Ex Parte Claus et al

Patent Trials and Appeals Board

May 23, 2019

14251179 - (D) (P.T.A.B. May. 23, 2019)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
14/251,179 04/11/2014
63710 7590 05/28/2019
INNOVATION DIVISION
CANTOR FITZGERALD, L.P.
110 EAST 59TH STREET (6TH FLOOR)
NEW YORK, NY 10022
FIRST NAMED INVENTOR
Matthew W. Claus
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.
06-6268-C2 5168
EXAMINER
OYEBISI, OJO 0
ART UNIT PAPER NUMBER
3697
NOTIFICATION DATE DELIVERY MODE
05/28/2019 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 MATTHEW W. CLAUS, KEVIN M. FOLEY,
JOSEPH C. NOVIELLO, and HOW ARD W. LUTNICK
Appeal2018-005049
Application 14/251, 179 1
Technology Center 3600
Before JENNIFER L. McKEOWN, CATHERINE SHIANG, and
JASON J. CHUNG, Administrative Patent Judges.
SHIANG, Administrative Patent Judge.
DECISION ON APPEAL
Appellants appeal under 35 U.S.C. § 134(a) from the Examiner's
rejection of claims 21-39, which are all the claims pending in the
application. Claims 1-20 have been cancelled. We have jurisdiction under
35 U.S.C. § 6(b).
We affirm.
1 Appellants identify BGC Partners, Inc. as the real party in interest. App.
Br. 3.
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Application 14/251, 179
STATEMENT OF THE CASE
Introduction
The present invention relates to "electronic trading and more
specifically to a system for replenishing quantities of trading orders." Spec.
,r 2. Claim 21 is exemplary:
21. An apparatus, comprising:
at least one processor;
at least one memory in electronic communication with the
processor, the at least one memory having instructions stored thereon
which, when executed by the at least one processor, direct the at least
one processor to:
(a) receive from a trader computer a trading order
comprising a total quantity of a product;
(b) transmit to the trader computer at least one electronic
message comprising a request to indicate a formula for
replenishing a quantity of the trading order;
( c) receive from the trader computer information about at
least one algorithm to determine a displayed quantity for the
trading order, in which the information is transmitted from the
trader computer to the at least one processor in response to the
electronic message comprising a request to indicate a formula
for replenishing a quantity of the trading order;
( d) apply the algorithm to determine the displayed
quantity;
( e) determine a reserved quantity based on the
determined displayed quantity and the total quantity;
(f) communicate the trading order having the determined
displayed quantity and the determined reserved quantity, in
which the determined displayed quantity is displayed to other
traders;
(g) determine that the displayed quantity of the trading
order was filled;
(h) reduce the total quantity of the trading order by the
amount of the displayed quantity that was filled; and
(i) responsive to determining that the total quantity of the
trading order is not yet filled, repeat operations (d) through (f).
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Rejection2
Claims 21-39 are rejected under 35 U.S.C. § 101 because they are
directed to patent-ineligible subject matter. Final Act. 2-5.
ANALYSIS
We disagree with Appellants' arguments. To the extent consistent
with our analysis below, we adopt the Examiner's findings and conclusions
in (i) the action from which this appeal is taken (Final Act. 2-5) and (ii) the
Answer (Ans. 3---6). 3
The Examiner rejects the claims under 35 U.S.C. § 101 because they
are directed to patent-ineligible subject matter. See Final Act. 2-5; Ans. 3-
6. In particular, the Examiner concludes the claimed processes and
functions are directed to a fundamental economic practice. See Final Act. 3;
Ans. 5. The Examiner determines the claims do not identify an inventive
concept to transform the nature of the claims into a patent-eligible
application. See Final Act. 2-5; Ans. 3---6. Appellants argue the Examiner
erred. See App. Br. 10-15; Reply Br. 2.
Appellants have not persuaded us of error. Section 101 of the Patent
Act provides "[ 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
2 Throughout this opinion, we refer to the (1) Final Office Action dated July
20, 2017 ("Final Act."); (2) Appeal Brief dated January 12, 2018 ("App.
Br."); (3) Examiner's Answer dated February 14, 2018 ("Ans."); and
(4) Reply Brief dated April 12, 2018 ("Reply Br.").
3 To the extent Appellants advance new arguments in the Reply Brief
without showing good cause, Appellants have waived such arguments. See
37 C.F.R. § 41.41(b)(2).
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Application 14/251, 179
and requirements of this title." 35 U.S.C. § 101. However, the Supreme
Court has long interpreted 35 U.S.C. § 101 to include implicit exceptions:
"[l]aws of nature, natural phenomena, and abstract ideas" are not patentable.
E.g., Alice Corp. Pty. Ltd. v. CLS Bankint'l, 573 U.S. 208,216 (2014)
(internal quotation marks and citation omitted).
In determining whether a claim falls within an excluded category, we
are guided by the Supreme Court's two-step framework, described in Mayo
and Alice. Id. at 217-18 ( citing Mayo Collaborative Servs. v. Prometheus
Labs., Inc., 566 U.S. 66, 75-77 (2012)). In accordance with that framework,
we first determine what concept the claim is "directed to." See Alice, 573
U.S. at 219 ("On their face, the claims before us are drawn to the concept of
intermediated settlement, i.e., the use of a third party to mitigate settlement
risk."); see also Bilski v. Kappas, 561 U.S. 593, 611 (2010) ("Claims 1 and 4
in petitioners' application explain the basic concept of hedging, or protecting
against risk.").
Concepts determined to be abstract ideas, and, thus, patent ineligible,
include certain methods of organizing human activity, such as fundamental
economic practices (Alice, 573 U.S. at 219-20; Bilski, 561 U.S. at 611);
mathematical formulas (Parker v. Flook, 437 U.S. 584, 594--95 (1978)); and
mental processes (Gottschalkv. Benson, 409 U.S. 63, 67 (1972)). Concepts
determined to be patent eligible include physical and chemical processes,
such as "molding rubber products" (Diamond v. Diehr, 450 U.S. 175, 191
(1981) ); "tanning, dyeing, making water-proof cloth, vulcanizing India
rubber, smelting ores" (id. at 182 n.7 (quoting Corning v. Burden, 56 U.S.
252, 267---68 (1854))); and manufacturing flour (Benson, 409 U.S. at 69
(citing Cochrane v. Deener, 94 U.S. 780, 785 (1876))).
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In Diehr, the claim at issue recited a mathematical formula, but the
Supreme Court held that "[a] claim drawn to subject matter otherwise
statutory does not become nonstatutory simply because it uses a
mathematical formula." Diehr, 450 U.S. at 187; see also id. at 191 ("We
view respondents' claims as nothing more than a process for molding rubber
products and not as an attempt to patent a mathematical formula."). Having
said that, the Supreme Court also indicated that a claim "seeking patent
protection for that formula in the abstract ... is not accorded the protection
of our patent laws, ... and this principle cannot be circumvented by
attempting to limit the use of the formula to a particular technological
environment." Id. ( citing Benson and Flook); see, e.g., id. at 187 ("It is now
commonplace that an application of a law of nature or mathematical formula
to a known structure or process may well be deserving of patent
protection.").
If the claim is "directed to" an abstract idea, we tum to the second
step of the Alice and Mayo framework, where "we must examine the
elements of the claim to determine whether it contains an 'inventive
concept' sufficient to 'transform' the claimed abstract idea into a
patent-eligible application." Alice, 573 U.S. at 221 ( citation omitted). "A
claim that recites an abstract idea must include 'additional features' to
ensure 'that the [claim] is more than a drafting effort designed to
monopolize the [abstract idea]."' Id. ( quoting Mayo, 566 U.S. at 77).
"[M]erely requir[ing] generic computer implementation[] fail[ s] to transform
that abstract idea into a patent-eligible invention." Id.
The PTO recently published revised guidance on the application of
§ 101. USPTO, 2019 REVISED PATENT SUBJECT MATTER ELIGIBILITY
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GUIDANCE, 84 Fed. Reg. 50 (Jan. 7, 2019) ("Guidance"). Under the
guidance set forth in the Guidance, we first look to whether the claim
recites:
(1) any judicial exceptions, including certain groupings of
abstract ideas (i.e., mathematical concepts, certain methods of
organizing human activity such as a fundamental economic
practice, or mental processes) (Step 2A, Prong 1 ); and
(2) additional elements that integrate the judicial exception into
a practical application (see MANUAL OF p ATENT EXAMINING
PROCEDURE ("MPEP") § 2106.05(a}-(c), (e}-(h)) (9th Ed., Rev.
08.2017, 2018) (Step 2A, Prong 2).
Only if a claim (1) recites a judicial exception and (2) does not integrate that
exception into a practical application, do we then look to whether the claim:
(3) adds a specific limitation beyond the judicial exception that
is not "well-understood, routine, conventional" in the field (see
MPEP § 2106.05(d)); or
(4) simply appends well-understood, routine, conventional
activities previously known to the industry, specified at a high
level of generality, to the judicial exception. (Step 2B.)
See Guidance, 84 Fed. Reg. at 54--56.
Turning to Step 2A, Prong 1 of the Guidance (Alice step one), claim
21 ( with emphases) recite:
21. An apparatus, comprising:
at least one processor;
at least one memory in electronic communication with
the processor, the at least one memory having instructions
stored thereon which, when executed by the at least one
processor, direct the at least one processor to:
(a) receive from a trader computer a trading order
comprising a total quantity of a product;
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(b) transmit to the trader computer at least one
electronic message comprising a request to indicate a
formula for replenishing a quantity of the trading order;
( c) receive from the trader computer information about
at least one algorithm to determine a displayed quantity for the
trading order, in which the information is transmitted from the
trader computer to the at least one processor in response to the
electronic message comprising a request to indicate a formula
for replenishing a quantity of the trading order;
( d) apply the algorithm to determine the displayed
quantity;
( e) determine a reserved quantity based on the
determined displayed quantity and the total quantity;
(t) communicate the trading order having the determined
displayed quantity and the determined reserved quantity, in
which the determined displayed quantity is displayed to other
traders;
(g) determine that the displayed quantity of the trading
order was filled;
(h) reduce the total quantity of the trading order by the
amount of the displayed quantity that was filled; and
(i) responsive to determining that the total quantity of the
trading order is not yet filled, repeat operations (d) through(!).
All of the italicized limitations are associated with trading. 4 For
example, "(a) receive from a trader ... a trading order comprising a total
quantity of a product" is an activity of trading. Likewise, "(b) transmit to
the trader ... at least one ... message comprising a request to indicate a
formula for replenishing a quantity of the trading order," "( c) receive from
the trader ... information about at least one algorithm to determine a
4 Appellants also argue "a human cannot perform the claimed ... algorithms
with the aid of pencil and paper" (App. Br. 15), but do not persuasively
explain why.
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displayed quantity for the trading order, in which the information is
transmitted from the trader. .. to ... in response to the ... message
comprising a request to indicate a formula for replenishing a quantity of the
trading order," "(d) apply the algorithm to determine the displayed
quantity," and "(e) determine a reserved quantity based on the determined
displayed quantity and the total quantity" manage trading by requesting a
formula, and using an algorithm to determine a displayed quantity and a
reserved quantity for the trading order. Further, "(f) communicate the
trading order having the determined displayed quantity and the determined
reserved quantity, in which the determined displayed quantity is displayed to
other traders," "(g) determine that the displayed quantity of the trading order
was filled," "(h) reduce the total quantity of the trading order by the amount
of the displayed quantity that was filled," and "(i) responsive to determining
that the total quantity of the trading order is not yet filled, repeat operations
(d) through (f)" manage trading by communicating the trading order with the
determined displayed quantity, reducing the total quantity of the trading
order by the filled displayed quantity, and if the total quantity of the trading
order is not filled, repeat operations to fill the total quantity.
Our determination is supported by the Specification, which describes
the need to provide better trading systems, such as "us[ing] one or more
formulas to determine replenishment amounts so as to disguise the actions of
a particular trader" (Spec. ,r 9):
[0002] The present invention relates generally to electronic
trading and more specifically to a system for replenishing
quantities of trading orders.
[0004] Many of these electronic trading systems use a bid/offer
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process in which bids and offers are submitted to the systems
by a passive side and then those bids and offers are hit or lifted
( or taken) by an aggressive side. For example, a passive trading
counterparty may submit a "bid" to buy a particular trading
product. In response to such a bid, an aggressive side
counterparty may submit a "hit" in order to indicate a
willingness to sell the trading product to the first counterparty
at the given price. Alternatively, a passive side counterparty
may submit an "offer" to sell the particular trading product at
the given price, and then the aggressive side counterparty may
submit a "lift" ( or "take") in response to the offer to indicate a
willingness to buy the trading product from the passive side
counterparty at the given price.
[0005] In accordance with the present invention, the
disadvantages and problems associated with prior electronic
trading systems have been substantially reduced or eliminated.
[0009] One advantage is that the trading platform of the
present system uses one or more formulas to determine
replenishment amounts so as to disguise the actions of a
particular trader. When other traders see multiple transactions
involving the same amount of the same trading product, those
other traders may guess that a single trader is incrementally
purchasing or selling a large amount of that trading product. By
replenishing the displayed quantity ( or reserved quantity) of a
particular trading order using one or more formulas, the trading
platform may generate multiple transactions involving different
amounts of a trading product. Thus, the trading platform may
disguise the fact that a single trader is buying or selling a large
amount of a trading product. The formula may be used to
generate a random value. In addition, the trading platform may
become more or less aggressive during the course of filling
trading orders according to the formulas that are used.
Spec. ,r 2-9 ( emphases added).
Similar to the concepts of intermediated settlement in Alice and
hedging in Bilski, the concept of trading "is a fundamental economic
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practice long prevalent in our system of commerce." Alice, 573 U.S.
at 216 ( citations and internal quotation marks omitted). Accordingly,
we conclude claim 21 recites a fundamental economic practice, which
is one of certain methods of organizing human activity identified in
the Guidance, and thus an abstract idea. 5
Appellants' assertion regarding pre-emption (App. Br. 14, Reply Br.
2) is unpersuasive, because "[ w Jhile preemption may signal patent ineligible
subject 1natter, the absence of complete preemption does not demonstrate
patent eligibility .... \Vhere a patent's claims are deemed only to disclose
patent ineligible subject matter under the Afayo framework, as they are in
this case, preemption concerns are fully addressed and made moot" Ariosa
Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015);
see also OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1362---63
(Fed. Cir. 2015) ("that the claims do not preempt all price optimization or
may be limited to price optimization in the e-commerce setting do not make
them any less abstract").
Turning to Step 2A, Prong 2 of the Guidance, contrary to
Appellants' assertion (App. Br. 10-15; Reply Br. 2), Appellants have
not shown claim 21 recites additional elements that integrate the
judicial exception into a practical application. In particular,
Appellants have not shown the additional elements "at least one
processor," "at least one memory in electronic communication with
the processor, the at least one memory having instructions stored
thereon which, when executed by the at least one processor, direct the
5 As a result, the Examiner correctly determines claim 21 is directed to a
fundamental economic practice (Final Act. 3; Ans. 5).
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Application 14/251, 179
at least one processor to," "computer," "electronic," and "the at least
one processor" integrate the judicial exception into a practical
app li cation.
Appellants' argument that claim 21 provides "a novel ... function"
(App. Br. 11) is unpersuasive because "a claim for a new abstract idea is still
an abstract idea." Synopsys, Inc. v. Mentor Graphics Corp., 839 F.3d 1138,
1151 (Fed. Cir. 2016). "[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) (citations omitted).
Appellants also argue "paragraph ,r [0009] of Appellants' published
application ... contains 'a teaching ... about how the claimed invention
improves a computer."' App. Br. 12. That argument contradicts the record
because paragraph 9 explains the improvement is "us[ing] one or more
formulas to determine replenishment amounts so as to disguise the actions of
a particular trader"-not "improve[ing] a computer," as Appellants assert.
[0009] One advantage is that the trading platform of the
present system uses one or more formulas to determine
replenishment amounts so as to disguise the actions of a
particular trader. When other traders see multiple transactions
involving the same amount of the same trading product, those
other traders may guess that a single trader is incrementally
purchasing or selling a large amount of that trading product. By
replenishing the displayed quantity (or reserved quantity) of a
particular trading order using one or more formulas, the
trading platform may generate multiple transactions involving
different amounts of a trading product. Thus, the trading
platform may disguise the fact that a single trader is buying or
selling a large amount of a trading product. The formula may
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be used to generate a random value. In addition, the trading
platform may become more or less aggressive during the course
of filling trading orders according to the formulas that are used.
Spec. ,r 9 ( emphases added).
Further, Appellants' argument that "the claimed subject matter recites
an improvement to the computer by allowing the computer to perform a
function it could not previously perform (i.e. no prior art anticipates or
obviates the claimed subject matter)" (App. Br. 12----13) is unpersuasive,
because a prior art rejection is determined under 35 U.S.C. § 102 and§ 103,
which are di fforent statutory requirements. As the Supreme Court
emphasizes: "[t]he 'novelty' of any element or steps in a process, or even of
the process itself, is of no relevance in determining whether the subject
matter of a claim falls within the § 101 categories of possibly patentable
subject matter." Diehr, 450 U.S. at 188-89 (emphasis added). Our
reviewing court further guides that "[ e ]ligibility and novelty are separate
inquiries." Two-Way Media Ltd. v. Comcast Cable Commc 'ns, LLC, 874
F.3d 1329, 1340 (Fed. Cir. 2017).
As a result, we conclude claim 21 does not recite additional elements
that integrate the judicial exception into a practical application. See
Guidance, Step 2A, Prong 2.
Turning to Step 2B of the Guidance (Alice step two), Appellants do
not persuasively argue any specific limitation is not well-understood,
routine, or conventional in the field. Nor do Appellants persuasively argue
the Examiner erred in that aspect. As a result, Appellants have not
persuaded us the Examiner erred with respect to the Guidance's Step 2B
analysis. See Guidance, Step 2B.
Because Appellants have not persuaded us the Examiner erred, we
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sustain the Examiner's rejection of independent claim 21 under 35 U.S.C.
§ 101.
Regarding independent claims 30 and 38, Appellants contend
that claims are patent eligible for "at least the same reasons"
associated with claim 21. App. Br. 16. Therefore, for similar reasons
discussed above, we sustain the Examiner's rejection of independent
claims 30 and 38 under 35 U.S.C. § 101.
We also sustain the Examiner's rejection of corresponding dependent
claims 22-29, 31-3 7, and 3 9 as Appellants do not advance separate
substantive arguments about those claims.
DECISION
We affirm the Examiner's decision rejecting claims 21-39.
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). See
37 C.F.R. § 41.50(±).
AFFIRMED
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