Sally Beauty (Petitioner) filed a Petition requesting a review under the transitional program for covered business method (CBM) patents of U.S. Patent No. 5,969,324, owned by Intellectual Ventures I LLC (IV).

Sally Beauty challenged the patentability of claims 1–14 of the '324 Patent under 35 U.S.C. §§ 101, 102, and 103.  IV disclaimed claim 14 (e.g., reciting point of sale), such that claims 1–13 remain to be challenged in the proceeding.

The PTAB determined that the Petition demonstrated that it is more likely than not that at least one of the challenged claims is unpatentable, and a CBM patent review of all of the challenged claims of the '324 Patent was instituted.

The '324 Patent relates to electronic recordkeeping of accounting data.  The Specification discusses the disadvantages of prior bookkeeping systems, and discloses the use of nonpredictable bar codes to identify transactions that are downloaded to an end user.  From a point of sale terminal, transaction information, including a list of items purchased, the amounts charged or credited for each item, and the date and time of the transaction, are received and associated with a nonpredictable code.  That nonpredictable code may be embedded in a bar code printed on a receipt by the point of sale terminal, as illustrated in Fig. 3, reproduced below.  Subsequently, the end user can scan the transaction receipt with the bar code and the resultant information can be transmitted to the end user's computer.

Claims 1 and 9 are independent, and claim 1 is considered representative of the claims challenged.  Claim 1 is reproduced below:

1.  A database management method comprising the steps of:
    receiving and storing transaction information associated with a nonpredictable bar code, the transaction information generated by a transaction terminal;
    receiving a request for the transaction information including data associated with the nonpredictable bar code;
    retrieving the transaction information based upon the nonpredictable bar code; and
    communicating the transaction information.

Standing to Seek Covered Business Method Patent Review

A covered business method patent "claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions."  AIA § 18(d)(1).

Sally Beauty argued that the '324 Patent claims relate to a financial product or service, citing claims 1 and 9 and its recitation of "transaction information," as well as discussion in the Specification and Figures which detail the communication of information in a transaction receipt generated at a point of sale terminal.

But IV argued that a recent Federal Circuit case (Blue Calypso LLC v. Groupon, Inc., 815 F.3d 1331 (Fed. Cir. 2016)) requires that the proper standard to apply when assessing the financial product or service prong of CBM eligibility is whether the claims of the patent, as construed, expressly or inherently recite a financial component.  IV argued that neither claim 1 nor claim 9 expressly or inherently recite a financial component, because "transaction information" is not exclusive to the financial sector, involving technology common in business environments across different sectors.

IV noted also argued that the Specification of the '324 Patent does not limit the scope of the claims to a financial product or service.

But the PTAB was persuaded by Sally Beauty in that at least one claim recites a method for performing data processing or other operations used in the practice, administration, or management of a financial product or service, namely claim 1.  Claim 1 explicitly recites that the information that the method is performed on is "transaction information."  Although claim 1 could be used with any number of transactions in a non-financial environment, the clear thrust of the '324 Patent was found to be toward financial transactions.

The PTAB also noted that an exclusivity to the financial sector test is not a proper inquiry to make, given the legislative history indicating that "financial product or service" should be interpreted broadly.  Where a broad claim could be interpreted as being applicable to both a financial product or service, and to a non-financial product or service, such an exclusivity test would excise all claims from consideration that do not implicitly recite such a product or service.  Because here the clear implication from the Specification of the '324 Patent is that the claimed "transaction information" is directed to use with a financial product or service, at least one claim was found to recite a method directed to a financial product or service sufficient to meet a criterion for instituting a covered business method patent review.

Technological Invention Exception

The definition of "covered business method patent" in Section 18(d)(1) of the AIA does not include patents for "technological inventions."  To determine whether a patent is for a technological invention, we consider "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. § 42.301(b).  Both prongs must be satisfied in order for the patent to be excluded as a technological invention.

Sally Beauty argued that the '324 Patent is not for a technological invention because none of the claims recite a technological feature that is novel and nonobvious over the prior art.  According to Sally Beauty, the terms recited in the claims are directed to generic, well-known components when the '324 Patent application was filed, and use of the claimed "nonpredictable bar code" includes bar codes that were known at that time as the '324 Patent concedes.

IV did not argue that the claims of the '324 Patent recite a novel and unobvious technological feature.

Thus, the PTAB easily found that the '324 Patent is not for a technological invention because at least claim 1 does not satisfy the first prong of the test.  Claim 1 does not recite a technological feature that is novel or unobvious over the prior art.  Claim 1 recites, in part, "receiving and storing transaction information associated with a nonpredictable bar code," such that no bar code need be scanned to meet the claim limitations, so that the claim only requires the manipulation of information.  The steps of receiving a request for information, retrieving that information, and communicating that information were all known processes that are generally performed by computers during the relevant time period, i.e., at the time of filing the '324 Patent.

Thus, the PTAB found that the '324 Patent is eligible for covered business method patent review.

Section 101 Subject Matter Eligibility

Once the CBM review was instituted, the claims were challenged under section 101.  Sally Beauty argued that the claims of the '324 Patent are directed merely to an abstract idea of "storing and retrieving transaction information through the use of a well-known security feature."  The argument presented was that the '324 Patent itself concedes that it was intended to automate a manual process and the claims describe the automation of the fundamental economic concept of recording and retrieving transaction information through the use of generic computer functions.

IV responded by indicating that the claim term "bar code" was read out of its analysis.  But the PTAB found that the claims recite receiving transaction information associated with a nonpredictable bar code, rather than use of a bar code.  No scanning or querying of any type of bar code is specifically recited, such that the independent claims need only handle the associated information, post-derivation, to satisfy the steps of claim 1 or the system of claim 9.  As such, from a standpoint of determining if the claims are directed to an abstract idea, any consideration of the use of a nonpredictable bar code is not necessary.

With respect to step 2 of the Mayo analysis, i.e., whether additional elements of the claims transform the nature of the claims into a patent-eligible application of the abstract idea, Sally Beauty argued that the claims are merely directed to performing the recited processes "using basic and indisputably well-known computing components."

IV simply argued that Sally Beauty did not show that the claim elements recite no inventive concept, but provided no specific analysis of Sally Beauty's assertions.

The PTAB found that the challenged claims of the '324 Patent are directed to the abstract idea of "storing and retrieving transaction information through the use of a well-known security feature," and that additional elements of the claims do not transform the nature of the claims into a patent-eligible application of the abstract idea.

The PTAB found that these additional computer-related limitations are not meaningful limitations that can salvage these claims and make them patent eligible, and that these computer-related limitations require nothing more than the routine and conventional use of a computer to receive, retrieve, and communicate information, and the handling of information requests.

The PTAB noted that, to be limited meaningfully, the claim must contain more than mere field-of-use limitations, tangential references to technology, insignificant pre- or post-solution activity, ancillary data-gathering steps, or the like.

As such, the PTAB was persuaded that it is more likely than not that claims 1–13 of the '324 Patent are directed to ineligible subject matter under 35 U.S.C. § 101, and thus, a CBM patent review of all of the challenged claims of the '324 Patent was instituted.

Before Administrative Patent Judges Karl D. Easthom, Kevin F. Turner, and Kevin W. Cherry
Decision by Administrative Patent Judge Turner