Ex Parte Adcock et al

Patent Trial and Appeal Board

May 24, 2018

13612627 (P.T.A.B. May. 24, 2018)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
13/612,627 09/12/2012
35811 7590 05/29/2018
IP GROUP OF DLA PIPER LLP (US)
ONE LIBERTY PLACE
1650 MARKET ST, SUITE 4900
PHILADELPHIA, PA 19103
UNITED ST A TES OF AMERICA
FIRST NAMED INVENTOR
Paul D. Adcock
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
ATTORNEY DOCKET NO. CONFIRMATION NO.
NGI-14-1117DIV-DIV 2607
EXAMINER
HAMILTON, SARA CHANDLER
ART UNIT PAPER NUMBER
3692
NOTIFICATION DATE DELIVERY MODE
05/29/2018 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):
pto. phil@dlapiper.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte PAUL D. ADCOCK, MICHAEL A. CORMACK,
THOMAS F. HALLER, and ROBERT A. HILL
Appeal2017-003337
Application 13/612,627 1
Technology Center 3600
Before CAROLYN D. THOMAS, AARON W. MOORE, and
DAVID J. CUTITTA II, Administrative Patent Judges.
CUTITT A, Administrative Patent Judge.
DECISION ON APPEAL
Appellants seek our review under 35 U.S.C. § 134(a) of the
Examiner's final decision rejecting claims 20, 21, and 24, which are all the
claims pending and under consideration in the application. 2 We have
jurisdiction under 35 U.S.C. § 6(b ).
We AFFIRM.
1 Appellants identify the Real Party in Interest as NYSE Group, Inc. See
Appeal Br. 1.
2 Claims 1-19 and 26-33 are canceled and claims 22, 23, 25, and 34--36 are
withdrawn from consideration. See Appeal Br. 18-19.
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Application 13/612,627
STATEMENT OF THE CASE
Invention
Appellants' invention relates to a posting market center for
repricing a reprice-to-block order. See Spec. i-f 7. 3
Exemplary Claim
Claim 20 is exemplary and is reproduced below.
20. A posting market center, comprising:
an internal order book and a public order book;
an interface embodied in a computing system receiving
orders, including reprice-to-block orders that are to be repriced
based on block trades executed at inferior prices, and
continuously electronically polling market-wide tape over the
Internet for a new last sale executed on an away market;
a posting market center memory storing code for
analyzing and processing reprice-to-block orders;
a processor executing the stored code for analyzing and
processing reprice-to-block orders when the interface receives
said reprice-to-block orders, wherein the code, upon execution
by said processor, causes said posting market center to:
(a) post one or more of the received reprice-to-block
orders on the internal order book and the public order
book;
(b) continuously electronically poll, via the
interface, the market-wide tape over the Internet for the
new last sale executed on the away market;
3 Our Decision refers to: Appellants' Appeal Brief filed April 26, 2016
("Appeal Br."); Reply Brief filed December 29, 2016 ("Reply Br.");
Examiner's Answer mailed November 3, 2016 ("Ans."); Final Office Action
mailed December 21, 2015 ("Final Act."); and original Specification filed
September 12, 2012 ("Spec.").
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( c) automatically activate, via the interface, a block
trade decision application when the new last sale is posted
on the tape;
( d) determine, via the block trade decision
application, that the new last sale is a block trade;
( e) determine that the block trade was executed at a
price that is inferior to a price of the one or more reprice-
to-block orders that were posted to the internal order book
and the public order book at step (a); and
(t) reprice at least one of the one or more reprice-to-
block orders to the price of the block trade that was
executed at the inferior price, wherein the at least one
repriced reprice-to-block order is posted in a position other
than a top position on at least one of said order books,
comprises one or more non-displayed components, or a
combination thereof.
Appeal Br. 18 (Claims Index).
REJECTION
Claims 20, 21, and 24 stand rejected under 35 U.S.C. § 101 as
directed to non-patentable subject matter. Final Act. 2-14.
Our review in this appeal is limited only to the above rejection and the
issues raised by Appellants. Arguments not made are waived. See MANUAL
OF PATENT EXAMINING PROCEDURE (MPEP) § 1205.02 (9th Ed., Rev.
08.2017, Jan. 2018); 37 C.F.R. §§ 41.37(c)(l)(iv), 41.39(a)(l).
ANALYSIS
Issue: Whether the Examiner properly rejects the claims under
35 U.S.C. § 101 as being directed to non-patentable subject matter?
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Appellants argue the claims as a group. See Appeal Br. 3, 14. We
select independent claim 20 as exemplary of Appellants' arguments for
claims 21 and 24. 37 C.F.R. § 41.37(c)(l)(iv).
The Examiner finds claim 20 is "directed to repricing a reprice-to-
block order," which is an abstract idea. Final Act. 4. The Examiner also
finds the claim does "not include additional elements that are sufficient to
amount to significantly more than the judicial exception." Final Act. 5.
Appellants present several arguments against the § 101 rejection. We
do not find Appellants' arguments persuasive. Instead, we find the
Examiner has provided a comprehensive response to Appellants' arguments
supported by a preponderance of evidence. See Ans. 3-15. As such, we
adopt the Examiner's findings and explanations. See Final Act. 2-14;
Ans. 3-15.
Section 101 provides that "[ w ]hoever invents or discovers any new
and useful process, machine, manufacture, or composition of matter, or any
new and useful improvement thereof, may obtain a patent therefor, subject to
the conditions and requirements of this title." 35 U.S.C. § 101. The
provision, however, "' ... contains an important implicit exception: [l]aws of
nature, natural phenomena, and abstract ideas are not patentable." Alice
Corp. Pty. Ltd. v. CLS Bank Int 'l, 134 S. Ct. 2347, 2354 (2014) (quoting
Assoc. for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107,
2116 (2013) ). The "abstract ideas" category embodies the longstanding rule
that an idea, by itself, is not patentable. Alice, 134 S. Ct. at 2355 (quoting
Gottschalkv. Benson, 409 U.S. 63, 67 (1972)).
In Alice, the Supreme Court sets forth an analytical "framework for
distinguishing patents that claim laws of nature, natural phenomena, and
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abstract ideas from those that claim patent-eligible applications of those
concepts." Id. at 2355 (citing Mayo Collaborative Servs. v. Prometheus
Labs., Inc., 566 U.S. 66, 72-73 (2012)). The first step in the analysis is to
"determine whether the claims at issue are directed to one of those patent-
ineligible concepts," such as an abstract idea. Id. If the claims are directed
to a patent-ineligible concept, the second step in the analysis is to consider
the elements of the claims "individually and 'as an ordered combination"' to
determine whether there are additional elements that "'transform the nature
of the claim' into a patent-eligible application." Id. (quoting Mayo, 566 U.S.
at 79, 78). In other words, the second step is to "search for an 'inventive
concept'-i.e., an element or combination of elements that is 'sufficient to
ensure that the patent in practice amounts to significantly more than a patent
upon the [ineligible concept] itself."' Id. (brackets in original) (quoting
Mayo, 566 U.S. at 72-73). The prohibition against patenting an abstract
idea "'cannot be circumvented by attempting to limit the use of the formula
to a particular technological environment' or adding 'insignificant
postsolution activity."' Bilski v. Kappas, 561 U.S. 593, 610-11 (2010)
(quoting Diamond v. Diehr, 450 U.S. 175, 191-92 (1981)).
First Step
Initially, independent claim 20 recites a "posting market center"
comprising a "processor." As such, claim 20 is directed to a machine, a
statutory class of invention within 35 U.S.C. § 101. Turning to the first step
of the Alice inquiry, we must determine whether claim 20, being directed to
a statutory class of invention, nonetheless falls within a judicial exception.
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We agree with the Examiner that claim 20 is "directed to repricing a reprice-
to-block order" and that "[ r ]epricing a reprice-to-block order is a
fundamental economic practice (block trading) and method of organizing
human activity (trading)," which is an abstract idea. Final Act. 4; see
Ans. 3.
Appellants argue claim 20 is not abstract because it is "directed
toward a new specialized computer system" and "a highly specialized
computer network architecture." Appeal Br. 3; Reply Br. 2.
We are unpersuaded. Claim 20, considered as a whole, relates to
repricing reprice-to-block orders. Such activities are squarely within the
realm of abstract ideas. Generating prices, which includes repricing, is a
fundamental economic practice long prevalent in our system of commerce,
like the risk hedging in Bilski (see Bilski, 561 U.S. at 593), the intermediated
settlement in Alice (see Alice, 134 S. Ct. at 2356-57), the verifying of credit
card transactions in CyberSource (see CyberSource Corp. v. Retail
Decisions, Inc., 654 F.3d 1366, 1370 (Fed. Cir. 2011)), the collecting and
analyzing of information to detect and notify of misuses in Fair Warning (see
FairWarning IP, LLC v. Iatric Sys., Inc., 839 F.3d 1089, 1093-94 (Fed. Cir.
2016)), and the guaranteeing of transactions in buySAFE (see buySAFE, Inc.
v. Google, Inc., 765 F.3d 1350, 1354 (Fed. Cir. 2014)). Generating prices
for financial instruments is also a building block of a market economy.
Thus, we agree with the Examiner that generating security prices by
repricing a reprice-to-block order, like the fundamental business practices
supra, is an "abstract idea" beyond the scope of§ 101. See Alice, 134 S. Ct.
at 2356.
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Moreover, as the Examiner notes, our reviewing court has held similar
fundamental economic business practices and methods of organizing human
activity to be abstract ideas, like a "method of pricing a product for sale" in
OIP. See OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1362 (Fed.
Cir. 2015) (internal quotations and citation omitted); see also Ans. 8. Like
the fundamental economic practice of offer-based price optimization in OIP,
Appellants' claim 20 generates price information. See id. Appellants'
arguments fail to demonstrate why the concept of generating security prices
by repricing a reprice-to-block order is dissimilar to other fundamental
economic concepts found to be abstract ideas by the Supreme Court and our
reviewing court.
Appellants argue the claimed invention "[is] not directed to an
abstract idea as evidenced by lack of preemption." Appeal Br. 11. We are
unpersuaded because the test for whether claims are statutory is not
preemption, but rather is the Mayo two step test. "While preemption may
signal patent ineligible subject matter, the absence of complete preemption
does not demonstrate patent eligibility." Ariosa Diagnostics, Inc. v.
Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015). "Where a patent's
claims are deemed only to disclose patent ineligible subject matter under the
Mayo framework, as they are in this case, preemption concerns are fully
addressed and made moot." Id.
We, therefore, agree with the Examiner that claim 20 focuses on an
abstract idea-and, hence, requires step-two analysis under § 101.
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Second Step
Turning to the second step of the Alice inquiry, we find nothing in
Appellants' claim 20 that adds "significantly more," sufficient to transform
the abstract idea of repricing a reprice-to-block order into a patent-eligible
application. Alice, 134 S. Ct. at 2357. We agree with the Examiner that
there are "no meaningful limitations beyond generally linking the use of an
abstract idea to a particular technical environment, and the claims require no
more than a generic computer to perform generic computer functions that are
well-understood, routine and conventional." Final Act. 5.
First, Appellants argue the appealed claim, like the claims in DDR
Holdings, is "necessarily rooted in computer technology" and overcomes "a
computer-centric problem specifically arising in the realm of computer
networks and the Internet." Appeal Br. 4 (citing DDR Holdings, LLC v.
Hotels.com, L.P., 773 F.3d 1245, 1258 (Fed. Cir. 2014) (finding an inventive
concept in the modification of the conventional mechanics behind website
display to produce a dual-source integrated hybrid display). Appellants
further argue that, consistent with DDR Holdings, the claimed solution
overcomes a problem that "prior art computer trading systems are
(technologically) unable to automatically reprice trades to be equal to the
price of a block trade that was executed outside of prices quoted on a
market," thereby "eliminat[ing] certain processing functions required of
prior computer systems" to minimize "wasting [of] computer resources."
Appeal Br. 4, 6.
We are unpersuaded. The solution offered by Appellants' claim 20 is
not rooted in any novel computer technology, as evidenced by claim 20
merely reciting a generic computing system and processor. Moreover, rather
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than identifying a solution rooted in computer technology, Appellants'
Specification identifies a problem that "there is a need for a posted limit
order that will reprice itself less aggressively in view of a block trade
executing in that issue at a trade price that is inferior to the prices quoted on
the posting market center." Spec. i-f 6. Appellants' claimed invention seeks
to solve the identified problem by "automatically repricing" orders.
Spec. i-f 7.
This problem is a business problem, not a technical problem. Claim
20 recites a specific way and specific context for repricing a reprice-to-block
order" by implementing steps (a) through (t) using a generic processor. See
claim 20. While these steps limit the scope of the abstract concept of
repricing a reprice-to-block order, the limitations are not sufficient to
transform Appellants' otherwise patent-ineligible abstract idea into patent-
eligible subject matter. Fundamentally, the solution Appellants offer is "an
entrepreneurial, rather than a technological, one." DDR, 773 F.3d at 1265
(Mayer, J., dissenting).
Second, Appellants argue the Examiner fails to follow the Office's
guidance in selecting a case similar to Appellants' claim 20 by not
recognizing claim 20 is comparable to Examples 21 and 23 from the JULY
2015 UPDATE: SUBJECT MATTER ELIGIBILITY. See Appeal Br. 7-8.
Appellants' argument is not sufficient to show Examiner error
because the guidelines are not legal requirements. See 2014 INTERIM
GUIDANCE ON PATENT SUBJECT MATTER ELIGIBILITY, 79 Fed. Reg. 74,619
(Dec. 16, 2014) ("This Interim Eligibility Guidance has been developed as a
matter of internal Office management and is not intended to create any right
or benefit, substantive or procedural, enforceable by any party against the
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Office. Rejections will continue to be based upon the substantive law, and it
is these rejections that are appealable. Failure of Office personnel to follow
this Interim Eligibility Guidance is not, in itself, a proper basis for either an
appeal or a petition"); cf In re Fisher, 421F.3d1365, 1372 (Fed. Cir. 2005)
("The MPEP and Guidelines are not binding on this court") (internal
quotations and citation omitted).
Third, Appellants argue "the claims include the limitations of a
posting market center activating (controlling), via an interface, other
computer components (e.g., a block trade decision application) to cause the
block trade decision application to perform certain functions, which is
patent-eligible under Diamond v. Diehr." Appeal Br. 9.
The Examiner responds "Li Just as Diehr could not save the claims in
Alice, which were directed to 'implement[ing] the abstract idea of
intermediated settlement on a generic computer', Alice, 134 S. Ct. at
2358-59, it cannot save OIP's claims directed to implementing the abstract
idea of price optimization on a generic computer" or Appellants' claim 20.
Final Act. 11.
We find Appellants' argument unpersuasive because we agree with
the Examiner that Appellants fail to persuasively distinguish claim 20 from
the claims in Diehr, in light of Alice and OIP.
Fourth, Appellants argue "the asserted abstract idea is applied by use
of a particular machine and provides improvements to the functioning of the
computer itself." Appeal Br. 10; see also Reply Br. 6-7 (including similar
arguments based on Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed.
Cir. 2016)).
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This argument is unpersuasive because claim 20, here, is unlike the
claims in Enfish. There, our reviewing court relied on the distinction made
in Alice between, on one hand, computer-functionality improvements and,
on the other, uses of existing computers as tools in aid of processes focused
on "abstract ideas" (in Alice, as in so many other § 101 cases, the abstract
ideas being the creation and manipulation of legal obligations such as
contracts involved in fundamental economic practices). Enfish, 822 F .3d at
1335-36; see also Alice, 134 S. Ct. at 2358-59. In Enfish, the decision to
reject the § 101 challenge was applied at stage one because the claims at
issue focused, not on asserted advances in uses to which existing computer
capabilities could be put, but on a specific improvement-a particular
database technique-in how computers could carry out one of their basic
functions of storage and retrieval of data. Enfish, 822 F.3d at 1335-36.
The present case is different because the focus of claim 20 is not on an
improvement in computer-functionality, as in Enfish, but on independently
abstract ideas that use a computer as a tool, i.e., to collect and manipulate
data to calculate a value to reprice at least one reprice-to-block order to the
price of the block trade that was executed at an inferior price. See Appeal
Br. 18, claim 20.
Appellants next argue the Examiner has not met the burden of
establishing a rejection under 35 U.S.C. § 101 because "the Examiner has
not produced any evidence that, for example, the Appellants' claims are a
fundamental economic practice or method of organizing human activity."
Appeal Br. 13 (citing Final Act. 8-9).
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We disagree. The USPTO carries its procedural burden when its
rejection satisfies the requirements of 35 U.S.C. § 132 by notifying the
applicant of the reasons for rejection, "together with such information and
references as may be useful in judging of the propriety of continuing the
prosecution of [the] application." In re Jung, 637 F.3d 1356, 1362 (Fed. Cir.
2011) (brackets in original, quoting 35 U.S.C. § 132). Here, the Examiner
has notified Appellants that the claims are directed to an ineligible abstract
idea. Specifically, the Examiner determines claim 20 is directed to
"[ r ]epricing a reprice-to-block order," which "is a fundamental economic
practice (block trading) and method of organizing human activity (trading)"
and that the "claim as a whole does not amount to 'significantly more' than
the judicial exception." Final Act. 4, 5; see Ans. 6-7. Thus, Appellants
have been notified of the reasons for the rejection with such information
"as may be useful in judging of the propriety of continuing the prosecution
of [the] application." Jung, 637 F.3d 1362 (internal citation omitted).
Because Appellants' exemplary claim 20 is directed to a patent-
ineligible abstract concept and does not recite something "significantly
more" under the second prong of the Alice analysis, we sustain the
Examiner's rejection of this claim under 35 U.S.C. § 101 as being directed
to non-patentable subject matter in light of Alice and its progeny. The
rejection of claims 21 and 24, which are not argued separately, is sustained
for the same reasons.
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DECISION
We affirm the Examiner's rejection of claims 20, 21, and 24 under
35 U.S.C. § 101.
No time period for taking any subsequent action in connection with
this appeal may be extended under 37 C.F.R. § 1.136(a)(l )(iv).
AFFIRMED
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