Ex Parte Brady et al

Patent Trial and Appeal Board

Sep 14, 2017

13870758 (P.T.A.B. Sep. 14, 2017)

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.
4672-10783DUS 9250
EXAMINER
POINVIL, FRANTZY
ART UNIT PAPER NUMBER
3691
NOTIFICATION DATE DELIVERY MODE
13/870,758 04/25/2013
12684 7590 09/18/2017
Lempia Summerfield Katz LLC/CME
20 South Clark Street
Suite 600
Chicago, IL 60603
Neal Brady
09/18/2017 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):
mail@lsk-iplaw.com
docket-us @ lsk-iplaw.com
pair_lsk @ firsttofile.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte NEAL BRADY, NOAH CAREY,
WILLIAM R. ERWIN, JOHN GILMORE, MICHAEL QUATTROCKI,
FRANK STONE, and MARK THORNBURGH
Appeal 2016-0030001
Application 13/870,7582
Technology Center 3600
Before PHILIP J. HOFFMANN, BRUCE T. WIEDER, and
MATTHEW S. METERS, Administrative Patent Judges.
MEYERS, Administrative Patent Judge.
DECISION ON APPEAL
STATEMENT OF THE CASE
Appellants appeal under 35 U.S.C. § 134(a) from the Examiner’s
Final Rejection of claims 1—21. We have jurisdiction under 35 U.S.C.
§ 6(b).
1 Our Decision references Appellants’ Appeal Brief (“Appeal Br.,” filed
July 6, 2015) and Reply Brief (“Reply Br.,” filed January 11, 2016), the
Examiner’s Answer (“Ans.,” mailed November 12, 2015), and the Final
Office Action (“Final Act.,” mailed February 10, 2015).
2 Appellants identify Chicago Mercantile Exchange Inc., as the real party in
interest (Appeal Br. 2).
Appeal 2016-003000
Application 13/870,758
We AFFIRM.
CLAIMED INVENTION
Appellants’ claims relate to the “field of electronically trading
derivatives” (Spec. 12).
Claims 1,13, and 21 are the independent claims on appeal. Claim 1
reproduced below, with minor formatting changes and added bracketed
notations, is illustrative of the subject matter on appeal:
1. A system for electronically trading derivatives,
comprising:
[a] a market maker station;
[b] a subscriber station; and
[c] a network managing station in communication over a
network with the market maker station and the subscriber station;
[d] wherein the market maker station is configured to
receive a request for and/or to provide an indicative quote and/or
a binding quote;
[e] wherein the subscriber station is configured to request
and/or to receive the indicative quote and/or the binding quote,
and is further configured to submit an order;
[f] wherein the network managing station is configured to
limit quote traffic to interested participants, wherein the market
maker station and the subscriber station are independently
configured to submit binding quotes and orders to an Exchange,
and wherein the Exchange is configured for clearing matched
trades.
REJECTION
Claims 1—21 are rejected under 35 U.S.C. § 101 as directed to non-
statutory subject matter.
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ANALYSIS
Appellants argue claims 1—21 as a group (see Appeal Br. 4—7; see also
Reply Br. 1—3). We select independent claim 1 as representative. Claims 2—
21 stand or fall with independent claim 1. See 37 C.F.R. § 41.37(c)(l)(iv).
According to Alice step one, “[w]e must first determine whether the
claims at issue are directed to a patent-ineligible concept,” such as an
abstract idea. Alice Corp. Pty. Ltd. v. CLS Bank Inti, 134 S. Ct. 2347, 2355
(2014).
The “directed to” inquiry [] cannot simply ask whether the claims
involve a patent-ineligible concept, because essentially every
routinely patent-eligible claim involving physical products and
actions involves a law of nature and/or natural phenomenon—
after all, they take place in the physical world. See Mayo, 132 S.
Ct. at 1293 (“For all inventions at some level embody, use,
reflect, rest upon, or apply laws of nature, natural phenomena, or
abstract ideas.”) Rather, the “directed to” inquiry applies a stage-
one filter to claims, considered in light of the specification, based
on 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); see Genetic Techs. Ltd. v.
MerialL.L.C., 818 F.3d 1369, 1375 [] (Fed. Cir. 2016) (inquiring
into “the focus of the claimed advance over the prior art”).
Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1335 (Fed. Cir. 2016). “The
‘abstract idea’ step of the inquiry calls upon us to look at the ‘focus of the
claimed advance over the prior art’ to determine if the claim’s ‘character as a
whole’ is directed to excluded subject matter.” Affinity Labs of Texas, LLC
v. DIRECTV, LLC, 838 F.3d 1253, 1257 (Fed. Cir. 2016) (citing Elec. Power
Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1353 (Fed. Cir. 2016); see also
Enfish, 822 F.3d at 1335.
In rejecting claims 1—21, the Examiner finds “[t]he claims are directed
towards performing trading [of] derivatives which is a fundamental financial
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practice^] and thus, the claims include an abstract idea” (Final Act. 2). The
Examiner further finds that “[tjrading derivatives is a fundamental business
activity being a fundamental financial practice” (id. at 4). The Examiner
also finds the claim “limitations are merely instructions to implement the
abstract idea on a computer and require no more than a generic computer to
perform generic computer functions that are well-understood, routine and
conventional activities previously known to the industry” (id. at 3).
In response, Appellants argue that the Examiner’s rejection is
improper because “the present claims are not directed to an abstract idea and
the claimed invention is not a mere statement of a general concept” (Appeal
Br. 4; see also Reply Br. 1—2). In this regard, Appellants “generally disagree
with the Examiner’s unsupported assertion that the claims are directed to an
‘abstract idea’, ‘mathematical relationship’, or ‘fundamental financial
practice’ and even if it were, Appellants]’ claims do not relate to, nor do
they preempt, for example, mere trading of financial instruments” (Appeal
Br. 5). Appellants’ arguments are not persuasive.
At the outset, we note that although preemption may be the concern
driving the exclusion of abstract ideas from patent-eligible subject matter,
preemption is not the test for eligibility. “The Supreme Court has made
clear that the principle of preemption is the basis for the judicial exceptions
to patentability” and “[f]or this reason, questions on preemption are inherent
in and resolved by the § 101 analysis.” Ariosa Diagnostics, Inc. v.
Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015) (citing Alice, 134
S. Ct. at 2354).
Furthermore, we agree with the Examiner that the claims are directed
broadly to the concept of “trading derivatives” (Final Act. 2), and are similar
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Application 13/870,758
to certain fundamental economic and conventional business practices that
our reviewing courts have found patent ineligible, such as the concept of
intermediated settlement in Alice, and the concept of risk hedging in Bilski v.
Kappos, 561 U.S. 593 (2010), and, thus, is an abstract idea beyond the scope
of § 101. See Alice Corp., 134 S. Ct. at 2356; Bilski, 561 U.S. at 611. In
making this determination, we note that independent claim 1 is directed to
“[a] system for electronically trading derivatives,” which includes “a market
maker station,” “a subscriber station,” and “network managing station.”
Independent claim 1 further states that “the market maker station is
configured to receive a request for and/or to provide an indicative quote
and/or a binding quote,” “the subscriber station is configured to request
and/or to receive the indicative quote and/or the binding quote, and is further
configured to submit an order,” “the network managing station is configured
to limit quote traffic to interested participants,” and “the market maker
station and the subscriber station are independently configured to submit
binding quotes and orders to an Exchange.”
And, to the extent Appellants argue that the Examiner erred in
adequately supporting this determination by providing objective analysis
(see Appeal Br. 4—5), Appellants’ argument is unpersuasive.
There is no requirement that the Examiners must provide evidentiary
support in every case before a conclusion can be made that a claim is
directed to an abstract idea. See, e.g., para. IV “July 2015 Update: Subject
Matter Eligibility” to 2014 Interim Guidance on Subject Matter Eligibility
(2014 IEG), 79 Fed. Reg. 74618 (Dec. 16, 2014) (“The courts consider the
determination of whether a claim is eligible (which involves identifying
whether an exception such as an abstract idea is being claimed) to be a
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question of law. Accordingly, courts do not rely on evidence that a claimed
concept is a judicial exception, and in most cases resolve the ultimate legal
conclusion on eligibility without making any factual findings.”) (Emphasis
added). We agree that evidence may be helpful in certain situations where,
for instance, facts are in dispute. But it is not always necessary. Based on
the above analysis in light of the claims themselves, we are unpersuaded it is
necessary in this case. See Amdocs (Israel) Ltd. v. Openet Telecom, Inc.,
841 F.3d 1288, 1294 (Fed. Cir. 2016) (“Instead of a definition [for what an
‘abstract idea’ encompasses], then, the decisional mechanism courts now
apply is to examine earlier cases in which a similar or parallel descriptive
nature can be seen—what prior cases were about, and which way they were
decided.”)
Appellants also argue that the claims are not directed to an abstract
idea because
the claimed invention improves upon the technical field of data
and transaction processing by providing a system which
facilitates anonymized direct communication between parties
interested in transacting with one another and eliminates
unnecessary broadcasting of messages expressing interest to
uninterested counter-parties, thereby improving transactional
throughput as well as minimizing risk exposure and thereby
encouraging participation by market participants, (e.g., “the
network managing station is configured to limit quote traffic to
interested participants”).
(Appeal Br. 5; see also Reply Br. 2—3). However, we agree with the
Examiner that the “improvement” to which Appellants refer is a business
improvement rather than an improvement to a technological or technical
field (see Ans. 5). Appellants assert that the Examiner incorrectly asserts
that the improvement is simply a business improvement because the
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“claimed system moderates communications among the market maker and
subscriber stations by modifying the communications architecture to include
a network managing station which is specifically configured to limit
communications as claimed” (Reply Br. 3). But, Appellants fail to provide
any evidence that the programming relating to “limit[ing] quote traffic to
interested participants” would entail anything atypical from conventional
programming. For example, the Specification discloses
[e]ach subscriber and market maker station connects to the
network managing station for the purpose of logging in. When
market makers connect, they provide a list of products that they
are interested in quoting. When subscribers connect, they
provide a list of products they are interested in trading. This list
of products and participants is updated as users log in/out or
change their product list. As this list changes, the network
managing station notifies the participants. This allows each
participant to respond accordingly.
(Spec. 160). Thus, Appellants have not established that their system
improves the technology of the computer itself, for example, or some other
relevant technology. Nor have Appellants provided adequate evidence or
technical reasoning that independent claim 1 improves some existing
technological process or solves some technological problem in conventional
industry practice. Versata Dev. Grp., Inc. v. SAP Am., Inc., 793 F.3d 1306,
1334 (Fed. Cir. 2015), cert, denied, 136 S. Ct. 2510, 195 L. Ed. 2d 841
(2016) (finding that the “claims recit[ed] a commonplace business method
aimed at processing business information despite being applied on a general
purpose computer.”); see also Alice, 134 S. Ct. at 2359.
We also agree with the Examiner “[t]he nominal recitation of a
network managing station to perform a business function fails to define a
specific apparatus distinct from other apparatus capable of performing the
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identical functions” (Ans. 5). In this regard we note that the Specification
discloses that the recited “market maker station,” “subscriber station,” and
“network managing station” are comprised of generic computing
components. More particularly, the Specification discloses that “a market
maker station preferably has hardware and software to provide indicative
quotes for subscribers and binding quotes to be sent to Exchanges” (Spec.
140). Similarly, the Specification discloses that “[a] network managing
station has hardware and software to a directory of participants receiving and
providing quotes. The network managing station consists of hardware (for
instance, Windows-based servers) that runs application software that
validates and coordinates the use of the LD network” (Spec. 1 60).
Likewise, the Specification discloses that
[a] subscriber station (Sub 1, Sub 2, Sub 3 and Sub 4 of FIG. 1)
has hardware and software to query indicative quotes, request
binding quotes, and send orders to Exchanges. In one
embodiment, the subscriber station consists of a Windows-based
PC running an application that allows users to login, select
symbols, and receive quotes for those symbols.
(Spec. 123). Therefore, as the Federal Circuit stated: “after Alice, there
can remain no doubt: recitation of generic computer limitations does not
make an otherwise ineligible claim patent-eligible.” DDR Holdings, LLC v.
Hotels.com, L.P., 773 F.3d 1245, 1256 (Fed. Cir. 2014) (citing Alice, 134
S. Ct. at 2358). The bare fact that a computer exists in the physical rather
than purely conceptual realm “is beside the point.” Id. Unlike DDR, the
instant claims are not “necessarily rooted in computer technology in order to
overcome a problem specifically arising in the realm of computer networks,”
nor is there any evidence that the programming reflected in the invention is
anything but routine. DDR, 773F.3datl257.
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Appellants also argue
limiting quote traffic to interested parties who query specific
contracts and/or contract combinations. . . is neither a routine nor
conventional activity previously known in the industry, or a
generic computerization thereof, as evidenced by the lack of
prior art, but is instead a patentable application and meaningful
limitation beyond generally linking the use of an abstract idea to
a particular technological environment.
(Appeal Br. 6; see also Reply Br. 2—3). However, we agree with the
Examiner that the “the elements involved in the recited process undertake
their roles in performance of their activities according to their generic
functionalities which are well-understood, routine and conventional” (Ans.
6; cf. Spec. 23, 40, 60). See Ultramercial, Inc. v. Hulu, LLC, 772 F.3d
709, 716 (Fed. Cir. 2014) (“[T]he claimed sequence of steps comprises only
‘conventional steps, specified at a high level of generality,’ which is
insufficient to supply an ‘inventive concept.’”) (Citing Alice, 134 S. Ct. at
2357) (internal citations omitted).
And, to the extent that Appellants argue that independent claim 1
necessarily contains an “inventive concept” “as evidenced by the lack of
prior art” (Appeal Br. 6; Reply Br. 3), Appellants misapprehend the
controlling precedent. Although the second step in the Alice/Mayo
framework is termed a search for an “inventive concept,” the analysis is not
an evaluation of novelty or non-obviousness, but rather, a search for “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.’” Alice, 134 S. Ct. at 2355. A novel and
nonobvious claim directed to a purely abstract idea is, nonetheless, patent-
ineligible. See Mayo, 132 S. Ct. at 1304.
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In view of the foregoing, we sustain the Examiner’s rejection under
35U.S.C. § 101 of independent claim 1, and claims 2—21, which fall with
independent claim 1.
DECISION
The Examiner’s rejection of claims 1—21 under 35 U.S.C. § 101 is
affirmed.
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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