Ex Parte Efron et al

Patent Trial and Appeal Board

Nov 29, 2017

11006441 (P.T.A.B. Nov. 29, 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.
11/006,441 12/07/2004 Paul Efron GOLDl 1-00213 5066
132787 7590
Docket Clerk-GOLD
P.O. Drawer 800889
Dallas, TX 75380
EXAMINER
APPLE, KIRSTEN SACHWITZ
ART UNIT PAPER NUMBER
3694
NOTIFICATION DATE DELIVERY MODE
12/01/2017 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):
patents @ munckwilson. com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte PAUL EFRON, TAMILLA GHODSI, and JAMES BROWER
Appeal 2016-000080
Application 11/006,4411
Technology Center 3600
Before KEVIN F. TURNER, NINA L. MEDLOCK, and
SHEILA F. McSHANE, Administrative Patent Judges.
McSHANE, Administrative Patent Judge.
DECISION ON APPEAL
Appellants seek our review under 35 U.S.C. § 134(a) of the Examiner’s final
decision to reject claims 1, 3—12, and 15. We have jurisdiction under 35 U.S.C.
§ 6(b).
We AFFIRM.
1 According to Appellants, the real party in interest is Goldman, Sachs & Co.
Appeal Brief filed February 2, 2015, hereafter “Appeal Br.,” 2.
Appeal 2016-000080
Application 11/006,441
BACKGROUND
The invention relates to hedging leveraged lease equity credit risks
associated with leveraged lease equity transactions. Specification, hereafter
“Spec.,” Abstract, 1:5—7. Goals of the invention are to provide a more efficient
way to hedge risks and to provide new opportunities for non-investment grade
companies to obtain lease financing. Id. at 3:14—18.
Representative method claim 1 is reproduced from page 9 of the Appeal
Brief (Claims App.) as follows:
1. A processor-implemented method for performing a credit risk
hedging transaction, comprising:
electronically identifying an entity via a processor, said entity
holding at least one asset on lease and receiving rent payments on said
lease, said entity having a beneficial interest owned by a leveraged
lease equity investor, wherein said beneficial interest is an ownership
interest in said entity;
electronically establishing via the processor a leveraged lease
equity investment between the leveraged lease investor and the entity,
wherein said beneficial interest is received by said leveraged lease
equity investor for investing in said entity;
electronically structuring via the processor a first agreement
associated with a hedging transaction between said leveraged lease
equity investor and a hedge counterparty to hedge credit risk
associated with the leveraged lease equity investment, wherein the
structured first agreement includes identification of a credit event
associated with said lease and an obligation that the said leveraged
lease equity investor deliver said beneficial interest to said hedge
counterparty upon the occurrence of said credit event, the credit event
representing events that present the credit risk to the leveraged lease
equity investor;
electronically structuring a second agreement between said
hedge counterparty and a third party investor, said structured second
agreement including an obligation of said hedge counterparty to
deliver a second beneficial interest to said third party investor upon
the occurrence of said credit event[;] and
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Application 11/006,441
electronically generating via the processor said first agreement
associated with the transaction and issuing the generated first
agreement to said leveraged lease equity investor and said hedge
counterparty, and generating said second agreement and issuing the
generated second agreement to said hedge counterparty and said third
party investor.
In the Final Action, the Examiner rejects claims 1, 3—12, and 15 under
35 U.S.C. § 101 as directed to non-statutory subject matter. The Examiner also
rejects claim 1 as unpatentable under 35 U.S.C. § 103(a) over Kastel2 and
Canezin.3’4 Claims 4, 6—12, and 15 are rejected as unpatentable under
35 U.S.C. § 103(a) over Kastel, Canezin, and Monsen.5 Claim 3 is rejected as
unpatentable under 35 U.S.C. § 103(a) over Kastel, Canezin, Monsen, and
Andrus.6 Claim 5 is rejected over Kastel, Canezin, Monsen, and Freund.7 Final
Action, hereafter “Final Act.,” 2—8, mailed September 8, 2014; Answer, hereafter
“Ans.,” 2, mailed July 14, 2015.
Appellants address the claims under the § 101 and § 103 rejections as a
group, with claim 1 used as the representative claim. Appeal Br. 6, 8. We will
address the claims in a similar manner. See 35 C.F.R. § 41.37(c)(iv).
Claim 2 was cancelled by amendment filed on January 20, 2012. Claims 9—
12, which depend directly or indirectly from claim 2, were not cancelled, but are
2 US Patent No. 7,792,730 B2, issued September 7, 2010.
3 US Patent Publication No. 2006/0282355 Al, published December 14, 2006.
4 Although there are typographical inconsistencies in the claim identifications in
the summaries of the respective rejections, this is inadvertent error because the
correct claim numbers and basis of rejections can be discerned from the context of
the Action. See Final Act. 3—6. Appellants do not present any arguments related
to typographical issues.
5 US Patent Publication No. 2006/0259419 Al, published November 16, 2006.
6 US Patent Publication No. 2002/0156709 Al, published October 24, 2002.
7 US Patent No. 7,853,461 B2, issued December 14, 2010.
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Application 11/006,441
unpatentable, as they stand, by virtue of their dependency. See Claims App. 10-
11. In light of the disposition of this Appeal, in which we address the claims as a
group and affirm the § 101 rejection, we decline to enter a new rejection of
claims 9-12 on a dependency basis because it would be moot.
DISCUSSION
35U.S.C.§ 101
The Examiner finds that claims 1, 3—12, and 15 are directed to non-statutory
subject matter that is an abstract idea because the steps of the claims are to
“establishing an ‘agreement’ which is no more than a legal cont[r]act,” where
“establishing an agreement” is an abstract idea. Final Act. 2. The Examiner finds
that the claims are “no more patentable under 101 than words in a book.” Ans. 2.
The Examiner finds that the limitations of claim 1 are directed to “identifying
elements, structuring and generating ‘legal’ agreements,” which do not qualify as
patentable under § 101. Id. Additional claim elements are not found to be
significantly more than the abstract idea because they are via a processor and “do
not provide meaningful limitation(s) to transform the abstract idea into a patent
eligible application of the abstract idea such that the claim(s) amounts to
significantly more than the abstract idea itself.” Final Act. 2—3.
Appellants argue that the § 101 rejection is based on conclusory statements,
with insufficient analysis or rationale provided in support of the rejection. Appeal
Br. 4. Appellants also allege that the claims are novel and non-obvious and,
therefore, even if the claims involve an abstract idea, the elements of the claims are
sufficient to transform them into patent eligible subject matter. Id. at 5.
Appellants further allege that there should be no concern with representative
claim 1 because there would be no monopolization of basic tools of science and
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Application 11/006,441
technology because the claim includes “additional concrete and meaningful
limitations,” which Appellants list. App. Br. 5.
To provide context, 35 U.S.C. § 101 provides that a new and useful
“process, machine, manufacture, or composition of matter” is eligible for patent
protection. The Supreme Court has made clear that the test for patent eligibility
under Section 101 is not amenable to bright-line categorical rules. See Bilski v.
Kappos, 561 U.S. 593, 609 (2010). There are, however, three limited, judicially
created exceptions to the broad categories of patent-eligible subject matter in
§ 101: laws of nature; natural phenomena; and abstract ideas. See Mayo
Collaborative Services v. Prometheus Labs., Inc., 566 U.S. 66, 70 (2012).
In Alice Corporation Pty, Ltd. v. CLS Bank International, 134 S. Ct. 2347
(2014) (“Alice”), the Supreme Court reiterated the framework set forth previously
in Mayo, “for distinguishing patents that claim laws of nature, natural phenomena,
and abstract ideas from those that claim patent-eligible applications of those
concepts.” Alice, 134 S. Ct. at 2355 (citation omitted). Under Alice, the first step
of such analysis is to “determine whether the claims at issue are directed to one of
those patent-ineligible concepts.” Id. (citation omitted). If it is determined that the
claims are directed to a patent-ineligible concept, the second step in the analysis is
to consider the elements of the claims “individually and ‘as an ordered
combination”’ to determine whether the additional elements ‘transform the nature
of the claim’ into a patent-eligible application.” Id. (quoting Mayo, 566 U.S. at 79,
78). In other words, the second step is to “search for an ‘inventive concept’—i.e.,
an element or combination of elements that is ‘sufficient to ensure that the patent
in practice amounts to significantly more than a patent upon the [ineligible
concept] itself.’” Id. (alteration in original) (quoting Mayo, 566 U.S. at 12—IS).
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Application 11/006,441
After considering Appellants’ arguments and the evidence presented in this
Appeal for the § 101 rejection, we are not persuaded that Appellants identify
reversible error. We add the following for emphasis.
We agree with the Examiner that when steps of the claims are considered,
they are directed to generating legal documents associated with transactions,
including steps of identifying entities and structuring transactions. The Federal
Circuit has held that if a method can be performed by human thought alone, or by a
human using pen and paper, it is merely an abstract idea and is not patent-eligible
under § 101. CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1372—73
(Fed. Cir. 2011) (“[A] method that can be performed by human thought alone is
merely an abstract idea and is not patent-eligible under § 101.”). Mental processes
remain unpatentable even when automated to reduce the burden on the user of
what once could have been done with pen and paper. CyberSource, 654 F.3d at
1375 (“That purely mental processes can be unpatentable, even when performed by
a computer, was precisely the holding of the Supreme Court in Gottschalk v.
Benson.”). Here, the claims could have been performed by a human structuring the
respective transactions and reducing the related agreements to paper. Moreover,
similar types of claims have been found to be directed to an abstract idea. See In
re Comiskey, 554 F.3d 967 (Fed. Cir. 2009) (methods directed to resolving binding
arbitration involving legal documents, such as contracts, were patent-ineligible);
Bilski, 561 U.S. at 609 (claims directed to risk hedging ineligibly directed to an
abstract idea); Dealertrack, Inc. v. Huber, 674 F.3d 1315, 1331—34 (Fed. Cir.
2012) (ineligible method directed to a computer aided method for credit
management). And, although Appellants list all the steps of representative claim 1
(see Appeal Br. 5), there is no explanation provided in support of why the elements
transform the abstract idea into “significantly more” under step 2 of Alice.
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Regarding Appellants’ argument that the Examiner’s findings are
insufficient and unsupported, we determine that the findings provide sufficient
notice of the basis for the rejection. See In re Jung, 637 F.3d 1356, 1362 (Fed. Cir.
2011). The Examiner has identified the abstract idea the claims are directed to,
and has also identified why the claims do not represent “significantly more”
because they are merely directed to performance by a processor. Notice of the
basis of the rejection is sufficient, however, as there is no requirement that
additional extrinsic evidence has to be provided in support of the findings. See id.;
see also, e.g., Mortgage Grader, Inc. v. First Choice Loan Servs. Inc., 811 F.3d
1314, 1325 (Fed. Cir. 2016).
Appellants’ argument regarding the lack of monopolization by claim 1 also
does not support patentability in this instance. Although it may be true that there is
no broad preemption of “basic tools of science and technology” under the scope of
the claims, that issue is not dispositive as to whether the claims are patent eligible.
SeeAriosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir.
2015) (“While preemption may signal patent ineligible subject matter, the absence
of complete preemption does not demonstrate patent eligibility.”); see also OIP
Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1360—1361 (Fed. Cir. 2015).
Finally, we disagree with Appellants’ allegations that the claims are novel
and non-obvious and, therefore, the elements of the claims are sufficient to
transform the nature of the claims into patent eligible subject matter. Novelty and
non-obviousness are additional requirements for patentability, which are separate
and distinct from those of § 101 patent eligibility.
We, therefore, sustain the Examiner’s rejection of claims 1, 3—12, and 15
under § 101.
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Application 11/006,441
35 U.S.C.§ 103
Appellants contend that Kastel fails to disclose the claim 1 limitations of
“electronically identifying an entity . . . having a beneficial interest owned by a
leveraged lease equity investor, wherein said beneficial interest is an ownership
interest in said entity” and “electronically structuring via the processor a first
agreement. . . includes ... an obligation that the said leveraged lease equity
investor deliver said beneficial interest to said hedge counterparty.” Id. at 7.
Appellants also disagree with the Examiner’s findings that in the comparison of the
claim elements to Kastel that “the ‘hedge counterparty’ is the ‘protection seller’,
the ‘credit event’ is the ‘credit risk’ and the ‘deliver beneficial interest’ is the
‘specified obligation’ and ‘will receive payment.’” Id. (citing Final Act. 4).
After considering Appellants’ arguments and the evidence presented in this
Appeal for the § 103 rejection, we are persuaded that Appellants identify reversible
error, and we, therefore, reverse the obviousness rejection. We add the following
for emphasis.
The Examiner relies upon Kastel for the teachings of the majority of the
claim steps, with the reliance on Canezin limited to teaching the elements relating
to “a third party investor.” Final Act. 4—5. The only portion of Kastel relied upon
in the rejection states:
Another field where such techniques can be applied to is the valuation
of futures contracts that are based on a basket of credit default swaps as
underlyings. Credit default swaps are the most commonly traded credit
derivatives. A credit default swap is a contract where one party (the
“protection seller”) receives a premium from another party (the
“protection buyer”) for assuming the credit risk of a specified
obligation. In return for this premium, the protection buyer will receive
a payment from the protection seller upon the occurrence of a credit
event.
Kastel, 1:43-59.
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Application 11/006,441
Although this portion of Kastel may disclose the use of the equivalent of
“hedging” transactions, that is, assumptions of “credit risk,” it fails to disclose, at
least, a “leveraged lease equity investment” with a beneficial interest ownership as
required in claim 1.
Thus, we cannot sustain the Examiner’s rejection of representative claim 1,
and claims 3—12 and 15, under 35 U.S.C. § 103(a).
SUMMARY
The rejection of claims 1, 3—12, and 15 under 35 U.S.C. § 101 is affirmed.
The rejection of claims 1, 3—12, and 15 under 35 U.S.C. § 103(a) is reversed.
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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