Ex Parte Burkhardt et al

Patent Trials and Appeals Board

Jun 18, 2019

12586913 - (D) (P.T.A.B. Jun. 18, 2019)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
12/586,913 09/29/2009
35811 7590 06/20/2019
IP GROUP OF DLA PIPER LLP (US)
ONE LIBERTY PLACE
1650 MARKET ST, SUITE 4900
PHILADELPHIA, PA 19103
FIRST NAMED INVENTOR
Roger Burkhardt
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.
NSL-l4-ll31R3DIV 9383
EXAMINER
BORLING HAUS, JASON M
ART UNIT PAPER NUMBER
3693
NOTIFICATION DATE DELIVERY MODE
06/20/2019 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):
pto. phil@dlapiper.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte ROGER BURKHARDT, ANNE E. ALLEN,
ROBERT J. McSWEENEY, and LOUIS G. PASTINA1
Appeal 2018-004659
Application 12/586,913
Technology Center 3600
Before CHARLES N. GREENHUT, JAMES P. CALVE, and
ALYSSA A. FINAMORE, Administrative Patent Judges.
CAL VE, Administrative Patent Judge.
DECISION ON APPEAL
STATEMENT OF THE CASE
Appellants appeal under 35 U.S.C. § 134(a) from the Final Office
Action rejecting claims 11, 12, 14, and 19-29. Appeal Br. 1. Claims 1-10,
13, and 15-18 are cancelled. Id. We have jurisdiction under 35 U.S.C.
§ 6(b ).
We AFFIRM.
1 New York Stock Exchange LLC is identified as the real party in interest.
Appeal Br. 1.
Appeal 2018-004659
Application 12/586,913
CLAIMED SUBJECT MATTER
The claims relate to the field of securities trading and particularly to
systems and methods for automatic order processing and execution done in
conjunction with a live floor auction market. Spec. 1:10-12. They address a
need for greater integration of live floor auction markets with computer
automated markets and order matching systems. Id. at 1 :21-23. Claims 11,
19, and 20 are independent. Claim 11 is reproduced below.
11. A computer-implemented method for improving order
throughput and processing efficiency in at least one
programmed computer, the method comprising:
identifying, by the at least one programmed computer,
orders within received order data that are not eligible for
execution, comprising:
receiving, by the at least one programmed
computer, the order data comprising a published best offer for a
security, an auction limit buy order for the security with a buy
order limit price that is above the published best offer for the
security, a published best bid for the security, and an auction
limit sell order for the security with a sell order limit price that
is below the published best bid for the security,
determining, by the at least one programmed
computer, a price difference between a highest purchase price
for the security and a lowest selling price for the security based
on at least one of the auction limit buy order for the security,
the published best offer for the security, the auction limit sell
order for the security, and the published best bid for the
security,
comparing, by the at least one programmed
computer, the price difference to a minimum variation, wherein
the minimum variation is one penny, and
determining, by the at least one programmed
computer, that the orders are not eligible for execution by
determining that the price difference is less than the minimum
variation; and
2
Appeal 2018-004659
Application 12/586,913
initiating, by the at least one programmed computer, an
order data adjustment procedure to automatically convert the
orders identified as not eligible for execution into executable
orders, comprising:
automatically quoting, by the at least one
programmed computer, the auction limit buy order for the
security at the minimum variation above the highest purchase
price for the security and automatically quoting the auction
limit sell order for the security at the minimum variation below
the lowest selling price for the security,
activating, by the at least one programmed
computer, a timer circuit with a predetermined time period,
generating, by the timer circuit, a control signal to
signal expiration of the predetermined time period and sending
the control signal to the at least one programmed computer, and
the control signal causing the at least one
programmed computer to automatically execute the auction
limit buy order for the security against a displayed offer and the
auction limit sell order for the security against a displayed bid.
Appeal Br. 28-29 (Claims App.).
REJECTIONS2
Claims 11, 12, 14, and 19-29 are rejected as directed to patent-
ineligible subject matter under a judicial exception to 35 U.S.C. § 101.
Claims 11, 12, 14, and 19-29 are rejected under 35 U.S.C. § 112, first
paragraph, for failing to comply with the written description requirement.
Claims 11, 12, 14, and 19-29 are rejected under 35 U.S.C. § 112,
second paragraph, for being indefinite.
2 We understand the Examiner's statement in the Answer that the claims are
so indefinite that no prior art rejection is warranted to indicate the Examiner
has withdrawn the rejection of claims 11, 12, 14, and 19-29 under 35 U.S.C.
§ 103(a) as unpatentable over Cleary Neubert (US 2002/0184136 Al, pub.
Dec. 5, 2002). See Ans. 23; Reply Br. 7.
3
Appeal 2018-004659
Application 12/586,913
ANALYSIS
Subject Matter Eligibility of Claims
Appellants argue the claims as a group. Appeal Br. 7-22. We select
claim 11 as representative. See 37 C.F.R. § 41.37(c)(l)(iv).
The Examiner determines claim 11 is directed to "automatic order
processing and execution in conjunction with a live floor auction market."
Final Act. 2 ( quoting Spec. 1 ). The Examiner determines that claim 11
recites a fundamental economic practice to manage financial instruments,
which is similar to trading risk management contracts held to be an abstract
idea in Alice Corp. Pty. Ltd. v. CLS Bank International, 573 U.S. 208
(2014). Id. The Examiner also determines that the claim does not include
any additional elements that are sufficient to amount to significantly more
than the abstract idea itself, and the claimed invention does not improve the
functioning of the computer in any meaningful way. Id. at 2-3; Ans. 9-10.
Appellants argue that the claims relate to highly specialized electronic
communication network architectures with unique characteristics and special
protocols that enable order data processing and communications in global
markets by providing a mechanism for adjustment and automatic execution
that keeps orders on the same platform and eliminates routing and latency
that occurs in prior art architectures. Appeal Br. 8-9. Appellants argue that
the novel proactive data handling mechanism results in faster execution of
data at the platform and incentivizes participant interaction via autoquoting
of ineligible orders to try to execute these orders ( after adjustment). Id. at
10. Appellants argue that the claims are patent eligible because they are
directed to reconfigured network architecture through the automatic use of
rules to proactively handle ineligible orders. Id. at 11-14.
4
Appeal 2018-004659
Application 12/586,913
The patent laws provide 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. However,
"this provision contains an important implicit exception: Laws of nature,
natural phenomena, and abstract ideas are not patentable." Alice, 573 U.S. at
216 ( citation omitted).
Mayo Collaborative Services established a framework to distinguish
patents that claim laws of nature, natural phenomena, and abstract ideas
from those that claim patent-eligible applications of those concepts. Alice,
573 U.S. at 217 (citing Mayo Collaborative Serv. v. Prometheus Labs., Inc.,
566 U.S. 66, 77 (2012)). First, we determine whether the claims are directed
to a patent-ineligible concept. Id. If so, we next consider the claim elements
individually and as an ordered combination to determine whether additional
elements transform the claims into a patent-eligible application. Id. This
search for an inventive concept seeks an element or combination of elements
"sufficient to ensure that the patent in practice amounts to significantly more
than a patent upon the [ineligible concept] itself." Id. at 217-18.
Recently, the PTO published guidance for evaluating subject matter
eligibility. See 2019 Revised Patent Subject Matter Eligibility Guidance, 84
Fed. Reg. 50 (Jan. 7, 2019) ("Revised Guidance"). Under Step One, a
determination is made whether the claims are in a statutory category of
patentable subject matter, i.e., whether they recite a process, machine,
manufacture, or a composition of matter, identified in 35 U.S.C. § 101.
Revised Guidance, 84 Fed. Reg. at 53-54; See Alice, 573 U.S. at 216; Mayo,
566 U.S. at 70.
5
Appeal 2018-004659
Application 12/586,913
Next, at Revised Step 2A, Prong One, an evaluation is made whether
a claim recites a judicial exception, i.e., an abstract idea set forth in Section I
of the Revised Guidance, a law of nature, or a natural phenomenon. Revised
Guidance, 84 Fed. Reg. at 54. Specific limitations that recite an abstract
idea must be identified (individually or in combination), and a determination
made whether the limitation(s) falls within the subject matter groupings in
Section I of the Revised Guidance. Id. (A. Revised Step 2A). The groupings
cover (1) mathematical concepts, relationships, formulas, or calculations,
(2) certain methods of organizing human activity, fundamental economic
principles and practices, commercial interactions, managing personal
behavior, relationships, or interactions, and (3) mental processes and
concepts formed in the human mind. Id. at 52.
If a claim recites a judicial exception, Prong Two of Revised Step 2A
requires a determination to be made whether the claim as a whole integrates
the judicial exception into a practical application. Id. at 54. "A claim that
integrates a judicial exception into a practical application will apply, rely on,
or use the judicial exception in a manner that imposes a meaningful limit on
the judicial exception, such that the claim is more than a drafting effort
designed to monopolize the judicial exception." Id. at 53. If a judicial
exception is integrated, the claim is patent eligible. See id. at 54-55.
If a claim does not "integrate" a recited judicial exception, the claim is
directed to the judicial exception. We proceed to Step 2B to determine if the
claim contains an inventive concept. Id. at 56. In particular, Step 2B
considers whether the claim adds a specific limitation or combination of
limitations that are not well-understood, routine, conventional activity in the
field, which is indicative that an inventive concept may be present. Id.
6
Appeal 2018-004659
Application 12/586,913
Step One: Does Claim 11 Fall within a Statutory Category of§ 1 OJ?
We agree with the Examiner that claim 11 recites a method and thus
fall within the statutory categories of 35 U.S.C. § 101. See Final Act. 2.
Appellants do not dispute this determination.
Step 2A, Prong One: Does Claim 11 Recite a Judicial Exception?
We agree with the Examiner that claim 11 recites an abstract idea.
The Revised Guidance characterizes an abstract idea as ( 1) certain methods
of organizing human activity-fundamental economic principles or practices
(including hedging and mitigating risk), (2) certain methods of organizing
human activity involving managing interactions between people including
following rules or instructions, (3) mathematical concepts-mathematical
calculations, and ( 4) mental processes or concepts performed in the human
mind such as an observation, evaluation, and judgment. Revised Guidance,
84 Fed. Reg. at 52.
Appellants argue the preamble of claim 11 is not a claim limitation
(Appeal Br. 22), so we start our analysis with the first step of "identifying,
by the at least one programmed computer, orders within received order data
that are not eligible for execution, comprising: receiving, by the at least one
programmed computer" a published best offer and bid for a security and an
auction limit buy and sell order for the security. See Appeal Br. 28 (Claims
App.). This step involves certain methods of organizing human activity and
managing interactions between people trying to buy and sell securities in an
auction market by receiving their orders including limit orders to mitigate or
limit risk, which is a fundamental economic practice. See Spec. 5: 10-18. It
also represents insignificant extra-solution activity of receiving order data as
a predicate step to performing the steps discussed below.
7
Appeal 2018-004659
Application 12/586,913
Next, "a price difference between a highest purchase price for the
security and a lowest selling price for the security based on at least one of'
the bids and offers received in the previous step is "detennin[ ed] by the at
least one programmed computer" and then "compar[ ed] ... to a minimum
variation, [which] is one penny." If "the price difference is less than the
minimum variation," the programmed computer determines "the orders are
not eligible for execution." Appeal Br. 28 (Claims App.).
These steps involve fundamental economic practices of market trading
activities and mathematical concepts involving mathematical relationships,
formulas, and calculations to determine a price difference between the
highest purchase price and the lowest selling price for the security and then
to compare that price difference to a minimum variation so a determination
can be made which orders are eligible for execution. The steps also can be
performed as a mental process in the human mind through observation and
evaluation. CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366,
1372 (Fed. Cir. 2011).
The next step recites order adjustment that converts ineligible orders
by automatically quoting by "the at least one programmed computer, the
auction limit buy order for the security at the minimum variation above the
highest purchase price for the security and automatically quoting the auction
limit sell order for the security at the minimum variation below the lowest
selling price for the security." Appeal Br. 28 (Claims App.). This step is a
another example of organizing human activity via a fundamental economic
practice, namely adjusting an auction limit order at the minimum variation
relative to the highest purchase/lowest selling price for the security to reduce
the risk that the limit orders may not be executed.
8
Appeal 2018-004659
Application 12/586,913
As explained in the Specification, the auction limit orders "thereby
becom[ e] the Exchange best bid or offer" so these orders may attempt to
achieve price improvement wherein electronic representation limits the
possibility that the orders "risks missing the market in its attempt to obtain
price improvement" because the auction limit "order may participate in any
execution, including automatic executions and sweeps." Spec. 6:6-7:3.
This step then is comparable to the fundamental practices of hedging and
intermediate settlement to mitigate risk, which were held to be abstract ideas
in Alice and Bilski. See Alice, 573 U.S. at 219-20; Bilski v. Kappas, 561
U.S. 609, 611 (2010).
This step also involves basic mathematical concepts of quoting an
auction limit buy/sell order at a minimum variation relative to purchase and
selling prices for that security.
Claim 11 then recites a step of activating a timer circuit that generates
a control signal at the expiration of a predetermined time period and sends
the control signal to the programmed computer to automatically execute the
auction limit buy/sell order against a displayed offer/bid. Appeal Br. 28-29
(Claims App.). These steps also involve the fundamental economic practice
of hedging or risk mitigation by allowing an auction limit buy/sell order a
predetermined period of time (e.g., 15 seconds) to execute in the auction
market with the possibility of price improvement before executing the limit
order automatically to ensure that it trades. Spec. 7:4-17; Bilski, 561 U.S. at
609-12 ( determining claims reciting steps to help buyers and sellers of
commodities in the energy market protect or hedge against the risk of price
changes are directed to a fundamental economic practice and an abstract
idea).
9
Appeal 2018-004659
Application 12/586,913
Similarly, Alice held that claims to a method of exchanging financial
obligations between two parties using a third party intermediary to mitigate
settlement risk involved a fundamental economic practice long prevalent in
our system of commerce and an abstract idea like the risk hedging in Bilski.
Alice, 573 U.S. at 219-21 (describing the concept of risk hedging in Bilski as
"a method of organizing human activity" and an abstract idea).
For these reasons, claim 11 recites fundamental economic practices,
mathematical concepts, and mental steps, which are abstract ideas.
Claim 11, therefore, recites abstract ideas.
Step 2A, Prong Two: Is There Integration into a Practical Application?
Appellants argue that their invention is "defined by highly specialized
electronic communication network architectures, which have unique
characteristics and utilize specialized protocols to enable order data
processing and communications in global markets. Such networks are
distinct from conventional electronic communication networks, which add to
the technical challenges associated with reducing latency." Appeal Br. 8.
Appellants also argue that prior art network architectures lack a mechanism
for adjustment and automatic execution that keeps orders on the same
platform and eliminates the need for routing the orders to another market
center platform, incentivizes execution of orders through autoquoting, and
automatically executes orders at the same platform after a fixed period of
time. Id. at 9. Appellants argue that prior art systems are subject to latency
because they lack a proactive data handling mechanism that automatically
adjusts and controls execution of ineligible orders at the same platform as
opposed to having to re-route orders to another platform or store them in an
order book awaiting a match. Id.
10
Appeal 2018-004659
Application 12/586,913
We determine that claim 11 does not recite additional limitations that
integrate the abstract ideas discussed above into a practical application. The
"at least one programmed computer" and "time circuit" are claimed as a
generic computer that performs generic functions of receiving and analyzing
( comparing, determining) data and automatically quoting a limit order at a
minimum variation to a highest purchase or lowest selling price for the
security and measuring a time period of predetermined length.
Steps that recite basic data collection and analysis, even when limited
to particular content ( e.g., market orders), without more, are insufficient to
integrate abstract ideas recited in claim 11 into a practical application. See
Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1353-54 (Fed. Cir.
2016) (holding that steps of collecting information, even when limited to
particular content (which does not change its character as information), do
not make claims patent eligible and analyzing information by steps people
go through in their minds, or by mathematical algorithms, without more, are
essentially mental processes within the abstract-idea category); buySAFE,
Inc. v. Google, Inc., 765 F.3d 1350, 1354-55 (Fed. Cir. 2014) (determining
claims to creating a contractual relationship with a "transaction performance
guaranty" recite a long-familiar commercial transaction that is an abstract
idea and reciting generic computer functions of receiving and sending
information over a network was insufficient to make the abstract idea patent
eligible); Trading Techs. Int'!, Inc. v. !BG LLC, 921 F.3d 1084, 1092-93
(Fed. Cir. 2019) (holding claims to placing an order on displayed market
information even with some particularity is a fundamental economic practice
and collection, organization, and displaying two sets of information on a
generic display device does not make the claims patent eligible).
11
Appeal 2018-004659
Application 12/586,913
A programmed computer and timer circuit do not integrate abstract
ideas into a practical application. Alice, 573 U.S. at 223 ("[M]ere recitation
of a generic computer cannot transform a patent-ineligible abstract idea into
a patent-eligible invention. Stating an abstract idea while adding the words
'apply it' is not enough for patent eligibility." ( citation and internal
quotation omitted)); Accenture Global Servs., GmbH v. Guidewire Software,
Inc., 728 F.3d 1336, 1345 (Fed. Cir. 2013) ("Accenture attempts to limit the
abstract idea of claim 1 by applying it in a computer environment and within
the insurance industry. However, those types of limitations do not 'narrow,
confine, or otherwise tie down the claim.' ... [S]imply implementing an
abstract concept on a computer, without meaningful limitations to that
concept, does not transform a patent-ineligible claim into a patent-eligible
one." (citation omitted)); Bancorp Servs., L.L.C. v. Sun Life Assurance Co.
of Canada (U.S.), 687 F.3d 1266, 1278 (Fed. Cir. 2012) ("To salvage an
otherwise patent-ineligible process, a computer must be integral to the
claimed invention, facilitating the process in a way that a person making
calculations or computations could not."); SAP Am., Inc. v. InvestPic, LLC,
898 F .3d 1161, 1168 (Fed. Cir. 2018) ("[E]ven if a process of collecting and
analyzing information is 'limited to particular content' or a particular
'source,' that limitation does not make the collection and analysis other than
abstract."); In re TL! Commc 'ns LLC Patent Litig., 823 F.3d 607, 612 (Fed.
Cir. 2016) (holding claims "to the use of conventional or generic technology
in a nascent but well-known environment" are patent ineligible); OIP Techs.,
Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1363 (Fed. Cir. 2015) ("At best,
the claims describe the automation of the fundamental economic concept of
offer-based price optimization through ... generic computer functions.").
12
Appeal 2018-004659
Application 12/586,913
Furthermore, there is no claimed improvement to a network or to
computer architecture so as to integrate the abstract ideas into a practical
application. The Specification does not describe advances in network
architecture, computer processing, or trading technology. Appellants'
Figure 1, which is reproduced below, illustrates an exemplary system.
,···· 112
{
OOOER AAOOESSING
·~{CMS,
PSS. SOOT)
...- 114
- ····-·--_{ ··-····················-······· .....................•.•• ·············"·""····"
r·····-
1 ..........••••••
-
\, 100 \,102
FIG.1
Figure 1 illustrates system 100 for brokers 102, specialists 104, and
customers/clients 106 who generate orders. Id. at 25:21-26:1. The order
processing systems 112 include Common Message Switch, Post Support
System, and Designated Order Turnaround, and networks 114 that connect
elementsofthesystem. Id. at26:l-7. Network 114maybeaLAN, WAN,
Ethernet, PSTN, or any wireless or wired network. Id. at 26: 14-15. General
purpose or special purpose handheld computers are used. Id. at 26:9-10.
"The computers generally include a central processor (CPU), memory for
processing software instructions that is stored on fixed and removable
media, as well as input/output devices such as keyboards, monitors, printers,
pointing devices, and system busses." Id. at 26: 10-13.
13
Appeal 2018-004659
Application 12/586,913
The alleged improvement does not make these generic computers or
networks operate more efficiently. It is directed to a set of rules designed to
execute as many limit orders as possible as quickly as possible on the same
exchange without sending any of those orders to another exchange.
Toward this end, the rules reprice the auction limit order to reset its
bid/ask price at the best bid/offer of the exchange at that time. Then, the
repriced limit order is executed against "a displayed offer" or "a displayed
bid" after fifteen ( 15) seconds if the limit order does not execute sooner.
The alleged improvement is not to computer technology implementing
the trading method, but rather to the trading method itself in that more limit
orders can be executed faster if each limit order is repriced ( autoquoted) at
the market's current best bid/offer and then automatically executed within
15 seconds against an unspecified displayed offer/bid with no apparent
regard for the limit order parameters set for that bid or offer. As a result, the
exchange makes more money by executing more orders at that exchange
more quickly. SAP, 898 F.3d at 1163 ("No matter how much of an advance
in the finance field the claims recite, the advance lies entirely in the realm of
abstract ideas, with no plausibly alleged innovation in the non-abstract
application realm. An advance of that nature is ineligible for patenting.").
The fact that claim 11 may recite a new ordered combination of rules
that are abstract ideas does not provide an inventive step or integrate those
abstract ideas into a patent-eligible application. See Synopsys, Inc. v. Mentor
Graphics Corp., 839 F.3d 1138, 1151 (Fed. Cir. 2016) ("But, a claim for a
new abstract idea is still an abstract idea."); Versata Dev. Grp., Inc. v. SAP
Am., Inc., 793 F.3d 1306, 1335 (Fed. Cir. 2015) (affirming unpatentability of
claims that improved an abstract idea, but not a computer's performance).
14
Appeal 2018-004659
Application 12/586,913
The cases cited by Appellants illustrate the lack of a technological
improvement in this case. In Enfish, LLC v. Microsoft Corp., 822 F.3d 1327
(Fed. Cir. 2016), the court held that claims to a data storage and retrieval
system for computer memory was not directed to an abstract idea because
they involved more than storing, organizing, and retrieving memory in a
logical table. Enfish, 822 F.3d at 1336-37. The claims were directed to a
self-referential table ("means for configuring" algorithm) that functions
differently than conventional database structures. Id. at 1337. This
technological improvement provided increased flexibility, faster search
times, and smaller memory requirements. Id.
Here, Appellants have not identified any improvement in database
structure or function, and we find no such improvement in claim 11. Appeal
Br. 8-11. Neither claim 11 nor the Specification recites/describes a network
innovation involving latency or any other issue for securities trading. Claim
11 recites "at least one programmed computer." There is no configuration or
reconfiguration of a network architecture as Appellants allege. See id. at 11.
InMcRO, Inc. v. Bandai Namco Games Am., 837 F.3d 1299 (Fed. Cir.
2016), the claims focused on a specific improvement in computer animation.
The claimed process used a combined order of specific rules that renders
information into a specific format used and applied to create a desired
result-a sequence of synchronized, animated characters. McRO, 873 F .3d
at 1314-15. The claims recited a process of automated lip-synchronization
of 3-D characters that resulted from a specific order of rules as a relationship
between sub-sequences of phonemes, timing, and weight of visual
expression at a particular timing by a morph weight set. Id. at 1315. The
rules improved the synchronization of 3-D characters on computers.
15
Appeal 2018-004659
Application 12/586,913
Whether considered individually or as an ordered combination, the
steps of claim 11 do not recite an inventive step that is significantly more
than the abstract ideas themselves. See Smart Sys. Innovations, LLC v.
Chicago Transit Auth., 873 F.3d 1364, 1374 (2017) ("When claims like the
Asserted Claims are 'directed to an abstract idea' and 'merely requir[e]
generic computer implementation,' they 'do[] not move into section 101
eligibility territory."') ( citation omitted); Digitech Image Techs, LLC v. Elec.
for Imaging, Inc., 758 F.3d 1344, (Fed. Cir. 2014) ("Without additional
limitations, a process that employs mathematical algorithms to manipulate
existing information to generate additional information is not patent eligible.
'If a claim is directed essentially to a method of calculating, using a
mathematical formula, even if the solution is for a specific purpose, the
claimed method is nonstatutory. "') ( citation omitted); see also Trading
Technologies International, Inc. v. !BG LLC, 921 F.3d 1084, 1093-94
(2019) (holding that claimed elements individually and as an ordered
combination did not transform the abstract idea of routine data gathering and
displaying of market information as indicators on a scaled price axis nor did
helping a trader process information more quickly provide an improvement
to computer functionality to provide an inventive concept); Bancorp, 687
F.3d at 1279 ("the computer merely permits one to manage a stable value
protected life insurance policy more efficiently than one could mentally.
Using a computer to accelerate an ineligible mental process does not make
that process patent-eligible."); In re Chorna, 656 F. App'x 1016, 1021 (Fed.
Cir. 2016) (non-precedential) (for a claimed exchange and trading system
"the claimed financial securities, allocation formulas, trading networks, and
clearing houses do not add anything to the steps described above.")
16
Appeal 2018-004659
Application 12/586,913
The claimed trading rules do not improve the speed of operation or the
accuracy of computer operations. They simply reprice auction limit orders
to current market bid/ask prices and execute the orders automatically in 15
seconds against a displayed bid/offer. The computer does not operate faster
or more efficiently. See Appeal Br. 11-12. Essentially, the claimed rules
ignore the auction limit order instructions and reprice the orders to current
market and then automatically fill the order if it does not execute within 15
seconds at the repriced levels by matching it with "a displayed offer/bid" of
undefined properties and price.
The decision in Bascom is instructive. In that case, the claims recited
a hybrid Internet filtering system that provided the benefits of a filter on a
local computer with the benefits of a filter on the Internet Service Provider
server as an improvement to existing technological filtering processes by
adapting many different users' preferences while being installed remotely in
a single location. Bascom Global Internet Servs., Inc. v. AT&T Mobility
LLC, 827 F.3d 1341, 1350-51 (Fed. Cir. 2016) (finding an inventive concept
in a filtering system that associates individual accounts with their own
filtering scheme while locating the system on an ISP server). In upholding
the patent-eligibility of the claims, the court emphasized that "[t]he claims
do not merely recite the abstract idea of filtering content along with the
requirement to perform it on the Internet, or to perform it on a set of generic
computer components. Such claims would not contain an inventive
concept." Id. at 1350.
Here, Appellants have not identified an inventive network architecture
or computer data handling mechanism that improves over operation of prior
art financial computer networks. See Appeal Br. 13.
17
Appeal 2018-004659
Application 12/586,913
Instead, the claimed "at least one programmed computer" merely
performs generic data collecting and analysis/calculations according to the
claimed abstract rules that reprice auction limit orders and autoquote them
for automatic execution within 15 seconds. In short, the claimed method is
directed to trading rules rather than improvements in computers, networks,
or trading technologies. The rules are designed to keep as many trades as
possible at the same exchange so the commissions earned from executing
those trades also stay at the exchange and no business is lost to competing
exchanges even if another exchange offers a better price for execution of an
auction limit order. This practice appears to undermine the purpose of
auction limit orders to provide opportunity for price improvement, which is
an important choice of customers. See Spec. 5: 11-12.
We determine that claim 11 does not integrate the abstract ideas
recited therein into a practical application that is patent eligible. Claim 11
does not impose a meaningful limit on those judicial exceptions.
Step 2B: Does Claim 11 Recite Well-Understood, Routine, Conventional
Activity?
"The second step of the Alice test is satisfied when the claim
limitations involve more than performance of well-understood, routine [and]
conventional activities previously known to the industry." Berkheimer v.
HP Inc., 881 F.3d 1360, 1367 (Fed. Cir. 2018) (internal quotations and
citation omitted); see also Revised Guidance, 84 Fed. Reg. at 56 ( explaining
that the second step of the Alice analysis considers whether a claim adds a
specific limitation beyond a judicial exception that is not "well-understood,
routine, conventional" activity in the field); MPEP § 2106.05( d) (9th ed.
Rev. 08.2017, Jan. 2018).
18
Appeal 2018-004659
Application 12/586,913
Moreover, claim limitations describing the excluded subject matter
cannot satisfy the second step of the Alice analysis. See Mayo, 566 U.S. at
72-73 (requiring "a process that focuses upon the use of a natural law also
contain other elements or a combination of elements, sometimes referred to
as an 'inventive concept,' sufficient to ensure that the patent in practice
amounts to significantly more than a patent upon the natural law itself'
(emphasis added)); BSG Tech. LLC v. BuySeasons, Inc., 899 F.3d 1281,
1290 (Fed. Cir. 2018) ("It has been clear since Alice that a claimed
invention's use of the ineligible concept to which it is directed cannot supply
the inventive concept that renders the invention 'significantly more' than
that ineligible concept."); Berkheimer v. HP Inc., 890 F.3d 1369, 1374
(Fed. Cir. 2018) (Moore, J., concurring) ("[A]nd Berkheimer .. . leave[s]
untouched the numerous cases from [the Federal Circuit] which have held
claims ineligible because the only alleged 'inventive concept' is the abstract
idea.)."
Appellants contend that claim 11 captures and supports improvements
described in the Specification as improving the speed of trading systems and
reducing latency so that, the limitations are not well-understood, routine, and
conventional. See Reply Br. 4-6. Appellants' contention is not persuasive,
however, because it improperly relies upon the excluded subject matter,
which are abstract ideas involved in trading securities as discussed above.
Appellants do not identify any additional elements that provide alleged
improvements beyond the abstract ideas recited in claim 11.
For all the foregoing reasons, we sustain the rejection of claim 11 and
the remaining claims, which fall therewith, as directed to patent-ineligible
subject matter under 35 U.S.C. § 101.
19
Appeal 2018-004659
Application 12/586,913
Written Description Rejection
The Examiner determines the phrase "for improving order throughout
and efficiency in at least one programmed computer" in the preamble of
claims 11, 19, and 20 is not supported by the Specification. Final Act. 4.
The Examiner does not address Appellants' argument that the Specification
describes these benefits. Appeal Br. 22 (citing Spec. 5:10-8:12); see Ans. 5.
As discussed above, the claimed rules may increase throughput and
processing of orders by repricing them to market and automatically
executing them in 15 seconds and ignoring limits placed on those orders.
Thus, we do not sustain this rejection.
Indefiniteness Rejection
We agree with the Examiner that the claims use the term "limit order"
in a different manner than its ordinary meaning that allows a customer to set
a price for buying or selling a security. Indeed, the Specification alludes to
this meaning as providing "an opportunity for price improvement, thereby
preserving a very important choice for customers." Spec. 5:11-12. We also
agree with the Examiner that the claimed rules ignore this limit feature and
reprice the limit orders at the current market best bid/ask prices and execute
the orders automatically against "a displayed offer/bid." Final Act. 4-5.
However, we determine that the claims, when interpreted in view of
the Specification, make clear that the scope of the claims is broad rather than
being indefinite. The auction limit orders are received and then repriced via
autoquoting if they are determined to be "ineligible" orders and then they are
executed against "a displayed offer" or "a displayed bid" after 15 seconds
without any further indication of the terms or characteristics of the displayed
offer/bid against which the requoted limit order is executed.
20
Appeal 2018-004659
Application 12/586,913
Thus, we do not sustain this rejection.
DECISION
We affirm the rejection of claims 11, 12, 14, and 19-29 as directed to
patent-ineligible subject matter under a judicial exception to 35 U.S.C.
§ 101.
We reverse the rejection of claims 11, 12, 14, and 19-29 under
35 U.S.C. § 112, first paragraph, for lack of written description.
We reverse the rejection of claims 11, 12, 14, and 19-29 under
35 U.S.C. § 112, second paragraph, for being indefinite.
No time period for taking any subsequent action in connection with
this appeal may be extended under 37 C.F.R. § l .136(a)(l )(iv).
AFFIRMED
21