Ex Parte Emerick et al

Patent Trial and Appeal Board

Aug 24, 2018

13613712 (P.T.A.B. Aug. 24, 2018)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
13/613,712 09/13/2012
30756 7590 08/28/2018
BANNER & WITCOFF, LTD.,
ATTORNEYS FOR CLIENT NO. 006119
10 SOUTH WACKER DRIVE
SUITE 3000
CHICAGO, IL 60606
FIRST NAMED INVENTOR
David Emerick
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.
006119.00283 7015
EXAMINER
NGUYEN, LIZ P
ART UNIT PAPER NUMBER
3696
NOTIFICATION DATE DELIVERY MODE
08/28/2018 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):
PT0-30756@bannerwitcoff.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte DAVID EMERICK, JOHN LABUSZEWSKI, WILL PATRICK,
SANDRA RO, ROGER RUTHERFORD, and STEVE YOUNGREN
Appeal2017-004371
Application 13/613,712 1
Technology Center 3600
Before MARC S. HOFF, CATHERINE SHIANG, and
JOHN D. HAMANN, Administrative Patent Judges.
HOFF, Administrative Patent Judge.
DECISION ON APPEAL
STATEMENT OF THE CASE
Appellants appeal under 35 U.S.C. § 134 from a Final Rejection of
claims 1, 3, 5, 6, 8, 10, 12, 13, 15, 17, 19, and20. 2 Wehavejurisdiction
under 35 U.S.C. § 6(b ).
We affirm.
Appellants' invention is a system and method for executing trading of
futures contracts, and/or options on futures contracts, including spot market
trading. A computer system associated with spot market trading may
communicate with a computer system associated with trading in futures
1 The real party in interest is Chicago Mercantile Exchange, Inc.
2 Claims 2, 4, 7, 9, 11, 14, 16, 18, and 21-23 have been cancelled.
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contracts or options in futures contracts. The communications may include
pricing data for at least one of futures contracts or options in futures
contracts. Said pricing data may be used for spot market pricing. When it is
determined that completion of a pending spot market transaction will exceed
a limit, the computer system identifies one or more futures transactions that
will create a hedging position. When it is determined that transmitted orders
have created the hedging position, the computer system transmits data
authorizing completion of the pending spot market transaction. See
Abstract; App. Br. 2-3.
Claim 1 is exemplary of the claims on appeal:
1. A method comprising:
receiving, at an exchange computer system configured to
perform operations of an exchange for trading in at least one of
futures contracts or options in futures contracts for a subject
matter, and from a spot trading computer system external to the
exchange computer system, data indicating a pending spot
market transaction for the subject matter;
accessing, by the exchange computer system, data
identifying a limit associated with spot trading in the subject
matter;
determining, by the exchange computer system, whether
completion of the pending spot market transaction will exceed
the limit;
accessing, by the exchange computer system, data
identifying a futures hedging position corresponding to the limit;
as a result of determining that completion of the pending
spot market transaction will exceed the limit, and by the
exchange computer system, identifying one or more futures
transactions that will create the hedging position;
as a result of determining that completion of the pending
spot market transaction will exceed the limit, and by the
exchange computer system, generating and transmitting one or
more orders associated with the identified one or more futures
transactions;
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determining, by the exchange computer system, that the
transmitted one or more orders have created the hedging
position; and
as a result of determining that the transmitted one or more
orders have created the hedging position, and by the exchange
computer system, transmitting data to the spot trading computer
system authorizing completion of the pending spot market
transaction.
Claims 1, 3, 5, 6, 8, 10, 12, 13, 15, 17, 19, and 20 stand rejected under
35 U.S.C. § 101 as being directed to patent-ineligible subject matter.
Claims 1, 3, 5, 6, 8, 10, 12, 13, 15, 17, 19, and 20 stand rejected under
35 U.S.C. § I03(a) as being unpatentable over McConnel3 and Glodjo4.
Throughout this Decision, we make reference to the Appeal Brief
("App. Br.," filed Apr. 28, 2016), the Reply Brief ("Reply Br.," filed Jan. 18,
2017), and the Examiner's Answer ("Ans.," mailed Nov. 18, 2016) for their
respective details.
ISSUES
1. Is the claimed invention directed to a judicial exception,
specifically an abstract idea, without reciting significantly more, so as to
transform the invention into a patent-eligible concept?
2. Does the combination of McConnel and Glodjo disclose or fairly
suggest determining, by the exchange computer system, that the transmitted
one or more orders have created the hedging position, and as a result of that
determination, by the exchange computer system, transmitting data to the
spot trading computer system authorizing completion of the pending spot
market transaction?
3McConnel (US 2012/0143738 Al; publ. June 7, 2012).
4 Glodjo (US 2006/0195386 Al; publ. Aug. 31, 2006).
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The Supreme Court
PRINCIPLES OF LAW
set forth a framework for distinguishing patents that claim laws
of nature, natural phenomena, and abstract ideas from those that
claim patent-eligible applications of those concepts. First, ...
determine whether the claims at issue are directed to one of
those patent-ineligible concepts .... If so, we then ask, "[ w ]hat
else is there in the claims before us? ... To answer that question,
... consider the elements of each claim both individually and "as
an ordered combination" to determine whether the additional
elements "transform the nature of the claim" into a patent-
eligible application .... [The Court] described step two of this
analysis as a 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."
Alice Corp. Pty. Ltd. v. CLS Bank Int'!, 134 S. Ct. 2347, 2355 (2014)
(citing Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66
(2012)).
ANALYSIS
The Examiner finds that the claimed invention is directed to the
abstract idea of "implementing spot market trading with respect to trading in
futures contracts or options in futures contracts for a particular subject
matter." Ans. 3--4. The Examiner then finds that the steps of independent
claim 1 corresponds to concepts identified as abstract ideas by the courts, in
cases including "[]buySAFE[J/51 ... []SmartGene[}/61 .. . []Content
5 buySAFE, Inc. v. Google, Inc., 765 F.3d 1350 (Fed. Cir. 2014).
6 SmartGene, Inc. v. Adv. Bio. Labs., SA, 555 F.Appx. 950 (Fed. Cir. 2014)
(unpublished).
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Extraction[J/71 ... []Digitech[J/81 ... []Bilski[}/91 and ... []Alice
Corp.[J,!1°1" Ans. 4--5. The Examiner finds that all of the analogous
concepts in these cases "relate to processes of organizing information and to
mitigating risks." Ans. 5.
Appellants argue that if the Examiner characterizes the abstract idea
as "implementing spot market trading with respect to trading in futures
contracts or options in futures contracts for a particular subject matter," the
Examiner should have identified precedent relating to that idea, rather than
the collection of concepts mentioned. Reply Br. 2 (internal citation and
quotation marks omitted).
We agree with the Examiner that the claims recite a judicial
exception, specifically an abstract idea, and we agree with the Examiner's
characterization of the abstract idea. Claim 1 largely recites receiving,
accessing, and transmitting data. Apart from simply moving information
around, claim 1 further determines whether a transaction will exceed a limit
"associated with spot trading," identifies one or more futures transactions
that will create a hedging transaction, and determines whether transmitted
orders have, in fact, created said hedging position. Given that mitigating
settlement risk by facilitating the exchange of obligations between parties is
characterized by the Alice Court as "intermediated settlement," we do not
7 Content Extraction & Transmission LLC v. Wells Fargo Bank, N.A., 776
F.3d 1343 (Fed. Cir. 2014).
8 Digitech Image Techs., LLC v. Elecs.for Imaging, Inc., 758 F.3d 1344
(Fed. Cir. 2014).
9 Bilski v. Kappas, 561 U.S. 593 (2010).
10 Alice Corp. Pty. Ltd. v. CLS Bank Int'!, 134 S. Ct. 2347 (2014).
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find error in the Examiner's characterization of the abstract idea contained in
independent claim 1. Alice, 134 S. Ct. at 2356.
We further agree with the Examiner's analogy of the claims under
appeal to the claims in Bilski. Ans. 5. Bilski concerned a method for
hedging against the financial risk of price fluctuations, an abstract idea very
similar to the ideas expressed in the claimed invention. Bilski, 561 U.S. at
597-98. The claims in Bilski specifically recited
(a) initiating a series of transactions between said commodity
provider and consumers of said commodity wherein said
consumers purchase said commodity at a fixed rate based upon
historical averages, said fixed rate corresponding to a risk
position of said consumers;
(b) identifying market participants for said commodity having a
counter-risk position to said consumers; and
( c) initiating a series of transactions between said commodity
provider and said market participants at a second fixed rate such
that said series of market participant transactions balances the
risk position of said series of consumer transactions.
Id. at 599---600 (internal citation and quotation marks omitted).
The Court found that "[p]etitioners seek to patent both the concept of
hedging risk and the application of that concept to energy markets," and that
prior precedent shows petitioners' claims to be "attempts to patent abstract
ideas." Id. at 595. The Court found that hedging "is a fundamental
economic practice long prevalent in our system of commerce." Id. at 611.
Similarly, Appellants' claims recite receiving data concerning trading
in either futures contracts or options in futures contracts, and under certain
circumstances identifying transactions that will create a hedging position. If
transmitted orders have created said hedging position, the pending spot
market transaction is completed. Just as in Bilski, the claims in the present
appeal concern initiating transactions that establish a counter-risk position,
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i.e., hedging. Just as in Bilski, the claims under appeal express a
fundamental economic practice long prevalent in commerce.
Turning to step two of the Alice analysis, Appellants argue that claim
1 recites significantly more than the identified abstract idea, such that the
claim may be considered to be directed to patent-eligible subject matter.
"[C]laim 1 recites operations associated with certain types of hedging that
are distributed among different computer systems in a way not previously
known to the pertinent industry." Reply Br. 3. Appellants' Appeal Brief
and Reply Brief do not direct the reader to evidence supporting this
assertion. Appellants further assert that distribution of operations among
different computer systems can amount to significantly more than an
abstract idea. Id. Again, Appellants do not direct the reader to evidence
supporting this assertion.
Appellants further argue that "[i]nherent in claim 1 is a distribution of
operations among an exchange computer system and a separate spot trading
computer system." Reply Br. 2. Appellants do not further explain this
alleged "inherency." While claim 1 explicitly specifies steps to be
performed by the exchange computer system and spot trading computer
system, we see no evidence in claim 1 of such "inherent distribution." We
are not persuaded that Amdocs 11 and BASCOM12 are analogous to
Appellants' invention; unlike Amdocs, Appellants' claimed invention has not
been shown to "recite an inventive concept through the system's distributed
architecture." Amdocs, 841 F.3d at 1302.
11 Amdocs (Israel) Ltd. v. Openet Telecom, Inc., 841 F.3d 1288 (2016).
12 BASCOM Global Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d
1341 (2016).
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Because we are not persuaded by Appellants' arguments that the
Examiner erred, we sustain the Examiner's § 101 rejection of claims 1, 3, 5,
6, 8, 10, 12, 13, 15, 17, 19, and 20.
OBVIOUSNESS REJECTION
The Examiner finds that McConnel discloses "determining, by the
exchange computer system, that the transmitted one or more orders have
created the hedging position," and as a result of that determination, "by the
exchange computer system, transmitting data to the spot trading computer
system authorizing completion of the pending spot market transaction."
Ans. 9. The Examiner cites to paragraphs 87, 93-97, 126, and 147, and
Figures 2 and 4, of McConnel for support of this finding. Id.
We have reviewed the Examiner's cited evidence and we agree with
Appellants that none of the cited sections of McConnel disclose or suggest,
inter alia, authorizing a spot market transaction based on a determination
that one or more orders have created a futures hedging position. App. Br.
10-11. We agree with Appellants that Glodjo does not remedy the
deficiencies of McConnel. Id.
We conclude that the Examiner erred in rejecting independent claims
1, 8, and 15 as being unpatentable under 35 U.S.C. § 103(a) over McConnel
and Glodjo. We do not sustain the rejection of claims 1, 8, and 15, and of
dependent claims 3, 5, 6, 10, 12, 13, 17, 19, and 20 not separately argued.
CONCLUSIONS
1. The claimed invention recites an abstract idea without reciting
significantly more so as to transform the claimed invention into patent-
eligible subject matter.
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2. The combination of McConnel and Glodjo does not disclose or
fairly suggest determining, by the exchange computer system, that the
transmitted one or more orders have created the hedging position, and as a
result of that determination, by the exchange computer system, transmitting
data to the spot trading computer system authorizing completion of the
pending spot market transaction.
ORDER
The Examiner's decision to reject claims 1, 3, 5, 6, 8, 10, 12, 13, 15,
17, 19, and 20 under 35 U.S.C. § 101 is affirmed. The Examiner's decision
to reject claims 1, 3, 5, 6, 8, 10, 12, 13, 15, 17, 19, and 20 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). See 37
C.F.R. § 41.50(±).
AFFIRMED
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