Axioma, Inc.Download PDFPatent Trials and Appeals BoardApr 28, 202015979162 - (D) (P.T.A.B. Apr. 28, 2020) Copy Citation UNITED STATES PATENT AND TRADEMARK OFFICE UNITED STATES DEPARTMENT OF COMMERCE United States Patent and Trademark Office Address: COMMISSIONER FOR PATENTS P.O. Box 1450 Alexandria, Virginia 22313-1450 www.uspto.gov APPLICATION NO. FILING DATE FIRST NAMED INVENTOR ATTORNEY DOCKET NO. CONFIRMATION NO. 15/979,162 05/14/2018 Anthony A. RENSHAW 166.0012-CON 4454 23448 7590 04/28/2020 HULTQUIST IP P.O. BOX 14329 RESEARCH TRIANGLE PARK, NC 27709 EXAMINER MAGUIRE, LINDSAY M ART UNIT PAPER NUMBER 3693 NOTIFICATION DATE DELIVERY MODE 04/28/2020 ELECTRONIC Please find below and/or attached an Office communication concerning this application or proceeding. The time period for reply, if any, is set in the attached communication. Notice of the Office communication was sent electronically on above-indicated "Notification Date" to the following e-mail address(es): hip@hultquistip.com PTOL-90A (Rev. 04/07) UNITED STATES PATENT AND TRADEMARK OFFICE ________________ BEFORE THE PATENT TRIAL AND APPEAL BOARD ________________ Ex parte ANTHONY A. RENSHAW ________________ Appeal 2019-006197 Application 15/979,162 Technology Center 3600 ________________ Before JOHNNY A. KUMAR, SCOTT B. HOWARD, and JOYCE CRAIG, Administrative Patent Judges. KUMAR, Administrative Patent Judge. DECISION ON APPEAL Appeal 2019-006197 Application 15/979,162 2 STATEMENT OF CASE Introduction Pursuant to 35 U.S.C. § 134(a), Appellant1 appeals the Final Rejection of claims 1–20. We have jurisdiction under 35 U.S.C. § 6(b). We AFFIRM. Invention The invention relates to the construction of indexes wherein a portfolio of securities such as stocks, bonds, or the like and their associated investment weights, allocations, or shares are determined. Spec. 1:9–11. Independent claims 1, 8, and 14 are reproduced below: 1. A computer based method of constructing a factor index of portfolio weights that replicate returns associated with a target factor by constraining tracking error while simultaneously reducing implementation costs flowing from a large number of names and unintended bets on other factors by constraining turnover comprising: selecting a set comprising a plurality of possible investments; defining a benchmark portfolio of weights comprising a subset of the set comprising a plurality of possible investments and a weight for each member of the subset; selecting a first factor risk model defined for the set comprising a plurality of possible investments, said first factor risk model defining a first matrix of factor exposures which gives a numerical exposure value for every possible investment for a set of factors; selecting a target factor for one of the factors defined by the first factor risk model; 1 We use the word “Appellant” to refer to “applicant” as defined in 37 C.F.R. § 1.42. According to Appellant, Axioma, Inc. is the real party in interest. Appeal Br. 1. Appeal 2019-006197 Application 15/979,162 3 constructing a target factor portfolio of weights for the target factor for the set comprising a plurality of possible investments, the benchmark portfolio of weights, and the first factor risk model, and whose weighted average exposure to the target factor is different than the weighted average exposure of the benchmark portfolio to the target factor; selecting a second factor risk model defined for the set comprising a plurality of possible investments, said second factor risk model defining a second matrix of factor exposures, wherein at least one factor exposure in the second matrix of factor exposures of the second factor risk model is different than all the factor exposures of the first matrix of factor exposures of the first factor risk model; performing a first optimization by determining weights of each of the plurality of possible investments for a factor index so that a tracking error between the factor index and the target factor portfolio of weights as predicted by the second factor risk model is constrained to be less than or equal to 5% and a one-way turnover is constrained to be less than 7.5%; and outputting the factor index weights as an electronic output displayed on a display. Claims App. 1 (emphasis added to indicate additional, i.e., non-abstract, element). 8. A computer system for constructing a factor index of portfolio weights that replicate returns associated with a target factor by constraining tracking error while simultaneously reducing implementation costs flowing from a large number of names and unintended bets on other factors by constraining turnover comprising: a programmed processor for selecting a set comprising a plurality of possible investments; the programmed processor selecting a benchmark portfolio comprising a subset of holdings from the set comprising a plurality of possible investments; Appeal 2019-006197 Application 15/979,162 4 the programmed processor selecting a first factor risk model defined for the set comprising a plurality of possible investments, said first factor risk model defining a first matrix of factor exposures; the programmed processor selecting a target factor which is one of the factors defined by the first factor risk model; the programmed processor constructing a target factor portfolio for the target factor whose holdings are fully determined by the set comprising a plurality of possible investments, the benchmark portfolio, and the first factor risk model, and whose exposure to the target factor is different than the exposure of the benchmark portfolio to the target factor; the programmed processor selecting a second factor risk model defined for the set comprising a plurality of possible investments, said second factor risk model defining a second matrix of factor exposures, wherein at least one factor exposure in the second matrix of factor exposures of the second factor risk model is different than all the factor exposures of the first matrix of factor exposures of the first factor risk model; the programmed processor performing a first optimization by determining weights of each of the plurality of possible investments for a factor index so that a tracking error between the factor index and the target factor portfolio as predicted by the second factor risk model is constrained to be less than or equal to 5% and a one-way turnover is constrained to be less than 7.5%; and the programmed processor outputting the factor index weights as an electronic output. Claims App. 2–3 (emphases added to indicate additional, i.e., non-abstract, element). 14. A computer system for constructing a factor index of portfolio weights that replicate returns associated with a target factor by constraining tracking error while simultaneously reducing implementation costs flowing from a large number of names and Appeal 2019-006197 Application 15/979,162 5 unintended bets on other factors by controlling turnover comprising: a first and a second factor risk selecting programmed processor for selecting a set comprising a plurality of possible investments; the first and a second factor risk selecting programmed processor selecting a benchmark portfolio comprising a subset of holdings from the set comprising a plurality of possible investments; the first and a second factor risk selecting programmed processor selecting a first factor risk model defined for the set comprising a plurality of possible investments, said first factor risk model comprising a first matrix of factor exposures, a first matrix of factor covariances, and a first matrix of specific risk variances; the first and a second factor risk selecting programmed processor selecting a target factor which is one of the factors defined by the first factor risk model; the first and a second factor risk selecting programmed processor constructing a target factor portfolio for the target factor whose holdings are fully determined by the set comprising a plurality of possible investments, the benchmark portfolio, and the first factor risk model, and whose exposure to the target factor is different than the exposure of the benchmark portfolio to the target factor; the first and a second factor risk selecting programmed processor selecting a second factor risk model defined for the set comprising a plurality of possible investments, said second factor risk model comprising a second matrix of factor exposures, a second matrix of factor covariances, and a second matrix of specific risk variances wherein at least one factor exposure in the second matrix of factor exposures of the second factor risk model is different than all the factor exposures of the first matrix of factor exposures of the first factor risk model; the first and a second factor risk selecting programmed processor performing a first optimization by determining weights of each of the plurality of possible investments for a factor index so that Appeal 2019-006197 Application 15/979,162 6 a tracking error between the factor index and the target factor portfolio as predicted by the second factor risk model is constrained to be less than or equal to 5% and a one-way turnover is constrained to be less than 7.5%; and the first and a second factor risk selecting programmed processor outputting the factor index weights as an electronic output. Claims App. 4–5 (emphases added to indicate additional, i.e., non-abstract, element). REJECTION Claims 1–20 stand rejected under 35 U.S.C. § 101 as being directed to patent ineligible subject matter. Final Act. 2–4. ANALYSIS We have only considered those arguments that Appellant actually raised in the Briefs2. Arguments Appellant could have made, but chose not to make, in the Briefs have not been considered and are deemed to be waived. See 37 C.F.R. § 41.37(c)(1)(iv) (2019). Related Appeal This appeal is related to PTAB 2017-000123, stemming from co- pending application 13/965,621. Appeal Br. 2. The instant appeal and 2 Claims 2–7 and 15–20 are not argued separately from claim 1 in either of Appellant’s briefs (Appeal Br. 8–15; Reply Br. 2–3); and claims 9–13 are not argued separately from claim 8 in either of Appellant’s briefs (Appeal Br. 8–15; Reply Br. 2–3). Therefore, claims 2–7, 9–13, and 15–20 will not be separately addressed. Appeal 2019-006197 Application 15/979,162 7 Appeal 2017-000123 have the same assignee (Axioma, Inc.), and are filed by the same inventive entity (Renshaw). A. The Examiner’s Rejections and Appellant’s Arguments The Examiner concludes that the present claims recite an abstract idea. Final Act. 3; Ans. 3–4. The Examiner further concludes that the abstract idea is not integrated into a practical application, because the display of claim 1 and the programmed processor of claims 8 and 14 are “recited at a high-level of generality (i.e., as a generic processor performing a generic computer function) such that [they] amount[] [to] no more than mere instructions to apply the exception using a generic computer component” and “do not impose any meaningful limits on practicing the abstract idea.” Ans. 4; see also Final Act. 4. The Examiner also determines that the claims do not recite additional elements that amount to significantly more than the judicial exception, because “the additional element of using a computer hardware amounts to no more than mere instructions to apply the exception using a generic computer component. Mere instructions to apply an exception using a generic computer component cannot provide an inventive concept.” Ans. 5–6 (citing Spec. 10:12–18, 17:1–18:21; MPEP 2106.05(f)). Appellant argues that the claimed invention is not directed to an abstract idea. Appeal Br. 9–11; Reply Br. 2. Appellant further argues that the claims do not preempt “use of the abstract idea of ‘constructing a factor for portfolio weights.’” Appeal Br. 10; see also Appeal Br. 11 (“The current claims clearly do not attempt to tie up an entire abstract idea.”). Appellant contends that the claimed invention provides a technological advantage that Appeal 2019-006197 Application 15/979,162 8 is described in Appellant’s Specification, similar to in Visual Memory LLC v. NVIDIA Corp., 867 F.3d 1253 (Fed. Cir. 2017). Id. at 9. Appellant contends that, analogous to DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014), the claims recite limitations that, when taken in an ordered combination, provide unconventional steps for a particular useful application. Id. at 12–13. Appellant further argues that, unlike in the related appeal (PTAB 2017-000123), the instant claims recite the technological improvement, similar to in McRO3. Appeal Br. 2. Appellant argues that novelty and non-obviousness have not been established in this case. Id. at 14; Reply Br. 3. Additionally, Appellant argues that a non-precedential Federal Circuit case, similar to Appellant’s application, held as patent eligible, “‘a method and system for electronic trading of stocks, bonds, futures, option and similar products.’” Appeal Br. 14 (quoting Trading Tech. Int’l., Inc. v. CQG, INC., 675 Fed. Appx. 1001 (Fed. Cir. 2017). Appellant avers that the Examiner’s Step 2B analysis is deficient, and further contends that the instant claims are not well-understood, routine, or conventional and present an inventive concept. Reply Br. 3. B. Principles of Law An invention is patent-eligible if it claims a “new and useful process, machine, manufacture, or composition of matter.” 35 U.S.C. § 101. However, the U.S. Supreme Court has long interpreted 35 U.S.C. § 101 to include implicit exceptions: “[l]aws of nature, natural phenomena, and 3 McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299 (Fed. Cir. 2016) Appeal 2019-006197 Application 15/979,162 9 abstract ideas” are not patentable. E.g., Alice Corp. v. CLS Bank Int’l, 573 U.S. 208, 216 (2014). In determining whether a claim falls within an excluded category, we are guided by the Court’s two-part framework, described in Mayo and Alice. Id. at 217–18 (citing Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 75–77 (2012)). In accordance with that framework, we first determine what concept the claim is “directed to.” See Alice, 573 U.S. at 219 (“On their face, the claims before us are drawn to the concept of intermediated settlement, i.e., the use of a third party to mitigate settlement risk.”); see also Bilski v. Kappos, 561 U.S. 593, 611 (2010) (“Claims 1 and 4 in petitioners’ application explain the basic concept of hedging, or protecting against risk.”). Concepts determined to be abstract ideas, and thus patent ineligible, include certain methods of organizing human activity, such as fundamental economic practices (Alice, 573 U.S. at 219–20; Bilski, 561 U.S. at 611); mathematical formulas (Parker v. Flook, 437 U.S. 584, 594–95 (1978)); and mental processes (Gottschalk v. Benson, 409 U.S. 63, 67 (1972)). Concepts determined to be patent eligible include physical and chemical processes, such as “molding rubber products” (Diamond v. Diehr, 450 U.S. 175, 191 (1981)); “tanning, dyeing, making waterproof cloth, vulcanizing India rubber, smelting ores” (id. at 182 n.7 (quoting Corning v. Burden, 56 U.S. 252, 267–68 (1853))); and manufacturing flour (Benson, 409 U.S. at 69 (citing Cochrane v. Deener, 94 U.S. 780, 785 (1876))). In Diehr, the claim at issue recited a mathematical formula, but the Court held that “a claim drawn to subject matter otherwise statutory does not become nonstatutory simply because it uses a mathematical formula.” Appeal 2019-006197 Application 15/979,162 10 Diehr, 450 U.S. at 187; see also id. at 191 (“We view respondents’ claims as nothing more than a process for molding rubber products and not as an attempt to patent a mathematical formula.”). Having said that, the Court also indicated that a claim “seeking patent protection for that formula in the abstract . . . is not accorded the protection of our patent laws, and this principle cannot be circumvented by attempting to limit the use of the formula to a particular technological environment.” Id. (citation omitted) (citing Benson and Flook); see, e.g., id. at 187 (“It is now commonplace that an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection.”). If the claim is “directed to” an abstract idea, we turn to the second step of the Alice and Mayo framework, where “we must examine the elements of the claim to determine whether it contains an ‘inventive concept’ sufficient to ‘transform’ the claimed abstract idea into a patent- eligible application.” Alice, 573 U.S. at 221 (quotation marks omitted). “A claim that recites an abstract idea must include ‘additional features’ to ensure ‘that the [claim] is more than a drafting effort designed to monopolize the [abstract idea].’” Id. (alterations in original) (quoting Mayo, 566 U.S. at 77). “[M]erely requir[ing] generic computer implementation[] fail[s] to transform that abstract idea into a patent-eligible invention.” Id. C. USPTO Section 101 Guidance In January 2019, the USPTO published revised guidance on the application of § 101. 2019 Revised Patent Subject Matter Eligibility Appeal 2019-006197 Application 15/979,162 11 Guidance, 84 Fed. Reg. 50 (Jan. 7, 2019) (“2019 Revised Guidance”).4 “All USPTO personnel are, as a matter of internal agency management, expected to follow the guidance.” Id. at 51; see also October 2019 Update at 1. Under the 2019 Revised Guidance and the October 2019 Update, we first look to whether the claim recites: (1) any judicial exceptions, including certain groupings of abstract ideas (i.e., mathematical concepts, certain methods of organizing human activity such as a fundamental economic practice, or mental processes) (“Step 2A, Prong One”); and (2) additional elements that integrate the judicial exception into a practical application (see MPEP § 2106.05(a)–(c), (e)–(h) (9th ed. Rev. 08.2017, Jan. 2018)) (“Step 2A, Prong Two”).5 2019 Revised Guidance, 84 Fed. Reg. at 52–55. Only if a claim (1) recites a judicial exception and (2) does not integrate that exception into a practical application, do we then look, under Step 2B, to whether the claim: 4 In response to received public comments, the Office issued further guidance on October 17, 2019, clarifying the 2019 Revised Guidance. USPTO, October 2019 Update: Subject Matter Eligibility (the “October 2019 Update”) (available at https://www.uspto.gov/sites/default/files/documents/peg_oct_2019_update.p df). 5 This evaluation is performed by (a) identifying whether there are any additional elements recited in the claim beyond the judicial exception, and (b) evaluating those additional elements individually and in combination to determine whether the claim as a whole integrates the exception into a practical application. See 2019 Revised Guidance - Section III(A)(2), 84 Fed. Reg. 54–55. Appeal 2019-006197 Application 15/979,162 12 (3) adds a specific limitation beyond the judicial exception that is not “well-understood, routine, conventional” in the field (see MPEP § 2106.05(d)); or (4) simply appends well-understood, routine, conventional activities previously known to the industry, specified at a high level of generality, to the judicial exception. 2019 Revised Guidance, 84 Fed. Reg. at 52–56. D. Step 2A, Prong 1 Because claims 1, 8, and 14 require constructing a factor index of portfolio weights for a plurality of possible investments by selecting first and second risk factor models, we conclude the non-emphasized portions of claims 1, 8, and 14 reproduced above (see supra at 2–6), recite fundamental economic principles or practices. Thus, the present claims describe subject matter relating to the economy and commerce, specifically hedging and mitigating risk. According to the Memorandum, fundamental economic principles or practices fall into the category of certain methods of organizing human activity. See Memorandum, 84 Fed. Reg. at 52. Moreover, those certain methods of organizing human activity are a type of abstract idea. See id. The present claims recite fundamental economic principles or practices, which fall into the category of certain methods of organizing human activity (i.e., an abstract idea). Namely, the claims require features such as, “selecting a set comprising a plurality of possible investments,”6 6 This limitation is in each of claims 1, 8, and 14. See Claims App. Appeal 2019-006197 Application 15/979,162 13 “defining a benchmark portfolio of weights,”7 “selecting a first factor risk model,”8 and “selecting a second factor risk model,”9 which are all features directed to mitigating risk in an investment portfolio, and therefore fall under fundamental economic principles or practices. Nevertheless, we must still determine whether the abstract idea is integrated into a practical application, namely whether the claim applies, relies on, or uses the abstract idea in a manner that imposes a meaningful limit on the abstract idea, such that the claim is more than a drafting effort designed to monopolize the abstract idea. See Guidance, 84 Fed. Reg. at 54–55. We therefore (1) identify whether there are any additional recited elements beyond the abstract idea, and (2) evaluate those elements both individually and collectively to determine whether they integrate the exception into a practical application. See id. Accordingly, we proceed to prong 2. E. Step 2A, Prong 2 Here, the only elements in the claims beyond the abstract idea are “a display” in claim 1; “[a] computer system” and “a programmed processor” in claim 8; and “[a] computer system” and “a…programmed processor” in claim 14. See 2019 Revised Guidance, 84 Fed. Reg. at 52. The additional elements of the present claims do not integrate the abstract idea into a practical application because they do not impose any meaningful limits on 7 Claim 1 recites this limitation. Claims 8 and 14 each recite a similar “selecting a benchmark portfolio.” See Claims App. 8 This limitation is in each of claims 1, 8, and 14. See Claims App. 9 This limitation is in each of claims 1, 8, and 14. See Claims App. Appeal 2019-006197 Application 15/979,162 14 practicing the abstract idea for the following reasons. Appellant does not identify persuasively how the Specification sets forth an improvement in technology. The USPTO October 2019 Patent Eligibility Guidance Update (“Update”) addresses how we consider evidence of improvement that is presented to us. The Update states: the evaluation of Prong Two requires the use of the considerations (e.g. improving technology, effecting a particular change treatment or prophylaxis, implementing with a particular machine, etc.) identified by the Supreme Court and the Federal Circuit, to ensure that the claim as a whole “integrates [the] judicial exception into a practical application [that] will apply, rely on, or use the judicial exception in a manner that imposes a meaningful limit on the judicial exception, such that the claim is more than a drafting effort designed to monopolize the judicial exception. Update, 11 (emphases added). The Update further states: [d]uring examination, the examiner should analyze the “improvements” consideration by evaluating the specification and the claims to ensure that a technical explanation of the asserted improvement is present in the specification, and that the claim reflects the asserted improvement. Generally, examiners are not expected to make a qualitative judgment on the merits of the asserted improvement. If the examiner concludes the disclosed invention does not improve technology, the burden shifts to applicant to provide persuasive arguments supported by any necessary evidence to demonstrate that one of ordinary skill in the art would understand that the disclosed invention improves technology. Any such evidence submitted under 37 C.F.R. § 1.132 must establish what the specification would convey to one of ordinary skill in the art and cannot be used to supplement the specification. For example, in response to a rejection under 35 U.S.C. § 101, an applicant could submit a declaration under § 1.132 providing testimony on how one of ordinary skill in the art would interpret the disclosed invention as improving technology and the underlying factual basis for Appeal 2019-006197 Application 15/979,162 15 that conclusion. Id. at 13 (emphasis added). We disagree with Appellant’s argument that the present claims are directed to a technological innovation. Appeal Br. 2, 9, 11–14 (citing McRO; Visual Memory; DDR Holdings; Trading Techs.). In this case, the Examiner concludes that the present claims do not recite an improvement to technology, but rather amount simply to instructions for using generic computer components. Final Act. 4; Ans. 4. See Affinity Labs of Tex. v. DirecTV, LLC, 838 F.3d 1253, 1264––65 (Fed. Cir. 2016); TLI Communications LLC v. AV Auto. LLC, 823 F.3d 607, 612-13 (Fed. Cir. 2016) (a claim must include more than conventional implementation on generic components or machinery to qualify as an improvement to an existing technology). Consequently, we focus on any evidence Appellant cites as discussed in the Update. Here, Appellant argues that the present claims provide technological improvements that include reducing a tracking error between a factor index and a target factor portfolio (Appeal Br. 11); and reducing turnover, number of items, and underperformance of factor indexes. Id. at 12, 14. However, this alleged improvement is an improvement in performance of factor indexes, which falls within the category of an abstract idea, as discussed supra, not an improvement to technology. “A claim for a new abstract idea is still an abstract idea.” Synopsys, Inc. v. Mentor Graphics Corp., 839 F.3d 1138, 1151 (Fed. Cir. 2016) (emphasis added). “[U]nder the Mayo/Alice framework, a claim directed to a newly discovered law of nature (or natural phenomenon or abstract idea) cannot rely on the novelty of that discovery for the inventive concept necessary for patent eligibility . . . .” Genetic Appeal 2019-006197 Application 15/979,162 16 Techs. Ltd. v. Merial L.L.C., 818 F.3d 1369, 1376 (Fed. Cir. 2016) (citations omitted). Furthermore, the additional elements in the claims, namely a display, a computer system, and a programmed processor, do not, either individually or in combination, integrate the abstract idea into a practical application. Appellant’s Specification discloses that these elements encompass generic components, such as a generic monitor or computer screen (Spec. 19:8–14), and a generic personal computer, workstation, or server (Spec. 17:5–18:6). Merely adding generic hardware and computer components to perform abstract ideas does not integrate those ideas into a practical application. See Guidance, 84 Fed. Reg. at 55 (identifying “merely includ[ing] instructions to implement an abstract idea on a computer” as an example of when an abstract idea has not been integrated into a practical application). We find Appellant’s argument that the present claims overcome the failure of the claims in the previous related appeal with respect to McRO unpersuasive. See Appeal Br. 2. The subject claim considered by the McRO court concerned a method for automatically animating lip synchronization and facial expressions. McRO, 837 F.3d at 1303. The McRO court concluded the subject claims did not recite an abstract idea because the computer animation used a structure of limited rules that reflected a specific implementation which an animator would not likely have utilized. Id. at 1316. Thus, the claimed invention in McRO used “limited rules in a process specifically designed to achieve an improved technological result” over “existing, manual 3-D animation techniques.” Id. Unlike the claims of McRO, the present claims do not recite a specific implementation of rules that a human performing risk assessment for a factor index would not have Appeal 2019-006197 Application 15/979,162 17 utilized, and the present claims instead focus on an improvement to the abstract idea itself. We are not persuaded by Appellant’s citation to Visual Memory to demonstrate that the present claims set forth an improvement in technology. Appeal Br. 9. The invention considered by the Visual Memory court was directed to an enhanced computer memory that could be programmed to work with different types of processors. Visual Memory, 867 F.3d at 1259–60. The Federal Circuit determined that Visual Memory’s claims were not directed to “the abstract idea of categorical data storage.” Visual Memory, 867 F.3d at 1259. The court determined that Visual Memory’s claims were directed to a technological improvement, i.e., an enhanced computer memory system because: (1) the claimed “programmable operational characteristics” were configurable based upon the type of processor, instead of “on a process that qualifies as an ‘abstract idea’ for which computers are invoked merely as a tool”; and, (2) Visual Memory’s “specification discusses the advantages offered by the technological improvement.” Id. at 1259–60. As such, the Federal Circuit concluded that Visual Memory’s claims were not directed to an abstract idea under Alice, step one. Id. Here, although Appellant’s Specification discusses advantages offered by the present invention, in contrast to the claim at issue in Visual Memory, Appellant’s claims recite an improved method and system for constructing a factor index of portfolio weights. See claims 1, 8, 14. Therefore, the focus of Appellant’s claims is on an improved method for fundamental economic practices, namely hedging and mitigating risk, i.e., an abstract idea. However, an improved abstract idea is still an abstract idea. See Mayo, 566 Appeal 2019-006197 Application 15/979,162 18 U.S. at 90 (holding that a novel and nonobvious claim directed to a purely abstract idea is, nonetheless patent-ineligible). Additionally, “a claim for a new abstract idea is still an abstract idea.” Synopsys, Inc. v. Mentor Graphics Corp., 839 F.3d 1138, 1151 (Fed. Cir. 2016) (emphasis added). “[U]nder the Mayo/Alice framework, a claim directed to a newly discovered law of nature (or natural phenomenon or abstract idea) cannot rely on the novelty of that discovery for the inventive concept necessary for patent eligibility . . . .” Genetic Techs. Ltd. v. Merial L.L.C., 818 F.3d 1369, 1376 (Fed. Cir. 2016) (citations omitted). We further disagree with Appellant’s argument that, similar to DDR Holdings, the present claims are patent eligible because they are necessarily rooted in computer technology to solve problems specifically arising in that realm because the present claim limitations, when taken as an ordered combination, provide steps to overcome shortcomings in factor indexes of the prior art. Appeal Br. 12–14. The subject claim considered by the DDR court pertained to a visitor of a host’s website clicking on an advertisement for a third-party product displayed on the host’s website, whereby the visitor is no longer being transported to the third party’s website. DDR Holdings, 773 F.3d at 1257. In DDR, instead of losing visitors to the third-party’s website, the host website can send its visitors to a web page on an outsource provider’s server that (1) incorporates “look and feel” elements from the host website and (2) provides visitors with the opportunity to purchase products from the third-party merchant without actually entering that merchant’s website. Id. at 1257–58. Here, in contrast to the claims of DDR, the present claims are not necessarily rooted in computer technology to overcome a problem Appeal 2019-006197 Application 15/979,162 19 specifically arising in computer networks. See id. at 1257. Unlike DDR, Appellant’s system and method for “constructing a factor index of portfolio weights that replicate returns associated with a target factor by constraining tracking error while simultaneously reducing implementation costs flowing from a large number of names and unintended bets on other factors by controlling turnover,” (Claims 1, 8, 14) is not claimed as solving or otherwise addressing a problem arising in computer networks. We furthermore disagree with Appellant’s argument that the present claims are patent eligible because they are similar to those in Trading Technologies, “describing and claiming ‘a method and system for electronic trading of stocks, bonds, futures, option and similar products.’” Appeal Br. 14. The court in Trading Technologies determined that the claimed method constituted more than merely displaying information on a graphical user interface. Trading Techs., 675 Fed.Appx. at 1004. Instead, the court determined that “[t]he claims require a specific, structured graphical user interface paired with a prescribed functionality directly related to the graphical user interface’s structure that is addressed to and resolves a specifically identified problem in the prior state of the art.” Id. (emphases added). Therefore, the court identified as patent-eligible a claimed combination of (1) a specific, structured graphical user interface, and (2) a functionality directly related to the structure of the graphical user interface. Here, unlike the claims considered by the court in Trading Technologies, the claims do not require either a specific, structured computer component, or a prescribed functionality directly related to the structure of the computer component. Therefore, the court’s determinations in Trading Technologies are not applicable in this case. Appeal 2019-006197 Application 15/979,162 20 Appellant’s argument that the present claims do not preempt any abstract idea does not persuade us that the claims are eligible. Appeal Br. 11. Although preemption may denote patent ineligibility, its absence does not demonstrate patent eligibility. See FairWarning, IP, LLC v. Iatric Sys., Inc., 839 F.3d 1089, 1098 (Fed. Cir. 2016). For claims covering a patent- ineligible concept, preemption concerns “are fully addressed and made moot” by an analysis under the Mayo/Alice framework. Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015). With regard to Appellant’s argument that the present claims recite features that are novel and nonobvious (Appeal Br. 14; Reply Br. 3), Appellant improperly conflates the requirements for eligible subject matter (§ 101) with the independent requirements of novelty (§ 102) and non- obviousness (§ 103). “The ‘novelty’ of any element or steps in a process, or even of the process itself, is of no relevance in determining whether the subject matter of a claim falls within the § 101 categories of possibly patentable subject matter.” Diehr, 450 U.S. at 188–89; see also Genetic Techs. Ltd. v. Merial L.L.C., 818 F.3d 1369, 1376 (Fed. Cir. 2016) (stating that, “under the Mayo/Alice framework, a claim directed to a newly discovered law of nature (or natural phenomenon or abstract idea) cannot rely on the novelty of that discovery for the inventive concept necessary for patent eligibility”). Appellant does not make any other arguments pertaining to step 2A, prong 2. Because the present claims recite an abstract idea that is not integrated into a practical application, we proceed to Step 2B. F. Step 2B Appeal 2019-006197 Application 15/979,162 21 We agree with the Examiner that the claims do not recite “significantly more” than the abstract idea, or an “inventive concept.” Ans. 5–6. We disagree with Appellant’s argument that, “[t]his Step 2B conclusion and analysis [by the Examiner] effectively eliminates Step 2B as the Answer merely repeats what it has said before with respect to Step 2A.” Reply Br. 3. Notably, the Examiner finds, and we agree, that “[m]ere instructions to apply an exception using a generic computer component cannot provide an inventive concept.” Ans. 5–6 (citing Spec. 10:12–18, 17:1–18:21; MPEP 2106.05(f) (mere instructions to apply an exception do not amount to “significantly more,” per step 2B)). We further disagree with Appellant’s unsupported contention that the combination of claim limitations are not well-understood, routine, or conventional. Reply Br. 3. In particular, we determine that the additional elements recited in the claims, namely the display of claim 1, and the computer and processor of claims 8 and 14, whether considered alone or as an ordered combination, are well-understood, routine, or conventional. See Bancorp Servs., L.L.C. v. Sun Life Assurance Co. of Can. (U.S.), 687 F.3d 1266, 1278 (Fed. Cir. 2012) (generic computer performing basic functions such as making calculations or computations); Parker v. Flook, 437 U.S. 584, 594 (generic computer performing mathematical algorithms); Versata Dev. Group, Inc. v. SAP Am., Inc., 793 F.3d 1306, 1331, 1134 (Fed. Cir. 2015) (generic computer arranging a hierarchy of product groups, sorting information); OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1361–63 (Fed. Cir. 2015) (gathering statistics, using data to estimate outcomes, automatically selecting based on the estimated outcomes). Appeal 2019-006197 Application 15/979,162 22 For at least the above reasons, we conclude, under the 2019 Memorandum, that each of Appellant’s claims 1–20, considered as a whole, is directed to a patent-ineligible abstract idea that is not integrated into a practical application, and does not include an inventive concept. We therefore sustain the Examiner’s rejection of claims 1–20 under 35 U.S.C. § 101. CONCLUSION In summary: No time period for taking any subsequent action in connection with this appeal may be extended under 37 C.F.R. § 1.136(a)(1)(iv). See 37 C.F.R. § 1.136(a)(1)(iv). AFFIRMED Claim(s) Rejected 35 U.S.C. § Reference(s)/Basis Affirmed Reversed 1–20 101 1–20 Copy with citationCopy as parenthetical citation