Ex Parte Jha et al

Patent Trial and Appeal Board

Aug 30, 2018

13956707 (P.T.A.B. Aug. 30, 2018)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
13/956,707 08/01/2013
12684 7590 09/04/2018
Lempia Summerfield Katz LLC/CME
20 South Clark Street
Suite 600
Chicago, IL 60603
FIRST NAMED INVENTOR
Udesh Jha
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.
4672-13001AUS 1010
EXAMINER
NGUYEN, TIEN C
ART UNIT PAPER NUMBER
3694
NOTIFICATION DATE DELIVERY MODE
09/04/2018 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 UDESH JHA, JALP AN SHAH, DMITRIY GLINBERG,
EDMUND LI, and FELIKS LANDA
Appeal2017-002572
Application 13/956,707
Technology Center 3600
Before JOHN A. EV ANS, SCOTT B. HOW ARD, and JASON M. REPKO,
Administrative Patent Judges.
EV ANS, Administrative Patent Judge.
DECISION ON APPEAL
Appellants 1 seek our review under 35 U.S.C. § 134(a) of the
Examiner's final rejection of Claims 1-25. Appeal Br. 2. We have
jurisdiction under 35 U.S.C. § 6(b).
We REVERSE. 2
1 Appellants identify Chicago Mercantile Exchange Inc., as the real party in
interest. Appeal Br. 2.
2 Rather than reiterate the arguments of Appellants and the Examiner, we
refer to the Appeal Brief ( filed July 18, 2016, "Appeal Br."), the Reply Brief
(filed November 23, 2016, "Reply Br."), the Examiner's Answer (mailed
September 23, 2016, "Ans."), the Final Action (mailed November 19, 2015,
Appeal2017-002572
Application 13/956,707
STATEMENT OF THE CASE
The Invention
The claims relate to a method of determining a margin requirement
for a financial product portfolio. See Abstract.
Claims 1, 13, and 25 are independent. Claim 1 is illustrative and is
reproduced below with some formatting added:
1. A computer implemented method for determining a
margin requirement for a financial product portfolio, wherein
market conditions for the financial product portfolio are
characterized by a zero curve, the computer implemented
method comprising:
producing, with a processor, a plurality of scenario
curves, each scenario curve reflecting a principal component
analysis (PCA) model of the zero curve with a respective PCA
factor of a plurality of PCA factors of the PCA model offset
from a corresponding base value for the zero curve;
calculating a respective projected value of the financial
product portfolio for each scenario curve of the plurality of
scenano curves;
calculating a loss risk amount for each PCA factor based
on the respective projected value and a current value of the
financial product portfolio; and
determining the margin requirement based on a sum of
the loss risk amounts for the plurality of PCA factors.
Rejection
Claims 1-25 stand rejected under 35 U.S.C. § 101 as directed to non-
statutory subject matter. Final Act. 2-7.
"Final Act."), and the Specification (filed August 1, 2013, "Spec.") for their
respective details.
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Application 13/956,707
ANALYSIS
We have reviewed the rejection of Claims 1-25 in light of Appellants'
arguments that the Examiner erred. We consider Appellants' arguments
seriatim, as they are presented in the Appeal Brief, pages 4--9.
CLAIMS 1-25: PATENT INELIGIBLE SUBJECT MATTER
The Examiner finds that various of the limitations recited in
independent claims 1 and 25 are similar in concept to a mathematical
formula. See Final Ans. 3-5. The Examiner's Answer finds the claims
simply recite:
input/producing information, a mathematical relationship or
formula to calculate a respective projected value of the financial
product portfolio, a loss risk amount, and a mathematical
relationship or formula to determine the margin requirement
based on a sum of the loss risk amounts for the plurality of PCA
factors.
Ans. 6. In view thereof, the Examiner finds that similarly-directed claims
relate to mathematical concepts, and thus, are directed to abstract ideas. Id.
Appellants contend the Examiner's Answer fails to address two
positions taken by the appellants, specifically that the present claims are not
directed either to a method of organizing information, or represent a
fundamental economic practice. Reply Br. 1-2 ( citing Appeal Br. 4--5).
Appellants argue the Final Action referenced each of these types of abstract
ideas as the bases for the rejection. Id. at 5 (citing Final Act. 3--4).
Appellants argue thus, the Examiner's Answer finds a mathematical
relationship or formula as the sole basis for rejecting the claims as being
directed to an abstract idea. Id.
35 us.c. § 101
Section 101 provides that a patent may be obtained for "any new and
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Application 13/956,707
useful process, machine, manufacture, or composition of matter, or any new
and useful improvement thereof." 35 U.S.C. § 101. The Supreme Court has
long recognized, however, that § 101 implicitly excludes "laws of nature,
natural phenomena, and abstract ideas" from the realm of patent-eligible
subject matter, as monopolization of these "basic tools of scientific and
technological work" would stifle the very innovation that the patent system
aims to promote. Alice Corp. Pty. Ltd. v. CLS Bank Int 'l, 134 S. Ct. 2347,
2354 (2014) (quoting Ass 'nfor Molecular Pathology v. Myriad Genetics,
Inc., 133 S. Ct. 2107, 2116 (2013)); see also Mayo Collaborative Servs. v.
Prometheus Labs., Inc., 132 S. Ct. 1289, 1294--97 (2012); Diamond v.
Diehr, 450 U.S. 175, 185 (1981).
Instead of using a definition of an abstract idea, "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)); accord July 2015
Update: Subject Matter Eligibility3 (instructing Examiners that "a claimed
concept is not identified as an abstract idea unless it is similar to at least one
concept that the courts have identified as an abstract idea."). As part of this
inquiry, we must "look at the 'focus of the claimed advance over the prior
art' to determine if the claim's 'character as a whole' is directed to excluded
subject matter." Affinity Labs of Tex., LLC v. DirecTV, LLC, 838 F.3d 1253,
1257 (Fed. Cir. 2016).
3 See MPEP 2106.04(a), https://www.uspto.gov/patent/laws-and-
regulations/examination-policy/subject-matter-eligibility.
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Application 13/956,707
Alice Step 1
The Supreme Court has instructed us to use a two-step framework to
"distinguish[] 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. At the first step, we determine whether
the claims at issue are "directed to" a patent-ineligible concept. Id. Under
the first step, the Examiner finds the phrase "mathematical
relationships/formulas" is used to describe mathematical concepts such as
mathematical algorithms, mathematical relationships, mathematical
formulas, and calculations. Ans. 5. The Examiner finds "these concepts
have common characteristics":
At least five cases have found concepts relating to a
mathematical relationship or formula abstract, for example an
algorithm for converting binary coded decimal to pure binary
(Benson), a formula for computing an alarm limit (Flook), a
formula describing certain electromagnetic standing wave
phenomena (Mackay Radio), the Arrhenius equation (Diehr),
and a mathematical formula for hedging (Bilski).
Id. The Examiner further finds several cases have found concepts relating to
performing mathematical calculations to be directed to an abstract idea. Id.
Claim Construction.
As an initial matter, we note that ... claim construction is helpful to
resolve the question of patentability under § 101. McRo v. Bandai Namco
Games Am. Inc., 837 F.3d 1299, 1311-12 (Fed. Cir. 2016). We begin with a
construction of the claim. Cf State St. Bank & Trust Co. v. Signature Fin.
Group, 149 F.3d 1368, 1370 (Fed. Cir. 1998) ("[W]hether the ... patent is
invalid for failure to claim statutory subject matter under § 101 [ ] is a matter
of both claim construction and statutory construction.").;
Appellants argue that a "rationale establishing that the PCA model-
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based scenario curve production and PCA factor loss risk amount calculation
aspects of the claimed invention are fundamental economic practices is thus
lacking." We interpret Appellants as arguing that, in construing the claims,
the Examiner characterizes them at too high a level of abstraction.
Defendants describe the claims at an impermissibly "high level of
abstraction," such that they are "untethered from the language of the
claims." Enfzsh, LLC v. Microsoft Corp., 822 F.3d 1327, 1337 (Fed. Cir.
2016).
Because "all inventions at some level embody, use, reflect, rest upon,
or apply laws of nature, natural phenomena, or abstract ideas," (Mayo
, 132 S.Ct. at 1293); see also In re TL! Commc'ns LLC Patent Litig., 823
F.3d 607, 611 (Fed. Cir. 2016)), "the claims are considered in their entirety
to ascertain whether their character as a whole is directed to excluded
subject matter." Internet Patents Corp. v. Active Network, Inc., 790 F.3d
1343, 1346 (Fed. Cir. 2015). The Federal Circuit has previously cautioned
that courts "must be careful to avoid oversimplifying the claims" by looking
at them generally and failing to account for the specific requirements of the
claims. McRo, at 1313 (quoting TL! Commc'ns, 823 F.3d at 611; see also
Diehr, 450 U.S. at 189 n.12, 101 S.Ct. 1048).
Specific Limitations.
In order to avoid oversimplification, we "look to whether the claims
in these patents 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, at 1314 (quotingEnfishLLCv. Microsoft Corp., 822 F.3d 1327, 1336
(Fed. Cir. 2016); see also Rapid Litig. Mgmt. Ltd. v. CellzDirect, Inc., 827
F.3d 1042, 1048 (Fed. Cir. 2016)).
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Appellants contend the claimed invention improves upon the technical
field of data processing, specifically arguing the improvement is a reduction
in the data processing load of a computer system, such as an exchange
computer system. Appeal Br. 7 (citing Spec. ,r 22) ("[t]he disclosed
embodiments may thus decrease the processing load presented by the margin
requirement determination"). Appellants further argue "[ t ]he decreased
processing load is rooted in the inventors' recognition that a limited number
of PCA model-based scenario curves is 'nonetheless capable of addressing
correlation and volatility risks presented by [a] portfolio."' Id. at 8 ( quoting
Spec. ,r 19). "The limited number of scenario curves is nonetheless
sufficient for margining purposes." Id. (quoting Spec. ,r 22). Appellants
argue the claimed invention is premised upon a more computationally
manageable set of scenario curves (paragraph [0019]) than, for instance, full
PCA-based simulations (e.g., Monte Carlo simulations) which prior art
simulations have conventionally involved "billions or trillions of scenarios"
and that "[i]mplementing a full Monte Carlo simulation for each such
instance would be computationally infeasible. Id. (quoting Spec. ,r,r 19, 22).
With respect to Appellants' PCA-based arguments, the Examiner
finds the additional processor-based claimed limitations perform nothing
more than producing, inputting, or collecting information. Ans. 13. We
disagree.
"Software can make non-abstract improvements to computer
technology just as hardware improvements can, and sometimes the
improvements can be accomplished through either route." Enfzsh, at 1335.
The Examiner does not reply to Appellants argument and evidence that the
claims now render possible calculations that were computationally-infeasible
according to the prior art. See Ans. 13.
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Application 13/956,707
We analyze the claimed advance over the art at Step 1 of the
Mayo/Alice framework. We see "no reason to conclude that all claims
directed to improvements in computer-related technology, including those
directed to software, are abstract and necessarily analyzed at the second step
of Alice, nor do we believe that Alice so directs." Enfzsh, at 1335. We find
the claims assert a specific improvement in computer technology, an
assertion which is not traversed in the Record, and therefore, are directed to
an improvement to computer functionality. "That the improvement is not
defined by reference to 'physical' components does not doom the claims. To
hold otherwise risks resurrecting a bright-line machine-or-transformation
test." Enfzsh, at 1340.
Because of the failure of the Examiner to address Appellants'
argument regarding improvement of computer functionality, we find the
rejection does not sufficiently demonstrate that the claims are directed to an
abstract idea within the meaning of Alice. See Enfzsh, at 1336. Because the
claims are not "directed to" an abstract idea, the inquiry ends. McRo, at
1312.
DECISION
The rejection of claims 1-25 under 35 U.S.C. § 101 is REVERSED.
REVERSED
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