim 1 also requires that the received transaction request include a method of payment, an account identifier, and an amount of the transaction. Since none of these items are used in the evaluating step, their inclusion in the receiving step amounts to nothing more than insignificant data- gathering that add[s] nothing of practical significance to the underlying abstract idea. Ultramercial, slip op. at 111 (citing CyberSource, 654 F.3d at 1370). Furthermore, providing a method of payment, an account identifier, and/or an amount for a commercial transaction wass routine,, conventional practice regardless of whether a transaction took place over the Internet, by telephone, or 1005 at 005 (Gore at 2:22-38) ) (discussing verification of credit face-to-face. Ex. card number and particular amount ); Ex at 010 (Fraser at 17:46-18:2) (disclosing a method of employing a communications system to mediate a credit 38

39 transaction between a customer, a vendor, and a credit-giving entity [including] providing the credit identification number and the debit amount to the credit-giving entity ). In sum, the inclusion of generic computer components and collection of routine transaction information fails to transform the patent-ineligible abstract idea into a patent-eligible invention. Alice, 134 S. Ct. at Accordingly, under the Alice/Mayo framework, independent method claim 1 recites an unpatentable abstract idea. d. Dependent method claim 2 also fails to make the abstract idea patent eligible. Challenged claim 2 depends from claim 1 and recites wherein the evaluating comprises comparing the Internet address to known Internet addresses maintained in computer storage. Since computer storage is a generic component and collecting and comparing stored data amounts to electronic recordkeeping one of the most basic functions of a computer, these features provide no meaningful limitations. Alice, 134 S. Ct. at 2359 (citing Benson, 409 U. S. at 65 (noting that a computer operates upon both new and previously stored data )). Comparing is a fundamental computer operation that can also be performed manually by eyeball, that is, mentally. Ex at 019 (Shamos Decl. 58). Accordingly, these additional features are not enough to transform the abstract idea into a patent-eligible invention. Alice, 134 S. Ct. at

40 e. Dependent method claim 3 also fails to make the abstract idea patent eligible. Challenged claim 3 depends from claim 2 and recites wherein the known Internet addresses maintained in computer storage are in an Internet address negative database. Since storing data in a database amounts to electronic recordkeeping one of the most basic functions of a computer, this feature of claim 3 provides no meaningful limitations. Id. at 2359 (citing Benson, 409 U. S. at 65). Negative databases were also conventional features in fraud prevention systems. See, e.g., Ex at 011 (Penzias at 7:23-25) ( Negative file data base 435 contains a list of so-called hot cards. Hot cards are cards that are known to be invalid, e.g., card[s] that were reported stolen. ); Ex at 019 (Shamos Decl. 59). Accordingly, this additional feature is not enough to transform the abstract idea into a patent-eligible invention. Alice, 134 S. Ct. at f. Dependent method claim 4 also fails to make the abstract idea patent eligible. Challenged claim 4 depends from claim 2 and recites wherein the known Internet addresses maintained in computer storage are in a negative database. Since storing data in a database amounts to electronic recordkeeping one of the most basic functions of a computer, this feature of claim 4 provides no meaningful limitations. Id. at 2359 (citing Benson, 409 U. S. at 65). Negative databases were also conventional features in fraud prevention systems. See, e.g., 40

41 Ex at 011 (Penzias at 7:23-25) (discussing negative file data base 435 ); Ex at 019 (Shamos Decl. 59, 60). Accordingly, this additional feature is not enough to transform the abstract idea into a patent-eligible invention. Alice, 134 S. Ct. at g. Dependent method claim 5 also fails to make the abstract idea patent eligible. Challenged claim 5 depends from claim 2 and recites wherein the known Internet addresses maintained in computer storage are configured by the party that sent the transaction request. Since collecting and storing data in a database amounts to electronic recordkeeping one of the most basic functions of a computer, this feature of claim 5 provides no meaningful limitations. Id. at 2359 (citing Benson, 409 U. S. at 65). This limitation is drawn merely to the identity of the person entering the data and has no structural or computer implications. Furthermore, such configuration can be performed manually by writing on a piece of paper. Ex at 019 (Shamos Decl. 61). Accordingly, this additional feature is not enough to transform the abstract idea into a patent-eligible invention. Alice, 134 S. Ct. at h. Dependent method claim 6 also fails to make the abstract idea patent eligible. Challenged claim 6 depends from claim 1 and recites wherein the evaluating comprises comparing the Internet address to a set of Internet addresses 41

42 maintained in computer storage that correspond to one or more geographic regions. Since computer storage is a generic component and collecting and comparing stored data amounts to electronic recordkeeping one of the most basic functions of a computer, these additional features of claim 6 provide no meaningful limitations. Id. at 2359 (citing Benson, 409 U. S. at 65 (noting that a computer operates upon both new and previously stored data )). This is drawn merely to the meaning of the data being compared, and does not affect the comparison in any way and does not represent an improvement to the computer art. In any event, the claimed evaluating can be performed by a human being. Ex at (Shamos Decl. 62). Moreover, the correspondence between Internet (IP) addresses and geographic regions was conventional Internet practice long before the 942 patent. See, e.g., Ex at (RFC1366 at 2-3) (discussing a a broad geographic allocation of IP addresses). Accordingly, these additional features are not enough to transform the abstract idea into a patent-eligible invention. Alice, 134 S. Ct. at i. Dependent method claim 7 also fails to make the abstract idea patent eligible. Challenged claim 7 depends from claim 1 and recites wherein the evaluating comprises: identifying the number of transaction requests originating from the Internet address during a time period; and comparing the number to a 42

43 predetermined limit. Since counting transactions and comparing the count to a predetermined limit amounts to electronic recordkeeping one of the most basic functions of a computer, these features of claim 7 provide no meaningful limitations. Id. at 2359 (citing Benson, 409 U. S. at 65). Further, this is simply a counting exercise that can be performed mentally. Ex at 020 (Shamos Decl. 63). Accordingly, these additional features are not enough to transform the abstract idea into a patent-eligible invention. Alice, 134 S. Ct. at j. Dependent method claim 8 also fails to make the abstract idea patent eligible. Challenged claim 8 depends from claim 1 and recites wherein the evaluating comprises checking for repeated transaction requests from the Internet address. Since obtaining transaction requests and comparing to previous requests amounts to electronic recordkeeping one of the most basic functions of a computer, these features of claim 8 provide no meaningful limitations. Id. at 2359 (citing Benson, 409 U. S. at 65 (noting that a computer operates upon both new and previously stored data )). Further, this is likewise a counting exercise that can be performed mentally. Ex at 020 (Shamos Decl. 64). Accordingly, these additional features are not enough to transform the abstract idea into a patent-eligible invention. Alice, 134 S. Ct. at

44 k. Dependent method claims 9 and 10 also fail to make the abstract idea patent eligible. Challenged claim 9 depends from claim 1 and recites wherein the transaction request further includes physical address information associated with the user and wherein the evaluating step further comprises comparing the physical address information with a geographic location associated with the Internet address. Challenged claim 10 depends from claim 9 and recites wherein the physical address information is selected from the group consisting of shipping address information and billing address information. As discussed above with respect to claim 6, the association between Internet addresses and geographic location was conventional practice long before the 942 patent. See, e.g., Ex at (RFC1366 at 2-3). Furthermore, providing a physical address, such as a shipping or billing address, is a routine practice in commercial transactions regardless of whether a transaction takes place over the Internet, by telephone, or face-to-face. See, e.g., Ex at 006 (Kraus at 3:11-15); Ex at 006 (Fraser at 10:46-50). Obtaining and comparing conventional data such as physical and IP addresses amounts to electronic recordkeeping one of the most basic functions of a computer. Alice, 134 S. Ct. at 2359 (citing Benson, 409 U. S. at 65). This limitation is drawn to the nature of the data being compared, and does not involve any improvement to the computer art. Furthermore, the claimed comparison can be performed mentally. Ex at

45 (Shamos Decl. 65, 66). Accordingly, since these features of claims 9 and 10 provide no meaningful limitations, they are not enough to transform the abstract idea into a patent-eligible invention. Alice, 134 S. Ct. at l. Dependent method claims also fail to make the abstract idea patent eligible. Challenged claim 11 depends from claim 1 and recites wherein the transaction request is denied based, at least in part, on the evaluating. Challenged claim 12 depends from claim 1 and recites wherein the transaction request is held for manual review based, at least in part, on the evaluating. Challenged claim 13 depends from claim 1 and recites wherein the transaction request is approved based, at least in part, on the evaluating. Denial, placing on hold pending further review, and approval are merely three conventional outcomes associated with transactional fraud prevention. See, e.g., Ex at 005 (Kraus at 2:67-3:30). The entire purpose of fraud checking, since long before the 942 patent, was to be able to refuse a transaction if fraud was indicated. These limitations merely reflect the conventional practice of fraud control and does not involve any improvement to the computer art. Ex at (Shamos Decl. 67). The claimed evaluating and denial (claim 11) or approval (claim 13) can be performed mentally. Id. at (Shamos Decl. 67, 69). Manual review (claim 12), of course, is performed by humans mentally. Id. at 021 (Shamos Decl. 68). Since these purported limitations are merely 45

46 another way to express the abstract idea itself, none of them provide an inventive concept sufficient to transform the claimed abstract idea into a patent-eligible application. Alice, 134 S. Ct. at 2357; see also Mayo, 132 S. Ct. at m. Dependent method claim 14 also fails to make the abstract idea patent eligible. Challenged claim 14 depends from claim 1 and recites wherein the method of payment is selected from the group consisting of credit card, debit card, electronic draft, electronic check, and electronic funds transfer. As discussed above, since the method of payment is not used in the evaluating step, receiving it with the transaction request amounts to nothing more than insignificant data-gathering that add[s] nothing of practical significance to the underlying abstract idea. Ultramercial, slip op. at 11 (citing CyberSource, 654 F.3d at 1370). Furthermore, the payment methods named in claim 14 were in common, widespread use long before the 942 patent. See, e.g., Ex at (Hearings at (statements of R. Fischer and H. Goff, discussing financial products available from VISA and Mastercard, respectively)). In any event, this is a limitation on the nature of the data being processed and does not involve any improvement to the computer art. Ex at 021 (Shamos Decl. 70). Accordingly, these additional features are not enough to transform the abstract idea into a patent-eligible invention. Alice, 134 S. Ct. at

47 n. Dependent method claim 15 also fails to make the abstract idea patent eligible. Challenged claim 15 depends from claim 1 and recites wherein Internet address associated with the user is an IP address of a personal computer connected to the Internet. Assigning a personal computer an IP address when it connected to a network, such as the Internet, was conventional practice long before the 942 patent. See, e.g., Ex at 010 (RFC1531 at 10) ( The second service provided by DHCP is the allocation of temporary or permanent network (IP) addresses to hosts. ). This is a limitation on the source of data being processed and does not involve any improvement to the computer art. Ex at 021 (Shamos Decl. 71). Accordingly, these additional features are not enough to transform the abstract idea into a patent-eligible invention. Alice, 134 S. Ct. at o. System claims mimic the language of the method claims and are patent ineligible for the same reasons. Independent system claim 16 is substantially identical to independent method claim 1. As highlighted below, claim 16 includes the same collection of generic computer components and functionality as the challenged method claims, including computer[s], user computer, computerized, computer network, and processor. These terms are nothing significantly more than an instruction to apply the abstract idea on a unspecified, generic computer connected to a unspecified, generic network. Id. at 2360 (citing Mayo, 132 S. Ct. at 1298). 47

48 Covered Business Method Patent Review United States Patentt No. 8,630,942 Furthermore, the term over the Internet amounts to a generic instruction to apply the otherwise abstract idea using the well-known, world-wide network that was prevalent long before the 942 patent. Ultramercial, slip op. at 12 (citing Mayo, 132 S.Ct. at 1297) ). The inclusion of a method of payment, an account identifier, and an amount of the transaction in the transaction request amounts to nothing more than insignificant data-gathering that add[s] nothing of practical significance to the underlying abstract idea. Id., slip op. at 11 (citing CyberSource, 654 F.3d at 1370). Stripped of generic computer components and routine, conventional transaction information, highlighted above, independent system claim 16 is no different in substance than independent method claim 1. Moreover, each of 48