Ex Parte Davies

Patent Trial and Appeal Board

Jan 30, 2019

12053487 (P.T.A.B. Jan. 30, 2019)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
12/053,487 03/21/2008
63710 7590 02/01/2019
INNOVATION DIVISION
CANTOR FITZGERALD, L.P.
110 EAST 59TH STREET (6TH FLOOR)
NEW YORK, NY 10022
FIRST NAMED INVENTOR
James Davies
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.
07-2155 4378
EXAMINER
WONG,ERICTAKWAI
ART UNIT PAPER NUMBER
3692
NOTIFICATION DATE DELIVERY MODE
02/01/2019 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 JAMES DA VIES
Appeal 2017-011782
Application 12/053,487
Technology Center 3600
Before ALLEN R. MacDONALD, RAMA G. ELLURU, and
ADAM J. PYONIN, Administrative Patent Judges.
MacDONALD, Administrative Patent Judge.
DECISION ON APPEAL 1
STATEMENT OF THE CASE
Appellant appeals under 35 U.S.C. § 134(a) from a final rejection of
claims 1-21, which constitute all the claims pending in this application. We
have jurisdiction under 35 U.S.C. § 6(b ). We AFFIRM.
1 Appellant indicates the real party in interest is BGC Partners, Inc.
App. Br. 3.
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Application 12/053,487
Illustrative Claims
Illustrative claims 1-3 under appeal read as follows ( emphasis,
formatting, and bracketed material added):
1. A method, comprising the steps performed on one or
more computers, of:
[A.] computing in memory of the one or more computers a value
representative of a first yield for a first instrument, the first
instrument being a derivative of an underlying financial
instrument, the first instrument being a non-fixed-income
instrument;
[B.] controlling by the one or more computers submission of
trading orders to an automated trading exchange, the
orders to trade at least one of the first instrument and a
second instrument based at least in part on:
[i.] computing in memory of the one or more computers
a second yield of the second instrument, and
comparing the first yield value with the computed
second yield of the second instrument, and/or
[ii.] comparing in memory of the one or more computers
a differential of the first yield value over change in
market interest rates against a differential of the
second yield value over change in market interest
rates, and
[C.] the submission of orders being controlled to balance sizes of
positions in the first instrument and second instrument to
achieve a financial risk profile desired by a trader.
2. The method of claim 1, wherein the first instrument is a bond
futures contract.
3. The method of claim 2, wherein the second instrument is a
bond futures contract.
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Rejection2
The Examiner rejected claims 1-21 under 35 U.S.C. § 101 because
"the claimed invention is directed to a judicial exception ... without
significantly more," i.e., because the claimed invention is directed to patent-
ineligible subject matter. Final Act. 3. Separate patentability is not argued
for claims 1-21. Therefore, we select independent claim 1 as representative.
Except for our ultimate decision, we do not discuss the § 101 rejection of
claims 2-21 further herein.
Issues on Appeal
Did the Examiner err in rejecting claim 1 as being directed to patent-
ineligible subject matter?
ANALYSIS 3
We have reviewed the Examiner's rejections in light of Appellant's
Appeal Brief and Reply Brief arguments that the Examiner has erred.
A. Section 101
An invention is patent-eligible if it claims a "new and useful process,
machine, manufacture, or composition of matter." 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
2 All citations to the "Final Action" are to the Final Action mailed on August
11, 2016.
3 All Manual of Patent Examining Procedure (MPEP) citations herein are to
MPEP Rev. 08.2017, January 2018.
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Application 12/053,487
ideas" are not patentable. E.g., Alice Corp. v. CLS Bank Int 'l, 573 U.S. 208,
216 (2014).
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 ( Gottschalk v. Benson, 409 U.S. 63, 69 (1972)). Concepts
determined to be patent eligible include physical and chemical processes,
such as "molding rubber products" (Diamond v. Diehr, 450 U.S. 175, 192
( 1981) ); "tanning, dyeing, making waterproof 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))).
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
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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. ( citation omitted) ( 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 (quotation marks 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. (alterations in original) (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.
B. USPTO Section 101 Guidance
The United States Patent and Trademark Office (USPTO) recently
published revised guidance on the application of§ 101. US PTO' s January
7, 2019 Memorandum, 2019 Revised Patent Subject Matter Eligibility
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Application 12/053,487
Guidance, 84 Fed. Reg. 50 ("Memorandum"). Under that guidance, we first
look to whether the claim recites:
(1) (see Memorandum Step 2A - Prong One) any judicial exceptions,
including certain groupings of abstract ideas (i.e., mathematical
concepts, certain methods of organizing human interactions such as a
fundamental economic practice, or mental processes); and
(2) (see Memorandum Step 2A - Prong Two) additional elements that
integrate the judicial exception into a practical application (see MPEP
§ 2106.05(a}-(c), (e}-(h)). 4
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.
See Memorandum Step 2B.
4 We acknowledge that some of these considerations may be properly
evaluated under Step 2 of Alice (Step 2B of Office guidance). Solely for
purposes of maintaining consistent treatment within the Office, we evaluate
it under Step 1 of Alice (Step 2A of Office guidance). See USPTO's January
7, 2019 Memorandum, "2019 Revised Patent Subject Matter Eligibility
Guidance."
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C. Examiner's §101 Rejection -Alice/Mayo - Steps 1 and 2
C. I. Memorandum Step 2A - Prong One
Applying step 1 of the Alice/Mayo analysis, the Examiner concludes
claim 1 is directed to an abstract idea.
In this case, the claims are directed to submission of
financial orders, which is a fundamental economic practice and
therefore an abstract idea. The claims are principally drawn to
controlling submission of orders for two instruments in order to
achieve a financial risk profile desired by a trade. Note that the
courts have recently found claims drawn to concepts involving
human activity relating to commercial practices ineligible. Here,
the instant claims involve comparing values related to two
instruments and submitting orders based on those values, which
is similar to the commercial practices that have been found by
the courts to be abstract ideas.
Final Act. 3 ( emphasis added). The Examiner cites Bilski, Alice, and Perkin-
Elmer to establish that the courts have found financial risk management to
be an abstract idea. Final Act 3--4.
Here, the instant [claims] are similar to those in the cited court
decisions because they involve concepts relating to performance
of financial transactions, concepts relating to managing
transactions between people, as well as concepts relating to
processes of comparing data that can be performed mentally.
Final Act. 4.
C.2. Memorandum Step 2A - Prong Two
Applying step 2 of the Alice/Mayo analysis, the Examiner concludes:
The claims do not include limitations that are
"significantly more" than the abstract idea because the claims do
not include an improvement to another technology or technical
field, an improvement to the functioning of the computer itself,
or meaningful limitations beyond generally linking the use of an
abstract idea to a particular technological environment.
Final Act. 5.
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C.3. Memorandum Step 2B
Further applying step 2 of the Alice/Mayo analysis, the Examiner
concludes:
[T]he limitations, in the instant claims, are done by the
generically recited computer products. The generically recited
computer elements such as "one or more computers", "memory",
and "one or more tangible computer memories" do not add a
meaningful limitation to the abstract idea because they would be
routine in any computer implementation. The steps for data
gathering and processing do not add a meaningful limitation to
the method as they would be routinely used by those of ordinary
skill in the art in order to apply the abstract idea.
Final Act. 5 ( emphasis added).
Moreover, the specification does not contribute any
technically-specific computer algorithm or code, but rather
merely states that the claimed steps may be performed by the
generic modules with the expectation that one of ordinary skill
in the art would be capable of implementation without further
instruction. Whilst the implementation of such a solution may
include the use of generic technical features, these merely serve
their well-known functions as would be recognized by one of
ordinary skill in the art in the technical field under consideration .
. . . The computer components are recited at a high level of
generality and are recited as performing generic computer
functions routinely used in computer applications. Generic
computer components recited as performing generic computer
functions that are well-understood, routine and conventional
activities amount to no more than implementing the abstract idea
with a computerized system. The use of generic computer
components in this manner does not impose any meaningful limit
on the computer implementation of the abstract idea.
Final Act. 7 ( emphasis added).
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D. Appellant's§ 101 Arguments
D.1.
Appellant contends "the Office Action fails to make a prima facie
showing that the claims are directed to an abstract idea." App. Br. 6.
Appellant particularly contends:
[T]he Examiner does not cite to appropriate court decisions or
explain how the concepts correspond to concepts in cited court
decisions.
The only cases mentioned by the office action with
reference to the claims are Alice, Alice, Ultramercial, Content
Extraction, buySafe, Bilski, Accenture, Bancorp, De[al]ertrack,
Planet Bingo, Ambry, Myriad, Cybersource, SmartGene,
Classen, Gametek, and Grams. None of these are even remotely
close to Applicants claims. A listing of unrelated cases cannot
amount to a prima facie showing in line with required procedure.
Further, the Examiner unlawfully over simplifies the claim
and merely looks at the gist of the claims when saying that they
are directed to "submission of financial orders".
App. Br. 7 (emphasis added).
The Examiner ignores meaningful [ computing,
controlling, comparing] claim limitations to find an abstract idea
that is divorced from the claim and that completely misses the
point of the claim. The Examiner stands in direct disregard to the
directives of the courts and the PTO.
Furthermore, The Examiner as its justification for the
allegedly abstract idea being abstract states that the idea is a
"fundamental economic practice". The Office Action ignores the
Court[']s ruling in Alice that limits abstract ideas to fundamental
economic practices that are long prevalent. The Office Action
certainly presents no evidence regarding the long prevalence of
this alleged abstract idea. Moreover, the Examiner presents no
evidence of the fundamentality of this economic practice.
App. Br. 8 (emphasis added).
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Contrary to Appellant's argument that none of the claims of the cases
cited by the Examiner are even remotely close to Applicants claims, we
determine that the financial risk management claims of Alice and Bilski are
directly on point to Appellant's claimed financial risk management. The
Examiner correctly points out that step 1 of the Alice/Mayo framework does
not require evidence and may rely on comparing claimed concepts to prior
court decisions. Ans. 5---6.
Appellant also overlooks that the argued computing, controlling,
comparing specifics of claim 1 are part of the judicial exception. The fact
that a claimed concept is "[g]roundbreaking, innovative, or even brilliant"
does not "itself satisfy the§ 101 inquiry." Ass 'nfor Molecular Pathology v.
Myriad Genetics, Inc., 569 U.S. at 591; see also Aatrix Software, Inc. v.
Green Shades Software, Inc., 890 F.3d 1354, 1359 (Fed. Cir. 2018) ("It is
clear from Mayo that the 'inventive concept' cannot be the abstract idea
itself.").
We agree with the Examiner that claim 1 recites a judicial exception
in the form of a fundamental economic practice, i.e., certain methods of
organizing human activity comprising fundamental economic principles or
practices (including hedging, insurance, or mitigating risk).
D.2.
Appellant also contends "the Claims are not directed to an abstract
idea." App. Br. 8.
[The] claims clearly add functionality to a computer that
was previously not available and therefore are not directed to an
abstract idea. The lack of a valid prior art reference is clearly
indicative of this.
Applicants claims, like the claim in Trading Technology,
Inc[.] v[.] CQG, Inc. present a non-conventional improvement
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to trading technology that increase the efficiency and usability
of trading systems. These claims are therefore not directed to an
abstract idea.
Moreover, in the CAFC cases of Enfish and McRO, the
CAFC followed the Supreme Court's guidance and clearly
identified that the central test of abstractness is whether a claim
preempts an entire area. The claims clearly do not preempt an
entire area. These claim include specific rules, like the rules in
McRO, that clearly put them squarely outside of any risk of
preemption.
App. Br. 9 ( emphasis added).
First, Appellant's "lack of a prior art rejection" argument lacks merit
because, even though the Section 101 inquiry and the Section 102/103
inquiry might sometimes overlap, a novel and nonobvious claim directed to
a purely abstract idea is, nonetheless, patent-ineligible. See Mayo
Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. at 89 (rejecting the
suggestion that Sections 102, 103, and 112 might perform the appropriate
screening function and noting that in Mayo such an approach "would make
the 'law of nature' exception ... a dead letter").
Second, contrary to Appellant's technology improvement argument,
we do not find before us a non-abstract improvement to technology. The
focus of claim 1 is not on an improvement in computer-functionality, as in
Enfzsh, but on an abstract idea that uses a computer as a tool for "achieving a
financial risk profile desired by a trade." App. Br. 13. In Trading
Technologies, the Federal Circuit agreed with the district court explanation
that:
The claims require a specific, structured graphical user interface
paired with a prescribed functionality directly related to the
graphical user interface's structure that is addressed to and
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resolves a specifically identified problem in the prior state of the
art.
Trading Techs. Int'!, Inc. v. CQG, INC, 675 F. App'x 1001, 1004 (Fed. Cir.
2017). In contrast, in Appellant's claim 1, we find only abstract
improvements to financial risk management. A claim directed to a unique
and advantageous method for financial risk management is nonetheless
directed to an abstract idea. 5 "[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); see Diehr, 450 U.S. at 188-
89.
Third, Appellant's "preemption" argument is not persuasive because
although "preemption may signal patent ineligible subject matter, the
absence of complete preemption does not demonstrate patent eligibility."
Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir.
2015). We are instructed that "[ w ]here a patent's claims are deemed only to
disclose patent ineligible subject matter under the [Alice/Mayo] framework
... , preemption concerns are fully addressed and made moot." Id.
5 See Ultramercial, Inc. v. Hulu LLC, 772 F.3d. 709 (Fed. Cir. 2014). In
that case, the patentee argued that its financial arrangement ( a method of
using advertising as an exchange or currency) was distinguishable from the
"routine," "long prevalent," or "conventional" abstract idea in Alice
because it was "directed to a specific method of advertising and content
distribution that was previously unknown." Id. at 714. The court rejected
the patentee's position that "abstract ideas remain patent-eligible under
§ 101 as long as they are new ideas not previously well known, and not
routine activity." Id.
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We agree with the Examiner that claim 1 "do[es] not include an
improvement to another technology or technical field, an improvement to the
functioning of the computer itself [see MPEP 2106.0S(a)], or meaningful
limitations beyond generally linking the use of an abstract idea to a
particular technological environment [see MPEP 2106.0S(h)]." In view of
Appellant's Specification, and consistent with the Examiner's
determinations, we conclude that claim 1 does not integrate the judicial
exception into a practical application. We determine claim 1 does not recite:
(i) an improvement to the functioning of a computer;
(ii) an improvement to another technology or technical field;
(iii) an application of the abstract idea with, or by use of, a
particular machine;
(iv) a transformation or reduction of a particular article to a
different state or thing; or
(v) other meaningful limitations beyond generally linking the
use of the abstract idea to a particular technological
environment.
See MPEP §§ 2106.0S(a}-(c), (e}-(h). We agree with the Examiner that
claim 1 is directed to a judicial exception.
D.3.
As noted above, the Examiner also determined:
The generically recited computer elements such as "one or more
computers", "memory", and "one or more tangible computer
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memories" do not add a meaningful limitation to the abstract idea
because they would be routine in any computer implementation."
Final Act. 5.
Appellant contends "the Office Action has failed to make a prima facie
showing that the claims do not add significantly more than the allegedly
abstract idea." App. Br. 9. Appellant particularly contends:
The Office Action identifies numerous limitations that are not
considered part of the abstract idea. The Office Action addresses
all of them by saying they are simply conventional or well-
known. These allegations amount to a factual finding of the state
of the art made without evidentiary support. It is not readily
apparent that all of these claim limitations were actually
conventional or well[ -]known at the time of the filing of this
application either separately or together. Evidence is required to
make such findings. Without such evidence no prima facie
showing has been made.
App. Br. 9.
Although claim 1 recites "more" under step two of the Alice/Mayo
analysis, we conclude the "more" is not patentably significant. Rather, the
case law shows this "more" of "computers" and "memories" to be the
epitome of a well-understood, routine, conventional element/combination
previously known in the industry. See Alice, 573 U.S. at 227 ("[P]etitioner's
... media claims add nothing of substance to the underlying abstract idea.");
Fairwarning IP, Inc. v. Iatric Sys., Inc., 839 F.3d 1089, 1096 (Fed. Cir.
2016) ("Claims 15-17 ... add nothing more than similar nominal recitations
of basic computer hardware, such as 'a non-transitory computer-readable
medium with computer-executable instructions' and a microprocessor.").
Because claim 1, in addition to the abstract idea, recites only a well-
understood, routine, conventional element/combination previously known in
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the industry, we conclude the case law shows there is no genuine issue of
material fact regarding step two of the Examiner's Alice/Mayo analysis.
Therefore, we are unpersuaded by Appellant's argument that further
evidence is required. In view of Appellant's Specification, and consistent
with the Examiner's determinations, we determine the claims do not recite:
(vi) a specific limitation other than what is well-understood,
routine, conventional activity m the field or
unconventional steps that confine the claim to a particular
useful application.
See MPEP § 2106.05(d).
CONCLUSIONS
(1) The Examiner has not erred in rejecting claims 1-21 under
35 U.S.C. § 101, as being directed to patent-ineligible subject matter.
(2) Claims 1-21 are not patentable.
DECISION
The Examiner's rejection of claims 1-21 under 35 U.S.C. § 101, as
being directed to patent-ineligible subject matter, 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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