Ex Parte 7,418,423 et al

Patent Trial and Appeal Board

Nov 14, 2013

95000432 (P.T.A.B. Nov. 14, 2013)

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.
95/000,432 07/29/2009 7,418,423 00013-00002US4 3919
38662 7590 11/14/2013
LAW OFFICES OF GRADY L. WHITE, LLC
10605 Concord Street , SUITE 207
Kensington, MD 20895
EXAMINER
RIMELL, SAMUEL G
ART UNIT PAPER NUMBER
3992
MAIL DATE DELIVERY MODE
11/14/2013 PAPER
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.
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
____________________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________________

TELVENT DTN, LLC
Requester, Cross-Appellant, Respondent

v.

FARMS TECHNOLOGY, LLC
Patent Owner, Appellant, Respondent
____________________

Appeal 2013-007499
Inter partes Reexamination 95/000,432
Patent US 7,418,423 B2
Technology Center 3900
____________________

Before HOWARD B. BLANKENSHIP, MEREDITH C. PETRAVICK, and
WILLIAM V. SAINDON, Administrative Patent Judges.

SAINDON, Administrative Patent Judge.

DECISION ON APPEAL
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STATEMENT OF THE CASE
Claims 1-29 are rejected and are the subject of the present appeal.
Patent Owner appeals under 35 U.S.C. §§ 134(b) and 315(a) (2002) and
Requester cross-appeals under §§ 134(c) and 315(b). We have jurisdiction
under 35 U.S.C. § 134. We held an Oral Hearing with representatives of
both parties present on September 25, 2013.
We REVERSE the Examiner‟s decision to reject the claims using
certain rejections in the appeal and AFFIRM the Examiner‟s decision not to
adopt certain rejections in the cross-appeal. We enter a NEW GROUND of
rejection for all claims.

The Claimed Subject Matter
The disclosed invention relates to a method for automated
commodities trading system with an automatic hedging function. Corn is an
exemplary commodity. A producer of corn (a farmer) typically can either
sell to or rent space from a grain elevator, which stores and maintains the
corn. From the perspective of the elevator operator, the purchase of corn is
risky because the operator could purchase the corn from a producer at a fair
market price on day 1 and then on day 2 the price for corn could drop. ‟423
patent col. 2:24-31. The price on day 2 could fall enough such that the
elevator operator would not be able to cover the costs associated with
storage and transport to market, let alone make a profit (all of these factors
are called the “basis”). Id. at col. 2:12-14. Accordingly, the elevator
operator does two things. One, the operator offers to purchase the corn at a
rate of the market prices less its basis. Id. at col. 2:14-20. Two, at the same
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time, the operator purchases a hedge order to sell the corn at that market
price at some time in the future, thus preserving the margin. Id. at col. 2:32-
59.
The disclosed invention provides an automatic system for elevator
operators to enact this hedging strategy. Claim 1, reproduced below, is
exemplary:
1. A method for executing a commodities transaction on
a net market system, said method comprising:
(a) receiving on the net market system bid information
for a plurality of buyers of a commodity, the bid information
including for each buyer in the plurality of buyers a buyer-
specific basis for the commodity;
(b) storing the bid information on the net market system;
(c) repetitively receiving an updated commodity
exchange price for the commodity and calculating for each
buyer in the plurality of buyers a buyer-specific flat price based
on the buyer-specific basis for said each buyer and said updated
commodity exchange price;
(d) receiving an offer from a seller to sell an offered
quantity of the commodity to at least one buyer in the plurality
of buyers at the buyer-specific flat price for said at least one
buyer;
(e) responsive to receiving the offer, attempting to secure
a futures contract for the commodity on behalf of said at least
one buyer based on the offer; and
(f) if the attempt to secure the futures contract succeeds,
generating a contract between said at least one buyer and the
seller based on the offer;
(g) wherein steps (c) through (f) are carried out
automatically by the net market system without intervention
from said at least one buyer.
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Rejections & Evidence
The rejections on appeal and cross-appeal rely on the following
evidence:
Lindsey et al. (“Lindsey”) US 5,063,507 Nov. 5, 1991
Marynowski et al. (“Marynowski”) US 2006/0259417 A1 Nov. 16, 2006
Barbara L. Schlei, “Electronic Trading of Agricultural Products” (USDA
1980) (“ETAP”).
L.A. Times Financial Desk, “Ins and Outs of Program Trading, and Why It‟s
Being Blamed for Market Collapse,” L.A. Times, Business, p. 14 (Dec. 6,
1987) (“LA Times”).
Philip Crawford, “The New High-Tech Investing: Computer as Fund
Manager,” International Herald Tribune (Feb. 1, 1992) (“Herald Tribune”).
Chicago Board of Trade, “Commodity Trading Manual” (1998) (“CTM”).
Brian D. Adam et al., “Storage Hedging: What‟s a Merchandiser to Do?,”
Proceedings of the NCR-134 Conference on Applied Commodity Price
Analysis, Forecasting, and Market Risk Management (1993).
Terry L. Kastens and Kevin C. Dhuyvetter, “Post-Harvest Grain Storing and
Hedging with Efficient Futures,” J. Ag. Res. Econ. 24(2):482-505 (1999).
New York Mercantile Exchange, “A Guide to Energy Hedging” (1999)
(“Guide to Energy Hedging”).

Appeal
The following rejections under 35 U.S.C. §§ 102 and 103 are on appeal
(App. Br. PO 10-11):
I. Claims 1 and 16 as anticipated by Lindsey. RAN 12 (incorporating
First Office Action, mailed May 28, 2010 (“FOA”), at 12-14).
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II. Claims 1-29 as unpatentable over LA Times, Herald Tribune, and
Kastens. RAN 21-23 (incorporating Exhibit 44a).
III. Claims 1-29 as unpatentable over LA Times, CTM, and Lindsey.
RAN 29-30 (incorporating Exhibit 47a).
IV. Claims 1-29 as unpatentable over Herald Tribune, CTM, and Lindsey.
RAN 31-32 (incorporating Exhibit 48a).
V. Claims 1-29 as unpatentable over LA Times, Guide to Energy
Hedging, and Lindsey. RAN 40-42 (incorporating Exhibit 53a).
VI. Claims 1-29 as unpatentable over Herald Tribune, Guide to Energy
Hedging, and Lindsey. RAN 42-43 (incorporating Exhibit 54a).
Cross-Appeal
The following non-adopted rejections under 35 U.S.C. § 103 are on
cross-appeal (App. Br. Req. 8-9):
VII. Claims 1-29 as unpatentable over LA Times, Herald Tribune, and
CTM. RAN 6-8.
VIII. Claims 1-29 as unpatentable over LA Times, CTM, and ETAP. RAN
25-27.
IX. Claims 1-29 as unpatentable over LA Times, CTM, and Marynowski.
RAN 32-34.
X. Claims 1-29 as unpatentable over Herald Tribune, CTM, and
Marynowski. RAN 34-36.
XI. Claims 1-29 as unpatentable over LA Times, Herald Tribune, and
Adam. RAN 20-21.

OPINION
Patent Owner‟s Appeal
Independent claim 1 requires, in pertinent part, a step of calculating a
buyer-specific flat price based on the buyer-specific basis and an updated
commodity exchange price. Independent claim 16 requires a similar
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limitation, such that our analysis for claim 1 will be applicable to claim 16.
The resolution of this appeal turns on the Examiner‟s interpretation of this
claim limitation and subsequent reading of the claim limitation on the
references. See, e.g., App. Br. PO 12. Patent Owner‟s appeal apprises us of
error in the Examiner‟s rejections regarding the reading of a step of
calculating a “buyer-specific flat price” using a “buyer-specific basis” on
certain features of Lindsey and Kastens.

“Buyer-Specific Basis”
The Examiner first determines that “buyer specific basis” means “the
actions of the grain elevator operator who determines overhead costs as a
consideration when submitting a bid for a grain commodity.” RAN 81. The
Examiner then determines that the broadest reasonable interpretation of the
term is “to refer to the overhead costs for any type of commodity buyer.” Id.
(emphasis removed).
This interpretation of “buyer-specific basis” is only partially correct.
As the ‟423 patent clearly states, “[t]he basis includes the elevator‟s costs,
such as transportation to market and costs associated with running the
facilities, as well as the margin.” ‟423 patent col. 2:12-14 (emphasis added).
Accordingly, basis is costs plus margin. By including a fixed margin, the
buyer seeks to eliminate some of the risk of market variability. In view of
the above, we construe a “buyer specific basis” to include the costs plus
margin for the buyer. See also App. Br. PO 20.

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Analysis of the Examiner’s Findings Regarding Lindsey
In application, the Examiner reads “buyer specific basis” on certain
features of the Loan Advance Program (LAP) in Lindsey. RAN 81 (citing
Lindsey, col. 19:43-62). The LAP offers the producer a cash advance equal
to a government guarantee and the producer sets a net equity per bale
desired. Lindsey, col. 19:34-37, 43-45. The TELCOT
1
system in Lindsey
then “calculates the loan amount and all charges such as storage and interest
in order to offer the cotton at a price to buyers so that the producer nets the
desired amount of equity per-bale.” Id. at 19:45-48. This calculation is
updated every night. Id. at 19:48-62.
In view of this passage, we find that Lindsey calculates an offer to sell
price based on cash advanced, desired equity, storage, and interest. What we
do not find is an offer to buy price, a commodity exchange price, the buyer‟s
costs, or the buyer‟s margin. The Examiner reasons that bids made in
response to the offer to sell price “will include the storage and interest costs .
. . because those costs are recovered by the seller from the buyer.” RAN 81
(emphasis removed). However, the Examiner does not address how this
satisfies the limitation of claim 1 requiring a calculation of a buyer-specific
flat price based on a received updated commodity exchange price nor does it
address the requirement to receive buyer-specific basis information.
The Examiner then goes on to say that the exchange prices are
discussed in Lindsey in the “Monitor Summary Function,” which “functions
like a conventional stock ticker tape.” RAN 81-82 (citing Lindsey, col.

1
TELCOT is “a computer-based electronic marketing system . . . with
functions much like those available to NYSE or AMEX traders.” Lindsey,
col. 14:64-67.
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20:37-40). However, the data from the Monitor Summary Function is not
used in the LAP calculation upon which the Examiner bases the rejection.
Just because update commodity exchange data exists somewhere in the
TELCOT system does not mean that it is used in the LAP calculation.
Finally, the Examiner finds that the offer to sell price by TELCOT in
the LAP “becomes the „buyer specific flat price‟ because it is the price
offered to the buyer . . . that takes into account the overhead charges.” RAN
82. This finding is erroneous because a price offered by a seller that takes
into account a seller‟s overhead charges is different from a price offered by a
buyer that takes into account a buyer‟s overhead charges. An offer to buy is
different from an offer to sell. Likewise, a buyer‟s overhead is different
from a seller‟s overhead. Thus, calculations of buyer‟s prices are different
from calculations of seller‟s prices. Even if the prices end up at the same
value, the way in which they are reached is different because they take into
consideration different costs and considerations of different parties.
In view of the above, Patent Owner‟s arguments apprise us of an error
in the Examiner‟s finding that Lindsey discloses the use of an updated
commodity exchange price to repeatedly calculate a buyer-specific flat price,
as well as in improperly construing, and reading on Lindsey, a “buyer-
specific basis.” See App. Br. PO 16-22.

Analysis of Requester’s Response Regarding Lindsey
Requester‟s comments do not persuade us to the contrary. Requester
points out that updated commodity exchange price information and a buyer-
specific basis “were clearly available to the Lindsey computer.” Resp. Br.
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Req. 8. However, even if the data were available, that does not mean that
each feature of TELCOT uses that particular data.
Requester next points to a “limit price” feature of TELCOT‟s
Automated Counter Offer (ACO) program. Id. at 9. However, even if we
assume a buyer would naturally consider a basis of costs plus margin in their
“limit price,” this has nothing to do with the calculation of the offer to sell
price calculated in the LAP. Instead, the “limit price” in the ACO program
is an offer to buy price. In addition, there is no disclosure in Lindsey that
the ACO program calculates the limit price based on an updated commodity
exchange price.
Requester then points to the Acreage Crop Contracting (ACC) feature
of TELCOT, in which the PCCA
2
buys cotton from producers in an “acreage
contract,” in which producers “offer their cotton on a forward basis,
contracting for the future delivery of cotton at a specific price.” Resp. Br.
Req. 13; Lindsey, col. 19:63-68. A feature of this program is that the PCCA
“usually re-offers these contracts to other buyers or textile mills,” “to offset
its risk.” Lindsey, col. 20:11-12. Notably, however, Lindsey does not
specify how the calculation of the offer to buy is made. Requester
speculates that this is “easily calculated” by the exchange price (Resp. Br.
Req. 9), but Lindsey does not disclose as much and the Examiner‟s rejection
is not based on the ACC feature nor does the Examiner contemplate whether
it would have been obvious to a person of ordinary skill in the art to
calculate the offer to purchase price based on the particular factors claimed.

2
Plans Cotton Cooperative Association, creator and manager of the
TELCOT system. Lindsey, col. 15:16-33.
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Lastly, Requester states that the government offering price in the LAP
is an exchange price but offers no claim construction analysis to support
such an interpretation, nor is the Examiner‟s rejection articulated in a way
that we understand the claimed “exchange price” to be read on the
government offering price.

Conclusion Regarding Lindsey
In view of the above, we do not sustain the Examiner‟s rejections
including Lindsey.

Analysis of the Examiner’s Findings Regarding Kastens
The Examiner made a similar error in rejection II, which relies on
Kastens instead of Lindsey. The Examiner finds that Kastens describes a
model that “takes into account the current market price, less storage an[d]
interest costs.” RAN 83. On this basis, the Examiner finds that Kastens
discloses a “flat price based on the buyer specific basis.” Id.
Patent Owner apprises us of error in this finding. See App. Br. PO 22-
24. Specifically, Patent Owner points out that Kastens does not disclose the
buyer-specific basis as claimed (costs plus margin) such that Kastens does
not disclose a step of calculating a buyer-specific flat price as claimed. Id.
The relevant passage in Kastens presents a grain storage rule, in which
a grain producer looks at market prices and storage costs to determine
whether to store or sell grain. Kastens 485. The calculation in Kastens is
not a calculation of price but rather an expected return, determined on the
basis of expected sales price and storage costs. Id. Accordingly, Kastens
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does not describe a buyer-specific basis, which requires the buyer‟s costs as
well as a margin. Because Kastens does not describe a buyer-specific basis
in the manner required by claim 1, Kastens does not describe a calculation
using that figure.

Analysis of Requester’s Response Regarding Kastens
Requester‟s response conflates various disclosures of Kastens that
contain the word “basis.” First, Requester points to a passage in Kastens
similar to that relied on by the Examiner, in which a grain storage rule for a
producer is offered. Resp. Br. Req. 10 (citing Kastens 483). Requester then
points to a passage in Kastens discussing that “[a]dding historical basis to
deferred futures prices provides a simple and reasonably accurate procedure
for using futures prices to formulate cash price expectations.” Resp. Br.
Req. 10 (citing Kastens 483-4). This passage describes a calculation
involving futures prices and historical basis to calculate an offer to sell price,
however, not exchange price and buyer-specific basis to calculate an offer to
buy price. Respondent does not present a claim construction analysis, let
alone one that would persuade us that one of ordinary skill in the art would
read the “calculating” claim limitation in this manner (nor has the Examiner
made a rejection on this basis). As such, Requester‟s response is not
persuasive.

Conclusion Regarding Kastens
In view of the above, we do not sustain the Examiner‟s rejection
including Kastens.
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Requester‟s Cross-Appeal
Requester appeals the Examiner‟s decision not to adopt five rejections
listed above as rejections VII-XI. We address each rejection in turn below.
We sustain the Examiner‟s decision not to adopt these rejections.

Rejection VII: LA Times, Herald Tribune, CTM
Requester first points out that the LA Times article describes a
computer making calculations that include consideration of “commissions,
interest and other costs.” App. Br. Req. 10-11 (citing LA Times). Requester
also points out that the computer in the LA Times article is determining
whether stock price and futures price diverge enough to make a profit. App.
Br. Req. 11. The combination of these, Requester, argues, equates to a
“buyer-specific basis” as claimed.
Turning to the LA Times article, we find a description of an
automated trading program that effects an arbitrage trading scheme. LA
Times, p. 2. The program operates on the principle that, for brief moments
of time, the price of a stock in New York may differ from the equivalent
price of a maturing future of that stock in Chicago. Id.
3
If the divergence is
wide enough to make a profit (considering commissions, interests, and other
costs), the computer quickly buys in one market and sells in the other.

3
A stock future is a contract between two parties to exchange stock of a
particular company at a future date (the maturity date). The price of a
mature stock future should then be the same as the price of the actual stock
when the future matures. An arbitrage opportunity arises when this does not
occur.
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The Examiner found that this scheme does not describe a calculation
of a price. RAN 6. We agree. The computer described in LA Times looks
up two prices and calculates a delta, and then checks to see if this delta is
sufficient from which to profit. Looking up a value is different from
calculating a value.
Requester next argues that CTM discusses hedging strategies and
alleges that, in order to have such strategies, “one needs to take into account
the price of the futures contract and the buyer-specific basis.” App. Br. Req.
11. Like LA Times, however, CTM does not describe the calculation of a
price as claimed. Merely stating that “one needs to take into account”
certain things is not the same as calculating a price. As such, the Examiner‟s
finding that CTM does not teach the claimed feature (RAN 7) was correct.
In view of the above, we agree with the Examiner‟s decision not to
adopt this proposed rejection.

Rejection VIII: LA Times, CTM, ETAP
This proposed rejection includes the shortcoming discussed above
with respect to LA Times and CTM. The Examiner did not adopt this
rejection because the Examiner likewise did not find a calculation of a price
as claimed. RAN 25. Accordingly, we agree with the decision not to adopt
this proposed rejection.

Rejection IX: LA Times, CTM, Marynowski
This proposed rejection was not adopted by the Examiner because the
Examiner found that none of the references taught the claimed calculation.
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RAN 35. Requester first argues that LA Times and CTM describe the
calculating step. App. Br. Req. 21. We do not agree, for the reasons set
forth above with respect to rejection VII.
Requester next argues that Marynowski describes this step, and reads
the claimed “buyer-specific flat prices” on Marynowski‟s “theoretical buy
price.” Id. at 21. The Examiner did not adopt this proposed rejection
because “[n]o price calculations are discussed in [Marynowski].” RAN 33.
Instead, the Examiner found Marynowski to describe “comparing prices
once the prices are already established.” Id.
Turning to Marynowski, we find a high-speed trading system that
trades by comparing the market price of an option, for example, to a
theoretical price at which the system determines it would buy the option,
based on underlying market data and mathematical models using that data.
See Marynowski, paras. [0058]-[0059], fig. 3. Marynowski eschews
calculations and instead relies on lookup tables to decide whether to buy an
option, because lookup tables are computationally much faster than
calculations and even short delays “may freeze a trader out of an otherwise
lucrative transaction.” Id., paras. [0040]-[0041].
Requester does not cogently explain, nor do we see, how the
theoretical value of Marynowski is the “buyer-specific flat price” of claim 1.
Claim 1 explicitly requires the buyer-specific flat price to be calculated from
an updated commodity exchange price and a buyer-specific basis. The
theoretical price in Marynowski may be based on a commodity exchange
price, but not an updated one, as evidenced by the fact that Marynowski
explicitly does not calculate a price at which to buy or sell based on the
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current market price but rather uses the theoretical price, which in turn uses
a lookup table. Notwithstanding this, the theoretical price also does not
account for the claimed buyer-specific basis. Instead, the theoretical price is
based on the various factors listed in paragraph [0059].
4
The theoretical sell
or buy prices, in turn, are established based upon the theoretical price and a
selected “spread,” but Marynowski does not describe this spread as being a
buyer-specific basis.
In view of the above, we are not apprised of error in the Examiner‟s
decision not to adopt this proposed rejection.

Rejection X: Herald Tribune, CTM, Marynowski
The difference between this rejection and rejection IX is that the
primary reference is Herald Tribune instead of LA Times. Requester alleges
the same or similar errors as those discussed above. See App. Br. Req. 24-
25. We are not apprised of error in the Examiner‟s decision not to adopt this
proposed rejection for the reasons set forth above.

Rejection XI: LA Times, Herald Tribune, Adam
The issue in this rejection revolves around whether Adam describes
the claimed step of “calculat[ing] . . . a buyer-specific flat price.” Requester
argues that Adam describes an equation that “could be used to calculate a
flat price” and that the carrying cost factor (in a different calculation) is a
buyer-specific basis. App. Br. Req. 26-27 (citing Adam 88). The Examiner

4
Requester alleges that a buyer-specific basis “could” be included in these
factors, but provides no evidence to support such speculation or proposed
modification to Marynowski‟s teachings. App. Br. Req. 22.
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found this position lacking, stating “[Adam] is addressed to calculating net
return on storage hedging where the sales price is a known input, not the
calculated result.” RAN 20.
Turning to Adam, we find an article describing various considerations
for elevator operators with respect to storage of grain and hedging. Adam
87. Particularly, Adam discloses an equation that calculates an elevator‟s
net return to storage hedging. Adam 88. In addition, Adam describes how
many operators make hedging decisions based on a rule of thumb, such as
“[h]edge if market is offering x% of carry.” Id. In other words, the operator
compares the spread between the current offer price and a future price with
his or her cost to store the grain over that period of time. If the spread will
cover, for example, over 70% of the carrying costs, then the operator may
choose to hedge. Id.
Requester‟s position that the equation in Adam “could be used to
calculate a flat price” is not cogently explained. On its face, the equation
calculates a net return. Thus, Requester does not persuade us of error in the
Examiner‟s finding that Adam calculates a net return instead of a buyer-
specific flat price.
Requester‟s next position, that the carrying cost factor is a buyer-
specific basis, is likewise not cogently explained. As we discussed above, a
buyer-specific basis includes costs plus margin. It is not clear to us how the
carrying costs are anything other than one cost considered in the buyer-
specific basis. Further, even if it were a basis, the claim requires a
calculation using the basis and an updated exchange price.
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In view of the above, we are not apprised of error in the Examiner‟s
decision not to adopt this rejection.

New Ground of Rejection
Lindsey in view of Admitted Prior Art
Requester points out that the ‟423 patent acknowledges that it was
known in the art to calculate for each buyer a buyer-specific flat price based
on the buyer-specific basis and an updated commodity exchange price. App.
Br. Req. 10; Reb. Br. Req. 1. Reviewing the ‟423 patent, we find admitted
prior art in the section called “General Background and State of the Art.”
See col. 1:28 to col. 3:45. Admitted prior art in the background of the
Specification is available for rejections in an inter partes reexamination
proceeding. Ex parte McGaughey, 6 USPQ2d 1334, 1337-38 (BPAI 1988)
(a rejection may make use of information already established in the record);
37 C.F.R. § 1.104(c)(3); see also MPEP §§ 2617(III), 2258(I)(F).
The following findings are supported by a preponderance of the
evidence:
1. Lindsey describes a system and method for executing commodities
transactions on a net market system called TELCOT. Lindsey, col.
17:59 to 18:13; see also id., passim.
2. TELCOT receives bids from a plurality of buyers. Id., col. 18:48-
51, 20:13-34. Because TELCOT is a computer system, in order to
act on the bids, the bids must be stored in memory within the
system.
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3. Although TELCOT receives bids from buyers, Lindsey does not
explicitly discuss the method by which buyers arrive at their bids.
4. Notwithstanding fact 3, Lindsey does state that buyers can
automatically offer to purchase a commodity at a flat price (i.e., a
set price available to anyone having the goods they offer to buy)
based on a pre-set “limit price.” Id., col. 20:26-28. This offer to
purchase is displayed to producers, who may accept the offer. Id.,
col. 20:16-19.
5. Also notwithstanding fact 3, Lindsey discloses that it was known
in the art to have updated commodities prices available to buyers.
Id., col. 20:35-40.
6. Patent Owner admitted in the “GENERAL BACKGROUND AND
STATE OF THE ART” section of the ‟423 patent that it was
known in the art for a commodity purchaser to offer to purchase a
commodity at a price equal to the updated commodity exchange
price minus the purchaser‟s basis (costs plus margin). ‟423 patent,
col. 2:10-20.
7. TELCOT, being a system for executing commodities transactions,
receives offers to sell specified quantities of a commodity as well
as offers to buy those quantities of the commodity. See, e.g.,
Lindsey, col. 20:16-24 (discussing that transactions are made
between buyers and sellers of particular lots of a commodity).
8. While Lindsey acknowledges that hedges involving the contracted
future sale of a commodity are known in the art to be used to offset
a purchaser‟s risk (id., col. 19:67 to 20:12), TELCOT does not
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explicitly automatically attempt to secure a futures contract for a
purchaser before executing a transaction.
9. Patent Owner admitted in the “GENERAL BACKGROUND AND
STATE OF THE ART” section of the ‟423 patent that it was
known in the art for a commodities purchaser to attempt to secure a
futures contract to hedge risk before purchasing a commodity.
‟423 patent, col. 2:32-65 (describing how a futures contract serves
to hedge risk and how to determine which contract to purchase),
col. 3:1-5 (describing that the futures contract is purchased before
the commodities purchase and that the sale is contingent on first
acquiring the futures contract).
10. Sales in the TELCOT system result in a contract between the buyer
and seller. Lindsey, col. 18:28-41.
In view of the above facts, the subject matter of independent claims 1
and 16 would have been obvious to a person of ordinary skill in the art at the
time of invention. While Lindsey does not describe how the Automated
Counter Offer price is determined, it would have been obvious to a person of
ordinary skill in the art to determine the price based on the way prices were
usually determined by commodities purchasers—current exchange price
minus basis. The admitted prior art makes clear that it was known to add in
a margin in the basis calculation. Given that TELCOT already has the
capability to determine a current, updated exchange price, it would have
required nothing more than ordinary skill to further automate the ACO
feature of TELCOT to allow buyers to set their “limit price” using this
conventional method based on the available exchange price information. In
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addition, given that it was known for purchasers to secure a futures contract
before engaging in a commodities transaction, it would have been obvious to
add this known feature to the ACO program, to make it further “automated”
and to computerize those activities already carried out by the purchaser.
These additions do nothing more than add complementary and known
features for commodities purchasers. We find no evidence that such
additions are outside the level of ordinary skill in the art, given the
sophistication of automatic trading programs such as those described in LA
Times, Herald Tribune, and Marynowski.
5
Thus, in view of the above, the
subject matter of claims 1 and 16 is obvious.
The subject matter of the dependent claims is likewise obvious. Not
purchasing the commodity if the risk-minimizing hedge is not available
(claims 2, 17) is implicit in the knowledge that one minimizes risk by getting
the hedge and is explicit in the Admitted Prior Art (‟423 patent, col. 3, ll. 3-5
(“If an acceptable futures contract is obtained [then the contract moves
forward]”) (emphasis added). Trying again (claims 3, 19) when something
fails was a well-known technique for achieving a result. Notifying parties
that a transaction occurred (claims 4, 18) is implicit in the trading process.
If an offer was not accepted, it was known to try a different offer (claims 5,
20). Storing, displaying, and transmitting information used by a system, on
a terminal or PC, through a network such as the Internet, and using Web
pages or Web sites, were known (claims 6-8, 21, 22). Implicit in securing a
futures contract are the steps of contacting a party allowed to sell such

5
These references are evidence in the record that show the level of ordinary
skill in the art.
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instruments, determining if such a futures contract is available, and
purchasing said contract (claims 9, 23).
Regarding claims 10-14 and 24-28, implicit in offering and selling
lots of goods is the fact that, at times, the quantities available and/or desired
will not match, but that it is beneficial to enact the transaction to the extent
possible. Likewise, the lot size for the futures contracts known to be
purchased along with the commodity itself may not match the actual
purchased commodity amount. In order to facilitate the transaction it may
be necessary that the futures contract quantity and commodities quantity will
not match and one can deal with this inevitability by accepting one to be
lower than the other or by purchasing more or less of one or the other to the
extent possible.
Regarding claims 15 and 29, because steps (e) and (f) of the base
claims do not require seller action and, as we established above, it was
obvious to automatically carry out these transactions, there is no reason not
to have steps (e) and (f) carried out automatically without intervention of the
seller.
The above explanation for why the dependent claims are obvious is
based on a logical extension of the knowledge one of ordinary skill in the art
would have in view of Lindsey and the Admitted Prior Art. To supplement
our reasons, we incorporate by reference the logic and evidence used by the
Examiner in the appealed rejections. While we did not sustain the
Examiner‟s rejections, this was due to a factual deficiency that was,
ultimately, satisfied by Admitted Prior Art, not due to a factual deficiency
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regarding the limitations of the dependent claims of which we were
apprised.
We enter a new ground of rejection for claims 1-29 as obvious in view
of Lindsey and Admitted Prior Art consistent with the above.

DECISION
We REVERSE the Examiner‟s decision to reject claims 1-29 in
rejections I-VI.
We AFFIRM the Examiner‟s decision not to adopt rejections VII-XI.
We enter a NEW GROUND of rejection for claims 1-29 as
unpatentable in view of Lindsey and Admitted Prior Art.

The decision contains a new ground of rejection pursuant to 37 C.F.R.
§ 41.77(b). Section 41.77(b) provides that “[a] new ground of rejection . . .
shall not be considered final for judicial review.” That section also provides
that Patent Owner, WITHIN ONE MONTH FROM THE DATE OF THE
DECISION, must exercise one of the following two options with respect to
the new grounds of rejection to avoid termination of the appeal proceeding
as to the rejected claims:
(1) Reopen prosecution. The owner may file a response requesting
reopening of prosecution before the examiner. Such a response must be
either an amendment of the claims so rejected or new evidence relating to
the claims so rejected, or both.
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(2) Request rehearing. The owner may request that the proceeding be
reheard under § 41.79 by the Board upon the same record. The request for
rehearing must address any new ground of rejection and state with
particularity the points believed to have been misapprehended or overlooked
in entering the new ground of rejection and also state all other grounds upon
which rehearing is sought.
In accordance with 37 C.F.R. § 41.79(a)(1), the “[p]arties to the
appeal may file a request for rehearing of the decision within one month of
the date of: . . . [t]he original decision of the Board under § 41.77(a).” A
request for rehearing must be in compliance with 37 C.F.R. § 41.79(b).
Comments in opposition to the request and additional requests for rehearing
must be in accordance with 37 C.F.R. § 41.79(c), respectively. Under 37
C.F.R. § 41.79(e), the times for requesting rehearing under paragraph (a) of
this section, for requesting further rehearing under paragraph (c) of this
section, and for submitting comments under paragraph (b) of this section
may not be extended.
An appeal to the United States Court of Appeals for the Federal
Circuit under 35 U.S.C. §§ 141-144 and 315 and 37 C.F.R. § 1.983 for an
inter partes reexamination proceeding “commenced” on or after November
2, 2002 may not be taken “until all parties‟ rights to request rehearing have
been exhausted, at which time the decision of the Board is final and
appealable by any party to the appeal to the Board.” 37 C.F.R. § 41.81. See
also MPEP § 2682 (8th ed., Rev. 7, July 2008).
No time period for taking any subsequent action in connection with
this appeal may be extended under 37 C.F.R. § 1.136(a). Requests for
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extensions of time in this inter partes reexamination proceeding are
governed by 37 C.F.R. § 1.956. See 37 C.F.R. § 41.79.

REVERSED; 37 C.F.R. § 41.77(b)

alw

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Patent Owner:

Law Offices of Grady L. White, LLC
10605 Concord Street
Suite 207
Kensington, MD 20895

Third Party Requester:

Thomas J. Nikolai
Nikolai & Mersereau, P.A.
900 Second Avenue South
Suite 820
Minneapolis, MN 55042