PTAB

CBM2019-00013

Teradata Operations Inc v. Berkeley IEOR

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Key Events
Petition
petition

1. Case Identification

2. Patent Overview

  • Title: Process for Determining Object Level Profitability
  • Brief Description: The ’137 patent discloses a computer-implemented method for determining the profitability of specific "objects" (e.g., products, customers, organizational units) using a relational database. The process involves preparing financial and non-financial data, calculating opportunity values for funds, calculating marginal profit values and fully absorbed profit adjustments, and combining them to create a precise measure of object-level profitability.

3. Grounds for Unpatentability

Ground 1: Obviousness over E&Y - Claims 2, 4-7, and 25-30 are obvious over E&Y.

  • Prior Art Relied Upon: E&Y (The Ernst & Young Guide to Performance Measurement for Financial Institutions, 1995).
  • Core Argument for this Ground:
    • Prior Art Mapping: Petitioner argued that E&Y, a comprehensive guide for financial practitioners, taught every element of the challenged claims. E&Y allegedly disclosed using a computerized "repository database" built on a "relational database platform" to store financial data for profitability reporting. The petition asserted that E&Y taught calculating "opportunity costs" via funds-transfer pricing, performing a "profit calculus" using defined algorithms for activity-based costing, calculating marginal profit components (net interest, direct expenses, provisions), and calculating fully absorbed profit adjustments (indirect expenses). E&Y allegedly showed combining these values to determine profitability for various objects, including products, customers, and organizations.
    • Motivation to Combine: As a single-reference ground, the motivation focused on implementation. Petitioner argued it would have been obvious to a person of ordinary skill in the art (POSITA) to implement the financial accounting methods detailed in E&Y using the well-known and conventional computerized relational database systems that E&Y itself described for this purpose.
    • Expectation of Success: A POSITA would have had a high expectation of success, as E&Y provided a detailed roadmap with specific examples for building the exact type of performance measurement system recited in the claims.

Ground 2: Obviousness over E&Y in view of Blain - Claims 2, 4-7, and 25-30 are obvious over E&Y in view of Blain.

  • Prior Art Relied Upon: E&Y (as above) and Blain (Using SAP R/3, 1996).
  • Core Argument for this Ground:
    • Prior Art Mapping: Petitioner asserted that E&Y taught the fundamental financial methods for profitability analysis, while Blain described a well-known, commercially available, computer-implemented financial accounting system (SAP-R/3) that provided the specific technical framework to implement E&Y’s teachings. Blain allegedly disclosed a rules-based system using a relational database and SQL to perform profitability analysis, allocate costs, and calculate profit and loss based on both marginal and full absorption costing, thus supplying any technical details for E&Y's financial concepts.
    • Motivation to Combine: A POSITA seeking to implement the financial strategies from E&Y would have been motivated to use a known, powerful, and prevalent accounting software package like the SAP-R/3 system described in Blain. Petitioner argued that E&Y’s own discussion of using “packaged software” and “database gateway technology” would have directed a POSITA to a system like Blain’s.
    • Expectation of Success: Combining the references would yield predictable results because Blain’s system was expressly designed to perform the same types of profitability calculations and financial reporting that E&Y taught.

Ground 3: Obviousness over E&Y, Blain, and Kimball - Claim 29 is obvious over E&Y and Blain in view of Kimball.

  • Prior Art Relied Upon: E&Y, Blain, and Kimball (Calculating and Using Risk-adjusted ROE for Lines of Business, 1993).

  • Core Argument for this Ground:

    • Prior Art Mapping: This combination targeted the specific "Shareholder Value Added" (SVA) calculation in claim 29. Petitioner argued that while E&Y and Blain provided the foundational profitability system, Kimball supplied the specific, well-known formulas for calculating SVA. Kimball allegedly taught adjusting profit for risk by using risk-based "hurdle rates" derived from the Capital Asset Pricing Model (CAPM) and peer group analysis, and applying a tax rate to the final profit calculation, mirroring the formula recited in claim 29.
    • Motivation to Combine: A POSITA implementing the profitability system from E&Y and Blain would have been motivated to consult authoritative accounting literature like Kimball for specific, state-of-the-art financial formulas. E&Y’s discussion of “shareholder-value-based…analysis” would have prompted a skilled artisan to look to references like Kimball for detailed implementation guidance on equity allocation and risk adjustment.
    • Expectation of Success: Integrating Kimball’s standard financial equations into the rules-based system of Blain (implementing the methods of E&Y) was a simple substitution of known components that would have predictably resulted in the claimed SVA calculation.

  • Additional Grounds: Petitioner asserted numerous other grounds, including that claims were anticipated by E&Y, Blain, or SAP-IS-B individually. Additional obviousness grounds were asserted based on combinations including SAP-IS-B (a 1996 SAP technical paper) for its specific disclosures on banking profitability modules, and McKenzie (a 1996 government working paper) for its explicit teaching of the two-tiered tax calculation recited in claim 30. Petitioner also argued in Ground 1 that the claims were unpatentable under 35 U.S.C. §101 as directed to the abstract idea of "calculating object level profitability."

4. Key Claim Construction Positions

  • Petitioner proposed a construction for the term "profit information" to mean "financial and/or non-financial data related to calculating profit." This construction was argued as critical to understanding the scope of the database limitations. The petition asserted this was supported by the specification’s disclosure of storing both financial data (e.g., balances, rates) and non-financial data (e.g., product identification, dates) for use in the profitability calculations.

5. Relief Requested

  • Petitioner requested institution of a Covered Business Method Review of the ’137 patent and cancellation of claims 2, 4-7, and 25-30 as unpatentable.