Ex Parte Asher et al

Patent Trials and Appeals Board

Jun 26, 2019

13958935 - (D) (P.T.A.B. Jun. 26, 2019)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
13/958,935 08/05/2013
63710 7590 06/28/2019
INNOVATION DIVISION
CANTOR FITZGERALD, L.P.
110 EAST 59TH STREET (6TH FLOOR)
NEW YORK, NY 10022
FIRST NAMED INVENTOR
Joseph M. Asher
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.
04-6196-C2 2262
EXAMINER
APPLE, KIRSTEN SACHWITZ
ART UNIT PAPER NUMBER
3697
NOTIFICATION DATE DELIVERY MODE
06/28/2019 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):
patentdocketing@cantor.com
lkorovich@cantor.com
phowe@cantor.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte JOSEPH M. ASHER and HOWARD W. LUTNICK1
Appeal2017-007084
Application 13/958,935
Technology Center 3600
Before LARRY J. HUME, BARBARA A. BENOIT, and
MICHAEL J. ENGLE, Administrative Patent Judges.
ENGLE, Administrative Patent Judge.
DECISION ON APPEAL
Appellants appeal under 35 U.S.C. § 134(a) from a final rejection of
claims 43-72, which are all of the claims pending in the application. We
have jurisdiction under 35 U.S.C. § 6(b ).
We AFFIRM.
Technology
The application relates to "purchasing a financial instrument indexed
to entertainment revenue." Spec. ,r 2.
Illustrative Claim
Claim 43 is illustrative and reproduced below with certain limitations
at issue for 35 U.S.C. § 103 underlined and for§ 112 italicized:
1 Appellants state that the real party in interest is CFPH, LLC. App. Br. 3.
Appeal2017-007084
Application 13/958,935
43. A method, comprising:
determining, by a computing device, a first entertainment
event produced by a first entertainment company and funded
with a first funding amount;
determining, by the computing device, a second
entertainment event;
determining, by the computing device, a first period of
time;
determining, by the computing device, a second period of
time;
facilitating, by the computing device, bundling of rights to
a first payment and rights to a second payment to form a first
derivative contract that grants a holder of the first derivative
contract:
a) at a first date after the first period of time has
passed, a right to the first payment, in which the first
payment is based on a first revenue earned by the first
entertainment event during at least a portion of the first
period of time, and
b) at a second date when the second period of time
has passed, a right to the second, in which the second
payment is based on a second revenue earned by the
second entertainment event during at least a portion of the
second period of time,
in which the first derivative contract does not grant
an equity right to the holder;
facilitating, by the computing device, a sale of the first
derivative contract to a first buyer for a first price;
facilitating, by the computing device, the first payment to
the holder at least one of at and after the first date; and
facilitating, by the computing device, the second payment
to the holder at least one of at and after the second date.
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Rejections on Appeal
Claims 43-72 stand rejected under 35 U.S.C. § 101 for being
unpatentable because they are directed to unpatentable subject matter
without significantly more. Final Act. 4.
Claims 43-72 stand rejected under 35 U.S.C. § 103 as being
unpatentable over Keiser (US 8,756,142 Bl; June 17, 2014) and Barron's,
Dictionary of Finance & Investment Terms (John Downes ed., 6th ed. 2003).
Final Act. 5-12.
Claims 43-72 stand rejected under 35 U.S.C. § 112, second paragraph
for being unpatentable as indefinite. Final Act. 3.
Claims 43-72 stand rejected under the judicially-created doctrine of
obviousness-type double patenting over claims of U.S. Patent 7,567,931.
Final Act. 2.
ISSUES
1. Did the Examiner err in determining that claim 43 was directed
to patent-ineligible subject matter?
2. Did the Examiner err in finding the cited art teaches or suggests
"in which the first derivative contract does not grant an equity right to the
holder," as recited in claim 43?
3. Did the Examiner err in concluding that the terms "associated";
"bundling of rights"; and "derivative" render claim 43 indefinite?
4. Did the Examiner err in concluding claim 43 is unpatentable
under the obviousness-type double patenting doctrine over claim 1 of U.S.
Patent 7,567,931?
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ANALYSIS
§ 101
Section 101 defines patentable subject matter: "Whoever 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 Supreme Court, however, has "long held that
this provision contains an important implicit exception" that "[l]aws of
nature, natural phenomena, and abstract ideas are not patentable." Mayo
Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 70 (2012)
(quotation omitted). "Eligibility under 35 U.S.C. § 101 is a question of law,
based on underlying facts." SAP Am., Inc. v. InvestPic, LLC, 898 F.3d 1161,
1166 (Fed. Cir. 2018). To determine patentable subject matter, the Supreme
Court has set forth a two-part test.
"First, we determine whether the claims at issue are directed to one of
those patent-ineligible concepts" of "laws of nature, natural phenomena, and
abstract ideas." Alice Corp. v. CLS Bank Int'!, 573 U.S. 208,217 (2014).
"The inquiry often is whether the claims are directed to 'a specific means or
method' for improving technology or whether they are simply directed to an
abstract end-result." RecogniCorp, LLC v. Nintendo Co., 855 F.3d 1322,
1326 (Fed. Cir. 2017). A court must be cognizant that "all inventions at
some level embody, use, reflect, rest upon, or apply laws of nature, natural
phenomena, or abstract ideas" (Mayo, 566 U.S. at 71), and "describing the
claims at ... a high level of abstraction and untethered from the language of
the claims all but ensures that the exceptions to § 101 swallow the rule."
Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1337 (Fed. Cir. 2016).
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Instead, "the claims are considered in their entirety to ascertain whether their
character as a whole is directed to excluded subject matter." Internet
Patents Corp. v. Active Network, Inc., 790 F.3d 1343, 1346 (Fed. Cir. 2015).
If the claims are directed to an abstract idea or other ineligible
concept, then we continue to the second step and "consider the elements of
each claim both individually and 'as an ordered combination' to determine
whether the additional elements 'transform the nature of the claim' into a
patent-eligible application." Alice, 573 U.S. at 217 (quoting Mayo, 566 U.S.
at 79, 78). The Supreme Court has "described step two of this analysis as a
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. at
217-18 (quotation omitted).
The U.S. Patent & Trademark Office recently published revised
guidance on the application of§ 101. USPTO, 2019 Revised Patent Subject
Matter Eligibility Guidance, 84 Fed. Reg. 50 (Jan. 7, 2019) ("Revised
Guidance"). Under the Revised Guidance, we look to whether the claim
recites
( 1) a judicial exception, such as a law of nature or any of the
following groupings of abstract ideas:
(a) mathematical concepts, such as mathematical formulas;
(b) certain methods of organizing human activity, such as a
fundamental economic practice; or
( c) mental processes, such as an observation or evaluation
performed in the human mind;
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(2) any additional limitations that integrate the judicial exception
into a practical application (see MPEP § 2106.05(a}-(c), (e}-(h));
and
(3) any additional limitations beyond the judicial exception that,
alone or in combination, were not "well-understood, routine,
conventional" in the field (see MPEP § 2106.05(d)).
See Revised Guidance 52, 55, 56. Under the Revised Guidance, if the claim
does not recite a judicial exception, then it is eligible under § 101 and no
further analysis is necessary. Id. at 54. Similarly, under the Revised
Guidance, "if the claim as a whole integrates the recited judicial exception
into a practical application of that exception," then no further analysis is
necessary. Id. at 53, 54.
Although we conduct our review for patent eligibility de nova in light
of the Revised Guidance, we agree with the Examiner for the reasons
discussed below.
A) USPTO Step 2A, Prong 1
Claim 43 recites:
facilitating . . . bundling of rights to a first payment and
rights to a second payment to form a first derivative contract that
grants a holder of the first derivative contract:
a) at a first date after the first period of time has
passed, a right to the first payment, in which the first
payment is based on a first revenue earned by the first
entertainment event during at least a portion of the first
period of time, and
b) at a second date when the second period of time
has passed, a right to the second, in which the second
payment is based on a second revenue earned by the
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second entertainment event during at least a portion of the
second period of time,
in which the first derivative contract does not grant
an equity right to the holder;
facilitating ... a sale of the first derivative contract to a
first buyer for a first price;
facilitating ... the first payment to the holder at least one
of at and after the first date; and
facilitating ... the second payment to the holder at least
one of at and after the second date.
Thus, claim 43 is directed to "creating a security bundle" (Ans. 4),
including establishing the bundle, selling the bundle, and handling payments
from the bundle. The Specification itself explains that "[t]his disclosure
relates generally to ... financial investments" and "[ m Jore specifically ... to
purchasing a financial instrument indexed to entertainment revenue." Spec.
,r 2. For example, "this disclosure provides a method for forming a
securities bundle indexed to entertainment revenue." Id. ,r 4 ( emphasis
added).
We therefore agree with the Examiner that creating such a security
bundle is "a fundamental economic practice," which is a certain "method[]
of organizing human activities." Ans. 4. The Examiner correctly analogizes
the claimed security bundling with the Supreme Court's determination that
the concept of hedging was unpatentable subject matter. Id. at 5-6; Bilski v.
Kappas, 561 U.S. 593, 611-12 (2010) ("The concept of hedging ... is an
unpatentable abstract idea, just like the algorithms at issue in Benson and
Flook. Allowing petitioners to patent risk hedging would pre-empt use of
this approach in all fields, and would effectively grant a monopoly over an
abstract idea."). Similarly, the Supreme Court has held that "the concept of
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intermediated settlement" is unpatentable subject matter. Alice, 573 U.S. at
220. Here, "[t]he claims are squarely about creating a contractual
relationship"-in this case, a "derivative" that "bundles" two rights
together-"that is beyond question of ancient lineage." buySAFE, Inc. v.
Google, Inc., 765 F.3d 1350, 1355 (Fed. Cir. 2014). Appellants themselves
argue that the concepts of a "derivative" and "bundling of rights" would
have been understood by a person of ordinary skill in the art. E.g., App.
Br. 8; see also Ans. 7 ( discussing known definitions). Thus, consistent with
case law, the Revised Guidance, and the Specification, we conclude such a
fundamental economic practice is a certain method of organizing human
activities constituting an abstract idea. E.g., Bilski, 561 U.S. at 611-12;
Alice, 573 U.S. at 220; Revised Guidance 52 & n.13 (listing cases).
Appellants argue, "This is not an abstract idea. It is a thing- namely,
a security bundle. Just like a screwdriver is not an abstract idea, but rather a
thing as well." App. Br. 6. However, Appellants fail to explain this
argument or its relevance. To the extent a security bundle can broadly be
considered a "thing," the same would be true for a hedge or intermediated
settlement, both of which the Supreme Court has held constitute
unpatentable subject matter in Bilski and Alice.
B) USP TO Step 2A, Prong 2
We next tum to "whether the claim as a whole integrates the recited
judicial exception into a practical application." Revised Guidance 54. We
conclude that it does not.
Claim 43 recites that the claimed steps are performed "by a computing
device" or "by the computing device." Yet the Supreme Court has held that
"simply implementing [an abstract idea] on a physical machine, namely a
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computer, [is] not a patentable application of that principle." Mayo
Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 86 (2012). Put
another way, "the mere recitation of a generic computer cannot transform a
patent-ineligible abstract idea into a patent-eligible invention." Alice, 573
U.S. at 222-23; see also Ans. 4.
Claim 43 also recites:
determining ... a first entertainment event produced by a
first entertainment company and funded with a first funding
amount;
determining ... a second entertainment event;
determining ... a first period of time;
determining ... a second period of time[.]
However, the abstract idea is a security bundle based on the claimed
entertainment events and periods of time. Thus, "determining" those
entertainment events and periods of time constitutes mere "insignificant
data-gathering steps" that "add nothing of practical significance to the
underlying abstract idea." Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709,
716 (Fed. Cir. 2014) (quotation omitted); see also Ans. 5; MPEP
§ 2106.05(g).
Here, claim 43 does not improve the functioning of a computer or
other technology, nor does it effect a transformation of a particular article to
a different state or thing. See MPEP § 2106.05(a), (c). Rather, the claim
involves only a generic "computer" rather than a particular machine. See id.
§ 2106.05(b), (f).
Thus, claim 43 does not integrate the judicial exception into a
practical application. See Revised Guidance 54--56; MPEP § 2106.05(a}-
(c), (e}-(h).
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C) USPTO Step 2B
Finally, we agree with the Examiner that "[a]ny generic computer can
be used to carry out the steps of the proposed invention." Ans. 5. As the
Federal Circuit has held, "the use of conventional computer components,
such as a database and processors, operating in a conventional manner"
"do[es] not confer patent eligibility." Intellectual Ventures I LLC v. Capital
One Bank (USA), 792 F.3d 1363, 1371 (Fed. Cir. 2015). This is because
"mere automation of manual processes using generic computers does not
constitute a patentable improvement in computer technology." Credit
Acceptance Corp. v. Westlake Servs., 859 F.3d 1044, 1055 (Fed. Cir. 2017).
The patent eligibility inquiry may contain underlying issues of fact.
Mortg. Grader, Inc. v. First Choice Loan Servs. Inc., 811 F.3d 1314, 1325
(Fed. Cir. 2016). In particular, "[t]he question of whether a claim element or
combination of elements is well-understood, routine and conventional to a
skilled artisan in the relevant field is a question of fact." Berkheimer v. HP
Inc., 881 F.3d 1360, 1368 (Fed. Cir. 2018).
In accordance with existing Step 2B guidance, an examiner's finding
that an additional element ( or combination of elements) is well understood,
routine, conventional activity must be supported with at least one of the four
specific types of evidence required by the USPTO Berkheimer
Memorandum. See Revised Guidance 51 & n.6, 56 & n.36; MPEP
§ 2106.05( d); Memorandum from Deputy Commissioner for Patent
Examination Policy, "Changes in Examination Procedure Pertaining to
Subject Matter Eligibility, Recent Subject Matter Eligibility Decision
(Berkheimer v. HP, Inc.)" (Apr. 19, 2018).
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As evidence of the conventional nature of the recited "computing
device" in method claim 43 and "machine readable medium" in apparatus
claim 70, the Specification discloses:
One or more of the illustrated participants of system 100 may be
or include a computer 102. For example, though computer 102
is illustrated as being associated with special-purpose trust 120,
a plurality of computers 102 may be associated with
entertainment company 110, investors 130, or other illustrated or
non-illustrated participants, or any combination thereof. At a
high level, as used in this document, the term "computer" is
intended to encompass a personal computer, server pool,
workstation, server, network computer, personal data assistant
(PDA), dumb terminal, cell phone, pager, text message device,
mainframe, or any other suitable data processing device.
Moreover, "computer" and "user of computer" may be used
interchangeably, as appropriate, without departing from the
scope of this disclosure.
Spec. ,r 26.
Thus, because the Specification describes the additional elements in
general terms, without describing the particulars, we conclude the claim
limitations may be broadly but reasonably construed as reciting conventional
computer components and techniques, particularly in light of Appellants'
Specification, as quoted above. 2
We therefore determine that claim 43 does not add significantly more
to the patent-ineligible abstract idea.
Appellants argue that "[t]he claims do not preempt the alleged abstract
idea." Reply Br. 3. However, "[ w ]hile preemption may signal patent
2 Claim terms are to be given their broadest reasonable interpretation, as
understood by those of ordinary skill in the art and taking into account
whatever enlightenment may be had from the Specification. In re Morris,
127 F.3d 1048, 1054 (Fed. Cir. 1997).
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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.
Appellants further argue that the claims must add new functionality
because there is no "lawful prior art rejection." Reply Br. 4--5. Yet
"[g]roundbreaking, innovative, or even brilliant discovery does not by itself
satisfy the § 101 inquiry." Ass 'n for Molecular Pathology v. Myriad
Genetics, Inc., 569 U.S. 576, 591 (2013). "[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).
Accordingly, we sustain the rejection of claims 43-72 under§ 101.
§ 112, second paragraph
Independent claims 43 and 70 recite "bundling of rights to a first
payment and rights to a second payment to form a first derivative contract
that grants a holder of the first derivative contract" a "right" to certain
specified payments at specified times.
The Examiner determines that the terms "bundling of rights" and
"derivative" render the claims indefinite. Final Act. 3. The Examiner asks,
"Which rights? How is this done?" Id. "Is the term 'derivative' being used
as a financial instrument derivative or general term derivative - defined as a
type of something?" Id. "The term 'derivative' has a very specific meaning
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and this does not fit into the description by the appellant. The appellant
perhaps intended to mean a 'payment' or 'legal contract."' Ans. 7.
We agree with Appellants, however, that "[t]he rights are identified in
the claim limitation." App. Br. 8. In particular, the independent claims
specify "rights to a first payment" and "rights to a second payment" at
specific times and based on revenue for specific entertainment events. We
agree with Appellants that a person of ordinary skill in the art at the time of
the invention would have understood the terms "bundling of rights" and
"derivative" to have their ordinary meaning in view of the claims and the
rest of the Specification. Id. at 8-9.
The Examiner also states that "the examiner did not understand" the
"loose term of 'associate"' in the phrase "first security is associated with a
first entertainment company." Final Act. 3; Ans. 6. Although this phrase
appears in the Specification (e.g., paragraph 4), it does not appear to be in
any claims on appeal. The basis of the Examiner's rejection under§ 112
therefore is unclear. To the extent the word "associated" appears in different
phrases in dependent claims 67 ("the first derivative contract is associated
with a dividend schedule" that "includes" certain specified "dates") and 69
("the first entertainment event is associated with a movie"), we agree with
Appellants that "breadth is not indefiniteness." SmithKline Beecham Corp.
v. Apotex Corp., 403 F.3d 1331, 1341 (Fed. Cir. 2005) (quotation omitted).
"Merely claiming broadly does not ... prevent the public from
understanding the scope of the patent." Ultimax Cement Mfg. Corp. v. CTS
Cement Mfg. Corp., 587 F.3d 1339, 1352 (Fed. Cir. 2009).
Accordingly, we do not sustain the Examiner's rejection under§ 112
of claims 43-72.
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§ 103
Independent claims 43 and 70 recite "in which the first derivative
contract does not grant an equity right to the holder."
For the obviousness rejection, Appellants argue that this "in which"
clause "remains unaddressed by the Examiner." App. Br. 12.
We agree with Appellants. The Examiner does not address this "in
which" clause in the Answer. See Ans. 9-13. In the Final Office Action, the
Examiner conflates the "in which" clause with the following limitation
("facilitating, by the computing device, a sale of the first derivative contract
to a first buyer for a first price"), yet fails to explain how the citations apply
to the "in which" clause rather than the "facilitating" clause. See Final
Act. 6 ("in which the first derivative contract does not grant an equity right
to the holder; facilitating, by the computing device, a sale of the first
derivative contract to a first buyer for a first price (see Keiser Figure 2, item
210 + Figure 1 + column 2, lines 15-55 + column 6, line 16-37)").
Accordingly, we are constrained to reverse the Examiner's rejection
under § 103 of independent claims 43 and 70, and their dependent claims
44---69, 71, and 72.
Double Patenting
In view of the complete lack of any argument or even
acknowledgment of the double patenting rejection of claims 43-72, we pro
forma affirm the Examiner's rejection. Arguments not made are waived.
See 37 C.F.R. § 4I.37(c)(l)(iv).
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CONCLUSION
For the reasons above, we affirm the Examiner's decision rejecting
claims 43-72 under§ 101, and we also affirm the Examiner's decision
rejecting claims 43-72 under the obviousness-type double patenting
doctrine. We reverse the Examiner's rejections of claims 43-72 under
§§ 103 and 112.
Because we have affirmed at least one ground of rejection with
respect to each claim on appeal, we affirm the Examiner's decision. See 37
C.F.R. § 4I.50(a)(l).
DECISION
We affirm the Examiner's decision rejecting claims 43-72.
No time for taking subsequent action in connection with this appeal
may be extended under 37 C.F.R. § 1.136(a). See 37 C.F.R. § 41.50(±).
AFFIRMED
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