Ex Parte Farnstrom

Patent Trial and Appeal Board

May 10, 2018

14683256 (P.T.A.B. May. 10, 2018)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
14/683,256 04/10/2015
35811 7590 05/14/2018
IP GROUP OF DLA PIPER LLP (US)
ONE LIBERTY PLACE
1650 MARKET ST, SUITE 4900
PHILADELPHIA, PA 19103
FIRST NAMED INVENTOR
Amy Joy Farnstrom
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.
NGI-14-1077DIV 1063
EXAMINER
BAIRD, EDWARD J
ART UNIT PAPER NUMBER
3692
NOTIFICATION DATE DELIVERY MODE
05/14/2018 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):
pto. phil@dlapiper.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte AMY JOY F ARNSTROM
Appeal2017-000356 1
Application 14/683,2562
Technology Center 3600
Before HUBERT C. LORIN, NINA L. MEDLOCK, and
BRADLEY B. BAY AT, Administrative Patent Judges.
MEDLOCK, Administrative Patent Judge.
DECISION ON APPEAL
STATEMENT OF THE CASE
Appellant appeals under 35 U.S.C. § 134(a) from the Examiner's final
rejection of claims 1, 2, 4--8, and 10-14. We have jurisdiction under
35 U.S.C. § 6(b).
We AFFIRM.
1 Our decision references Appellant's Appeal Brief ("App. Br.," filed
March 30, 2016) and Reply Brief ("Reply Br.," filed September 30, 2016),
and the Examiner's Answer ("Ans.," mailed August 10, 2016) and Final
Office Action ("Final Act.," mailed February 1, 2016).
2 Appellant identifies NYSE Group, Inc. as the real party in interest. App.
Br. 1.
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Application 14/683,256
CLAIMED INVENTION
Appellant's claimed invention "generally relates to the field of
electronic trading systems," and, more particularly, "to calculating and
mitigating risk for traders participating in the electronic trading system"
(Spec. if 1 ).
Claims 1 and 7 are the independent claims on appeal. Claim 1,
reproduced below, is illustrative of the claimed subject matter:
1. A computer-implemented method for mitigating
trading risks of a market participant, the method comprising:
receiving, by a risk mitigation (RM) module, an electronic
message associated with the market participant, the electronic
message indicating a breach of a trading risk threshold, said RM
module comprising computer-readable instructions stored on a
non-transitory computer readable storage medium and executed
by at least one processor;
determining, by the RM module, whether the breach of the
trading risk threshold occurred within a rolling time period;
automatically activating, by the RM module, a risk counter
when the breach occurs within the rolling time period;
incrementing, by the risk counter, a total number of
breaches;
receiving, by the RM module, the total number of
breaches;
determining, by the RM module, whether the total number
of breaches exceeds a predetermined maximum; and
automatically deactivating, by the RM module, a trading
status of the market participant thereby preventing execution of
any further trades associated with the market participant when it
is determined that the breach exceeds the predetermined
maximum.
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REJECTION3
Claims 1, 2, 4--8, and 10-14 are rejected under 35 U.S.C. § 101 as
directed to non-statutory subject matter.
ANALYSIS
Appellant argues claims 1, 2, 4--8, and 10-14 as a group (App. Br. 7-
13). We select independent claim 1 as representative. The remaining claims
stand or fall with claim 1. See 37 C.F.R. §41.37(c)(l)(iv).
Under 35 U.S.C. § 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. The Supreme Court, however, has long interpreted§ 101
to include an implicit exception: "[l]aws of nature, natural phenomena, and
abstract ideas" are not patentable. See, e.g., Alice Corp. Pty. Ltd. v. CLS
Bank Int'!, 134 S. Ct. 2347, 2354 (2014).
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 Corp., 134 S. Ct.
at 2355. The first step in that analysis is to "determine whether the claims at
issue are directed to one of those patent-ineligible concepts." Id. If the
claims are not directed to a patent-ineligible concept, e.g., an abstract idea,
the inquiry ends. Otherwise, the inquiry proceeds to the second step where
3 The Examiner's rejections of claims 1, 2, 4--8 and 10-14 under 35 U.S.C.
§ 112(b), and claims 1, 2, 4--8 and 10-14 under 35 U.S.C. § 103(a) have
been withdrawn. See Ans. 8-9.
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the elements of the claims are considered "individually and 'as an ordered
combination"' to determine whether there are additional elements that
"'transform the nature of the claim' into a patent-eligible application." Id.
(quoting Mayo, 566 U.S. at 79, 78).
The Court acknowledged in Mayo, that "all inventions at some level
embody, use, reflect, rest upon, or apply laws of nature, natural phenomena,
or abstract ideas." Mayo, 566 U.S. at 71. Therefore, the Federal Circuit has
instructed that claims are to be considered in their entirety to determine
"whether their character as a whole is directed to excluded subject matter."
McRO, Inc. v. Bandai Namco Games Am., Inc., 837 F.3d 1299, 1312
(Fed. Cir. 2016) (quoting Internet Patents Corp. v. Active Network, Inc.,
790 F.3d 1343, 1346 (Fed. Cir. 2015)).
Here, in rejecting the pending claims under 35 U.S.C. § 101, the
Examiner determined that the claims are "directed to mitigating trading
risk," and, therefore, to an abstract idea (Final Act. 7 (citing the USPTO's
2014 Interim Guidance on Subject Matter Eligibility, 79 Fed. Reg. 74618
(Dec. 16, 2014) and the "July 2015 Update: Subject Matter Eligibility"4));
and that the claims do not include additional elements that are sufficient to
amount to significantly more than the judicial exception itself (id. at 9-10).
Appellant first argues that the § 101 rejection cannot be sustained
because claim 1 includes "features such as a unique system topography
having separate specialized computer components [i.e., a specialized risk
management ("RM") module and risk counter] that are activated to perform
specified functions only when certain conditions are met" (App. Br. 6).
4 Available at https://www.uspto.gov/sites/default/files/documents/ieg-
july2015-update.pdf.
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Appellant maintains that this constitutes an improvement to a technical field,
and that the claims are, therefore, patent-eligible under Diamond v. Diehr,
450 U.S. 175 (1981) (id. at 6-8).
Appellant's reliance on Diehr is misplaced. The claims in Diehr were
directed to a process for curing synthetic rubber, and recited a series of steps
(e.g., installing rubber in a press, closing the mold, constantly determining
the temperature of the mold, constantly recalculating the appropriate cure
time through the use of the Arrhenius equation and a digital computer, and
automatically opening the press at the proper time) that together provided a
significant and novel practical application of the well-known Arrhenius
equation and transformed uncured synthetic rubber into a new state or thing.
See Diehr, 450 U.S. at 184--87. The Court determined that although the
invention employed a well-known equation, it used that equation in a
process designed to solve a technological problem in conventional industry
practice. Alice Corp., 134 S. Ct. 2348 (citing Diehr, 450 U.S. at 177). The
claims in Diehr were, thus, found patent-eligible because they improved an
existing technological process. Id.
Appellant argues that separating the computer components, i.e., the
RM module and risk counter, and only selectively activating and
deactivating them, "enhances the operational efficiency of the overall
system" (App. Br. 7) and that Appellant's claims provide "improvements to
the field of electronic trading systems and also to the functioning of the
computer itself' (id. at 8). Yet, there is nothing in the record, short of
attorney argument, to support Appellant's position. For example, we find
nothing in the Specification, nor does Appellant direct us to anything in the
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Specification, that attributes any improvement in operational efficiency or
any improvement in computer functionality to the claimed invention.
Claim 1 is directed to a method for mitigating trading risks of a
market participant, and recites that the method comprises: (1) receiving an
electronic message indicating a breach of a trading risk threshold;
(2) activating a risk counter if the breach occurred within a rolling time
period; (3) determining whether the total number of breaches exceeds a
predetermined maximum; and ( 4) deactivating the trading status of the
market participant if the predetermined maximum is exceeded. The claimed
invention, as the Specification discloses, is intended to address the need for
"systems, methods, and apparatus" capable of mitigating the financial risk to
which market makers and/or market participants are exposed due to sudden
and/or dramatic changes in market conditions or trading activity (see, e.g.,
Spec. i-fi-12, 21-23). The Specification, thus, describes that the claimed
system and method are configured to provide risk mitigation for market
participants by disabling further trading upon the occurrence of trading
events indicative of an increased risk (see id. i-fi-124--26).
It appears clear, when considered in light of the Specification, that the
focus of the claimed invention, as recited in claim 1, is on achieving a
business objective (i.e., mitigating trading risk), and not on any claimed
means for achieving that goal that improves technology.
Ostensibly seeking to draw a further analogy to the claims at issue in
Diehr, Appellant argues that "the activation of a risk counter is no different
than the opening of a molding press in Diehr" (App. Br. 8). Yet, we fail to
see how activating a risk counter to count the number of breaches of a
trading risk threshold is similar to controlling a physical process, like the
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rubber molding process in Diehr. Appellant's claimed method does not
involve any industrial or physical and chemical process, and does not
involve the transformation of an article into a different state or thing.
Instead, the activation of the risk counter in claim 1 is, in our view, akin to
the electronic recordkeeping involved in Alice, which the Court determined
was not patent-eligible.
The claims in Alice related to a computerized scheme for mitigating
risk ("settlement risk"), and were designed to facilitate the exchange of
financial obligations between two parties by using a computer system as a
third-party intermediary. Alice Corp., 134 S. Ct. at 2352. The computer
updated shadow account records in real time as transactions were entered,
and allowed only those transactions for which the parties' updated shadow
records indicated sufficient resources to satisfy their mutual obligations.
See id. In finding that the claims did no more than instruct a practitioner to
implement the abstract idea of intermediated settlement on a generic
computer, the Court observed that "[ u ]sing a computer to create and
maintain 'shadow' accounts amounts to electronic recordkeeping---one of
the most basic functions of a computer." Id. at 2359.
Similarly here, Appellant's claim 1 involves updating "a risk
counter"; determining "whether the total number of breaches exceeds a
predetermined maximum"; and "preventing execution of any further trades
associated with the market participant when it is determined that the breach
exceeds the predetermined maximum." We find no indication in the record,
nor does Appellant point us to any indication, that the particular operations
recited in claim 1 require any specialized computer hardware or other
inventive computer components, invoke any assertedly inventive
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programming, or that the claimed invention is implemented using other than
generic computer components to perform the claimed operations, which the
Court made clear in Alice is not enough for patent-eligibility.
We also cannot agree with Appellant that claim 1 is similar to claim 2
of the USPTO's Example 21 in the "July 2015 Update Appendix 1:
Examples"5 and, therefore, patent-eligible, because the "claims perform
5 Exemplary claim 2, which appears at pages 2-3 of Appendix 1 of the
July 2015 Update (available at https://www.uspto.gov/sites/default/files
I documents/ieg-july-2015-app 1.pdf), reads:
2. A method of distributing stock quotes over a network to a
remote subscriber computer, the method comprising:
providing a stock viewer application to a subscriber for
installation on the remote subscriber computer;
receiving stock quotes at a transmission server sent from a data
source over the Internet, the transmission server comprising a
microprocessor and a memory that stores the remote subscriber's
preferences for information format, destination address,
specified stock price values, and transmission schedule, wherein
the microprocessor
filters the received stock quotes by comparing the received
stock quotes to the specified stock price values;
generates a stock quote alert from the filtered stock quotes
that contains a stock name, stock price and a universal resource
locator (URL), which specifies the location of the data source;
formats the stock quote alert into data blocks according to
said information format; and
transmits the formatted stock quote alert over a wireless
communication channel to a wireless device associated with a
subscriber based upon the destination address and transmission
schedule,
wherein the alert activates the stock viewer application to
cause the stock quote alert to display on the remote subscriber
computer and to enable connection via the URL to the data
source over the Internet when the wireless device is locally
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unconventional functions while working within the computing system," such
as "a specialized RM module configured to deactivate the trading status of
the market participant to prevent the execution of any further trades" (App.
Br. 9).
Exemplary claim 2 was not found patent-eligible merely because it
provided "unconventional functions" or a "specialized" module in a
"computing system"; nor would that alone have been sufficient for patent-
eligibility. Cf Mayo, 566 U.S. at 88-89 ("[O]ur cases have not
distinguished among different laws of nature according to whether or not the
principles they embody are sufficiently narrow"). Instead, exemplary
claim 2 was deemed patent-eligible because it addressed an Internet-centric
challenge, i.e., alerting a subscriber with time sensitive information when the
subscriber's computer is offline. Appellant has not demonstrated that
claim 1 addresses any comparable Internet-centric challenge.
Contrary to Appellant's assertions, we also find no parallel between
the present claims and those in DDR Holdings, LLC v. Hotels.com, L.P.,
773 F.3d 1245 (Fed. Cir. 2014). In DDR Holdings, the Federal Circuit held
that the claims were directed to patent-eligible subject matter because they
claim a solution "necessarily rooted in computer technology in order to
overcome a problem specifically arising in the realm of computer networks,"
and that the claimed invention did not simply use computers to serve a
conventional business purpose. Id. at 1257. Rather, there was a change to
the routine, conventional functioning of Internet hyperlink protocol. Id.
connected to the remote subscriber computer and the remote
subscriber computer comes online.
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Appellant argues that, similar to DDR Holdings, the claimed invention
involves "a new computer system with new specialized modules that ...
run only under certain conditions (e.g., when certain parameters are met)"
while, at the same time, "eliminating human intervention by deactivating the
trading status of the market participant and preventing the execution of any
further trades" and that these features cause "the claimed computer system to
operate more efficiently (and unconventionally) when compared against
typical computer systems in this technology space" (App. Br. 11) (citing
paragraph 21 of Appellant's Specification). Yet, contrary to Appellant's
assertion, we find no indication in paragraph 21 of Appellant's Specification
that the claimed invention improves system efficiency. And, unlike the
situation in DDR Holdings, there is no indication that the claimed "at least
one processor" is used other than in its normal, expected, and routine
manner to perform the abstract business practice of managing market
participant trading status, which, as the court in DDR Holdings explained, is
not patent-eligible. DDR Holdings, 773 F.3d at 1256 ("[T]hese claims [of
prior cases] in substance were directed to nothing more than the performance
of an abstract business practice on the Internet or using a conventional
computer. Such claims are not patent-eligible.").
Critically too, unlike the situation in DDR Holdings, there is no
indication here that Appellant's claims yield a result that overrides the
routine and conventional sequence of events ordinarily triggered by the
operation of generic technology. See id.
Appellant further argues that the claims are patent-eligible because
"the public will not be preempted from performing the alleged abstract
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concept of 'mitigating trading risk."' (App. Br. 11-13). That argument is
similarly unpersuasive.
There is no dispute that the Supreme Court has described "the concern
that drives [the exclusion of abstract ideas from patent eligible subject
matter] as one of pre-emption." Alice Corp., 134 S. Ct. at 2354. But
characterizing preemption as a driving concern for patent eligibility is not
the same as characterizing preemption as the sole test for patent eligibility.
"The Supreme Court has made clear that the principle of preemption is the
basis for the judicial exceptions to patentability" and "[ f]or this reason,
questions on preemption are inherent in and resolved by the§ 101 analysis."
Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir.
2015) (citing Alice Corp., 134 S. Ct. at 2354). "[P]reemption may signal
patent ineligible subject matter, [but] the absence of complete preemption
does not demonstrate patent eligibility." Id.
We also are not persuaded of Examiner error to the extent that
Appellant maintains that the claimed invention is patent-eligible, i.e., that
the recited functions of claim 1 are not "well-understood, routine and
conventional in the field," because the "claimed invention provides an
unconventional mechanism for preventing the execution of further trades
that is not taught by conventional electronic trading systems" (App. Br. 13)
and "the Examiner has withdrawn all prior art rejections, indicating that the
claims are not anticipated by or obvious in view of any prior art" (Reply
Br. 9). A finding of novelty or non-obviousness does not automatically lead
to the conclusion that the claimed subject matter is patent-eligible. Although
the second step in the Mayo/Alice framework is termed a search for an
"inventive concept," the analysis is not an evaluation of novelty or non-
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obviousness, but rather, a search for "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., 134 S. Ct. at 2355. "Groundbreaking, innovative, or even
brilliant discovery does not by itself satisfy the § 101 inquiry." Ass 'n for
Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 591 (2013).
A novel and non-obvious claim directed to a purely abstract idea is,
nonetheless, patent-ineligible. See Mayo, 566 U.S. at 90; see also Diamond
v. Diehr, 450 U.S. 175, 188-89 (1981) ("The '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.").
Responding to the Examiner's Answer, Appellant argues in the Reply
Brief that the present claims are analogous to the claims at issue in Enfzsh,
LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016), in that "the instant
claims take an electronic trading system and reconfigure it by adding a
completely novel mechanism, in the form of a risk mitigation (RM) module"
(Reply Br. 2), which, according to Appellant, "actually improves the
functioning of the conventional computer systems in this art" (id. at 3).
Appellant notes that by tracking breaches associated with a particular
participant, the claimed invention provides selective disablement of trade
execution, while allowing trades from other participants to continue to be
executed (id.). And Appellant maintains that this "improves the overall
operational efficiency and resource consumption of the electronic trading
system"; "reduces memory requirements"; "reduces the burden on the
processing components"; and "improves system stability" (id.).
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Appellant cites paragraphs 2, 21, 23, 26, 31-33, 35-36, 41, and47--49
of the Specification as supporting this position (id.). But, we find nothing
from our review of the Specification, including the cited paragraphs, which
ascribes any particular technical improvement in computerized systems to
the claimed invention. For example, we find no discussion in the
Specification of improved efficiency or reduced memory requirements.
Appellant's attempt to analogize the present claims to those in
Bascom Global Internet Services, Inc. v. AT&T Mobility LLC, 827 F.3d
1341 (Fed. Cir. 2016) also fails (see Reply Br. 5). In Bascom, the court
determined that "an inventive concept can be found in the non-conventional
and non-generic arrangement of known, conventional pieces." Bascom,
827 F.3d at 1350. Specifically, Bascom's content filter could be "installed
remotely in a single location" and "[this] particular arrangement of elements
is a technical improvement over the prior art ways of filtering." Id.
Appellant does not identify any similar non-conventional, non-generic
arrangement of elements that is recited in claim 1. Nor does Appellant
otherwise explain how the court's ruling in Bascom impacts the patent-
eligibility of the present claims.
We are not persuaded, on the present record, that the Examiner erred
in rejecting claim 1 under 35 U.S.C. § 101. Therefore, we sustain the
Examiner's rejection of claim 1, and claims 2, 4--8, and 10-14, which fall
with claim 1.
DECISION
The Examiner's rejection of claims 1, 2, 4--8, and 10-14 under
35 U.S.C. § 101 is affirmed.
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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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