Ex Parte Herbst et al

Board of Patent Appeals and Interferences

Aug 17, 2006

09467646 (B.P.A.I. Aug. 17, 2006)

The opinion in support of the decision being entered today
was not written for publication in
and is not binding precedent of the Board.

UNITED STATES PATENT AND TRADEMARK OFFICE
___________

BEFORE THE BOARD OF PATENT APPEALS
AND INTERFERENCES
___________

Ex parte ANTHONY F. HERBST and WAYNE F. PERG
___________

Appeal No. 2006 - 1174
Application No. 09/467,646
___________

ON BRIEF
___________

Before SMITH, NAPPI, and FETTING, Administrative Patent Judges.

FETTING, Administrative Patent Judge.

DECISION ON APPEAL

This is a decision on appeal under 35 U.S.C. §134 from the examiner's non-final
rejection of claims 1 through 51, which are all of the claims pending in this application.
At least one claim has been twice rejected, and thus this application is proper for
appeal.

We REVERSE and MAKE A NEW GROUND OF REJECTION UNDER
37 CFR § 41.50(b).
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Application No. 09/467,646

BACKGROUND

The appellants’ invention relates to a method for operating a customizable
investment fund. An understanding of the invention can be derived from a reading of
exemplary claim 1, which is reproduced below.
A computer-aided method for operating a customizable investment
fund, the method including the steps of:
receiving, at a central computer, first digital signals from a first
computer specifying a custom set of investments for a fund;
receiving, at the central computer, second digital signals from a
second computer specifying a custom set of investments for the fund;
generating, at the central computer, digital signals for acquisition of
investments consistent with the first digital signals and the second digital
signals;
entering transaction data, at the central computer, reflecting the
acquisition of said investments; and
outputting a separate accounting for each said set of investments
within the fund.

PRIOR ART
The prior art references of record relied upon by the examiner in rejecting the
appealed claims are:
Rebane 6,078,904 June 20, 2000
(filed March 16, 1998)

Kenneth M. Morris and Virginia B. Morris (Morris), Your Guide to Understanding
Investing, Lightbulb Press, 1999.

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Application No. 09/467,646
In addition, we refer to the following art, already of record.
Wallman 6,338,047 January 8, 2003
(filed June 24, 1999)

In addition, we make the following art of record.
Kiron et al. (Kiron) 5,806,048 September 8, 1998

El-Kadi et al. (El-Kadi) 6,014,642 January 11, 2000
(filed May 6, 1996)

Luskin et al. (Luskin) 5,812,987 September 22, 1998

Durbin et al. (Durbin) 4,933,842 June 12, 1990

REJECTIONS
Claims 1, 9-15, 20, 25-36 and 40-44 stand rejected under 35 U.S.C. § 103 as being
unpatentable as obvious over Rebane.
Claims 2-8, 16-19, 21-24, 37-39 and 45-51 stand rejected under 35 U.S.C. § 103 as
being unpatentable as obvious over Rebane in view of Morris.
Rather than reiterate the conflicting viewpoints advanced by the examiner and
appellants regarding the above-noted rejections, we make reference to the examiner's
answer (mailed July 1, 2005) for the reasoning in support of the rejection, and to
appellants’ brief (filed October 27, 2004), supplemental brief (filed November 8, 2004)
and reply brief (filed August 29, 2005) for the arguments thereagainst.

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OPINION
In reaching our decision in this appeal, we have given careful consideration to
appellants’ specification and claims, to the applied prior art references, and to the
respective positions articulated by appellants and the examiner. As a consequence of
our review, we make the determinations that follow.
The appellants argue primarily that Rebane does not describe application of its
teachings to the investment fund in all of the claimed subject matter. [See Brief at p.
20] The appellants go on to elaborate that the phrase “investment fund” has a well
defined meaning. The appellants argue that
[A] person having ordinary skill in the art would know that an
investment fund is an organization, a company, and based on common
usage of the term in the art, for example, in the Investment Company Act
of 1940. The Board is welcome to take Official Notice of the Act for a
definition of an ''investment fund'' (as per Applicant's Response filed
February 12, 2003). An investment fund is not, as the Examiner continues
to mistakenly assert, an investment or a set of investments. [See Brief at
p. 22].
This same issue has been argued in two of the related appeals noted in the appeal
brief, namely the appeals 2004-0132 (Application Nbr. 09/280,244) and 2004-0511
(Application Nbr. 09/375,817).
The examiner responds that Rebane discloses a computer-aided method for
operating a customizable investment fund. The examiner goes on to argue that an
investment fund is the same as claimed by the appellant and as taught by Rebane.
[See Answer at p. 8].
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We note that the exact phrasing referred to by the examiner as it appears in
Rebane is
A computer system and method for optimally allocating investment funds
of an investor in a portfolio having a plurality of investments, comprising:
determining a risk tolerance function for the investor specifying the
investor's probability preference at each of a plurality of monetary amounts
relative to a monetary range relevant to the investor, and allocating the
investment funds among the investments to create an investment
allocation by maximizing an expected value of a first probability density
function of the investor's probability preferences determined as a function
of a second probability density function of the portfolio's predicted market
performance with respect to the investment funds and the investor's risk
tolerance function. [See Rebane, Abstract].
As is readily apparent, the phrase “investment fund” does not appear in the text
pointed to by the examiner, although the phrase “investment funds” does appear in
three instances. We note that the phrase “investment funds” is ambiguous in that it may
refer to either the plural of an “investment fund” or to the plural of funds that are applied
to investments, just as the word “funds” is ambiguous as referring to either cash, or the
plural of fund, which is an account. This distinction is crucial because the appellants
argue that the phrase “investment fund”, as contrasted with the single word “fund” has a
specific meaning as a collective organization. Therefore, we must first ascertain
whether the appellants are in fact using the term “investment fund” to mean a collective
organization, as the appellants argue, and then determine in which of these two
manners Rebane is using the term “investment funds.”

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In determining the meaning of the disputed claim limitation, we look principally to
the intrinsic evidence of record, examining the claim language itself, the written
description, and the prosecution history, if in evidence. Phillips v. AWH Corp., 415 F.3d
1303, 75 USPQ2d 1321 (Fed. Cir. 2005) (en banc). The specification provides
guidance as to the meaning of “investment fund”:
Investment funds are the vehicle [sic, vehicles] that has [sic, have]
allowed virtually all individual investors to efficiently achieve adequate
diversification. Investment funds aggregate the investments of large
numbers of individual investors, making it possible for individual investors
to efficiently invest in a diversified manner. [See Specification at p. 5].
And
For the purposes of the present invention, a fund is a set of
investments managed by a central computer. The fund may have any
legal form of organization consistent with its purpose (economic viability
requires a form of organization such that investment income and gains are
not taxed at the fund level but are rather passed untaxed through to the
investors in the fund, including forms such as a mutual fund, a trust, a
limited liability company or a limited partnership). Title to the securities in
the fund may be held by the fund entity or (subject to possible legal
constraints) by the respective investors in the fund. [See Specification at
p. 23-24].
These portions and the title “Digital Computer System for Operating a Customizable
Investment Fund” make it clear the disclosure is, as the appellants argue, using the
term “investment fund” to refer to a collective organization. We further note that this
usage is supported by the usage in Wikipedia, which, although it does not have an entry
for the term “investment fund”, does redirect such a query to an article on Collective
Investment Schemes and lists an investment fund as one of the embodiments within
this entry. Further, we agree with appellants that a customizable investment fund must
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be interpreted in the manner understood by those skilled in the art. The artisans would
understand that such a fund is not met by an individual investor’s portfolio. We agree
with appellants that the term customizable investment fund only relates to a securities
fund meeting the various regulations required of publicly traded securities. Therefore,
we conclude that the term “investment fund” and “investment funds” as used in the
claimed subject matter refer to collective organizations that invest funds owned by the
collective entity, as argued by the appellants.
Next we determine in what manner Rebane uses the term “investment funds.”
Three characteristics of its usage in Rebane are clear. First, that the phrase always
occurs in the plural and never in the singular, so there is no unambiguous reference to
the term “investment fund.” Second, all of the references refer to manipulating the
value, i.e. the amount of the funds, and not to a collective organization of funds. Third,
that all activity in Rebane is with reference to a single entity and not any form of
collective entity. Therefore, we conclude that Rebane is using the phrase “investment
funds” to mean funds used for investment, and not to a collective investment scheme.
Therefore, we do not find the examiner’s argument that Rebane teaches a customizable
investment fund to be persuasive.
The rejection of these claims can thus be decided on the very narrow question of
whether the management of an individual investor’s portfolio as taught by Rebane can
meet the claim recitation of forming a customizable investment fund. We also agree
with appellants that Rebane does not teach the transmission from a first to a second
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computer of a custom set of investments as recited in claim 1. Accordingly, we do not
sustain the examiner’s rejection of claim 1.
Since we have not sustained the examiner’s rejection of independent claim 1, we
also do not sustain the examiner’s rejection of any of the dependent claims 9-15, 20,
25-36 and 40-44 under 35 U.S.C. § 103. With respect to the rejection of claims 2-8, 16-
19, 21-24, 37-39 and 45-51 as being unpatentable over the teachings of Rebane and
Morris, we will not sustain this rejection of the claims because the examiner has failed to
establish a prima facie case of obviousness. The deficiencies in Rebane discussed
above render the rejection of these claims improper for the same reasons discussed
above. Morris does not overcome these noted deficiencies.
Accordingly, we do not sustain the examiner’s rejection of claims 1, 9-15, 20, 25-
36 and 40-44 under 35 U.S.C. § 103 as being unpatentable as obvious over Rebane or
the rejection of claims 2-8, 16-19, 21-24, 37-39 and 45-51 under 35 U.S.C. § 103 as
being unpatentable as obvious over Rebane in view of Morris.
New Grounds of Rejection Under 37 CFR § 41.50(b)
Pursuant to 37 CFR § 41.50(b), we enter the following new grounds of rejection:

Independent claim 1 is rejected under 35 U.S.C. § 103 as unpatentable as obvious
over Wallman.
Wallman presents the claim limitations of claim 1 as follows:
A computer-aided method for operating a customizable investment
fund [ col. 3 line 66 – col. 4 line 4 -- opportunity for investors to invest in a
dynamically-changing fund that is actively managed not by a professional
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manager but by the constantly and dynamically changing preferences of
thousands or millions of investors]
receiving, at a central computer, first digital signals from a first
computer specifying a custom set of investments for a fund [Fig 1, first
computer and col. 9 lines 6-22];
receiving, at the central computer, second digital signals from a
second computer specifying a custom set of investments for the fund [Fig
1, second computer and col. 9 lines 6-22];
generating, at the central computer, digital signals for acquisition of
investments consistent with the first digital signals and the second digital
signals [col. 9 lines 6-22];
entering transaction data, at the central computer, reflecting the
acquisition of said investments [col. 9 lines 6-22]
Wallman does not explicitly refer to accounting, but the claim element of
outputting a separate accounting for each said set of investments
within the fund
is essentially met by col. 9 lines 23 to 41 describing the acquisition of investments and
the advising of the investors in the fund which implicitly provides an accounting of each
set of investments within the fund. In any event, a separate accounting of each
investment transaction, and therefore of the acquisition of each investment, is known to
those of ordinary skill in the financial investment art to be required to meet the
regulatory agencies’ audit requirements.
It would have been obvious to one of ordinary skill in the art to have applied
conventional accounting techniques to the advisory information accumulated and
supplied within Wallman to the remaining claimed subject matter steps performed by
Wallman for the purpose of meeting regulatory accounting requirements to meet the
limitations of claim 1.
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Accordingly, we reject the sole independent claim 1 under 35 U.S.C. § 103 as
obvious over Wallman. We leave the consideration of the applicability of this reference
to the remaining dependent claims to the examiner.
REMARKS
In addition to Wallman, the examiner should consider Kiron, Luskin, El-Kadi and
Durbin in determining the patentability of the remaining dependent claims. Kiron
describes the acquisition of equity, interest bearing and derivative assets in creating a
synthetic fund of funds. El-Kadi describes a system of collecting investment needs from
multiple computers into a single server for an investment fund for benefits processing.
Luskin describes an investment fund management system. Durbin describes an
investment fund accounting system.

CONCLUSION
To summarize,
• The rejection of claims 1, 9-15, 20, 25-36 and 40-44 under 35 U.S.C. § 103 as
being unpatentable as obvious over Rebane is not sustained.
• The rejection of claims 2-8, 16-19, 21-24, 37-39 and 45-51 under 35 U.S.C. §
103 as being unpatentable as obvious over Rebane in view of Morris is not
sustained.
• A new ground of rejection of independent claim 1 under 35 U.S.C. § 103 as
obvious over Wallman is entered pursuant to 37 CFR § 41.50(b).
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This decision contains a new ground of rejection pursuant to 37 CFR § 41.50(b)
(effective September 13, 2004, 69 Fed. Reg. 49960 (August 12, 2004), 1286 Off. Gaz.
Pat. Office 21 (September 7, 2004)). 37 CFR § 41.50(b) provides “[a] new ground of
rejection pursuant to this paragraph shall not be considered final for judicial review.”
37 CFR § 41.50 (b) also provides that the appellants, WITHIN TWO MONTHS
FROM THE DATE OF THE DECISION, must exercise one of the following two options
with respect to the new ground of rejection to avoid termination of the appeal as to the
rejected claims:
(1) Reopen prosecution. Submit an appropriate amendment of the
claims so rejected or new evidence relating to the claims so rejected, or
both, and have the matter reconsidered by the examiner, in which event
the proceeding will be remanded to the examiner . . . .
(2) Request rehearing. Request that the proceeding be reheard under
§ 41.52 by the Board upon the same record . . . .

No time period for taking any subsequent action in connection with this appeal may
be extended under 37 CFR § 1.136(a).
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REVERSED AND NEW GROUND OF REJECTION UNDER 37 CFR § 41.50(b)

JERRY SMITH )
Administrative Patent Judge )
)
)
)
) BOARD OF PATENT
ROBERT E. NAPPI ) APPEALS
Administrative Patent Judge ) AND
) INTERFERENCES
)
)
)
ANTON W. FETTING )
Administrative Patent Judge )

awf/ki

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Peter K. Trzyna
P.O. Box 7131
Chicago, IL 60680-7131

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