Ex Parte GILBERT et al

Patent Trial and Appeal Board

Aug 21, 2018

13430122 (P.T.A.B. Aug. 21, 2018)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
13/430, 122 03/26/2012
63710 7590 08/23/2018
INNOVATION DIVISION
CANTOR FITZGERALD, L.P.
110 EAST 59TH STREET (6TH FLOOR)
NEW YORK, NY 10022
FIRST NAMED INVENTOR
Andrew C GILBERT
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.
01-1040-Cl 5420
EXAMINER
TRAN,HAI
ART UNIT PAPER NUMBER
3697
NOTIFICATION DATE DELIVERY MODE
08/23/2018 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):
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 MARY ANN GILBERT 1 and ANGELA STERGIOPOULOS2
Appeal2017-004658
Application 13/430, 1223
Technology Center 3600
Before ERIC B. CHEN, MATTHEW R. CLEMENTS, and
SCOTT E. BAIN, Administrative Patent Judges.
CHEN, Administrative Patent Judge.
DECISION ON APPEAL
Appellants appeal under 35 U.S.C. § 134(a) from the Examiner's
Final Rejection of claims 1-8, 13-20, and 25-28. Claims 9-12 and 21-24
have been cancelled. We have jurisdiction under 35 U.S.C. § 6(b ).
We AFFIRM.
1 Legal Representative of inventor Andrew C. Gilbert, deceased.
2 Legal Representative of inventor Andrew Stergiopoulos, deceased.
3 Appellants identify the real party in interest as "BGC Partners, Inc."
(App. Br. 3.)
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Application 13/430, 122
THE INVENTION
The present invention creates a spread market for illiquid stocks,
which are stocks priced too high to sell. (Spec. ,r,r 8-11.) Specifically, when
there is gap between a stock's highest buy orders (highest price someone is
willing to buy at) and lowest sell orders (lowest price someone is willing to
sell at), the invention allows a "spread market maker" to offer a pair of buy
and sell orders at a lesser gap. (Id. at ,r,r 12-13, 36-39 (describing Figs. 3-
4); accord App. Br. 3.) Another user may (at their option) choose the buy
order, choose the sell order, or counteroffer the pair of buy and sell orders
with a lesser spread. (Spec. ,r,r 14, 40-41 ( describing Figs. 5---6); accord
App. Br. 3--4.) The market maker must (is obligated to) then do the same.
(Spec. ,r,r 15, 42--44 (describing Figs. 7-9); accord App. Br. 4.)
Claim 1 is reproduced below.
1. A method comprising the steps of:
by a computer of a computer trading system, issuing to the
market of the trading system a bid/offer spread order placed by
an originating party:
the bid/offer spread order identifying an instrument
to be traded, a first spread, and a second spread, and
requesting from counterparties two-sided counterorders
for the instrument, a two-sided order for an instrument
being a bid to buy the instrument at a bid price and an offer
to sell the instrument at an offer price, the two-sided order
to be satisfied by a party executing on either the bid or the
offer;
the bid/offer spread order obligating the originating
party to trade on one side of a two-sided counterorder for
the instrument received from a counterparty, in the event
that a received two-sided counterorder has a bid price and
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an offer price that differ by no more than the first spread
identified in the originating party's bid/offer spread order;
the bid/offer spread order soliciting from
counterparties an acceptance of the second spread, a
counterparty's acceptance to obligate the originating party
to issue a two-sided order to the accepting counterparty,
the bid price and offer price of the originating party's
two-sided order to differ by no more than the second
spread, and the originating party's two-sided order to
obligate the accepting counterparty to trade one side of the
originating party's two-sided order;
by computer of the computer trading system, enforcing the
obligations created by the responding counterparty's
counterorder or acceptance and the originating party's two-sided
order.
(App. Br. 11 (Claims Appendix).)
REJECTIONS
Claims 1-8, 13-20, and 25-28 stand rejected under 35 U.S.C. § 101
as being directed to non-statutory subject matter.
ANALYSIS
We are unpersuaded by Appellants' arguments (App. Br. 7-9; see also
Reply Br. 2---6) that independent claims 1, 13, and 25 are directed to patent-
eligible subject matter under 35 U.S.C. § 101.
The Examiner found that "[ m ]anaging bid/ offer spread trading [ as
recited in claims 1, 13, and 15] has been in widespread use[] in the industry
and is considered to be a fundamental economic practice (trading between
parties) and a method of organizing human activities ( creating a contractual
relationship between parties)." (Final Act. 5.) The Examiner further found
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that "[t]he claim does no more than call on a 'computing device' with basic
functionality for issuing bid/offer spread orders to be traded on a trading
system between parties and enforcing obligations created by parties." (Id.
at 6.) We agree with the Examiner's findings and ultimate conclusion that
the claims are directed to non-statutory subject matter.
A patent may be obtained for "any new and useful process, machine,
manufacture, or composition of matter, or any new and useful improvement
thereof." 35 U.S.C. § 101. The Supreme Court has held that this "provision
contains an important implicit exception: [l]aws of nature, natural
phenomena, and abstract ideas are not patentable." Alice Corp. Pty. Ltd. v.
CLS Bankint'l, 134 S. Ct. 2347, 2354 (2014); Gottschalkv. Benson, 409
U.S. 63, 67 (1972) ("Phenomena of nature, though just discovered, mental
processes, and abstract intellectual concepts are not patentable, as they are
the basic tools of scientific and technological work."). Notwithstanding that
a law of nature or an abstract idea, by itself, is not patentable, the application
of these concepts may be deserving of patent protection. Mayo
Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 71-72 (2012).
In Mayo, the Court stated that "to transform an unpatentable law of nature
into a patent-eligible application of such a law, one must do more than
simply state the law of nature while adding the words 'apply it."' Mayo, 566
U.S. at 72 (internal citation omitted).
In Alice, the Supreme Court reaffirmed 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. The first step in
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the analysis is to "determine whether the claims at issue are directed to one
of those patent-ineligible concepts." Id.
If the claims are directed to a patent-ineligible concept, then 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. (brackets in original) (quoting Mayo, 566 U.S. at 72-
73). "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. at 2357 (brackets in original) (quoting
Mayo, 566 U.S. at 77-78). The prohibition against patenting an abstract
idea "cannot be circumvented by attempting to limit the use of the formula
to a particular technological environment or adding insignificant post-
solution activity." Bilski v. Kappas, 561 U.S. 593, 610-11 (2010) (internal
citation and quotation marks omitted). The Court in Alice noted that
"' [ s ]imply appending conventional steps, specified at a high level of
generality,' was not 'enough' [in Mayo] to supply an 'inventive concept."'
Alice, 134 S. Ct. at 2357 (quoting Mayo, 566 U.S. at 82-83, 77-78, 72-73).
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Alice Step One: Are the claims at issue
directed to a patent-ineligible concept?
Independent claim 1 is a method claim, which recites, the following:
(i) "the bid/offer spread order identifying an instrument to be traded, a first
spread, and a second spread, and requesting from counterparties two sided
counterorders for the instrument;" (ii) "the bid/offer spread order obligating
the originating party to trade on one side of a two sided counterorder for the
instrument received from a counterparty;" (iii) "the bid/offer spread order
soliciting from counterparties an acceptance of the second spread, a
counterparty' s acceptance to obligate the originating party to issue a two-
sided order to the accepting counterparty." Such method steps of claim 1 are
directed to a patent-ineligible abstract idea of either: (1) "a fundamental
economic practice long prevalent in our system of commerce," Alice, 134 S.
Ct. at 2356, for example, trading stocks on a stock exchange, which includes
concepts such as bid price (i.e., highest price a buyer of a stock is willing to
pay), ask price (i.e., the lowest price a seller of a stock is willing to sell), and
bid-ask spread (i.e., difference between the bid price and ask price); or (ii)
creating of a contractual relationship between two parties, for example, the
buyer of a stock and seller of a particular stock, see buySAFE, Inc. v.
Google, Inc., 765 F.3d 1350, 1355 (Fed. Cir. 2014) (creating a suretyship is
an abstract idea).
Claim 13, a non-transitory computer-readable storage medium claim,
and claim 25, a system claim, recite limitations similar to those discussed
with respect to claim 1. Thus, claims 13 and 25 are also directed to a patent-
ineligible abstract idea.
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First, Appellants argue that "the Examiner fails to make a prima facie
showing that the alleged abstract idea of 'issuing bid/offer spread orders to
be traded on a trading system between parties and enforcing obligations
created by parties' is abstract," but "[i]nstead, the Examiner makes a factual
finding without any evidence in clear violation of the administrative
procedure acts requirement for substantial evidence to make such factual
findings." (App. Br. 7; see also Reply Br. 2-3.) Similarly, Appellants argue
that "being a fundamental economic practice is not a test for abstractness"
and "[t]he full test identified in Alice is whether an idea is a fundamental
economic practice long prevalent in our system of commerce." (App. Br. 7
( emphasis omitted).) Contrary to Appellants' arguments, the Examiner has
identified the appropriate judicial exceptions as "fundamental economic
practices" or "certain methods of organizing human activity" and the
Examiner has compared the claimed concepts of independent claim 1 to
appropriate Supreme Court and Federal Circuit decisions (i.e., Alice and
buySAFE).
Second, Appellants argue that "[ t ]his rationale [ a method of
organizing human activity] does not fall into any of the categories of abstract
idea identified by the Court in Alice" and "that 'certain methods of
organizing human activities' was never identified as a category of abstract
idea but rather used as a manner of distinguishing cases." (App. Br. 8; see
also Reply Br. 4--5.) Accordingly, Appellants argue, "[a]n error in the
PTO' s interim guideline making procedure included that category [ method
of organizing human activity] in the interim guidelines." (App. Br. 8.)
Contrary to Appellants' arguments, the Supreme Court in Alice recognized
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"a method of organizing human activity" as a category of abstract idea.
Alice, 134 S. Ct. at 2356 ("Although hedging is a longstanding commercial
practice, it is a method of organizing human activity, not a "truth" about the
natural world "'that has always existed"').
Last, Appellants argue that "[ t ]he claims here as the claims in Enfish
are directed to the added functionality that improves computerized matching
and marketplaces" and "[t]he claims here clearly offer an improvement to
that underlying computerized technology improving their information
efficiency and the operation of marketplaces." (Reply Br. 3.) Similarly,
Appellants argue that "[i]n Trading Technologies International, Inc. v. CQG
Inc., the Federal Circuit recognized that improvements to the accuracy,
efficiency and usability of technologies involved in trading are not directed
to abstract ideas." (Id.) However, Appellants have not adequately explained
why the claim "purport[ s] to improve the functioning of the computer itself'
or "any other technology or technical field." Alice, 134 S. Ct. at 2359. In
particular, Appellants have not explained why the trading of instruments
improves the function of a computer or other technology.
Alice Step Two: Is there something else in the claims
that ensures that they are directed to significantly
more than a patent-ineligible concept?
Because claims 1, 13, and 25 are directed to an abstract idea, the
question is whether these claims recite an element, or combination of
elements, that is enough to ensure that the claim is directed to significantly
more than an abstract idea.
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Claim 1 is a method claim, which includes "a computer of a computer
trading system." Claim 13, a non-transitory computer-readable storage
medium claim, includes "at least one processor" and "computers of a
computer trading system." Claim 25, a system claim, includes "at least one
processor" and a "memory." With respect to the claimed hardware
components, Appellants' Specification discloses the following:
FIG. 2 illustrates a hardware implementation of market 102 that
facilitates electronic trading. Market 102 may include one or
more local workstations 150 and one or more remote
workstations 166. Workstations 150 and 166 may be any
suitable means for presenting data and, in preferred
embodiments, accepting participant input. Each workstation
may enable a participant to engage in the trading process. For
example, workstations 150 and 166 may be personal computers,
laptop computers, mainframe computers, data displays, Internet
browsers, etc.
(Spec. ,r 32 (emphases added).)
The trading process may preferably be controlled by a server
154. Server 154 may be any suitable computer or server, such
as a network or Internet server. Server 154 may be connected to
workstations 150 by a network 152. Server 154 may also be
connected to workstations 166 by a network 156, a
communications device 15 8, a communication link 160, a remote
server 162, and a network 164. Networks 152 and 156 may be
any suitable network, such as the Internet. Similarly,
communications device 158, link 160, remote server 162, and
network 164, which may be any suitable components of a
computer network for enabling workstations 166 to connect to
server 154, may be eliminated in part or whole, or may be
supplemented by additional components. Although a specific
arrangement is shown for connecting workstations 166 to server
154, any suitable configuration may be used in accordance with
the present invention.
(Spec. ,r 33 (emphases added).)
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The generalized functional terms by which the computer components,
for example, workstations 150 and 166, server 154, networks 152 and 156,
communications device 158, link 160, remote server 162, and network 164,
are described reasonably indicate that Appellants' Specification discloses a
conventional "computer," including conventional "processor" and
"memory."
In view of the Examiner's findings, which are consistent with
Appellants' Specification, the claimed hardware components, including "a
computer of a computer trading system," "at least one processor" and a
"memory" reasonably may be determined to be generic, purely conventional
computer elements. Thus, the claims do no more than require generic
computer elements to perform generic computer functions, rather than
improve computer capabilities.
Appending a conventional "a computer of a computer trading
system," "at least one processor," and a "memory" to an abstract idea is not
enough to transform an abstract idea into a patent-eligible invention. See
Alice, 134 S. Ct. at 2358 ("[T]he mere recitation of a generic computer
cannot transform a patent-ineligible abstract idea into a patent-eligible
invention.").
First, Appellants argue that "[ t ]he Examiner has provided no evidence
or discussion that these limitations are not substantially more than 'issuing
bid/offer spread orders to be traded on a trading system between parties and
enforcing obligations created by parties"' and "[ t Jo make []findings of fact,
the Examiner must present substantial evidence showing that such
limitations are well-understood, routine and conventional activities
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previously known to the industry." (App. Br. 9; see also Reply Br. 6.)
Regardless of the sufficiency of the Examiner's analysis, Appellants'
Specification, as explained above, provides sufficient basis to support the
conclusion that claim 1 does not recite significantly more than the abstract
idea.
Second, Appellants argue that "the Examiner does not allege that
these limitations lack novelty or are obvious in view of the prior art" and
"[t]o be novel and non-obvious, these claims must then add something
significantly more than just 'issuing bid/offer spread orders to be traded on a
trading system between parties and enforcing obligations created by
parties."' (App. Br. 9.) However, Appellants improperly conflate the
requirements for eligible subject matter with the independent requirements
of novelty and non-obviousness. "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." Diamond v. Diehr, 450 U.S. 175, 188-
89 (1981).
Third, Appellants argue that "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" and "[t]he claims clearly do not preempt the alleged abstract
idea." (Reply Br. 3.) However, 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). Where claims are deemed to recite
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only patent ineligible subject matter under the two-step Alice analysis, as
they are here, "preemption concerns are fully addressed and made moot."
Id.
Last, Appellants argue that
[i]n the CAFC cases of DDR Holdings, Bascom and
Amdocs, the CAFC followed the Supreme Court's guidance and
clearly identified that improvements rooted in computer
technology that included an inventive concept add something
more to an abstract idea even if some or all of the elements are
abstract or were previously known
and "in Trading Technologies ... , the Federal Circuit recognized that
improvements to the accuracy, efficiency and usability of technologies
involved in trading add an inventive concept that is significantly more to an
abstract idea." (Reply Br. 5.) Accordingly, Appellants argue "like in DDR
holdings, the claims clearly recited improvements to technology and
electronic trading that are rooted in networking and computers" because
"[ t ]hey override the routine and conventional manner of operation of those
technologies as is evidenced by the lack of a complete prior art rejection."
(Id.) Again, as discussed previously, "[t]he '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." Diehr, 450 U.S. at 188-89. Moreover,
other than providing a conclusory statement that "the claims clearly recited
improvements to technology and electronic trading that are rooted in
networking and computers," Appellants have not adequately explained why
the claims overcome a problem that specifically arises in computer
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technology. In particular, Appellants have not explained how trading
instruments is a problem rooted in computer technology.
Thus, we agree with the Examiner that claims 1, 13, and 25 are
directed towards patent-ineligible subject matter. Accordingly, we sustain
the rejection of independent claims 1, 13, and 25 under 35 U.S.C. § 101.
Claims 2-8, 14--20, and 26-28 depend from independent claims 1, 13,
and 25. We sustain the rejection of claims 2-8, 14--20, and 26-28 under 35
U.S.C. § 101 for the same reasons discussed with respect to independent
claims 1, 13, and 2 5.
DECISION
The Examiner's decision rejecting claims 1-8, 13-20, and 25-28 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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