In re Johnston

502 F.2d 765, 183 U.S.P.Q. (BNA) 172, 1974 CCPA LEXIS 124

• Court: Court of Customs and Patent Appeals
• Decided: September 19, 1974
• Docket: Patent Appeal No. 9088
• Status: Published

Opinions

BALDWIN, Judge.

This appeal is from the decision of the Patent Office Board of Appeals rejecting claims 20-24¹ of appellant’s application.²

The Invention

Appellant’s invention relates to an automatic financial record-keeping system which employs a digital computer. The application states:

Automatic data processing equipments employing digital computers have been developed for the handling of much of the record-keeping operations involved in a banking system.

The checks and deposit slips are automatically processed by forming those items as machine-readable records; that is, magnetic ink characters are imprinted on the check, so that magnetic readers are enabled to process these checks and enter the data in a computer system in the form of coded electrical signals. Other character-reading machines operating on an optical principle for automatically reading special optical type fonts are also employed. With such machine systems, most of the extensive data handling required in a bank can be performed automatically.

It has been found that such data processing equipment, with certain additions and modifications, can be employed to process automatically much, if not all, of the individual record keeping required by a bank’s customers to maintain their own personal and business financial records. That is, as a supplement to the conventional, periodic bank statement furnished to a bank customer, a record summary is provided with [sic] makes unnecessary much or all of the tedious bookkeeping and accounting that the customers would otherwise have to perform. •x * * * * -X-

In accordance with an embodiment of this invention, an automatic record-keeping system is provided which is especially adapted for use with automatic banking devices • for machine handling of the transactions (i. e. checks or deposits) of demand-deposit accounts of bank customers. Machine-readable records of each bank transaction are generated directly on the check or the deposit ticket. The data of such records incorporate those required for conventional banking systems presently carried on cheeks (or deposit tickets); namely, the customer’s account number, amount of the transaction, and the type of transaction (that is, whether a check or a deposit) . Another set of data forming a machine-readable record is provided on each transaction, namely, a set of code characters that identify the bookkeeping classification of each transaction; this classification code is called the “category number.” [e. g., categories indicating different sources of income for which deposits are made and categories indicating different types of expenses for which checks are written.] The category number is entered by the customer on each transaction slip (check or deposit) at the time it is prepared, in the form of a machine-readable record by means of an appropriate device, or in the form of a set of hand-written numeric characters which are converted to a machine-readable record by the customer’s bank.

In the customer’s bank, upon a deposit being made or a check clearing the bank, the machine-readable transaction records on the imprinted cheeks or deposit tickets are read by a suitable document-reader device and stored in a transaction file. To process the transaction file, the automatic record-keeping system employs a data processor, such as a programmable electronic digital computer, having certain data storage files and a control system. In addition to the transaction file, a master record-keeping file is used to store all of the records required for each customer in accordance with the customer’s own chart of accounts. The latter is individually designed to the customer’s needs and also constructed to cooperate with the control system in the processing of the customer’s transactions. The control system directs the generation of periodic output reports for the customer which present the customer’s transaction records in accordance with his own chart of accounts and desired accounting procedures.

The control system is described as comprising a general control which is applicable to the processing operations that are common to most customers and a master control for the operations that vary on an individual basis with each customer. The general control, as allegedly reduced to practice, is in the form of a software program, and the master control is a series of sub-files, one for each customer, which are in the form of a sequence of records containing suitable control mechanisms and the customer’s financial data.

The application contains schematic block and flow diagrams of the entire apparatus including detailed descriptions of each diagram which set forth the interrelationships between all the disclosed elements of the apparatus. The application also discloses a print-out of a complete program and a detailed flow chart thereof for use with a known commercial general-purpose computer, the IBM 1400 series, to provide the special-purpose computer which forms the apparatus of appellant’s invention.

Claim 20 is exemplary:

20. A record-keeping machine system for financial accounts, said system comprising a data processor including a memory for storing eombi-natorially coded signal records;

a processor for combining and comparing the coded signals of said records;

input and output devices;

and a control system for supervising and directing said other parts of said data processor to perform a certain sequence of operations;

said memory including a storage file of a plurality of machine-readable records formed of coded combinatorial signals, a master section of said file including a plurality of predeter-minedly sequenced sub-files of said records, each said sub-file including a different signal group record for a certain one of a plurality of account identifications, a plurality of predeter-minedly sequenced different signal group records for different record-keeping category codes individually associated with reach of said account identification records, a plurality of different group records each for an amount total associated with a different one of said category records, and a plurality of totalizing operation records individually associated with certain pluralities of said category records and sequenced with the associated category records, a transaction section of said file including different pluralities of sub-files of said records, each of said transaction sub-files including one of said account identification signal group records, one of said associated category signal group records, and a separate transaction amount signal group record associated with each of said category records;

said control system including means for directing the processing of said files in accordance with the predetermined sequences of said master sub-files and of said category records of each sub-file, said processing directing means including means for locating in said master file section, for each of said transaction sub-files, that one of said category records corresponding to the transaction account identification record and the transaction category record and for augmenting the associated master amount total record by the amount records of the corresponding transaction sub-file; and

means for producing an output record for each of said master sub-files ;

said output record producing means including means for identifying each of said master sub-file category records and for producing an output listing of the sub-file category codes and of the associated category amount total from said records, means for directing the accumulation of the amount totals of successive ones of said category records, and means for identifying each of said totalizing records and for producing an output record of said accumulation of totals of the preceding category records, [paragraphing ours].

The Rejections

The examiner rejected all the claims in appellant’s application under 35 U.S. C. § 112 and 35 U.S.C. § 102; however, the board did not consider .the underlying bases for these rejections to be valid and did not sustain these rejections.³ However, under the provisions of Rule 196(b), Rules of Practice in Patent Cases,⁴ the board then entered five new rejections under the provisions of 35 U. S.C. § 112, 35 U.S.C. § 101, and 35 U.S. C. § 103.⁵

Rejections Under 35 U.S.C. § 112

The board’s first rejection of the claims is under the provisions of the second paragraph of § 112 in that the claims fail to particularly point out and distinctly claim that which appellant considers to be his invention.

The board stated:

Appellant * * * [in] his specification acknowledges that automatic data processing equipment has already been developed for the financial record-keeping and statement-furnishing operations of a bank so that the rendering of these services merely by some form of automatic data processing, not including appellant’s improvements thereover, was not considered to be appellant’s invention.

Turning now to the appealed claims, both apparatus and method,

[6] we find them not directed to improved record keeping machinery, but rather to a broad system of keeping financial records where the distinction over acknowledged prior record-keeping is either in the identity of the person or institution which has custody of certain phases of the bookkeeping operation or in the financial meaning of, or the relationship existing between, the various records. Thus, the broad sweeping reference in the claims to the automation of the banking industry serves only as a dress for claims that spell out, in effect, the relationship of a bank and its customers, not any particular configuration of business machinery.

The board’s second rejection under the provisions of § 112, second paragraph, was labeled indefiniteness. The board reasoned that portions of appellant’s apparatus are defined as means for identifying an account or type of transaction and that this “identification of the meaning represented by a section of the computer memory is in the mind of the user and cannot define any characteristic of the apparatus.” Relying upon the following passage from In re Foster, 438 F.2d 1011, 1015, 58 CCPA 1001, 1006, (1971):

Judge Baldwin in the second Prater opinion [Application of Prater, 415 F.2d 1393, 56 CCPA 1381 (1969)] made it clear that means-plus-function language such as that used in the present apparatus claims does not encompass the human being as the

“means” or any part thereof [,] the board held the claims to be indefinite insofar as they purportedly encompassed a human being as a part of the claimed apparatus.

Rejection Under 35 U.S.C. § 101

Under the provisions of § 101 the board rejected all the claims as claiming non-statutory subject matter. After reviewing the holdings of prior opinions of this court, e. g., In re Foster, supra; and In re Musgrave, 431 F.2d 882, 57 CCPA 1352 (1970), which held that computer related inventions were “statutory” subject matter if they were within the “technological arts,” the board inferred that computer related inventions which “extend beyond the field of technology are not within the ‘technological arts’ and are non-statutory.” After noting that the term “ ‘technological arts’ should [not] embrace processes of using machines so as to dominate practices in the ‘liberal arts,’ such as social or political sciences, humanities, music and art,” the board stated:

A granting of the instant claims would, in effect, grant a monopoly to appellant on a method of conducting the banking business since banks would thereby be restricted to the use of their data processing equipment only for their own bookkeeping and not being allowed to freely expand into the business of keeping books for their customers.

The granting of claims which would allow the intrusion of the patent system into the social sciences already under regulation by governmental agencies would exceed the constitutional grant of authority to issue patents in the “technological arts.”

Rejections Under 35 U.S.C. § 103

All the claims were further rejected under the provisions of § 103 as being “obvious variations of either the system of bookkeeping by banks that was acknowledged to be old by appellant . ■ [in his] specification [⁷] or the system of bookkeeping of the Dirks patent. [⁸] when applied to banking rather than industrial business.”

The board noted that individual bank customers frequently have plural accounts, such as “trust” or “escrow” accounts, and that the names of these accounts is a “category code” as required by the claims. The board acknowledged that, although a bank may regard those accounts as separate accounts, its treatment of those accounts is the same as that accorded appellant’s different category codes, inasmuch as “the bookkeeping in the separate special accounts of a single customer correctly credits and debits the same and renders periodic summary statements of account to the customer.” Therefore, the board opined:

Merely printing the summary sheets for all the special accounts of an individual on a single document with totals for all accounts would be an obvious convenience to both the bank and the customer.

As to the rejection of the claims as unpatentable over the Dirks patent, the board stated:

Dirks discloses a comprehensive automatic data processing system for many different purposes in networks of individual departments of a large business corporation * * *. This system allows personalized files for localized areas of responsibility * * *. Each area is assigned an account number in which transaction and balance files are kept and updated * * *. The bookkeeping is on a cost accounting basis * * * such as for sales of a product.

There is no fundamental difference in a data processing apparatus or method because of the nature of the goods involved in a sales transaction. The bookkeeping apparatus and method would be the same no matter whether the amount debited represented the value of the merchandise or the value of the extended credit.

Accordingly, it would have been obvious to a person of ordinary skill to use the cost accounting portion of the Dirks system of bookkeeping in the banking rather than the mercantile business.

OPINION

Considering first the rejections under the second paragraph of.§ 112, we find the instant apparatus claims to be in compliance with the requirements set forth in that section of the statute. These requirements were recently discussed by this court in In re Knowlton, 481 F.2d 1357, (Oust. & Pat.App.1973).

In essence, the “failure to particularly point out and distinctly claim” rejection ⁹ is based upon the board’s con-elusion that the “relationship of a bank and its customers, not any particular configuration of business machinery”, is being claimed. Upon reading the appealed apparatus claims we cannot perceive how any such “relationship” is being claimed. In typical means-plus-function language, which is expressly sanctioned by the third paragraph of § 112, the appealed apparatus claims are clearly drawn to a “record-keeping machine system for financial accounts” (emphasis added). Accordingly, we cannot sustain the board’s rejection on its stated grounds.

The board’s rationale underlying its second rejection under § 112 for indefiniteness ¹⁰ appears to be the same as that found to be defective in In re Foster, supra. Here, as in Foster, we find the appealed apparatus claims clearly read only upon the subject matter which appellant regards as his invention — a “record-keeping machine system for financial accounts” (emphasis added) — not a human being inside or outside appellant’s apparatus. Appellant’s specification makes it quite clear that the claimed apparatus automatically performs the identifying operations referred to by the board; those operations are neither actually performed by a human being, nor can we imagine how they could be realistically performed by a human being. See In re Bernhart, supra. Thus, we cannot sustain this rejection on the board’s stated rationale.¹¹

With regard to the rejection under § 101, we cannot agree with the board that the apparatus of the appealed claims is not within the “technological arts.”¹² Eecord-keeping machine systems are clearly within the “technological arts.” Such machine systems, which comprise programmed digital computers, are statutory subject matter under the provisions of § 101, and “claims defining them must be judged for patentability in light of the prior art.” In re Bernhart, supra. Furthermore, we are not aware of, nor can we locate, any dictionary which would define a machine system as within the purview of the “liberal arts.”¹³

The board’s reluctance to “grant a monopoly to appellant on a method of conducting the banking business” is misplaced. The appealed apparatus claims are not drawn to cover either a method of doing business or even a method of bookkeeping. Nor would banks “be restricted to the use of their data processing equipment only for their own bookkeeping and not * * * [be] allowed to freely expand into the business of keeping books for their customers.” Obviously, banks would be free to so expand their services and use any apparatus they may desire except the apparatus set forth in appellant’s claims. We do not find that situation to be in conflict with Article I, Section 8, of the Constitution, since the “right to exclude others” is the very heart of our patent system.

Additionally, the solicitor argues that the holding in the recent opinion of the Supreme Court in Gottschalk v. Benson, 409 U.S. 63, 93 S.Ct. 253, 34 L.Ed.2d 273 (1972) is logically applicable to the instant apparatus claims. However, as we stated in In re Christensen, 478 F.2d 1392 (Cust. & Pat.App.1973):

The issue considered by the Supreme Court in Benson was a narrow one,

namely, is a formula for converting binary coded decimal numerals into pure binary numerals by a series of mathematical calculations a patentable process? (emphasis added).

Furthermore, the instant claims, in apparatus form, do not claim or encompass a law of nature, a mathematical formula, or an algorithm. For these reasons, we do not find the holding of Benson to be applicable to claims of the type now before us.

Finally, we reach the rejections under § 103. In determining whether or not appellant’s record-keeping machine system is an obvious variation of the bookkeeping systems which were acknowledged by appellant to be known in the art, “we must view the prior art without reading into that art appellant’s teachings.” In re Sponnoble, 405 F.2d 578, 56 CCPA 823 (1969).

We cannot agree with the board that the claimed “category codes” are equivalent to the account numbers of separate accounts that a customer may have with one bank. Appellant’s “category codes” and account numbers¹⁴ are two different types of controls, as appellant’s specification and claims clearly point out. Furthermore, appellant’s claimed invention produces a breakdown of a customer’s income and expenditures associated with a single account and is not directed to the board’s proposed modification of known data processing apparatus to provide a customer with merely a summary sheet consisting of net totals of plural separate accounts which a customer may have at a bank. Although it may possibly be obvious to modify known record-keeping apparatus to achieve a summary sheet of a plurality of separate accounts, as proposed by the board, we conclude that any further modification to such known apparatus, in order to achieve the results of appellant’s claimed apparatus, would not have been obvious to one of ordinary skill in the art who did not have appellant’s specification before him.

Turning to the obviousness rejection based upon the patent to Dirks, we conclude that this reference does not render the subject matter of the appealed claims obvious to one of ordinary skill in the art. The four brief portions of the Dirks specification ¹⁵ referred to by the board and the additional passages of that specification called to our attention by the solicitor simply are not suggestive of the subject matter of the appealed claims. We find that, with appellant’s specification before them, the board and solicitor have merely chosen various portions of the Dirks apparatus and have attempted to read them upon various elements set forth in appellant’s claims. Furthermore, we note that the solicitor’s interpretation of Dirk’s, apparatus creates substantially the same apparatus as that of the board's proposed modification of known data processing apparatus, supra,, insofar as the solicitor interprets various separate accounts of Dirks as corresponding to appellant’s claimed category codes. Accordingly, we cannot sustain this rejection.

For the foregoing reasons, the decision of the Patent Office Board of Appeals is reversed.

Reversed.

1 . The board’s decision concerned claims 1-11 and 16-27, but appellant has only appealed the rejection of claims 20-24.

2 . Serial No. 624,741, filed March 21, 1967.

3 . The board found that the examiner had based his rejections upon the premise “that an unprogrammed, or a differently programmed, general purpose computer is the same machine as the one that would result from appellant’s programming of the same or of a similar computer.” The board acknowledged that neither it nor this court considers that premise to be valid, obviously referring to In re Bernhart, 417 F.2d 1395, 57 CCPA 737 (1969).

4 . 196. Decision by Board of Appeals

* * * # * (b) Should the Board of Appeals have knowledge of any grounds not involved in the appeal for rejecting any [appealed] claim, it may include in its decision a statement to that effect with its reasons for so holding, which statement shall constitute a rejection of the claims. The appellant may submit an appropriate amendment of the claims so rejected or a showing of facts, or both, and have the matter reconsidered by the primary examiner. The statement shall be binding upon the primary examiner unless an amendment or showing of facts not previously of record be made which, in the opinion of the primary examiner, avoids the additional ground for rejection stated in the decision. The applicant may waive such reconsideration before the primary examiner and have the case reconsidered by the Board of Appeals upon the same record before them. Where request for such reconsideration is made the Board of Appeals shall, if necessary, render a new decision which shall include all grounds upon which a patent is refused. The applicant may waive reconsideration by the Board of Appeals and treat the decision, including the added grounds for rejection given by the Board of Appeals, as a final decision in the case.

5 . The appellant did not seek any reconsideration provided for by Rule 196(b) and appealed directly to this court.

6. The presently appealed claims 20-24 are all apparatus claims.

7 . This portion of the specification is reproduced in this opinion under The Invention section, supra.

8 . U. S. Patent No. 3,343,133, issued September 19, 1967, on an application filed August 9, 1963.

9 . We note that although the “failure to distinctly claim” language used in the board’s rejection connotes a rejection for indefiniteness, In re Knowlton, supra, the sole basis for its rejection was that appellant was claiming something — a relationship between a bank and its customer — other than what appellant regarded as his invention, i. e., a failure to particularly point out the subject matter which appellant regards as his invention. Accordingly, we treat the rejection on this basis.

10 . Although the board held the claims to be indefinite, we again find the sole basis of the rejection was that appellant was claiming something — a human being — other than what appellant regarded as his invention. Thus, we also treat this rejection on this basis.

11 . The solicitor argues that the board had another basis for its indefiniteness rejection, namely that the means-plus-function recitations in the claims are indefinite for lack of any corresponding descriptions of structure in the specification upon which the scope of equivalents might be based in accordance with the third paragraph of § 112.

However, we cannot agree with the solicitor that the board set forth any such basis for its “indefiniteness” rejection. Furthermore, the thrust of this proposed rejection indicates that it would have been properly made under the first paragraph of § 112. See In re Comstock, 481 F.2d 905, (Cust. & Pat.App.1973), In re Knowlton, supra. See also In re Bernhart, supra.

12 . “The phrase ‘technological arts,’ * * * is synonymous with the phrase ‘useful arts’ as it appears in Article I, Section 8 of the Constitution.” In re Waldbaum, 59 CCPA 940, 457 F.2d 997 (1972).

13 . We likewise do not agree with the board that banking is a “social science.”

14 . Claim 20 uses the terminology “account identifications” for account numbers.

15 . We note that the Dirks patent comprised 509 pages of the instant Record.