# United States Court of Appeals **for the Federal Circuit**

______________________ IN RE: RAY SMITH, A MANDA TEARS SMITH, Appellants

______________________

2015

- 1664

______________________ Appeal from the United States Patent and Trademark Office, Patent Trial and Appeal Board

, in No. 12/912,410.

______________________

Decided: March 10, 2016

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M ARK A LAN L ITMAN , Mark A. Litman & Associates, P.A., Edina, MN, argued for appellants.

S COTT W EIDENFELLER , Office of the Solicitor, United States Patent and Trademark Office, Alexandria, VA, argued for appellee Michelle K. Lee. Also represented by T HOMAS W. K RAUSE , R OBERT M C B RIDE

.

______________________

Before M OORE , H UGHES , and S TOLL , Circuit Judges.

S TOLL , Circuit Judge

. Ray and Amanda Tears Smith (collectively, “Appl icants”) appeal the final decision of the Patent Trial and Appeal Board (“ Board ” ) affirming the rejection of claims
1– 18 of U.S. Patent Application No . 1 2/912,410 ( “the ’410 patent application” ) for claiming patent

- ineligible subject matter under 35 U .S.C . § 101. Because the claims coverIN RE : SMITH 2

only the ab stract idea of rules for playing a wagering

game and use conv e ntional steps of shuffling an d dealing a standard deck of cards , we affirm

. B ACKGROUND On October 26, 2010, Applicants filed the ’410 patent application, titled “Blackjack Variation.” According to the application, “[t]he present invention relates to a wagering game utilizing real or virtual standard playing cards.” Joint Appendix (“J.A.”) 258. Claim 1, which the Board analyzed as representative, recites :

1. A method of conducting a wagering game comprising:
[a]) a dealer providing at least one deck of . . . physical playing cards and shuffling the physical playing cards to form a random set of physical playing cards;
[b]) the dealer accepting at least one first w ager from each participating player on a player game hand against a banker’s/dealer’s hand;
[c]) the dealer dealing only two cards from the random set of physical playing cards to each de signated player and two cards to the banker/dealer such that the designated player and the ban ker/dealer receive the same number of exactly two random physical playing cards ; [d]) the dealer examining respective hands to determine in any hand has a Natural 0 count from totaling count from cards, defined as the first two random physical playing cards in a hand being a pair of 5’s, 10’s, jacks, queens or kings;
[e]) the dealer resolving any player versus dealer wagers between each individual player hand that has a Natural 0 count and between the dealer hand and all player hands where a NaturalIN RE : SMITH 3

0 is present in the dealer hand, while the dealer exposes only a single card to the players;
[f]) as between each player and the dealer where neither hand has a Natural 0, the dealer allowing each player to elect to take a maximum of one additional card or standing pat on the initial two card player hand, while still having seen only one dealer card;
[g]) the dealer/banker remaining pat within a first certain predetermined total counts and being required to take a single hit within a second pr edetermined total counts, where the first total counts range does not overlap the second total
counts range; [h]) after all possible additional random phys ical playing cards have been dealt, the dealer co mparing a value of each designated player’s hand to a final value of the banker’s/dealer’s hand wherein said value of the designated player’s hand and the banker’s/dealer’s hand is in a range of zero to nine points based on a pre

- established scoring system wherein aces count as one point, tens and face cards count as zero points and all other cards count as their face value an d wherein a two

- digit ha nd total is deemed to have a value correspon ding to the one’s digit of the two

- digit total ; [i]) the dealer resolving the wagers based on whether the designated player’s hand or the banker’s/dealer’s hand is nearest to a value of 0.

J.A. 10

– 11. The examin er rejected claims 1

– 18 as d irected to patent

- ineligible subject matter under § 101

, applying the machine -or- transformation test described in Bilski v. Kappos

, 561 U.S. 593 (2010). The examiner concluded that the claims represented “an attempt to claim a new set of rules for playing a card game,” whichIN RE : SMITH 4

“qualifies as an abstract idea.” J. A

. 102. On appeal, the Board affirmed the rejection, applying the two

- step test outline d in Alice Corp

. v. CLS Bank International , 134 S. Ct. 2347 (2014) , which had been decided in the interim

. Applying step one, the Board determined that “indepen dent claim 1 is directed to a set of rules for conducting a wagering game which

. . . constitut es a patent

- ineligible abstract idea.” J. A. 16. Applying the second step, the Board concluded that “shuffling and dealing cards are

c onventional in the gambling art,” and as such, “do not add enough to the claims” to render them patent eligible. J.A. 17

. Applicants appealed to this court, and we have juri sdiction pursuant to 28 U.S.C § 1295(a)(4)(A) and 35 U.S.C. § 141(a)

. D ISCUSSION

We review de novo whe ther a claim is drawn to p atent

- ineligible subject matter. In re Nuijten , 500 F.3d 1346, 1352 (Fed. Cir. 2007). Section 101 defines patent

eligible subject matter as “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” 35 U.S.C. § 101. The Supreme Court has “long held that this provision contains an important implicit excep tion. L aws of nature, natural phenomena, and abstract ideas are not patent able.” Mayo Collaborative Servs. v. Prometheus Labs., Inc.

, 132 S. Ct. 12 89, 1293 (2012 ) (internal quotation marks, brackets, and cita tions omitted)

. To determine whether an invention claims ineligible subject matter , we apply the now

- familiar two

- step test introduced in Mayo

, id. at 129 6–97

, and further explained in Alice

, 134 S. Ct. at 2355. First, we determine whether the claims at issue are directed to a patent

- ineligible concept such as an abstract idea

. Id. Second, we “exa mine the elements of the claim to determine whether it contains an ‘inventive concept’ sufficient to ‘transform’ theIN RE : SMITH 5

claimed abstract idea into a patent

- eligible application.” Id. at 2357 (quoting Mayo , 132 S. Ct. at 1294, 1298).
On the first step, we conclude that Applicants’ claims, directed to rules for conducting a wagering game, compare to other “fundamental economic pract ice[s] ” found a bstract by the Supreme Court. See id

. As the Board re asoned here, “ [a] wagering game is, effectively, a method of exchanging and resolving financial obligations based on probabilities created during the distribution of the cards.” J.A. 15. In Alice

, the Supr eme Court held that a method of exchanging financial obligations was drawn to an abstract idea. 134 S. Ct. at 235 6–57. Likewise , i n Bilski

, the Court determined that a claim to a method of hedging risk was directed to an abstract i dea. 561 U.S. at 611

. Here, Applicants’ claimed “method of conducting a wage ring game” is drawn to an abstract idea much like Alice ’s method of exchanging financial obliga tions and Bilski ’s method of hedging risk.
Moreover, our own cases have denied patentability of similar concepts as being directed towards ineligible subject matter. See OIP Techs., Inc. v. Amazon.com, Inc.

, 788 F.3d 1359, 1362 (Fed. Cir. 2015 ) (finding offer

- based price optimization abstract), ce rt. denied

, 136 S. Ct. 701 (2015) ; Planet Bingo , LLC v. VKGS LLC , 576 F. App’ x 1005, 1007

– 08 (Fed. Cir. 2014) ( determining that methods of managing a game of bingo were abstract ideas ). Thus, in light of these cases , we conclude that the rejected claims, describing a set of rules for a game, are drawn to an abstract idea.
Our inquiry, however, does not end there . A bstract ideas , including a set of rules for a game, may be patent

eligible if they contain an “‘inventive concept’ sufficient to ‘transform’ the claimed abstract idea into a patent

- eligible application.” Alice , 134 S. Ct. at 2357 (quoting Mayo

, 132 S. Ct. at 1294, 1298). But appending purely conventional steps to an abstract idea does not supply a sufficient lyIN RE : SMITH 6

inventive concept. Id. at 2357

– 58. The claims here require shuffling and dealing “physical playing cards,” which Applicants argue bring the claims within patent

eligible territory. J.A. 10

– 11. We disagree. Just a s the recitation of computer implementation fell short in Alice

, shuffling and dealing a standard deck of car ds are “p urely conventional ” activities. See Alice

, 134 S. Ct. at 235 8–5 9. We therefore hold that the rejected claims do not have an “inventive concept” sufficient to “transform” the claimed subject matter into a patent

- eligible application of the abstract idea

. That is not to say that all inventions in the gaming
arts would be foreclosed from patent protection under § 101

. We could envisage, for example, claims directed to conducting a game using a new or original deck of cards potentially surviving step two of Alice . The Government acknowledged as much during oral argument

. See Oral Argument at 14: 59

– 15 :31

, available at http ://oralarguments.cafc.uscourts.gov/default.aspx?fl=20 15

- 1664.mp3

. Finally, we cannot address Applicants’ argument that the PTO’s 2014 Interim Guidance on Patent Subject Matter Eligibility (“Interim Eligibility Guidance”) exceeds the scope of § 101 and the Supreme Court’s Alice decision. Applicants’ challenge to the Guidelines is not properly before us in this appeal. See 35 U.S.C. § 141(a) (stating that an applicant “dissatisfied with the final decision ” of the Board may appeal that decision to the Federa l Ci rcuit) (emphasis added). As the Interim Eligibility Gui dance itself states, it “is not intended to create any right or benefit, substantive or procedural, enforceable by any party against the Office. Rejections will continue to be based upon the subs tantive law, and it is these rejections that are appealable.” Interim Eligibility Guidance, Vol. 79 Fed. Reg. 74618, 74619 (Dec. 16, 2014) (emphasis added). And even if the Applicants had properly cha llenged the Guidance, we have previously determined thatIN RE : SMITH 7

such Guidance is “not binding on this Court.” See In re Fisher , 421 F.3d 1365, 1372 (Fed. Cir. 2005). Thus we decline to consider Applicants’ argument regarding the Interim Eligibility Guidance.

We have considered Applicants ’ remaining arguments and find them unpersuasive. Because the rejected claims are drawn to the abstract idea of rules for a wagering game and lack an “inventive concept” sufficient to “tran sform” the claimed subject matter into a patent

- eligible application of that idea, we affirm.

AFFIRMED