Trials@uspto.gov Paper 38
`571-272-7822 Entered: July 23, 2018
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`FEDERAL RESERVE BANK OF ATLANTA, FEDERAL RESERVE
`BANK OF BOSTON, FEDERAL RESERVE BANK OF CHICAGO,
`FEDERAL RESERVE BANK OF CLEVELAND, FEDERAL RESERVE
`BANK OF DALLAS, FEDERAL RESERVE BANK OF KANSAS CITY,
`FEDERAL RESERVE BANK OF MINNEAPOLIS, FEDERAL RESERVE
`BANK OF NEW YORK, FEDERAL RESERVE BANK OF
`PHILADELPHIA, FEDERAL RESERVE BANK OF RICHMOND,
`FEDERAL RESERVE BANK OF SAN FRANCISCO, and
`FEDERAL RESERVE BANK OF ST. LOUIS,
`Petitioner,
`
`v.
`
`BOZEMAN FINANCIAL LLC,
`Patent Owner.
`____________
`
`Case CBM2017-00036
`Patent 8,768,840 B2
`____________
`
`
`Before MICHAEL W. KIM, WILLIAM V. SAINDON, and
`KEVIN W. CHERRY, Administrative Patent Judges.
`
`CHERRY, Administrative Patent Judge.
`
`
`
`
`FINAL WRITTEN DECISION
`35 U.S.C. § 328(a) and 37 C.F.R. § 42.73
`
`
`
`
`571-272-7822 Entered: July 23, 2018
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`FEDERAL RESERVE BANK OF ATLANTA, FEDERAL RESERVE
`BANK OF BOSTON, FEDERAL RESERVE BANK OF CHICAGO,
`FEDERAL RESERVE BANK OF CLEVELAND, FEDERAL RESERVE
`BANK OF DALLAS, FEDERAL RESERVE BANK OF KANSAS CITY,
`FEDERAL RESERVE BANK OF MINNEAPOLIS, FEDERAL RESERVE
`BANK OF NEW YORK, FEDERAL RESERVE BANK OF
`PHILADELPHIA, FEDERAL RESERVE BANK OF RICHMOND,
`FEDERAL RESERVE BANK OF SAN FRANCISCO, and
`FEDERAL RESERVE BANK OF ST. LOUIS,
`Petitioner,
`
`v.
`
`BOZEMAN FINANCIAL LLC,
`Patent Owner.
`____________
`
`Case CBM2017-00036
`Patent 8,768,840 B2
`____________
`
`
`Before MICHAEL W. KIM, WILLIAM V. SAINDON, and
`KEVIN W. CHERRY, Administrative Patent Judges.
`
`CHERRY, Administrative Patent Judge.
`
`
`
`
`FINAL WRITTEN DECISION
`35 U.S.C. § 328(a) and 37 C.F.R. § 42.73
`
`
`
`
`
`CBM2017-00036
`Patent 8,768,840 B2
`
`
`I. INTRODUCTION
`Federal Reserve Bank of Atlanta, Federal Reserve Bank of Boston,
`Federal Reserve Bank of Chicago, Federal Reserve Bank of Cleveland,
`Federal Reserve Bank of Dallas, Federal Reserve Bank of Kansas City,
`Federal Reserve Bank of Minneapolis, Federal Reserve Bank of New York,
`Federal Reserve Bank of Philadelphia, Federal Reserve Bank of Richmond,
`Federal Reserve Bank of San Francisco, and Federal Reserve Bank of St.
`Louis (“Petitioner”) filed a Petition (Paper 1, “Pet.”) seeking a covered
`business method patent review of claims 1–20 of U.S. Patent No. 8,768,840
`B2 (Ex. 1001, “the ’840 patent” or the “challenged patent”) under Section 18
`of the Leahy-Smith America Invents Act, Pub. L. No. 112–29, 125 Stat. 284,
`331 (2011) (“AIA”). Petitioner supports its contentions that the claims are
`unpatentable with the Declaration of Thomas M. Conte, Ph.D. (Ex. 1007),
`and its contentions that it was charged with infringement with the
`Declaration of Richard M. Fraher (Ex. 1008). Patent Owner, Bozeman
`Financial LLC, filed a Preliminary Response (Paper 5, “Prelim. Resp.”).
`Patent Owner submitted the Declaration of William O. Bozeman, III with its
`Preliminary Response. Paper 6 (“First Bozeman Decl.”).
`On May 19, 2017, pursuant to our authorization, Petitioner filed a
`Reply to Patent Owner’s Preliminary Response on the limited issue of
`whether Petitioner has standing to bring this proceeding. Paper 8 (“Reply”).
`With its Reply, Petitioner provided a second Declaration of Richard M.
`Fraher (Ex. 1023). On May 26, 2017, also pursuant to our authorization,
`Patent Owner filed a Sur-Reply on the limited issue of standing. Paper 12
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`(“Sur-Reply”). Patent Owner submitted a second Declaration of William O.
`Bozeman, III in support of its Sur-Reply. Paper 13 (“Second Bozeman
`Decl.”).
`Pursuant to 35 U.S.C. § 324, in our Decision to Institute, we instituted
`this proceeding as to claims 1–20 on all asserted grounds. Paper 22
`(“Dec.”).
`After the Decision to Institute, Patent Owner filed a Patent Owner
`Response (Paper 24, “PO Resp.”), and Petitioner filed a Reply to the Patent
`Owner Response (Paper 27, “Pet. Reply”). Patent Owner supported its
`Response with a third Declaration of William O. Bozeman, III (Ex. 2003)
`(“Third Bozeman Decl.”).
`Patent Owner also filed a Contingent Motion to Amend. Paper 25
`(“Mot.”). Petitioner filed an Opposition to the Motion to Amend. Paper 29
`(“Opp.”). Patent Owner filed a Reply in Support of its Motion to Amend.
`Paper 31 (“PO Reply”). Pursuant to our authorization, Petitioner filed a Sur-
`Reply to Patent Owner’s Motion to Amend. Paper 33 (“Pet. Sur-Reply”).
`An oral hearing was held on April 5, 2018. Paper 37 (“Tr.”).
`We have jurisdiction under 35 U.S.C. § 6(b). This Decision is a Final
`Written Decision under 35 U.S.C. § 328(a) as to the patentability of the
`challenged claims. Based on the complete record, we determine Petitioner
`has demonstrated, by a preponderance of the evidence, that claims 1–20 are
`unpatentable. We further deny Patent Owner’s Motion to Amend.
`
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`A. Related Matters
`Petitioner and Patent Owner represent that Petitioner has filed a
`covered business method patent review, CBM2017-00035, against a related
`patent, U.S. Patent No. 6,754,640 B2 (“the ’640 patent,” Ex. 1006).
`Pet. 6–7; Paper 7, 1. Petitioner has also filed a declaratory judgment action
`of non-infringement of both the ’640 patent and the ’840 patent—Federal
`Reserve Bank of Atlanta et al. v. Bozeman Financial LLC, Case No. 1:17-cv-
`00389 (N.D. Ga.). Paper 7, 2.
`
`B. Standing to File a Petition for
`Covered Business Method Patent Review
`A petition for covered business method review must set forth the
`petitioner’s grounds for standing. 37 C.F.R. § 42.304(a). Rule 42.304(a)
`states it is Petitioner’s burden to “demonstrate that the patent for which
`review is sought is a covered business method patent, and that the petitioner
`meets the eligibility requirements of § 42.302.” Id. One of those eligibility
`requirements is that only persons (or their privies) who have been sued or
`charged with infringement under a patent are permitted to file a petition
`seeking a covered business method patent review of that patent. AIA
`§ 18(a)(1)(B); 37 C.F.R. § 42.302(a). Under our rules, “[c]harged with
`infringement means a real and substantial controversy regarding
`infringement of a covered business method patent exists such that the
`petitioner would have standing to bring a declaratory judgment action in
`Federal court.” 37 C.F.R. § 42.302(a).
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`
`The Declaratory Judgment Act provides that “[i]n a case of actual
`controversy within its jurisdiction, . . . any court of the United States, upon
`the filing of an appropriate pleading, may declare the rights and other legal
`relations of any interested party seeking such declaration.” 28 U.S.C.
`§ 2201(a). In MedImmune, Inc. v. Genentech, Inc., the Supreme Court stated
`that the test for whether an “actual controversy” exists is “whether the facts
`alleged, under all the circumstances, show that there is a substantial
`controversy, between parties having adverse legal interests, of sufficient
`immediacy and reality to warrant the issuance of a declaratory judgment.”
`549 U.S. 118, 127 (2007) (internal quotation marks omitted).
`Although it relaxed the test for establishing jurisdiction, MedImmune
`“did not change the bedrock rule that a case or controversy must be based on
`a real and immediate injury or threat of future injury that is caused by the
`defendants—an objective standard that cannot be met by a purely subjective
`or speculative fear of future harm.” Prasco, LLC v. Medicis Pharm. Corp.,
`537 F.3d 1329, 1339 (Fed. Cir. 2008). Thus, courts have explained post-
`MedImmune that “jurisdiction generally will not arise merely on the basis
`that a party learns of the existence of a patent owned by another or even
`perceives such a patent to pose a risk of infringement, without some
`affirmative act by the patentee.” SanDisk Corp. v. STMicroelecs., Inc., 480
`F.3d 1372, 1381 (Fed. Cir. 2007). Instead, courts have required “conduct
`that can be reasonably inferred as demonstrating intent to enforce a patent.”
`Hewlett-Packard Co. v. Acceleron LLC, 587 F.3d 1358, 1363 (Fed.
`Cir. 2009).
`
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`
`In this case, Patent Owner has not sued Petitioner for infringement.
`Instead, Petitioner contends that Patent Owner charged it with infringing the
`’840 patent. Pet. 37–40. Petitioner submits, supported by the testimony of
`Mr. Fraher, that Patent Owner contacted Petitioner by telephone, in January
`2016, and contended that Petitioner was infringing the ’640 and ’840
`patents. Id. at 38 (citing Ex. 1008 ¶¶ 2, 4, 5). Petitioner also asserts that
`Patent Owner indicated that it intended to seek fees for the alleged
`infringement. Id. Petitioner argues that Patent Owner continued to contact
`it about potentially licensing the ’640 and ’840 patents. Id. Petitioner also
`provides an infringement claim chart Patent Owner sent Petitioner, mapping
`Petitioner’s conduct to the claims of the ’840 patent. Id. at 38–39 (citing
`Ex. 1022, 000001-5).
`In its Patent Owner Response, Patent Owner contends “Petitioner’s
`unclean hands and deceptive actions, along with the fact the only
`controversy regarding infringement was created and induced by the
`Petitioner’s own bad faith, should bar it from this forum.” PO Resp. 17. To
`support this contention, Patent Owner argues that it “had a 15 year
`relationship with the Petitioner.” Id. at 13. Patent Owner claims that its
`discussions with Petitioner have only been about a “cooperative business
`arrangement” with Petitioner. Id. Patent Owner argues that it only
`discussed infringement at Petitioner’s “urging” and that it never had any
`interest in litigation. Id. at 13–14. Patent Owner asserts that Petitioner had
`no fear that it infringed the ’840 patent. Id. at 14–15. Patent Owner further
`argues that Petitioner “misled” it, because Petitioner never informed Patent
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`Owner that Petitioner thought that the ’840 patent was invalid, and Petitioner
`never informed Patent Owner that it intended to file these proceedings. Id.
`at 15–16. Patent Owner asserts that “[t]hese lack of disclosures, along with
`the inducement of Patent Owner to present infringement allegations,” were
`because “Petitioner was entrapping the Patent Owner to present such
`allegations as to the ’840 Patent . . . in order to gain standing.” Id. at 16.
`In its Reply, Petitioner disputes Patent Owner’s characterization of the
`events that took place in their negotiations in 2016 and early 2017.
`Reply 1–5. Petitioner points to the testimony of Mr. Fraher about the details
`of the discussions that took place before the parties signed their NDA,
`including confidential discussions that took place between the parties, and
`detailing Patent Owner’s actions through the course of those discussions. Id.
`(citing Ex. 1023 ¶¶ 1–14).
`We have reviewed Petitioner’s and Patent Owner’s submissions and
`supporting evidence, and we determine that Petitioner has established
`sufficiently the facts, taken together, demonstrate that it has standing to
`bring this covered business method review. Here, it is undisputed that
`Patent Owner contacted Petitioner in October 2014 and the parties entered
`into lengthy discussions regarding the potential licensing of the ’840 patent.
`See Ex. 1008 ¶¶ 4–8; Ex. 1023 ¶¶ 3–7; First Bozeman Decl. ¶¶ 7–14. In
`April 2016, Patent Owner sent Petitioner a claim chart mapping existing
`services offered by Petitioner to claims of the ’840 patent. See Ex. 1022, 1
`(seeking licensing discussions), 2–5 (claim chart of ’840 patent). Although
`Patent Owner attempts to characterize these communications as an effort to
`
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`reach a business partnership (PO Resp. 14), the email’s statement that Patent
`Owner sought a “commercially reasonable treatment” and mapped existing
`products to claim 1 of the ’840 patent suggest otherwise (Ex. 1022, 1–5),
`and, in any case, is, at a minimum, “conduct that can be reasonably inferred
`as demonstrating intent to enforce a patent.” Hewlett-Packard Co., 587 F.3d
`at 1363.
`Furthermore, the April 2016 communication and claim chart, Patent
`Owner’s September 29, 2016 communication and Memorandum and
`Proposal repeatedly references the “Bozeman patents” collectively
`(including both the ’640 and ’840 patents), and threaten litigation. See, e.g.,
`Ex. 10241, 1. For example, in the September 29, 2016 email from Patent
`Owner’s counsel to Mr. Fraher, Patent Owner’s counsel states:
`Pursuant to our ongoing discussions regarding the Bozeman
`patent dispute with the [Federal Reserve Banks (“FRB”)] and in
`the interest of attempting to move this process along at a more
`rapid pace we provide the attached Proposal, Memorandum,
`Appendix and revised preliminary Claim Chart for consideration
`by the Federal Reserve in addressing the current divide on past
`usage and rents due by the FRB. . . . As we have been going at
`this since late 2014 and as the Bozeman patents useful life
`continues to tick away, we are respectfully requesting that the
`FRB use best efforts to review the attached and to set up a follow-
`up meeting or conference session in the near future. If we cannot
`get to that point, it may leave [Mr. Bozeman] with little alternate
`but to begin to head down an enforcement path that would most
`likely be very disruptive. . . . We remain very flexible in
`
`
`1 Patent Owner has filed a redacted version of Exhibit 1024 as Exhibit 2011
`in the PTAB E2E System.
`
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`
`discussing alternative approaches but do want to point out the
`time sensitivities involved in [Mr. Bozeman’s] opening proposal.
`Ex. 1024, 1 (emphasis added).
`Attached to this email is Patent Owner’s Memorandum and Proposal
`of Bozeman Financial LLC to the Federal Reserve Bank (“FRB”)
`(“Memorandum”). Id. at 2. The Memorandum repeatedly alludes to, and
`openly discusses, the parties’ dispute regarding whether Petitioner’s systems
`infringe the Bozeman patents. See, e.g., id. at 9 (alleging “when Bozeman
`first made known his IP to the FRB, that the FRB was in the process of
`updating its systems from its dated legacy methods to those anticipated by
`the Bozeman I.P.,” and noting, with respect to the “Bozeman patents,” that
`the parties have “differing views of its applicability to the current and past
`FRB systems and service offerings”), 9–10 (noting “Bozeman[] asserts that a
`relatively basic reading of the Bozeman patents readily shows
`that . . . [Petitioner’s] systems . . . fit well within the inventions of the
`Bozeman IP”), 10 (asserting Petitioner’s “argument and its related technical
`analysis have not persuaded Bozeman and his advisors that the Bozeman
`interpretation of the patents is not the more likely outcome to be upheld if
`infringement litigation were to be undertaken”), 12 (discussing “the
`Bozeman interpretation of the patents;” noting that “[w]e believe that
`Bozeman and the FRB are at a critical crossroad in determining if they can
`reach an agreement recognizing that each side believes it has valid and
`determinative arguments and analysis to defeat the other’s claims;” and
`arguing that “with the stakes so high the relevant question is it more
`practical to compromise and reach a fair accord, or is it in the best interest of
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`either party to litigate these issues on multiple fronts over the next 1–5
`years”), 16–18 (discussing “settlement criteria which would substantially
`discount the totals from traditional patent damages”).
`We note that the context for these statements significantly enhances
`their weight in our analysis. This Memorandum was sent at the culmination
`of almost two years of talks between the parties, including numerous calls
`and a technical presentation by Petitioner on how its systems operated, and
`why they did not infringe. See Ex. 1005 ¶¶ 4–6 (discussing early talks
`between the parties); Ex. 1014 ¶¶ 7–11 (discussing the parties’ meetings and
`discussions leading up to the Memorandum). Rather than back down from
`its previous assertions, Patent Owner repeatedly asserts, in the
`Memorandum, that Petitioner’s systems are covered by (i.e., infringe) the
`Bozeman patents. Moreover, the email and Memorandum make clear that
`the time for Petitioner to license the Bozeman patents was running short, and
`that if Petitioner did not take a license that Patent Owner would begin to
`“head down an enforcement path” (Ex. 1024, 1), which could involve
`“litigat[ing] these issues on multiple fronts over the next 1–5 years,” id. at
`12.
`
`Mr. Bozeman’s efforts to re-characterize these actions in his
`Declarations (see, e.g., Second Bozeman Decl. ¶¶ 4, 18; Third Bozeman
`Decl. ¶ 11), are inconsistent with the Memorandum and other written
`communications he sent to Petitioner, and is contradicted by the testimony
`of Mr. Fraher. In view of the Memorandum and other written
`communications, we find Mr. Bozeman’s assertions, in his Declarations, that
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`he never threatened to sue not to be credible, and give that testimony little
`weight.
`“[A] specific threat of infringement litigation by the patentee is not
`required to establish jurisdiction, and a ‘declaratory judgment action cannot
`be defeated simply by the stratagem of a correspondence that avoids magic
`words such as ‘litigation’ or ‘infringement.’’” ABB Inc. v. Cooper Indus.,
`LLC, 635 F.3d 1345, 1348 (Fed. Cir. 2011) (quoting Hewlett–Packard, 587
`F.3d at 1362). But, of course, if “a party has actually been charged with
`infringement of the patent, there is, necessarily, a case or controversy
`adequate to support [declaratory judgment] jurisdiction.” Cardinal Chem.
`Co. v. Morton Int’l, Inc., 508 U.S. 83, 96 (1993). Here, we find the
`statements in the Memorandum actually charge Petitioner with infringement
`of the ’840 patent, which is sufficient to give rise to declaratory judgment
`jurisdiction. Id.
`We are unpersuaded by Patent Owner’s arguments regarding the
`subjective understanding of the parties. PO Resp. 13–15. Most importantly,
`it is irrelevant whether Patent Owner subjectively believed Petitioner was
`infringing or actually intended to sue. “‘The test [for declaratory judgment
`jurisdiction in patent cases], however stated, is objective. . . .’” Hewlett-
`Packard, 587 F.3d at 1364 (quoting Arrowhead Indus. Water, Inc. v.
`Ecolochem, Inc., 846 F.2d 731, 736 (Fed. Cir. 1988)). “Indeed, it is the
`objective words and actions of the patentee that are controlling.” BP Chems.
`v. Union Carbide Corp., 4 F.3d 975, 979 (Fed. Cir. 1993). Thus, conduct
`that can be reasonably inferred as demonstrating intent to enforce a patent
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`can create declaratory judgment jurisdiction. Hewlett-Packard, 587 F.3d at
`1364. Here, when Patent Owner’s statements, demands, and actions are
`considered collectively, it is difficult to reasonably infer any conclusion
`other than Patent Owner was demonstrating an intent to enforce its patents.
`Moreover, Patent Owner’s contentions that it was only seeking a forward-
`looking agreement, see PO Resp. 13–14, are not supported by the record.
`The Memorandum repeatedly refers to seeking compensation for past use of
`the Bozeman patents. See Ex. 1024, 18 (“This option allows for a one-time
`payment to cover all of the past rents due. . . .”).
`As for Patent Owner’s argument that it was somehow entrapped by
`Petitioner, we note that (a) all through its negotiations with Petitioner, Patent
`Owner was represented by counsel (see First Bozeman Decl. ¶ 6; Ex. 1022,
`1; Ex. 1024, 1), (b) Patent Owner’s head, Mr. Bozeman, appears to be a
`sophisticated businessman (First Bozeman Decl. ¶¶ 2, 3; Ex. 1024, 4–5), and
`(c) there is no credible evidence showing that it was coerced into making the
`statements it made in the Memorandum. Moreover, the law was clear at the
`time the statements were made that they could give rise to declaratory
`judgment jurisdiction. See Hewlett-Packard, 587 F.3d at 1362 (“But it is
`implausible (especially after MedImmune and several post MedImmune
`decisions from this court) to expect that a competent lawyer drafting such
`correspondence for a patent owner would identify specific claims, present
`claim charts, and explicitly allege infringement.”). In addition, Patent
`Owner fails to explain why Petitioner had any legal obligation to reveal to
`Patent Owner that it believed the ’840 patent was invalid or that it planned to
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`file these CBM proceedings. See, e.g., Nat’l Westminster Bank, U.S.A. v.
`Ross, 130 B.R. 656, 679 (S.D.N.Y. 1991) (“Where parties deal at arms
`length in a commercial transaction, no relation of confidence or trust
`sufficient to find the existence of a fiduciary relationship will arise absent
`extraordinary circumstances.”); see also Williams v. Dresser Indus., Inc.,
`120 F.3d 1163, 1167–68 (11th Cir. 1997) (no general duty to disclose in
`commercial transactions under Georgia law).
`Accordingly, we conclude that Petitioner has demonstrated that it has
`standing to bring this covered business method review.
`
`C. The Challenged Patent
`The ’840 patent, titled “Universal Positive Pay Match, Authentication,
`Authorization, Settlement, and Clearing System,” describes a universal
`positive pay match database to reduce financial transaction fraud. Ex. 1001,
`[54], Abstract. The ’840 patent explains that check fraud is a significant
`problem in the financial system, and although many solutions have been
`proposed, “[o]ne area where [the solutions] all fall short is in the elimination
`of check fraud.” Id. at 1:64–65.
`The patent acknowledges the existence of numerous prior art systems
`aimed at verifying financial transactions and combatting checking fraud:
`“[m]any techniques have been developed to inhibit check fraud, such as
`Positive Pay [and] different forms of electronic check verification and
`electronic check presentment.” Id. at 1:57–60. The ’840 patent explains that
`positive pay services “have been available from individual banks” for a
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`number of years, and are “recognized as an effective service to fight against
`check fraud.” Id. at 13:11–12, 13:22–23. According to the patent, a
`check generating customer [using a prior art positive pay service]
`generally uploads a file of transaction records associated with
`financial transactions daily to the bank of all checks written that
`day. When checks drawn on the customers[’] accounts are
`presented to the bank, their database is queried. If the transaction
`record for a check has been tampered with or if transaction record
`includes an unauthorized check number, the transaction record
`will be rejected.
`Id. at 13:14–21.
`The patent explains that “[t]he existing positive pay services are bank
`specific,” meaning that “only a bank’s own account holders can utilize it and
`take advantage of it.” Id. at 13:30–32. The patent suggests that it will
`overcome this perceived problem by offering a “universal” positive pay
`system that “can be used by both account holder members and non-
`members,” and “accessed by customers, payers, payees, payee banks,
`drawee banks, and banking institutions intermediate the payee banks and the
`drawee banks for issuing and tracking transaction records associated with
`financial transactions at every point along the financial transaction clearing
`process.” Id. at 13:32–39. Figure 5A of the ’840 patent is reproduced
`below.
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`Figure 5A illustrates a flow diagram of the universal positive pay database
`method for checking accounts according to the claimed invention. Id. at
`7:10–11. Figure 5A shows that “each participant in the check clearing
`process (payer customer 30, payee 100, payee bank 110, Federal Reserve 80,
`clearing bank 70, or payor bank 120), participates in a [universal positive
`pay database (“UPPD”)] method 130 used by a payer (customer) 30 for
`maintaining check payment control and preventing check fraud.” Id. at
`17:56–61. According to the ’840 patent,
`[t]he UPPD method 130 includes a series of steps in which payer
`30 uploads check information to the UPPD system 10, payee 100
`deposits check in payee bank 110, payee bank 110 checks the
`check against the UPPD database 20 in the UPPD system 10,
`check is deposited in Federal Reserve 80 or clearing bank 70,
`which checks it against the UPPD database 20, payer bank 120
`receives check and checks it against the UPPD database 20 and
`reports back to the UPPD system 10 that the check has been
`debited from payer’s 30 account.
`Id. at 17:61–18:3.
`
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`D. Illustrative Claim
`Petitioner challenges all twenty claims of the challenged patent.
`Claims 1, 8, and 15 are independent claims. Claim 1 is illustrative of the
`claimed subject matter:
`1. A computer implemented method for detecting fraud in
`financial transactions during a payment clearing process,
`said method comprising:
`receiving through one of a payer bank and a third party, a first
`record of an electronic financial transaction from at least
`one of the following group: a payer, a point-of-sale
`terminal, an online account and a portable electronic
`device;
`storing in a database accessible by each party to said payment
`clearing process of said electronic financial transaction,
`said first record of said electronic financial transaction,
`said first record comprising more than one parameter;
`receiving at said database at least a second record of said
`electronic financial transaction from one or more of a
`payee bank and any other party to said payment clearing
`process as said transaction moves along said payment
`clearing process, wherein said second record comprises at
`least one parameter which is the same as said more than
`one parameter of said first record;
`each of said first and second records received at said database
`comprise at least two of the same said more than one
`parameters;
`determining by a computer when there is a match between at
`least two of said parameters of said second record of said
`first financial transaction received at said database and the
`same parameters of said first record of said financial
`transaction stored in said database, and wherein any party
`to said payment clearing process is capable of verifying
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`said parameters at each point along said financial
`transaction payment clearing process;
`sending a notification to said payee bank participant with
`authorization
`to process said electronic
`financial
`transaction when said parameters match; and
`sending a notification to said payee bank participant to not
`process said electronic financial transaction when said
`parameters do not match.
`Ex. 1001, 28:39–29:8.
`
`E. Instituted Ground of Unpatentability
`We have instituted review on the sole asserted ground—that claims 1–
`20 are unpatentable as directed to patent-ineligible subject matter under
`35 U.S.C. § 101.
`
`II. DISCUSSION
`
`A. Claim Construction
`In a covered business method patent review, a claim term in an
`unexpired patent shall be given its broadest reasonable construction in light
`of the specification of the patent in which it appears. 37 C.F.R. § 42.300(b);
`Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2144 (2016); Versata
`Dev. Grp., Inc. v. SAP Am., Inc., 793 F.3d 1306, 1328 (Fed. Cir. 2015).
`We construe the challenged claims according to these principles.
`Petitioner proposes constructions only for the term “behavior matrix.”
`Pet. 41–43. However, we determine that no terms require express
`construction for this Decision.
`
`17
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`CBM2017-00036
`Patent 8,768,840 B2
`
`
`B. Covered Business Method Patent
`The AIA defines a “covered business method 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 . . . .” AIA § 18(d)(1); see 37 C.F.R.
`§ 42.301(a). Congress provided a specific exception to this definition of a
`covered business method patent—“the term does not include patents for
`technological inventions.” Id. To determine whether a patent is eligible for
`a covered business method patent review, the focus is on the claims. See
`Unwired Planet, LLC v. Google Inc., 841 F.3d 1376, 1381 (Fed. Cir. 2016).
`For the reasons set forth below, we conclude that the challenged
`patent meets the definition of a covered business method patent.
`
`1. Financial Product or Service
`One requirement of a covered business method patent is for the patent
`to “claim[ ] 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); 37 C.F.R.
`§ 42.301(a).
`Petitioner contends the challenged patent meets the financial product
`or service requirement, because the patent claims computer-implemented
`methods for detecting fraud or errors in financial transactions. Pet. 27–30.
`Patent Owner does not dispute Petitioner’s assertions.
`We agree with Petitioner that the ’840 patent meets the financial
`product or service requirement. For example, claim 1 and its dependents are
`
`18
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`CBM2017-00036
`Patent 8,768,840 B2
`
`generally directed to “[a] computer implemented method for detecting fraud
`in financial transactions during a payment clearing process,” comprising: (a)
`receiving a first record relating to a financial transaction; (b) storing that
`record in a database accessible to each party to the payment clearing
`process; (c) receiving a second record relating to the same financial
`transaction; (d) determining whether there is a match between the first and
`second records; and (e) sending a notification based on the outcome of that
`determination. Pet. 28. We agree with Petitioner that the detecting fraud in
`financial transactions during a payment clearing process meets the financial
`product or service requirement of Section 18 of the AIA. See, e.g., Jack
`Henry & Assocs., Inc. v. DataTreasury Corp., Case CBM2014-00056, slip
`op. 8 (PTAB July 10, 2014) (Paper 17) (method and system for storage and
`verification of checks financial in nature). Accordingly, the financial
`product or service requirement is satisfied.
`
`2. Exclusion for Technological Inventions
`Section 18 of the AIA states that the term “covered business method
`patent” does not include patents for “technological inventions.”
`AIA § 18(d)(1); see 37 C.F.R. § 42.301(a). 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). The following claim drafting techniques, for
`example, typically do not render a patent a “technological invention”:
`
`19
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`CBM2017-00036
`Patent 8,768,840 B2
`
`
`(a) Mere recitation of known technologies, such as
`computer hardware, communication or computer networks,
`software, memory, computer-readable
`storage medium,
`scanners, display devices or databases, or specialized machines,
`such as an ATM or point of sale device.
`(b) Reciting the use of known prior art technology to
`accomplish a process or method, even if that process or method
`is novel and non-obvious.
`(c) Combining prior art structures to achieve the normal,
`expected, or predictable result of that combination.
`Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,764 (Aug. 14,
`2012).
`Petitioner submits that no “technological feature” of any of
`independent claims 1, 8, or 15 is novel and non-obvious. Pet. 31. Petitioner
`argues that the only technological features recited in claim 1 are a database,
`a computer, a point-of-sale terminal, a portable electronic device, and a
`notification. Id. Petitioner also submits that the only technological features
`recited in claim 8 are a computer having a database, a network interface, and
`an electronic notification. Id. Petitioner further argues that the only
`technological features recited in claim 15 are a computer having a processor,
`an area of main memory, and a storage device having a database; a point of
`sale terminal; a portable electronic device; and a notification. Id. Petitioner
`asserts that “[t]hese technological features are not novel or non-obvious —
`they are generic, conventional computer technologies that were well known
`at the time the provisional application was filed in October 2000.” Id.
`(citing Ex. 1007 ¶¶ 32–38).
`
`20
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`CBM2017-00036
`Patent 8,768,840 B2
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`
`Petitioner further contends that the ’840 patent does not provide a
`technical solution to a technical problem.
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