2106.04(a)(2) Examples of Concepts The Courts Have Identified As Abstract Ideas
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I. "FUNDAMENTAL ECONOMIC PRACTICES"
The courts have used the phrases “fundamental economic practices” or “fundamental economic concepts” to describe concepts relating to the economy and commerce, such as agreements between people in the form of contracts, legal obligations, and business relations.
- The term “fundamental” is used in the sense of being foundational or basic, and not in the sense of necessarily being “old” or “well-known.”
An example of a case identifying a concept relating to performance of a financial transaction as abstract is buySAFE, Inc. v. Google, Inc.
The patentee in buySAFE claimed a method in which a computer operated by the provider of a safe transaction service receives a request for a performance guarantee for an online commercial transaction, the computer processes the request by underwriting the requesting party in order to provide the transaction guarantee service, and the computer offers, via a computer network, a transaction guaranty that binds to the transaction upon the closing of the transaction.
The Federal Circuit described the claims as directed to an abstract idea because they were “squarely about creating a contractual relationship--a ‘transaction performance guaranty’.”
Another example is OIP Techs., Inc. v. Amazon.com, Inc.
The patentee in OIP Techs. claimed methods of pricing a product for sale comprising testing a plurality of prices, gathering statistics generated about how customers reacted to the offers testing the prices, using that data to estimate outcomes (i.e., mapping the demand curve over time for a given product), and automatically selecting and offering a new price based on the estimated outcome.
Citing Alice,Bilski,Ultramercial, and several other decisions, the Federal Circuit determined that these claims were directed to the concept of “offer-based price optimization, which was similar to other ‘fundamental economic concepts’ found to be abstract ideas by the Supreme Court and this court.”
Other examples of this type of concept include:
- i. hedging;
- ii. processing an application for financing a purchase, Credit Acceptance Corp. v. Westlake Services; and
- iii. rules for conducting a wagering game.
An example of a case identifying a concept relating to mitigating risk as abstract is Alice Corp. v. CLS Bank. The patentee in Alice Corp. claimed a computerized scheme for mitigating “settlement risk”, i.e., the risk that only one party to an agreed-upon financial exchange will satisfy its obligation.
A computer system is used as a third-party intermediary between the parties to the exchange.
The intermediary creates “shadow” credit and debit records (i.e., account ledgers) that mirror the balances in the parties’ real-world accounts at “exchange institutions” (e.g., banks).
The intermediary updates the shadow records in real time as transactions are entered, allowing only those transactions for which the parties’ updated shadow records indicate sufficient resources to satisfy their mutual obligations.
At the end of the day, the intermediary instructs the relevant financial institutions to carry out the “permitted” transactions in accordance with the updated shadow records, thus mitigating the risk that only one party will perform the agreed-upon exchange.
The Supreme Court determined that these claims were directed to the “abstract idea of intermediated settlement”, which is “a building block of the modern economy” and a “fundamental economic practice long prevalent in our system of commerce” like the risk hedging in Bilski.
Other examples of this type of concept include:
- i. hedging, Bilski v. Kappos; and
- ii. financial instruments that are designed to protect against the risk of investing in financial instruments.
II. "CERTAIN METHODS OF ORGANIZING HUMAN ACTIVITY"
The courts have used the phrase “methods of organizing human activity” to describe concepts relating to interpersonal and intrapersonal activities, such as managing relationships or transactions between people, social activities, and human behavior; satisfying or avoiding a legal obligation; advertising, marketing, and sales activities or behaviors; and managing human mental activity.
The term “certain” qualifies this category description as a reminder that:
- (1) not all methods of organizing human activity are abstract ideas, and
- (2) this category description does not cover human operation of machines.
An example of a case identifying a concept relating to managing relationships or transactions between people, or satisfying or avoiding a legal obligation as abstract is buySAFE, Inc. v. Google, Inc.
The patentee in buySAFE claimed a method in which a computer operated by the provider of a safe transaction service receives a request for a performance guarantee for an online commercial transaction, the computer processes the request by underwriting the requesting party in order to provide the transaction guarantee service, and the computer offers, via a computer network, a transaction guaranty that binds to the transaction upon the closing of the transaction.
The Federal Circuit described the claims as directed to an abstract idea because they were “squarely about creating a contractual relationship--a ‘transaction performance guaranty’”.
Another example is Dealertrack v. Huber.
The patentee in Dealertrackclaimed processes of managing a credit application, comprising receiving credit application data from a first source, selectively forwarding the credit application data to remote funding sources, and then forwarding funding decision data from a remote funding source back to the first source.
The Federal Circuit described the claims as directed to an abstract idea or “basic concept” of processing information through a clearing-house” like the hedging concept of Bilski.
And another example is Bancorp Services., L.L.C. v. Sun Life Assurance Co. of Canada (U.S.).
The patentee in Bancorp claimed methods and systems for managing a life insurance policy on behalf of a policy holder, which comprised steps including generating a life insurance policy including a stable value protected investment with an initial value based on a value of underlying securities, calculating surrender value protected investment credits for the life insurance policy; determining an investment value and a value of the underlying securities for the current day; and calculating a policy value and a policy unit value for the current day.
The court described the claims as an “attempt to patent the use of the abstract idea of [managing a stable value protected life insurance policy] and then instruct the use of well-known [calculations] to help establish some of the inputs into the equation.”
Other examples of this type of concept include:
- i. arbitration, In re Comiskey;
- ii. generating menus on a computer, Apple, Inc. v. Ameranth, Inc.;
- iii. generating rule-based tasks for processing an insurance claim, Accenture Global Services v. Guidewire Software, Inc.;
- iv. hedging, Bilski v. Kappos;
- v. mitigating settlement risk, Alice Corp. Pty. Ltd. v. CLS Bank Int'l; and
- vi. tax-free investing, Fort Props., Inc. v. Am. Master Lease, LLC.
An example of a case identifying a concept relating to advertising, marketing, and sales activities or behaviors as abstract is Apple, Inc. v. Ameranth, Inc.
The patentee in Ameranth claimed a system for generating and transmitting menus, e.g., a system comprising a central processing unit, data storage device on which several menus are stored, an operating system including a graphical user interface, and application software for generating a second menu from the first menu, and transmitting the second menu to a wireless device or webpage.
The Federal Circuit determined that the claims are directed to an abstract idea, which could be described as “generating menus …, or generating a second menu from a first menu and sending the second menu to another location [, or] taking orders from restaurant customers.”
The court also described the claimed invention as adding conventional computer components to well-known business practices, e.g., “a restaurant preparing a device that can be used by a server taking orders from a customer.”
Other examples of this type of concept include:
- i. structuring a sales force or marketing company, In re Ferguson;
- ii. using advertising as an exchange or currency; and
- iii. using an algorithm for determining the optimal number of visits by a business representative to a client, In re Maucorps.
An example of a case identifying a concept relating to managing human behavior as abstract is Intellectual Ventures I LLC v. Capital One Bank (USA). The patentee in this case claimed methods comprising storing user-selected pre-set limits on spending in a database, and when one of the limits is reached, communicating a notification to the user via a device.
The Federal Circuit determined that the claims were directed to the abstract idea of “tracking financial transactions to determine whether they exceed a pre-set spending limit (i.e., budgeting)”, which “is not meaningfully different from the ideas found to be abstract in other cases before the Supreme Court and our court involving methods of organizing human activity.”
Another example of this type of concept includes:
- i. filtering content – BASCOM Global Internet v. AT&T Mobility, LLC; and
- ii. a mental process that a neurologist should follow when testing a patient for nervous system malfunctions, In re Meyer.
An example of a case identifying a concept relating to tracking or organizing information as abstract is BASCOM Global Internet v. AT&T Mobility, LLC.
The patentee in BASCOM claimed a system for filtering content retrieved from an Internet computer network, comprising a local client computer and a remote ISP server that implements at least one filtering scheme and a plurality of sets of logical filtering elements.
The Federal Circuit described the concept of filtering content as an abstract idea and a “method of organizing human behavior, similar to concepts previously found to be abstract.”
Another example is Intellectual Ventures I LLC v. Capital One Bank (USA). The patentee in this case claimed a system for providing web pages tailored to an individual user, comprising an interactive interface having a display that depicts customized content based on:
- (1) information known about the user and
- (2) navigation data.
The Federal Circuit determined that both types of customization were abstract ideas.
The court described the first type of customization (tailoring content based on user information) as similar to how “newspaper inserts had often been tailored based on information known about the customer--for example, a newspaper might advertise based on the customer's location,” and the second type of customization (tailoring information based on the time of day the website was visited) as similar to how “a television channel might choose to present a commercial for children's toys during early morning cartoon programs but beer during an evening sporting event.”
Other examples of this type of concept include:
- i. classifying and storing digital images in an organized manner
- ii. collecting information, analyzing it, and displaying certain results of the collection and analysis
- iii. encoding and decoding image data – RecogniCorp, LLC v. Nintendo Co;
- iv. organizing information through mathematical correlations
- v. receiving, screening, and distributing email
III. "AN IDEA 'OF ITSELF'"
The courts have used the phrase “an idea ‘of itself’” to describe an idea standing alone such as an uninstantiated concept, plan or scheme, as well as a mental process (thinking) that “can be performed in the human mind, or by a human using a pen and paper.”
- As the Federal Circuit explained, “methods which can be performed mentally, or which are the equivalent of human mental work, are unpatentable abstract ideas--the ‘basic tools of scientific and technological work’ that are open to all.’”
- “Courts have examined claims that required the use of a computer and still found that the underlying, patent-ineligible invention could be performed via pen and paper or in a person’s mind.”
In Electric Power Group, the Federal Circuit explained that concepts of collecting and analyzing information fall within the “realm of abstract ideas” because information is intangible:
Information as such is an intangible. Accordingly, we have treated collecting information, including when limited to particular content (which does not change its character as information), as within the realm of abstract ideas. In a similar vein, we have treated analyzing information by steps people go through in their minds, or by mathematical algorithms, without more, as essentially mental processes within the abstract-idea category. And we have recognized that merely presenting the results of abstract processes of collecting and analyzing information, without more (such as identifying a particular tool for presentation), is abstract as an ancillary part of such collection and analysis.
A. Concepts relating to data comparisons that can be performed mentally or are analogous to human mental work
An example of a case identifying a concept relating to a data comparison that can be performed mentally as abstract is CyberSource Corp. v. Retail Decisions.
The patentee in CyberSource claimed a method for verifying the validity of a credit card transaction over the Internet, and a computer-readable medium comprising program instructions for performing the method.
The method comprised obtaining information about other transactions that have utilized an Internet address identified with the credit card transaction to be verified, constructing a map of credit card numbers based on the other transactions, and utilizing the map to determine if the credit card transaction is valid.
Although the patentee argued that the method could not be performed without the Internet, nothing in the claim required use of the Internet to obtain the data (as opposed to obtaining the data from a pre-compiled database).
The court therefore concluded that the method could be performed in the human mind, or by a human using a pen and paper, and that the claim was therefore directed to a mental process of “obtain[ing] and compar[ing] intangible data pertinent to business risks.”
Another example is University of Utah Research Foundation v. Ambry Genetics.
The patentee in Ambry Genetics claimed methods of screening a human’s genome for an altered BRCA gene, comprising comparing the sequence of the human’s BRCA gene with the sequence of the wild-type gene, and identifying any differences that arise.
The Federal Circuit determined that these claims were directed to the concept of “comparing BRCA sequences and determining the existence of alterations”, which was an “abstract mental process”.
An example of a case identifying a concept relating to a data comparison that is analogous to human mental work as abstract is Mortgage Grader, Inc. v. First Choice Loan Servs.
The patentee in Mortgage Grader claimed a computer-implemented system for enabling borrowers to anonymously shop for loan packages offered by a plurality of lenders, comprising a database that stores loan package data from the lenders, and a computer system providing an interface and a grading module.
The interface prompts a borrower to enter personal information, which the grading module uses to calculate the borrower’s credit grading, and allows the borrower to identify and compare loan packages in the database using the credit grading.
The Federal Circuit determined that these claims were directed to the concept of “anonymous loan shopping”, which was a concept that could be “performed by humans without a computer.”
Other examples of this type of concept include:
- i. collecting and comparing known information
- ii. diagnosing an abnormal condition by performing clinical tests and analyzing the results
An example of a case identifying a concept relating to organizing or analyzing information in a way that can be performed mentally as abstract is Synopsys, Inc. v. Mentor Graphics Corp.
In Synopsys, the patentee claimed methods of logic circuit design, comprising converting a functional description of a level sensitive latch into a hardware component description of the latch.
Although the patentee argued that the claims were intended to be used in conjunction with computer-based design tools, the claims did not include any limitations requiring computer implementation of the methods and thus do not involve the use of a computer in any way.
The court therefore concluded that the claims “read on an individual performing the claimed steps mentally or with pencil and paper,” and were directed to a mental process of “translating a functional description of a logic circuit into a hardware component description of the logic circuit.”
An example of a case identifying a concept relating to organizing or analyzing information in a way that is analogous to human mental work as abstract is Content Extraction and Transmission LLC v. Wells Fargo Bank, N.A.
In Content Extraction, the patentee claimed an application program interface comprising a scanner that extracted data from hard copy documents, a processor that recognized specific information from the extracted data, and a memory that stored the recognized information.
The court determined that these claims were directed to the basic concept of “data collection, recognition and storage”, stating that humans have always performed these functions and that banks have for some time reviewed checks, recognized relevant data such as the amount, account number, and identity of the account holder, and stored that information in their records.
The patentee argued that “its claims are not drawn to an abstract idea because human minds are unable to process and recognize the stream of bits output by a scanner”, but the court was unpersuaded, stating that “the claims in Alice also required a computer that processed streams of bits, but nonetheless were found to be abstract.”
Another example is FairWarning IP, LLC v. Iatric Sys., Inc. The patentee in FairWarning claimed a system and method of detecting fraud and/or misuse in a computer environment, comprising collecting information regarding accesses of a patient’s personal health information, analyzing the information according to one of several rules (i.e., related to accesses in excess of a specific volume, accesses during a pre-determined time interval, or accesses by a specific user) to determine if the activity indicates improper access, and providing notification if it determines that improper access has occurred.
The court determined that these claims were directed to the concept of “collecting and analyzing information to detect misuse and notifying a user when misuse is detected”.
The court also noted that the claimed rules here were unlike those inMcRO because they “are the same questions (though perhaps phrased with different words) that humans in analogous situations detecting fraud have asked for decades, if not centuries.”
Other examples of this type of concept include:
- i. collecting, displaying, and manipulating data
- ii. collecting information, analyzing it, and displaying certain results of the collection and analysis
- iii. creating an index, and using that index to search for and retrieve data
- iv. determining a price, using organizational and product group hierarchies
- v. encoding and decoding image data
- vi. organizing information through mathematical correlations
- vii. relaying mailing address data
- viii. retaining information in the navigation of online forms
An example of a case identifying a concept as an idea having no particular concrete or tangible form as abstract is Ultramercial, Inc. v. Hulu, LLC.
The patentee in Ultramercial claimed an eleven-step method for displaying an advertisement (ad) in exchange for access to copyrighted media, comprising steps of receiving copyrighted media, selecting an ad, offering the media in exchange for watching the selected ad, displaying the ad, allowing the consumer access to the media, and receiving payment from the sponsor of the ad.
The Federal Circuit determined that the “combination of steps recites an abstraction—an idea, having no particular concrete or tangible form” and thus was directed to an abstract idea, which the court described as “using advertising as an exchange or currency.”
Another example is Versata Dev. Group v. SAP America, Inc. The patentee in Versata claimed a system and method for determining a price of a product offered to a purchasing organization, comprising arranging a hierarchy of organizational groups and a hierarchy of product groups, storing pricing information associated with the organizational and product groups, retrieving and sorting applicable pricing information, and determining the product price using the sorted pricing information.
The Federal Circuit described the claims as “directed to the abstract idea of determining a price, using organizational and product group hierarchies, in the same way that the claims in Alice were directed to the abstract idea of intermediated settlement, and the claims in Bilski were directed to the abstract idea of risk hedging.”
The court also stated that that “[u]sing organizational and product group hierarchies to determine a price is an abstract idea that has no particular concrete or tangible form or application. It is a building block, a basic conceptual framework for organizing information”.
Another example of this type of concept is In re Brown. The applicant in Brown claimed a method of cutting hair that effectively allocates hair weight in opposition to head shape, comprising identifying a head shape, designating the head into at least three partial zones, identifying at least three hair patterns, assigning at least one of the hair patterns to each partial zone to either build weight or remove weight, and using scissors to cut hair according to the assigned hair pattern.
The Federal Circuit described the claims as directed to “the abstract idea of assigning hair designs to balance head shape”, because “[i]dentifying head shape and applying hair designs accordingly is an abstract idea capable, as the Board notes, of being performed entirely in one’s mind.”
IV. “MATHEMATICAL RELATIONSHIPS/FORMULAS”
The phrase “mathematical relationships/formulas” is used to describe mathematical concepts such as mathematical algorithms, mathematical relationships, mathematical formulas, and calculations.
- The courts have used the term “algorithm” to refer to both mathematical procedures and mathematical formulas, including: a procedure for converting binary-coded decimal numerals into pure binary form, a mathematical formula for calculating an alarm limit, and a series of steps for analyzing clinical data to ascertain the existence and identity of an medical abnormality, and possible causes thereof.
More recent opinions of the Supreme Court have affirmatively characterized mathematical relationships and formulas as abstract ideas.
A. Concepts relating to a mathematical relationship or formulaAn example of a case identifying a concept relating to a mathematical relationship or formula as a judicial exception is Diamond v. Diehr.
The applicant in Diehr claimed a method of operating a rubber-molding press, comprising providing an activation energy constant (C) unique to a particular batch of rubber to be molded and a constant (x) that is dependent on the geometry of the mold being used, constantly determining the temperature (Z) of the mold once it has closed, repetitively calculating the total cure time (v) using the Arrhenius equation (ln(v) = CZ+x) and comparing the total cure time with the elapsed time, and opening the press automatically when the comparison indicates equivalence.
The Supreme Court noted that a mathematical formula such as the claimed Arrhenius equation is an exception like a scientific principle or natural phenomenon, is non-statutory subject matter (an exception).
Other examples of this type of concept include:
- i. an algorithm for converting binary coded decimal to pure binary
- ii. a formula for computing an alarm limit
- iii. a formula describing certain electromagnetic standing wave phenomena
- iv. a mathematical formula for hedging
An example of a case identifying a concept relating to performing mathematical calculations as abstract is Bancorp Servs., LLC v. Sun Life Assur. Co. of Canada (U.S.).
The patentee in Bancorpclaimed methods and systems for managing a life insurance policy on behalf of a policy holder, which comprised steps including generating a life insurance policy including a stable value protected investment with an initial value based on a value of underlying securities, calculating surrender value protected investment credits for the life insurance policy; determining an investment value and a value of the underlying securities for the current day; and calculating a policy value and a policy unit value for the current day.
The court looked to the specification to understand the claims, and noted that “[a]s the formulae in the specification indicate, the determination of [the claimed] values, and their subsequent manipulation, is a matter of mere mathematical computation.”
Accordingly, the court determined that the claim was directed to “the abstract idea of managing a stable value protected life insurance policy by performing calculations and manipulating the results.”
Another example is Digitech Image Techs., LLC v. Electronics for Imaging, Inc.
The patentee in Digitech claimed methods of generating first and second data by taking existing information, manipulating the data using mathematical formulas, and organizing this information into a new form.
The court explained that such claims were directed to an abstract idea because they described a process of organizing information through mathematical correlations, like Flook's method of calculating using a mathematical formula.
Other examples of this type of concept include:
- i. an algorithm for determining the optimal number of visits by a business representative to a client
- ii. an algorithm for calculating parameters indicating an abnormal condition
- iii. calculating the difference between local and average data values
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