CITE: 609 F.2d 481
CMON: November 1979
PLAIN: Application of Maucorps
DEFND: United States Patent and Trademark Office
COURT: United States Court of Customs and Patent Appeals
DATE: November 1, 1979
HISTORY:
Appeal was taken from a decision of the Patent and Trademark Office Board
of Appeals affirming the rejection of patent application Serial No. 539,839.
The Court of Customs and Patent Appeals, Markey, Chief Judge, held that
computer-implemented model of sales organization enetitled "Computing
System for Optimizing Sales Organizations and Activities" did not
constitute a patentable process.
Affirmed.
SUMMARY:
Computer business method for optimizing sales not patentable.
JUDGE: MARKEY, Chief Judge
Before MARKEY, Chief Judge, RICH, BALDWIN, and MILLER, Associate Judges,
and WATSON, Judge.
DECISION:
This appeal is from the decision of the Patent and Trademark Office (PTO)
Board of Appeals (board) affirming the rejection under 35 U.S.C. 101 of
claims 1-5 and 7-13 of application serial No. 536,839, filed December 27,
1974, entitled "Computing System for Optimizing Sales Organizations
and Activities." We affirm.
The Invention
Appellant's invention is a computer-implemented model of a sales
organization. It determines the optimum number of times a sales
representative for a business should visit each customer over a period
of time. The optimum number of sales representatives the organization
should have, and the optimum organization of sales representatives.
Based on experimentation with a South African sales organization, appellant
determined that in South Africa, the basic sales unit supervised by a sales
manager should have no more than four sales representatives. The established
rule is that a single person cannot effectively control more than seven
subordinates. Appellant concluded that the discrepancy was due to the
greater mobility of sales representatives in South Africa, and developed
a generalized equation, recited in means (a) of claim 2, which takes
mobility into account. With that equation established, appellant proposed
and studied various model sales organizations to determine the value of
the control factor "gamma" (y),{1} and developed equations for the different
types of sales units in an organization. A circuit for calculating the
control factor y for one type of organization is recited in equation form
as means (b) of claim 2.
Ultimately, appellant's invention is directed toward optimizing the
organization of sales representatives in a business. Using the equations
and data described in the specification, appellant arrives at the optimum
business organization. Claim 1, the only independent claim, is illustrative:
1. A computing system for processing data to determine an optimum
"coding", defined as the number of regular visits over a predetermined
period of time, Pd, by a business representative to a client, to be
selected for such client, comprising:
(a) means for calculating for each different value of x representing
the coding of clients, a value for y representing the sales arising
over said predetermined period of time from the representative's
activity when x = 3 in accordance with the relation given by
( ................ lengthy formula ............... )
in which
G1 = M(0.5054 + 0.1930 log x)
K = 0.0581 M
D = Client's total demand over said period
M = "memory factor", i. e. retention after 24 hours, the values of x
and the corresponding values of y defining a "saturation curve"
of sales;
(b) means for calculating, for the value of x = 1 representing the
coding of clients, a value for y representing the sales arising over
said predetermined period of time from the representative's activity
in accordance with the relation by y = D(1 - G1);
(c) means for calculating for the value of x = 2 representing the
coding of clients, a value for y representing the sales arising over
said predetermined period of time from the representative's activity
in accordance with the relation given by y = D[(l-G1)^2 + K];
(d) means for calculating for each different value of x a value for y
where y = x C(l + y) (1 - a) / B TN in which
C = direct cost over said period of a representative RE
a = additional factor
B = percentage of gross profits on sales
T = visiting times (days)/periods of time/representative
N = number of visits/day/representative
y = "control factor", i. e. the cost C' over said period of
controlling a representative divided by the direct cost
C of that representative,
the values of x and the corresponding values of y defining a "minimum
sales line" which intersects the saturation curve at a point defined
as the "critical point", and
(e) means responsive to the output of said calculating means for
selecting a value of x as a client's coding for which the value of
y corresponding to the sales over said period arising from the
representative's activity provides a "representative point" P having
as coordinates x and y, such that said point P is above the minimum
sales line and the saturation curve and as close to the latter as
possible, each of said calculating means including electric circuits
constituted so that when said electric circuits are in an activated
state, values of y are automatically calculated upon receiving the
necessary input data regarding the above-defined variables, and said
value selecting means likewise including electric circuits constituted
so that, when said selecting means is in an activating state, a value
of x will be automatically selected upon said means receiving the
necessary minimum sales line and saturation curve data.
The invention is implemented via a computer program written in FORTRAN IV,
either built into the calculating machine, or loaded into a general purpose
computer. The program is listed in Table (87) of the specification. In the
system corresponding to Figs. 32 and 33, the program is permanently built
into the machine, data are entered via teletypewriter, and output is
printed via teletypewriter.
The system, as shown in Figs. 32 and 33, comprises a processor 100,
read-only memory (ROM) 500, random access memory (RAM) 600, and auxiliary
sequencing and interconnecting circuitry including clock circuit 200, state
decoder 300, address register 400, input/output (I/O) decoder 700,
teletypewriter entry circuits 800, 801, and 802, teletypewriter status
circuit 900, teletypewriter printer circuits 1000, 1001, and 1002,
interrupt/jam logic circuit 1100, and bus and 79-554, memory timing logic
circuit 1200. ROM 500 contains the equivalent in processor machine language
of the FORTRAN program. RAM 600 stores the data for each problem.
The apparatus shown in Figs. 32 and 33, except for circuits 800, 801, 802,
and 900, constitute the "means for" of claim 1.
The Rejection
The examiner rejected the claims under 35 U.S.C. 101 as being drawn to
non-statutory subject matter. Citing Gottschalk v. Benson, 409 U .S. 63,
93 S.Ct. 253, 34 L.Ed-2d 273 (1972) (hereinafter Benson), he stated that
"[t]he program or algorithm involved here has no substantial practical
application except in connection with a digital computer". Respecting
appellant's argument that the instant claims are drawn to apparatus while
those in Benson were drawn to a process, the examiner reasoned that the
form of the claim is immaterial under Benson, and that appellant should
not be allowed to achieve by indirection what he could not achieve directly.
The examiner concluded that neither decisions of this court subsequent to
Benson - specifically, In re Noll, 545 F.2d 141, (CCPA 1976), cert. denied,
434 U.S. 875, 98 S.Ct. 226, 54 L.Ed.2d 155 (1977); In re Chatfield, 545 F.2d
152 (CCPA 1976), cert. denied, 434 U.S. 875, 98 S.Ct. 226, 54 L.Ed.2d 155
(1977); In re Richman, 563 F.2d 1026 (CCPA 1977); In re de Castelet, 562 F.2d
1236 (CCPA 1977); and In re Freeman, 573 F.2d 1237 (CCPA 1978) - nor the
Supreme Court's decisions in Parker v. Flook, 437 U .S. 584, 98 S.Ct. 2522,
57 L.Ed.2d 451 (1978) (hereinafter Flook), rev'g In re Flook, 559 F.2d 21
(CCPA 1977), required a different result.
The board affirmed the examiner's rejection, agreeing with the examiner
that "the holdings and opinions expressed by the [Supreme] Court in Benson
and Flook apply to appellant's invention whether it is claimed as an
apparatus or as a process."
Applying the two-step analysis set forth in Freeman, supra, the board
determined that appellant's claims directly recited elements or steps
that were themselves calculations, and that they "merely recite[d] an
algorithmic procedure or a mathematical exercise . . . ". As to claim 1,
the board found that it was directed to determining an optimum number,
i.e., the number of regular visits by a business representative to a
client over a predetermined period of time, "obtained by calculating in
accordance with the equations stated in clauses (a), (b), (c), and (d),"
and that further analysis under Benson and Flook was required. The board
then found that the product of the invention claimed in claim 1
was merely a mathematical value, and that "nothing in the claim . . .
would be sufficient to transform it into a claim for an invention that
merely uses an algorithm."
The board found that dependent claims 2-5 and 7-13, involving the same
mathematical operations as claim 1, were also "merely directed to a
mathematical exercise for producing numbers . . . " It accordingly held
that, in light of Benson and Flook and this court's most recent
interpretations thereof, appellant's invention fell "within a judicially
determined category of non-statutory subject matter."
Issue
The issue is whether appellant's claimed apparatus is a "machine . . . or
any new and useful improvement thereof" within the meaning of Section 101.
OPINION
Labels are not determinative in Section 101 inquiries. "Benson applies
equally whether an invention is claimed as an apparatus or process, because
the form of the claim is often an exercise in drafting." In re Johnson,
589 F.2d 1070, 1077 (CCPA 1978). "Though a claim expressed in 'means for'
(functional) terms is said to be an apparatus claim, the subject matter
as a whole of that claim may be indistinguishable from that of a method
claim drawn to the steps performed by the 'means.'" In re Freeman, 573
F.2d at 1247. Moreover, that the claimed computing system may be a
"machine" within "the ordinary sense of the word", as appellant argues,
is irrelevant. The holding in Benson "forecloses a purely literal reading
of Section 101". Flook, 437 U.S. at 588-89, 98 S.Ct. at 2525; In re Johnson,
589 F.2d at 1076.
Determination of "whether the claim recites a mathematical algorithm, and,
if so, whether it preempts the use of the algorithm[,] In re Noll, 545 F.2d
141, 148 (CCPA 1976) [, and an application of] the two-step test in
In re Freeman, [573 F.2d at 1245]" are required in this case. {2}
In re Bradley, 600 F.2d 807, 813 (CCPA 1979).
Specific structure is not recited in the claims. Independent claim 1 recites
five "means for" performing functions. The first four "means" perform the
calculation of a directly recited mathematical formula. The formula
corresponding to the first, second, and third means defines a "saturation
curve". The formula corresponding to the fourth means defines "a 'minimum
sales line' which intersects the saturation curve at a point defined as the
'critical point' . . . ". The fifth means selects an optimum value, defined
as being "above the minimum sales line and the saturation curve and as close
to the latter as possible . . . ". Because appellant's claims recite an
algorithm in the Benson sense of the term, they meet step 1 of the Freeman
test.
Appellant argues that "even claim 1, the independent claim, does not specify
a computing system for computing a single mathematical formula", and that
"[t]his is not a straightforward mathematical procedure, because the value
selected is above the saturation curve, but as close to it as possible,
rather than between the two curves". Appellant's argument here is analogous
to an argument made in In re Gelnovatch, 595 F.2d 32, 37 (CCPA 1979), and
is equally without merit. As was said there: "The type of mathematical
computation involved does not determine whether a procedure is statutory
or non-statutory." Id. at 41 (footnote omitted). This court explained:
"Appellants' process as a whole comprises a solution technique for
a set of equations wherein sets of numbers are computed from other sets
of numbers." Id. at 41 n.7. Similarly, appellant's claimed invention
as a whole comprises each and every means for carrying out a solution
technique for a set of equations wherein one number is computed from a
set of numbers. Thus, appellant's claims wholly preempt the recited
algorithms, Benson 409 U.S. at 71-72, 93 S.Ct. 253, and meet step 2 of
the Freeman test. {3}
As admitted by appellant at oral argument, method claims drawn to the steps
performed by appellant's "means" would be non-statutory and an attempt to
claim appellant's algorithms in their application to a model of a sales
organization. Cf. In re Waldbaum, 559 F.2d 611, (CCPA 1977) (apparatus
claims limited to specific technology and written in "means for"
(functional) language held to be, in practical effect, an attempt to
patent an algorithm). "[I]f allowance of a method claim is proscribed by
Benson, it would be anomalous to grant a claim to apparatus encompassing
any and every 'means for' practicing that very method." In re Freeman,
573 F.2d at 1247 (footnote omitted). That 35 U.S.C. Section 112
authorizes the claiming of "means for" performing a function cannot
rescue appellant's claims from the requirements of Section 101, because
Section 112 does not authorize the claiming of apparatus entirely in terms
of "means for" performing a non-statutory method.
In re Noll, supra, cited by appellant as an example of apparatus claims
being found directed to statutory subject matter, is inapposite. There,
claims 2 through 9 recited no algorithm, either directly or indirectly,
and claim 10, reciting in "means for" language a calculation "method",
did not preempt the method because it included all the apparatus of
claim 9, from which it depended. 545 F.2d at 148. In re Freeman,
573 F.2d at 1247 n. 11.
The limitations added by the present dependent claims do not change the
nonstatutory nature of appellant's invention. Like claim 1, allowance
of claims 2-5 and 7-13 would result in a patent on the algorithms.
The decision of the board is affirmed.
AFFIRMED.
FOOTNOTES:
{1}. The control factor is related to the costs of maintaining a sales
representative.
{2}. The two-step test of in re Freeman consists of: (1) determining
"whether the claim directly or indirectly recites an 'algorithm' in the Ben-
son sense of that term . . . ", and (2) analyzing the claim "to ascertain
whether in its entirety it wholly preempts that algorithm." 573 F2d at
1245.
{3}. A computer or other apparatus which "as a whole comprises means for
carrying out a solution technique" does not necessarily constitute
nonstatutory subject matter. If a claim thereto does not recite a
mathematical formula, step 2 of the Freeman test is not reached. In re
Freeman, 573 F.2d at 1247. If a mathematical formula is recited, specific
structure recited in the claim may render step 2 unmet. Id. at 1247 n. 10.