Ex Parte Farabi et al

Patent Trial and Appeal Board

May 11, 2018

13891701 (P.T.A.B. May. 11, 2018)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
13/891,701 05/10/2013
12684 7590 05/15/2018
Lempia Summerfield Katz LLC/CME
20 South Clark Street
Suite 600
Chicago, IL 60603
FIRST NAMED INVENTOR
Corey Farabi
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.
4672-12014BUS 4276
EXAMINER
FU, HAO
ART UNIT PAPER NUMBER
3697
NOTIFICATION DATE DELIVERY MODE
05/15/2018 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):
mail@lsk-iplaw.com
docket-us@lsk-iplaw.com
pair_lsk@firsttofile.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte COREY F ARABI, CHAD VOEGELE,
MATT SIMPSON, KEITH A. ANGUISH, STEVE ISHMAEL,
DMITRIY GLINBERG, IGOR ZOLOTAREV,
RAFET EVREN BA YSAL, JINGBIN YIN, and ZIYI WANG 1
Appeal2017-001969
Application 13/891,701
Technology Center 3600
Before JAMES R. HUGHES, ERIC S. FRAHM, and
MATTHEW J. McNEILL, Administrative Patent Judges.
McNEILL, Administrative Patent Judge.
DECISION ON APPEAL
Appellants appeal under 35 U.S.C. § 134(a) from a rejection of claims
1-21. We have jurisdiction under 35 U.S.C. § 6(b).
We affirm.
1 According to Appellants, the real party in interest is Chicago Mercantile
Exchange Inc. App. Br. 2.
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Application 13/891,701
STATEMENT OF THE CASE
Introduction
Appellants' application relates to "reducing, minimizing or otherwise
optimizing margin requirements for a trader having both an interest rate (IR)
futures and over-the-counter (OTC) interest rate swaps (IRS) accounts by
efficiently allocating IR futures across both accounts." Spec. i-f 26. Claim 1,
reproduced below, is illustrative of the claimed subject matter:
1. A computer-implemented method for modifying a
plurality of data records stored in a memory of a data transaction
processing system in which data items are transacted by a
hardware matching processor that matches electronic data
transaction request messages for the same one of the data items
based on multiple transaction parameters from different client
computers over a data communication network, each of the
plurality of data records comprising data indicative of a result of
the operation of the hardware matching processor with respect to
a data item, wherein a first subset of the plurality of data records
are associated with a first account of a trader and a second subset
of the plurality of data records are associated with a second
account of the trader, the first and second accounts being
characterized by a combined value computed based on the data
stored in the first and second subsets of the plurality of data
records, the method comprising:
retrieving, automatically by a processor of the data
transaction processing system from the memory, the data stored
in the first and second subsets of the plurality of data records;
determining, automatically by the processor, an optimal
reallocation of the data stored in the first and second subsets of
the plurality of data records between the first and second subsets
which results in a total value for the first and second subsets of
the plurality of data records that is less than the combined value;
determining, automatically by the processor, one or more
modifications to the data of the data records of the first subset,
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the second subset, or a combination thereof to achieve the
determined optimal reallocation;
generating, automatically by the processor, a set of
proposed data transaction request messages to communicate to
the hardware matching processor, each having multiple
transaction parameters configured to effect the determined one
or more modifications; and
transacting, by the hardware matching processor, the
proposed set of data transaction request messages, wherein the
data of the data records of the first subset, the second subset, or
a combination thereof are modified thereby.
The Examiner's Rejections
Claims 1-21 stand rejected under 35 U.S.C. § 112, second paragraph,
as failing to claim the subject matter which Appellants regard as the
invention.
Claims 1-21 stand rejected under 35 U.S.C. § 101 as being directed to
patent-ineligible subject matter.
Claims 1-5, 8-12, and 15-19 stand rejected under 35 U.S.C. § 103(a)
as being unpatentable over Glinberg et al. (US 2009/0171824 Al; July 2,
2009), Chigirinskiy et al. (US 2008/0183638 Al; July 31, 2008), and El-
Sakkout et al. (US 2012/0209756 Al; Aug. 16, 2012).
Claims 6, 7, 13, 14, 20, and 21 stand rejected under 35 U.S.C.
§ 103(a) as being unpatentable over Glinberg, Chigirinskiy, El-Sakkout, and
Tully et al. (US 2009/0037320 Al; Feb. 5, 2009).
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ANALYSIS
§ 112, Second Paragraph
The Examiner finds claims 1-21 fail to claim the subject matter
Appellants regard as the invention. Final Act. 6-7. Specifically, the
Examiner finds that "[ e ]vidence that claim[ s] 1-21 fail[] to correspond in
scope with that which ... the applicant( s) regard as the invention can be
found in the original specification." Id. However, as the MPEP instructs,
"[a] rejection based on the failure to satisfy this requirement is appropriate
only where an inventor has stated, somewhere other than in the application
as filed, that the invention is something different from what is defined by the
claims." MPEP § 2172 (I); see also In re Conley, 490 F.2d 972, 976 (CCPA
197 4) ("This portion of the statutory language has been relied upon in cases
where some material submitted by applicant, other than his specification,
shows that a claim does not correspond in scope with what he regards as his
invention."). Here, the only evidence cited by the Examiner is the
Specification (see Final Act. 6-7). Any lack of agreement between the
claims and the Specification, however, is properly considered under§ 112,
first paragraph, not§ 112, second paragraph. See MPEP § 2172 (II) (citing
In re Ehrreich, 590 F.2d 902 (CCPA 1979). Accordingly, the Examiner
erred in rejecting claims 1-21 under§ 112, second paragraph.
Patent-Ineligible Subject Matter
Under 35 U.S.C. § 101, a patent may be obtained for "any new and
useful process, machine, manufacture, or composition of matter, or any new
and useful improvement thereof." The Supreme Court has "long held that
this provision contains an important implicit exception: Laws of nature,
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natural phenomena, and abstract ideas are not patentable." Alice Corp. Pty.
Ltd. v. CLSBankint'l, 134 S. Ct. 2347, 2354 (2014) (quotingAss'nfor
Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 589 (2013)).
The Supreme Court, in Alice, reiterated the two-step framework
previously set forth in Mayo Collaborative Services v. Prometheus
Laboratories, Inc., 566 U.S. 66 (2012), "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.
Assuming that a claim nominally falls within one of the statutory categories
of machine, manufacture, process, or composition of matter, the first step in
the analysis is to "determine whether the claims at issue are directed to one
of those patent-ineligible concepts." Id. For example, abstract ideas
include, but are not limited to, fundamental economic practices, methods of
organizing human activities, an idea of itself, and mathematical formulas or
relationships. Id. at 2355-57. If the claim is directed to a judicial exception,
such as an abstract idea, the second step is to determine whether additional
elements in the claim "'transform the nature of the claim' into a patent-
eligible application." Id. at 2355 (quoting Mayo, 566 U.S. at 78). This
second step is described as "a search for an "'inventive concept"'-i.e., an
element or combination of elements that is ' ... significantly more than ...
the [ineligible concept] itself."' Id. at 2355 (alteration in original) (quoting
Mayo, 566 U.S. at 72-73).
Alice Step One
"The first step in the Alice inquiry ... asks whether the focus of the
claims is on the specific asserted improvement in computer capabilities ...
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or, instead, on a process that qualifies as an 'abstract idea' for which
computers are invoked merely as a tool." Enfzsh, 822 F.3d 1327, 1335-36
(Fed. Cir. 2016). "The abstract idea exception prevents patenting a result
where 'it matters not by what process or machinery the result is
accomplished."' McRO, Inc. v. Bandai Namco Games America Inc., 837
F.3d 1299, 1312 (Fed. Cir. 2016) (quoting O'Reilly v. Morse, 56 U.S. (15
How.) 62, 113 (1854)). "We therefore look to whether the claims ... focus
on a specific means or method that improves the relevant technology or are
instead directed to a result or effect that itself is the abstract idea and merely
invoke generic processes and machinery." McRO, 837 F.3d at 1314.
Appellants disagree with the Examiner's characterization of the
claims and argue
the claimed invention is directed toward a unique
communications and transaction protocol which can be used by
a data transaction processing system to automatically increase
transaction volume while minimizing bandwidth consumption
and computational load, a concept inextricably tied to computer
technology and distinct from the types of concepts found by the
courts to be abstract.
App. Br. 9.
We are not persuaded by Appellants' argument. We see nothing in claim 1
that defines "a unique communications and transaction protocol," or that
specifies a way to "increase transaction volume while minimizing bandwidth
consumption and computational load." Id. Rather, claim 1 is a method that,
given certain data in first and second data subsets associated with first and
second trader accounts, determines an optimal reallocation of data between
the first and second data subsets, determines modifications to the data to
achieve the reallocation, sends messages with parameters for effecting the
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modifications, and performs modifications to the data according to the
messages. In sum, as the Examiner finds, claim 1 is directed to "cross-
account optimization," which "is a fundamental economic practice," i.e., an
abstract idea. Final Act. 7. Although we could characterize claim 1 with
more detail, for example, as being directed to modifying data to achieve an
optimal data reallocation between trader accounts, this does not change the
patent-eligibility analysis. See Apple, Inc. v. Ameranth, Inc., 842 F.3d 1229,
1240-1241 (Fed. Cir. 2016) ("An abstract idea can generally be described at
different levels of abstraction .... The Board's slight revision of its abstract
idea analysis does not impact the patentability analysis.").
The nature of claim 1 as a whole is not to define a specific
technological improvement, but to recite the steps necessary to perform the
abstract idea itself. In particular, contrary to Appellants' argument that "the
claims relate to a specifically configured processor" (App. Br. 9), claim 1
does not specify how either of the two recited processors perform the
claimed steps. For example, claim 1 provides no details on how "the
processor" performs "determining ... an optimal reallocation," or how "the
hardware matching processor" performs "transacting ... the proposed set of
data transaction request messages." Instead, these steps are defined in terms
of broadly recited results-i.e., "determining ... an optimal reallocation ...
which results in a total value ... that is less than the combined value," and
"transacting ... the proposed set of data transaction request messages ...
wherein the data ... are modified thereby." Accordingly, claim 1 employs
"generic processes and machinery" to achieve results, and is not focused on
"a specific means or method that improves the relevant technology." McRO,
837 F.3d at 1314.
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The fact that claim 1 uses two different processors to perform the
claimed steps does not in itself show the claim is directed to a technological
improvement, particularly because the communication between the
processors is devoid of details that could, as Appellants argue, establish "a
unique communications and transaction protocol." App. Br. 9. Rather, with
respect to communications from the "processor" to the "hardware matching
processor," claim 1 simply recites using "data transaction request messages
... each having multiple transaction parameters configured to effect the
determined one or more modifications." Such a broadly defined "data
transaction request message" encompasses a communication with an
instruction to modify a piece of data by a certain amount. This
communication is basic enough to be no different in kind than that between
two people working together to reallocate data between trader accounts: one
person to determine the reallocation, and another person to make a change to
the data determined by the first person. In fact, the Specification describes
how data reallocation between trader accounts was heretofore performed by
multiple people: "For example, current mechanisms will typically employ a
business analyst for data aggregation, a quantitative analyst for computing
optimized allocation of futures positions, and an operations analyst for
inputting the resulting transfers into a graphical user interface (GUI)."
Spec. i-f 30. Claim 1 simply automates this reallocation process by reciting a
method in "which computers are invoked merely as a tool." Enfzsh, 822
F.3d at 1336.
Accordingly, we find claim 1 does not contain the specificity
necessary to show how the processors' operations or the communications
between processors differ from prior human methods, and is therefore not
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directed to a technological improvement, but the abstract idea itself. See
McRO, 837 F.3d at 1314 ("The computer here is employed to perform a
distinct process to automate a task previously performed by humans ....
This is unlike Flook, Bilski, and Alice, where the claimed computer-
automated process and the prior method were carried out in the same way.").
However, we note that "the decisional mechanism courts now apply is
to examine earlier cases in which a similar or parallel descriptive nature can
be seen - what prior cases were about, and which way they were decided."
Amdocs (Isr.) Ltd. v. Openet Telecom, Inc., 841 F.3d 1288, 1294 (Fed. Cir.
2016) (citing Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1353-
54 (Fed. Cir. 2016)). Here, a survey of other cases supports our finding that
claim 1 is directed to an abstract idea. That is, claim 1 is analogous to other
cases where the Federal Circuit has found claims relating to computer-
implemented fundamental economic processes to be directed to abstract
ideas, for example, Inventor Holdings, LLC v. Bed Bath & Beyond, Inc., 876
F.3d 1372, 1374 (Fed. Cir. 2017) ("purchasing goods at a local point-of-sale
system from a remote seller"), Credit Acceptance Corp. v. Westlake
Services, 859 F.3d 1044 (Fed. Cir. 2017) (providing financing packages to a
customer for products in a dealer's inventory based on customer financial
information transmitted to a server via a communication network), OIP
Technologies, Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1362---63 (Fed. Cir.
2015) (automatic optimization of product pricing based on potential
customer responses to offers), buySAFE, Inc. v. Google, Inc., 765 F.3d 1350
(Fed. Cir. 2014) (performing a transaction performance guaranty service for
online commercial transactions).
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Alice Step Two
The second step in the Alice analysis requires a search for an
"inventive concept" that "must be significantly more than the abstract idea
itself, and cannot simply be an instruction to implement or apply the abstract
idea on a computer." Bascom Global Internet Services, Inc. v. AT&T
Mobility LLC, 827 F.3d 1341, 1349 (2016). There must be more than
"computer functions [that] are 'well-understood, routine, conventional
activit[ies]' previously known to the industry." Alice, 134 S.Ct. at 2359
(second alteration in original) (quoting Mayo, 566 U.S. at 73).
Appellants argue the claimed invention provides significantly more
than an abstract idea because it "improves the functioning of a computer,"
includes "specific limitations other than what is well-understood, routine and
conventional in the field," "requires more than just a general purpose
computer system to operate," and "does not merely amount to adding the
words 'apply it' ... or mere instructions to implement an abstract idea on
computer." App. Br. 9-11. We are not persuaded by these arguments. As
discussed above, claim 1 does not embody an improvement in the
functioning of a computer because it does not specify how the claimed
processors perform the steps of the method. Accordingly, claim 1 requires
no more than conventional computer processors for performing well-
understood computer functions. Essentially, claim 1 is an application of
computers to implement an abstract idea, because, as described in the
Specification, Appellants' invention simply automates a prior manual
process. See Spec. i-fi-130-31. To wit, the Specification characterizes the
benefits of the invention as follows:
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Clearly, automation in accordance with the present teachings
can result in significant savings in man-hours .... Moreover,
an optimization tool in accordance with the present teachings
can ensure accuracy of the transfers by pro grammatically
generating them according to the results of the optimization as
opposed to relying upon entry of the transfers into a GUI by an
operations analyst which, as noted above, is susceptible to
human user error.
Spec. i131.
Merely making the practice of an abstract idea more effective by
implementing the idea on a computer does not suffice to meet the inventive
concept requirement of Alice. See OIP Technologies, 788 F.3d at 1363
("[R ]elying on a computer to perform routine tasks more quickly or more
accurately is insufficient to render a claim patent eligible.").
Appellants additionally argue that, "as with the invention at issue in
the DDR case, which was directed to solving an Internet-centric problem,
Appellants' claimed invention [is] similarly patentable, and directed to
solving a transaction/data processing-centric problem." App. Br. 12. We
disagree with Appellants' comparison. In DDR Holdings, LLC v.
Hotels.com, L.P., the Federal Circuit found claims drawn to "generating a
composite web page that combines certain visual elements of a 'host'
website with content of a third-party merchant" provided a solution
"necessarily rooted in computer technology in order to overcome a problem
specifically arising in the realm of computer networks." 773 F.3d 1245,
1248, 1257 (Fed. Cir. 2014). In contrast, claim 1 solves a problem of
automating data reallocation between trader accounts. See Spec. i1i1 30-31.
That is, claim 1 improves a prior manual process; it does not embody a
solution to a computer-based problem. Thus, claim 1 is akin to the type of
claim the Federal Circuit admonished against in DDR Holdings. 773 F.3d at
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1257 (differentiating the claims at issue from claims that "merely recite the
performance of some business practice known from the pre-Internet world
along with the requirement to perform it on the Internet").
We are, therefore, not persuaded the Examiner erred in rejecting claim
1, and claims 2-7, which are not specifically argued separately, as patent-
ineligible. Although Appellants nominally address the groups of claims 8-
14 and 15-21 separately, Appellants provide no new arguments for these
groups. See App. Br. 11. Thus, we are also not persuaded the Examiner
erred in rejecting claims 8-21 as patent-ineligible.
Obviousness
Appellants contend, with respect to claim 1, that "Chigirinskiy does
not teach 'determining, automatically by the processor, one or more
modifications to the data of the data records of the first subset, the second
subset, or a combination thereof to achieve the determined optimal
reallocation,' where the determined optimal reallocation is a reallocation of
'the data stored in the first and second subsets of the plurality of data records
.... "' App. Br. 15. That is, although "Chigirinskiy may reduce the
transaction costs to rebalance multiple accounts in the aggregate, it does not
teach reallocating data between individual data records, i.e. between
multiple accounts, as recited by claim 1." App. Br. 15. Appellants further
contend Glinberg and Chigirinskiy both teach away from reallocating data
between accounts. App. Br. 16. Additionally, Appellants contend none of
the cited references teach "transacting, by the hardware matching processor,
the proposed set of data transaction request messages, wherein the data of
the data records of the first subset, the second subset, or a combination
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thereof are modified thereby," as also recited in claim 1. We are not
persuaded by Appellants' arguments.
Chigirinskiy describes rebalancing asset portfolios by providing
certain parameters and constraints to an optimization engine, which then
creates suggested trades that a user can incorporate into executions. See
Chigirinskiy, i-fi-161---64. Further, Chigirinskiy describes:
In some embodiments, the system performs optimization on a
smaller or individual basis (such as, e.g., on an account-by-
account basis) and evaluates which results also satisfy multi-
portfolio needs. Thus, certain embodiments can, essentially,
optimize individual accounts, subject to an aggregate. Based on
this optimization, the system can generate results providing
optimized portfolios across multiple accounts-reducing
potential transaction costs, reducing the frequency of required
trades and/or providing other benefits.
(Chigirinskiy, i-f 117) (emphasis added).
In other words, Chigirinskiy discloses determining trades for individual
accounts that effect an optimization for multiple accounts in the aggregate.
We find this disclosure suggests the claim 1 limitations "determining,
automatically by the processor, an optimal reallocation of the data stored in
the first and second subsets of the plurality of data records between the first
and second subsets" and "determining, automatically by the processor, one
or more modifications to the data of the data records of the first subset, the
second subset, or a combination thereof to achieve the determined optimal
reallocation." That is, Chigirinskiy's "optimized portfolios across multiple
accounts" suggest the claim 1 feature of "an optimal reallocation of the data
stored in the first and second subsets of the plurality of data records between
the first and second subsets."
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To the extent Appellants assert claim 1 requires some data transfer
from one account to another-based on the arguments that "Chigirinskiy
simply does not teach evaluating subsets of data records associated with first
and second accounts of a trader in concert, as claimed, to automatically
determine transactions to be executed ... and obtain a[ n] optimal
reallocation of data therebetween" and that "Chigirinskiy operates on a
single portfolio, i.e. a single subset of data records, at [] any one time" (App.
Br. 17)------we disagree. Although claim 1 recites "an optimal reallocation ...
between the first and second subsets," claim 1 also recites achieving this
reallocation by making "one or more modifications to the data of the data
records of the first subset, the second subset, or a combination thereof"
Here, claim 1 defines "an optimal reallocation," in part, to include a
modification to a single subset of data records associated with a single
account. Accordingly, the broadest reasonable interpretation of claim 1
encompasses a modification to one of a first or second subset of data,
associated with respective first and second accounts, without any transfer of
data between the first and second subsets of data. Chigirinskiy suggests this
feature by describing an optimization engine that can determine trades for
individual accounts that effect an optimization for multiple accounts in the
aggregate. See Chigirinskiy, i-fi-1 64, 117.
We are not persuaded by Appellants' teaching away arguments (App.
Br. 16) for two reasons. First, Chigirinskiy suggests the feature of an
optimal reallocation of data between accounts, as discussed above, rather
than teaches away from it. Second, Glinberg also does not teach away from
the optimal reallocation feature because Glinberg does not discourage
reallocating data between accounts. See In re Fulton, 391 F.3d 1195, 1201
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(Fed. Cir. 2004) (finding no teaching away where the prior art's disclosure
did "not criticize, discredit, or otherwise discourage the solution claimed").
Glinberg describes determining the margin requirements for individual
portfolios, and then considering whether a margin requirement for a
theoretical combined portfolio may be lower than the sum of the individual
margin requirements. See Glinberg, i-f 590. Appellants point to Glinberg's
description of "margining offsets across multiple distinct portfolios or
classes of portfolios while preserving the identity of each portfolio"
(Glinberg, i-f 30) to support the teaching away argument. App. Br. 16.
However, the quoted description merely means that portfolios are not
merged into one, but rather the portfolios remain distinct and are combined
only theoretically to determine whether any margin requirement savings are
justified. See Glinberg, i-f 590. Glinberg does not teach away from
reallocating data between portfolios, in addition to Glinberg's inventive
considering of a theoretical combined portfolio, as a way to achieve margin
requirement savings.
Finally, we are not persuaded by Appellants' argument that none of
the references teach "transacting, by the hardware matching processor, the
proposed set of data transaction request messages, wherein the data of the
data records of the first subset, the second subset, or a combination thereof
are modified thereby." Appellants argue Chigirinskiy teaches user execution
of trades. App. Br. 16. However, the fact that Chigirinskiy's user initiates
the trade (see Chigirinskiy, i-f 64), does not show that a "hardware matching
processor" does not actually perform the transaction. Claim 1 does not
preclude user involvement in decision-making, in addition to the claimed
steps that are performed by processors.
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We are, therefore, not persuaded the Examiner erred in rejecting claim
1, and claims 2-5, 8-12, and 15-19, which are not specifically argued
separately, as obvious. Although Appellants nominally argue claims 6, 7,
13, 14, 20, and 21 separately, Appellants do not present arguments
addressing the specific limitations of those claims. See App. Br. 17-18.
Thus, we are also not persuaded the Examiner erred in rejecting claims 6, 7,
13, 14, 20, and 21 as obvious.
DECISION
We affirm the Examiner's decision to reject claims 1-21.
No time period for taking any subsequent action in connection with
this appeal may be extended under 3 7 C.F .R. § 1.13 6( a). See 3 7 C.F .R.
§ 41.50(f).
AFFIRMED
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