Ex Parte Graff

Patent Trial and Appeal Board

Jul 23, 2013

10885569 (P.T.A.B. Jul. 23, 2013)

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.
10/885,569 07/06/2004 Richard A. Graff Graff-P2-04 7887
28710 7590 07/23/2013
PETER K. TRZYNA, ESQ.
P O BOX 7131
CHICAGO, IL 60680
EXAMINER
MEINECKE DIAZ, SUSANNA M
ART UNIT PAPER NUMBER
3684
MAIL DATE DELIVERY MODE
07/23/2013 PAPER
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.
PTOL-90A (Rev. 04/07)

UNITED STATES PATENT AND TRADEMARK OFFICE 1
___________ 2
3
BEFORE THE PATENT TRIAL AND APPEAL BOARD 4
___________ 5
6
Ex parte RICHARD A. GRAFF 7
___________ 8
9
Appeal 2012-003941 10
Application 10/885,569 11
Technology Center 3600 12
___________ 13
14
15
Before MURRIEL E. CRAWFORD, HUBERT C. LORIN, and 16
ANTON W. FETTING, Administrative Patent Judges. 17
18
FETTING, Administrative Patent Judge. 19
20
21
DECISION ON APPEAL22
Appeal 2012-003941
Application 10/885,569

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STATEMENT OF THE CASE1 1
Richard A. Graff (Appellant) seeks review under 35 U.S.C. § 134 of a 2
final rejection of claims 1-53, the only claims pending in the application on 3
appeal. We have jurisdiction over the appeal pursuant to 35 U.S.C. § 6(b). 4
The Appellant invented a form of securitization of property by 5
decomposition into at least two components. One component can be an 6
estate for years and/or an augmented estate for years interest, and a second 7
component can be a remainder and/or a complementary remainder interest. 8
The computer system computes the respective values and investment 9
characteristics of the components, and produces documentation thereof, to 10
facilitate financial transactions involving the separate components. (Spec. 11
2:9-14). 12
An understanding of the invention can be derived from a reading of 13
exemplary claim 1, which is reproduced below [bracketed matter and some 14
paragraphing added]. 15
1. A method to make financial analysis output, the method 16
comprising: 17
[1] receiving input signals at a processor in a computer system 18
comprising an input device and an output device, 19
the input signals representing data received from another 20
computer system via the input device, 21
the data including data 22
associated with a fractional interest in property, 23
wherein the property includes an interest in only one of 24
a contingent equity interest in real estate 25
that is a primary equity interest 26
and 27

1 Our decision will make reference to the Appellant’s Appeal Brief (“App.
Br.,” filed Sep. 6, 2011) and Reply Brief (“Reply Br.,” filed Jan. 9, 2012),
and the Examiner’s Answer (“Ans.,” mailed Nov. 9, 2011).
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Application 10/885,569

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a corresponding contingent equity interest in the 1
real estate 2
that is a secondary equity interest; 3
[2] controlling the processor 4
to manipulate at least some of the input signals 5
to compute a valuation of the fractional interest 6
in consummating 7
a sale 8
and 9
corresponding purchase 10
of the fractional interest 11
at a price corresponding to the valuation; 12
and 13
[3] producing financial analysis output 14
including one of 15
the valuation 16
and 17
the price 18
at the output device. 19
20
The Examiner relies upon the following prior art: 21
22
Eder US 6,393,406 B1 May 21, 2002 23
24
Brad Davidson, Valuation of Fractional Interests in Real Estate 25
Limited Partnerships - Another Approach, 60 The Appraisal Journal, 26
1-8 (Apr. 1992) (hereinafter “Davidson”). 27
28
Claims 1-53 stand rejected under 35 U.S.C. § 112, second paragraph, 29
as failing to particularly point out and distinctly claim the invention. 30
Claims 1-53 stand rejected under 35 U.S.C. § 103(a) as unpatentable 31
over Davidson and Eder. 32
Claims 1-53 stand rejected on the ground of nonstatutory 33
obviousness-type double patenting as being unpatentable over claims 1-202 34
of U.S. Patent No. 6,760,709. 35
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Claims 1-53 stand rejected on the ground of nonstatutory 1
obviousness-type double patenting as being unpatentable over claims 1-17 of 2
U.S. Patent No.6, 167,384. 3
4
ISSUES 5
The issues of indefiniteness turn primarily on whether the claims 6
distinguish between property interests in real estate and property interests in 7
those property interests. The issues of obviousness turn primarily on 8
whether the claims require property that includes an interest in only one of a 9
contingent equity interest in real estate that is a primary equity interest and a 10
corresponding contingent equity interest in the real estate that is a secondary 11
equity interest. The nonstatutory obviousness-type double patenting 12
rejections are not argued. 13
14
FACTS PERTINENT TO THE ISSUES 15
The following enumerated Findings of Fact (FF) are believed to be 16
supported by a preponderance of the evidence. 17
Facts Related to Claim Construction 18
01. Claim 1 does not recite using a fractional interest in property or a 19
contingent equity interest in real estate. Claim 1 recites receiving 20
signals that have some unspecified manner of representation 21
toward some data that in turn has some unspecified manner of 22
association with some fractional interest in property. That 23
property, not used as such in claim 1, is then recited as including 24
one of two possible contingent equity interests. 25
02. Property and equity interests are legal abstractions. 26
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03. The claims use the transition “comprising.” 1
04. Claim 1 recites receiving signals. This does not preclude 2
receiving plural such sets of signals. One of those sets is 3
associated in some manner with a nominally fractional interest in 4
only one of a primary and secondary interest. By simple 5
inference, this does not preclude a separate set of signals 6
associated in some manner with a nominally fractional interest in 7
the other of a primary and secondary interest. 8
Facts Related to the Prior Art 9
Davidson 10
05. Davidson is directed to examining the degree to which a fractional 11
interest in a real estate limited partnership should be discounted 12
relative to an otherwise identical fee simple interest. Davidson, 13
Abstr. 14
06. Davidson describes several mathematical algorithms for 15
computing a valuation of a fractional interest for conveyance. As 16
a specific example, conventional financial discounting is used in 17
some methods. Davidson 1-7. 18
07. Davidson describes several parameters that would be input 19
variables to those algorithms for computing a valuation of a 20
fractional interest for conveyance. As a specific example, income 21
is used in some valuation methods. Davidson 1-7. 22
Eder 23
08. Eder is directed to electronic valuations of business. Eder 1:8-11. 24
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ANALYSIS 1
Claims 1-53 rejected under 35 U.S.C. § 112, second paragraph, as failing to 2
particularly point out and distinctly claim the invention. 3
We are persuaded by the Appellant’s argument that “the Examiner has 4
simply confused the claimed element property with the claimed element real 5
estate, each of which is positively recited as distinct, as would be understood 6
by one having ordinary skill in the art.” Reply Br. 3. The Examiner found 7
that “[a]ccording to Applicant's cited excerpt from the specification, if a 8
property includes a secondary equity interest, it MUST include a primary 9
equity interest.” Ans. 6. As Appellant points out, the word property in the 10
quoted recitation refers to the real estate in the claim. One of ordinary skill 11
with even freshman level property law knowledge would appreciate the 12
meaning. 13
Nothing in this conclusion is meant to negate the reasonable inference 14
the Examiner drew that the claims are very broad and may read on any 15
imaginable subject of property. Our analysis in this regard is set forth in the 16
obviousness rejection analysis infra. 17
Claims 1-53 rejected under 35 U.S.C. § 103(a) as unpatentable over 18
Davidson and Eder. 19
Claim 1 receives data, manipulates that data to compute a valuation in 20
consummating a sale and in some manner outputting the valuation or price. 21
It is undisputed that Davidson does so, and the facts we find support this. 22
The arguments go to the nature of the data and property interests employed. 23
To this, the most direct response is that the nature of the data and legal 24
interests are given no patentable weight, and cannot distinguish the claims 25
over the art. The legal interests are abstractions, existing only in the minds 26
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of the beholders, and the only functional requirement of the data is that it be 1
somehow used in a valuation. Clearly, Davidson does so with its data. 2
Non-functional descriptive material cannot render nonobvious an 3
invention that would have otherwise been obvious. In re Ngai, 367 F.3d 4
1336, 1339 (Fed. Cir. 2004). Cf. In re Gulack, 703 F.2d 1381, 1385 (Fed. 5
Cir. 1983) (when descriptive material is not functionally related to the 6
substrate, the descriptive material will not distinguish the invention from the 7
prior art in terms of patentability). In a recent non-precedential decision, our 8
reviewing court reminded us of the applicability of the precedential In re 9
Gulack, 703 F.2d 1381 (Fed. Cir. 1983), In re Bernhart, 417 F.2d 1395 10
(CCPA 1969) and In re Lowry, 32 F.3d 1579 (Fed. Cir. 1994) decisions. 11
We have held that patent applicants cannot rely on printed 12
matter to distinguish a claim unless “there exists [a] new and 13
unobvious functional relationship between the printed matter 14
and the substrate.” In re Gulack, 703 F.2d 1381, 1386 15
(Fed.Cir.1983). . . . 16
17
. . . . 18
. . . [T]he Board did not create a new “mental 19
distinctions” rule in denying patentable weight . . . . On the 20
contrary, the Board simply expressed the above-described 21
functional relationship standard in an alternative formulation—22
consistent with our precedents—when it concluded that any 23
given position label’s function . . . is a distinction “discernable 24
only to the human mind.” . . . ; see In re Lowry, 32 F.3d 1579, 25
1583 (Fed.Cir.1994) (describing printed matter as “useful and 26
intelligible only to the human mind”) (quoting In re Bernhart, 27
. . . 417 F.2d 1395, 1399 (CCPA 1969)). 28
29
In re Xiao, 2011-1195 WL 4821929, at *3-4 (Fed. Cir. 2011) (Non-30
precedential). Thus non-functional descriptive material, being useful and 31
intelligible only to the human mind, is given no patentable weight. See 32
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Ngai, 367 F.3d at 1339. ). “The rationale behind this line of cases is 1
preventing the indefinite patenting of known products by the simple 2
inclusion of novel, yet functionally unrelated limitations.” King 3
Pharmaceuticals, Inc. v. Eon Labs, Inc., 616 F.3d 1267, 1279 (Fed Cir 4
2010). (The relevant inquiry here is whether the additional instructional 5
limitation has a “new and unobvious functional relationship” with the 6
method , that is, whether the limitation in no way depends on the method, 7
and the method does not depend on the limitation). 8
Here, the nature of signals as property interests in no way depends on the 9
steps of receiving, computing a valuation and producing a financial analysis 10
output and none of those steps depend on the nature of the signals being 11
property interests. While the particular computational algorithm and 12
analysis chosen might in some manner be related to the mental interpretation 13
of the signals as property interests, such selection criteria are not recited as 14
functional or structural limitations. Simply performing some unspecified 15
valuation and analysis in itself is not dependent on the nature of the 16
operators. 17
This simple fact that the inputs are simply arbitrary binary data signals 18
that the human mind interprets as to meaning and the output is some number 19
that the human mind interprets as the same number that corresponds to some 20
valuation, distinguishes this case from In re Ochiai, 71 F.3d 1565 (Fed. Cir. 21
1995) cited by Appellant at Reply Brief, page 20. Ochiai was directed 22
toward the generally uncertain technologies of chemistry where unknown 23
substances may exhibit unforeseen properties. Thus, in such a case, the 24
substance is inextricably part of the process it is an input to. In computer 25
technology, signals must conform to rigid predefined protocols to be 26
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processed. There is nothing uncertain about the processing. Indeed it is the 1
very certainty in processing that is the hallmark of automation. In such a 2
case, the input itself does not form part of the process. 3
The Examiner found that the use of the word “property” in the claims 4
was sufficiently broad to encompass Davidson’s property interests within its 5
scope. While the Examiner was relying principally on the indefiniteness 6
rejection to support this finding, we agree with the Examiner that the 7
property interests in the claims are so broad as to encompass Davidson, 8
again because a property interest is a legal abstraction given no patentable 9
weight. This is the essence of the Examiner’s findings at Answer, pages 23-10
25 addressing this issue. The claims do not recite any physical steps that 11
vary based on the nature of the legal interests, as even the actual 12
computation algorithms are not further narrowed dependent upon the nature 13
of the interest. Thus, the basic thrust of the Examiner’s rejection is 14
maintained. 15
We are not persuaded by the Appellant’s argument that the 16
cited art does not disclose the property includes 17
an interest in only one of a contingent equity 18
interest in real estate that is a primary equity 19
interest and a corresponding contingent equity 20
interest in the real estate that is a secondary 21
equity interest as claimed. 22
All claims require this property in connection with, and 23
as a limitation to, each claim as a whole. 24
Appeal Br. 53-54. The claims require receiving input signals, not property. 25
The signals, being arbitrary binary data, may represent whatever the 26
performer imagines, and the claims aspirationally suggest imagining 27
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property interests. The signals must be usable in some fashion in a 1
computation, but that is the extent of what the claims require. 2
We are not persuaded by the Appellant’s argument that Davidson is 3
dealing with the wrong property, and the claimed fractional interest cannot 4
be synonymous with Davidson's fractional interest. Appeal Br. 54-56. 5
Again, the claims recite receiving signals, not property. There is no wrong 6
property. As to whether one owner's fractional interest in an asset as taught 7
in Davidson can never be the whole equity interest in the asset, that is 8
irrelevant because (1) the claim does not require a fractional interest, (2) 9
because the fractional interest recited, though not required, does not specify 10
the fractional portion and in particular does not recite full ownership, and (3) 11
whether the property in Davidson may not encompass full ownership does 12
not diminish its scope of application to full ownership implementations. 13
We are not persuaded by the Appellant’s argument that Davidson 14
“does not disclose the property includes an interest in only one of a 15
contingent equity interest in real estate and a corresponding contingent 16
equity interest in the real estate.” Appeal Br. 57-59. As the claim does 17
not require property, it clearly does not require an interest in a contingent 18
equity interest in real estate, and certainly not exactly one such interest. 19
Again, the claims recite receiving signals. As the Examiner found at 20
Answer, pages 23-25, one can imagine whatever scenario one desires for 21
interpreting the signals. All the signals are used for is some computation 22
and output. One cannot use patents to exclude human thought. Further, the 23
claim does not exclude incorporating both primary and secondary interests 24
because of the “comprising” transition and the non-exclusionary signal 25
reception. FF 03-04. Finally, we note that Examiner is correct that the 26
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attribute of being primary or secondary is dependent on context, and so 1
Davidson clearly encompasses with its scope receiving one of primary or 2
secondary property interest representations. 3
We are not persuaded by the Appellant’s argument that the 4
cited art does not disclose controlling the 5
processor to manipulate at least some of the 6
input signals to computer [sic, compute] a 7
valuation of the fractional interest in 8
consummating a sale and a corresponding 9
purchase of the fractional interest at a price 10
corresponding to the valuation. . . . 11
The Examiner's finding that "the interest may be a 12
contingent equity interest in real estate that is a primary equity 13
interest" is mere Examiner rumination in hindsight. There is no 14
such teaching in the cited art. In fact, neither the word 15
"contingent" nor the word "contingency" is taught or even 16
disclosed in Davidson. 17
Appeal Br. 59-62. As the Examiner found, one is free to imagine 18
Davidson’s signals representing anything. What the signals represent in the 19
claims is given no patentable weight for that very reason. The signals are 20
used in some computation, and so they are in Davidson. The purpose of the 21
computation is simply aspirational rather than functional. Thus, whether the 22
word “contingent” is recited by Davidson is not relevant to patentability. 23
We are not persuaded by the Appellant’s argument that Davidson 24
teaches away from applying its methods to a contingent interest. Appeal Br. 25
62. Simply that there are differences between two references is insufficient 26
to establish that such references "teach away" from any combination thereof. 27
See In re Beattie, 974 F.2d 1309, 1312-13 (Fed. Cir. 1992). 28
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We are not persuaded by the Appellant’s argument that the Examiner 1
misconstrued the claims. Appeal Br. 63-72. We made findings as to this 2
supra. 3
The bulk of Appellant’s arguments with respect to dependent claims 4
at Appeal Brief, pages 73-88 reargue parent claim 1. 5
As to claim 4 reciting consummating a sale at an exchange, again 6
parent claim 1 only recites manipulating signals to compute a valuation. The 7
sale is simply aspirational. Further, the argument as to where controlling 8
takes place is not applicable to the claimed location where the sale took 9
place. Finally, a financial exchange is clearly a predictable forum for 10
financial sales, as that is the exchange’s very purpose. 11
The arguments as to the nature of Davidson’s property with respect to 12
claims 5-9 are misplaced because the nature of the property in the claim is of 13
no patentable weight. 14
The arguments with regard to claim 14 reciting outputting an offering 15
document are unpersuasive because an offering document is non-functional 16
in that it is perceptible only in the mind of the beholder. The offering 17
document is not an input to a functional process or structure recited in the 18
claims. 19
20
CONCLUSIONS OF LAW 21
The rejection of claims 1-53 under 35 U.S.C. § 112, second 22
paragraph, as failing to particularly point out and distinctly claim the 23
invention is improper. 24
The rejection of claims 1-53 under 35 U.S.C. § 103(a) as unpatentable 25
over Davidson and Eder is proper. 26
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The rejection of claims 1-53 on the ground of nonstatutory 1
obviousness-type double patenting as being unpatentable over claims 1-17 of 2
U.S. Patent No.6, 167,384 is uncontested. 3
4
DECISION 5
The rejection of claims 1-53 is affirmed. 6
No time period for taking any subsequent action in connection with this 7
appeal may be extended under 37 C.F.R. § 1.136(a). See 37 C.F.R. 8
§ 1.136(a)(1)(iv) (2011). 9
10
AFFIRMED 11
12
13
14
15
hh 16