Ex Parte Labuszewski et al

Patent Trials and Appeals Board

Jun 28, 2019

15079752 - (D) (P.T.A.B. Jun. 28, 2019)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
15/079,752 03/24/2016
12684 7590 07/02/2019
Lempia Summerfield Katz LLC/CME
20 South Clark Street
Suite 600
Chicago, IL 60603
FIRST NAMED INVENTOR
John Labuszewski
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.
4672-11002IUS 1061
EXAMINER
NGUYEN, LIZ P
ART UNIT PAPER NUMBER
3696
NOTIFICATION DATE DELIVERY MODE
07/02/2019 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 JOHN LABUSZEWSKI, JOHN NYHOFF, DAVID BOBERSKI,
MIKE KAMRADT, ROBERTA PAFF ARO, EDWARD GOGOL,
JOHN WILEY, RICHARD CO, and STEVE YOUNGREN
Appeal2018-004238
Application 15/079,752 1
Technology Center 3600
Before BRADLEY W. BAUMEISTER, NABEEL U. KHAN, and
MICHAEL M. BARRY, Administrative Patent Judges.
KHAN, Administrative Patent Judge.
DECISION ON APPEAL
Appellants appeal under 35 U.S.C. § 134(a) from the Final Rejection
of claims 1-23. We have jurisdiction under 35 U.S.C. § 6(b).
We affirm.
1 Appellants identify Chicago Mercantile Exchange Inc. as the real party in
interest. App. Br. 2.
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Application 15/079,752
BACKGROUND
THE INVENTION
Appellants describe their invention as follows:
A system for moving money between accounts of traders
by a central counterparty to facilitate payments, i.e. the
movement of funds, [therebetween] is disclosed which provides
a flexible mechanism [that] supports simpler accounting, new
types of derivatives contracts as well new types fees. The
disclosed futures contract, referred to as a 'payer' contract,
comprises a 'no-uncertainty' futures contract, i.e. the initial value
and settlement value parameters are defined, that leverages the
mechanisms of the clearing system to, for example,
accommodate related payments. Accordingly, a I-to-many
relationship between contracts and prices is provided whereby
each price component may be assigned its own payer contract.
The function of the payer contract may be to guarantee the
movement of money from related positions. In one embodiment,
payer contracts are dynamically created whenever a payment is
needed.
Abstract.
Exemplary independent claim 1 is reproduced below.
1. A computer implemented method of facilitating a payment
between traders based on a first position in a first instrument held
by a first trader to which a second trader is a counterparty, the
method comprising:
determining, automatically by a payment processor based
on the first position, the amount of a payment to be made from
one of the first or second trader to the other of the first or second
trader in advance of settlement thereof, the amount of the
payment being further based on a fixed percentage of a final
settlement value of the first instrument;
assigning, automatically by the payment processor based
on the first position in the first instrument held by the first trader
to which the second trader is a counterparty, a second position to
the first trader in a futures contract characterized by a settlement
date, a quantity and a pnce, the second position being
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characterized by a value based on the quantity and the price of
the futures contract as of the assigning, and a third position to the
second trader, counter to the second position, in the futures
contract, the first and second traders not being identified to each
other;
valuing, by a settlement processor upon occurrence of the
settlement date, the futures contract at a spot value different from
the price of the futures contract, the spot value being based on
the determined payment amount; and
modifying, by a margin processor, a first account record
associated with the first trader and a second account record
associated with the second trade, both stored in an account
database stored in a memory coupled with the processor to reflect
a credit to the account of the first trader and a debit from the
account of the second trader in the amount of the difference
between the value of the second position and the spot value when
the difference represents a loss for the second trader or to reflect
a debit from the account of the first trader and a credit to the
account of the second trader in the amount of the difference
between the value of the second position and the spot value when
the difference represents a loss for the first trader.
REJECTION
Claims 1-23 stand rejected under 35 U.S.C. § 101. Final Act. 5-9.
DISCUSSION
Legal Principles
An invention is patent-eligible if it claims a "new and useful process,
machine, manufacture, or composition of matter." 35 U.S.C. § 101.
However, the Supreme Court has long interpreted 35 U.S.C. § 101 to include
implicit exceptions: "[l]aws of nature, natural phenomena, and abstract
ideas" are not patentable. E.g., Alice Corp. v. CLS Bank Int 'l, 573 U.S. 208,
216 (2014).
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In determining whether a claim falls within an excluded category, we
are guided by the Supreme Court's two-step framework, described in Mayo
and Alice. Id. at 217-18 ( citing Mayo Collaborative Servs. v. Prometheus
Labs., Inc., 566 U.S. 66, 75-77 (2012)). In accordance with that framework,
we first determine what concept the claim is "directed to." See Alice, 573
U.S. at 219 ("On their face, the claims before us are drawn to the concept of
intermediated settlement, i.e., the use of a third party to mitigate settlement
risk."); see also Bilski v. Kappas, 561 U.S. 593, 611 (2010) ("Claims 1 and 4
in petitioners' application explain the basic concept of hedging, or protecting
against risk.").
Concepts determined to be abstract ideas, and thus patent ineligible,
include certain methods of organizing human activity, such as fundamental
economic practices (Alice, 573 U.S. at 219-20; Bilski, 561 U.S. at 611);
mathematical formulas (Parker v. Flook, 437 U.S. 584, 594--95 (1978)); and
mental processes (Gottschalkv. Benson, 409 U.S. 63, 67 (1972)). Concepts
determined to be patent eligible include physical and chemical processes,
such as "molding rubber products" (Diamond v. Diehr, 450 U.S. 175, 191
(1981) ); "tanning, dyeing, making water-proof cloth, vulcanizing India
rubber, smelting ores" (id. at 182 n.7 (quoting Corning v. Burden, 56 U.S.
252, 267---68 (1854))); and manufacturing flour (Benson, 409 U.S. at 69
(citing Cochrane v. Deener, 94 U.S. 780, 785 (1876))).
In Diehr, the claim at issue recited a mathematical formula, but the
Supreme Court held that "[a] claim drawn to subject matter otherwise
statutory does not become nonstatutory simply because it uses a
mathematical formula." Diehr, 450 U.S. at 176; see also id. at 191 ("We
view respondents' claims as nothing more than a process for molding rubber
products and not as an attempt to patent a mathematical formula."). Having
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said that, the Supreme Court also indicated that a claim "seeking patent
protection for that formula in the abstract ... is not accorded the protection
of our patent laws, ... and this principle cannot be circumvented by
attempting to limit the use of the formula to a particular technological
environment." Id. (citing Benson and Flook); see, e.g., id. at 187 ("It is now
commonplace that an application of a law of nature or mathematical formula
to a known structure or process may well be deserving of patent
protection.").
If the claim is "directed to" an abstract idea, we tum to the second
step of the Alice and Mayo framework, where "we must examine the
elements of the claim to determine whether it contains an 'inventive
concept' sufficient to 'transform' the claimed abstract idea into a patent-
eligible application." Alice, 573 U.S. at 221 ( quotation marks omitted). "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. ( quoting Mayo, 566 U.S. at 77).
"[M]erely requir[ing] generic computer implementation[] fail[ s] to transform
that abstract idea into a patent-eligible invention." Id.
The PTO recently published revised guidance on the application of
§ 101. UPTO, 2019 Revised Patent Subject Matter Eligibility Guidance,
84 Fed. Reg. 50 (Jan. 7, 2019) ("Guidance"). Under the Guidance, we first
look to whether the claim recites:
(1) any judicial exceptions, including certain groupings of
abstract ideas (i.e., mathematical concepts, certain methods of
organizing human activity such as a fundamental economic
practice, or mental processes); and
(2) additional elements that integrate the judicial exception into
a practical application (see MPEP § 2106.05(a}-(c), (e}-(h)).
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See Guidance, 84 Fed. Reg. at 52-55.
Only if a claim (1) recites a judicial exception and (2) does not
integrate that exception into a practical application, do we then look to
whether the claim:
(3) adds a specific limitation beyond the judicial exception that
is not "well-understood, routine, conventional" in the field (see
MPEP § 2106.05(d)); or
(4) simply appends well-understood, routine, conventional
activities previously known to the industry, specified at a high
level of generality, to the judicial exception.
See Guidance, 84 Fed. Reg. at 56.
Guidance Step 2A - Whether the Claims are
Directed to a Judicial Exception
Prong 1 of Step 2A
Under the first prong of step 2A of the Guidance, we determine if the
claims recite an abstract idea. Claim 1 recites "[a] ... method of facilitating
a payment between traders based on a first position in a first instrument held
by a first trader to which a second trader is a counterparty." This method
involves "determining ... the amount of a payment to be made from one of
the first or second trader to the other," based on a first position in an
instrument and a settlement value; "assigning ... a second position to the
first trader in a futures contract characterized by a settlement date, a quantity
and a price ... and a third position to the second trader, counter to the
second position, in the futures contract, the first and second traders not being
identified to each other;" "valuing ... the futures contract at a spot value
different from the price of the futures contract," and "modifying [ account
records associated with the first and second traders] . . . to reflect" a credit
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or debit from the accounts of the first and second traders depending on the
"difference between the value of the second position and the spot value."
Each of these limitations, under the broadest reasonable interpretation,
relates to facilitating a payment between traders of certain financial
instruments and/or entering into positions in financial contracts. For
example, "determining ... the amount of a payment" relates to the
facilitating a payment between traders. Assigning positions in futures
contracts relates to entering into financial and contractual obligations
between the traders. Valuing the futures contract, and crediting and debiting
accounts based on the payment relate, again, to facilitating payment between
traders. Facilitating payments, and entering into futures contracts involve
fundamental economic practices, along with commercial and legal
transactions. These activities constitute certain methods of organizing
human activity, which the Guidance recognizes as constituting an abstract
idea. See Guidance, 84 Fed. Reg. at 52.
Prong 2 of Step 2A
Next, we determine whether the claims integrate the recited judicial
exception into a practical application. Guidance, 84 Fed. Reg. at 52-55.
Here we look to see if, for example, any additional elements of the claims
reflect (i) an improvement in the functioning of a computer or to another
technological field, (ii) an application of the judicial exception with, or by
use of, a particular machine, (iii) a transformation or reduction of a
particular article to a different state or thing, or (iv) a use of the judicial
exception in some other meaningful way beyond generally linking the use of
the judicial exception to a particular technological environment. See MPEP
§ 2106.05(a}-(c), (e}-(h).
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Appellants argue, "this claimed structure ... improves the underlying
technology, not necessarily the use of a computer alone." App. Br. 6.
Appellants similarly argue:
the claimed invention improves upon the technical field of
anonymized data and transaction processing by providing a
system which efficiently facilitates the necessary crediting and
debiting of accounts to indirectly effect a transfer therebetween
and which leverages existing risk management
systems/techniques, in a novel and specific manner, to do so.
Further, the system accomplishes these goals while maintaining
anonymity between the payor and payee.
App. Br. 7.
We disagree with Appellants' arguments and instead agree with the
Examiner the "present claims do not purport to improve the functioning of
the computer itself, or to improve any other technology or technical field and
use of an unspecified computer does not transform an abstract idea into a
patent-eligible invention." Ans. 11. Appellants' characterization of the
system as "efficiently facilitat[ing] the necessary crediting and debiting of
accounts to indirectly effect a transfer therebetween and which leverages
existing risk management systems/techniques ... while maintaining
anonymity" (App. Br. 7) describes the invention in terms of the abstract
concepts identified above. This characterization does not show an
improvement to the computers or processors and does not identify additional
elements, beyond the abstract idea itself, that indicates an improvement to
computer or other technology.
Guidance Step 2B - Whether the Claims
Provide an Inventive Concept
In our analysis under step 2B, we look to the claim limitations
individually and as a whole to see if theytransform the claim to something
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significantly more than the recited abstract idea. We start by analyzing
limitations beyond the judicial exception that are not "well-understood,
routine, conventional" in the field (see MPEP § 2106.05(d)).
The additional claim limitations beyond those that are directed to the
above identified abstract idea, include the recitation of a "payment
processor," "settlement processor," "margin processor," and "account
database stored in a memory coupled with the processor." However, nothing
in the claims or Specification indicates that these elements are anything but
standard generic computer elements that function in their well understood,
routine and conventional manner.
For example, the Specification describes that "the processor 402 may
be part of a standard personal computer or a workstation. The processor
402 may be one or more general processors, digital signal processors,
application specific integrated circuits, field programmable gate arrays,
servers, networks, digital circuits, analog circuits, combinations thereof, or
other now known or later developed devices for analyzing and processing
data." Spec. ,r 13 8 ( emphasis added). Similarly, the Specification states,
"The memory 404 may be an external storage device or database for storing
data. Examples include a hard drive, compact disc ('CD'), digital video disc
('DVD'), memory card, memory stick, floppy disc, universal serial bus
('USB') memory device, or any other device operative to store data." Spec.
,r 139. This description supports the finding that these elements are generic
elements that operate in their well-known and standard manner and also do
not reflect an improvement to computer technology.
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Appellants argue the claimed method "is a specific implementation
which has NOT been used before and therefore is not well understood,
routine or conventional in the art." Specifically, Appellants argue:
the claimed invention operates in a manner which upends the
known margin computation process by valuing the claimed
second position based on a previously determined payment
amount so as to cause the margining system to move that
amount, as opposed to valuing the position based on a current
market value so as to determine a change, e.g. gain or loss,
thereto.
App. Br. 10-11.
This characterization of upending the known margin computation
process, however, relates to the abstract fundamental economic practice
itself, rather than adding something significantly more to the claim beyond
the judicial exception.
Appellants also argue "[ m ]oreover, the claims include specific
limitations other than what [are] well-understood, routine and conventional
in the field, as is apparent from the lack of prior art, or add[] unconventional
steps that confine the claim to a particular useful application." App. Br. 12.
Appellants' argument that the claimed limitations are not well-
understood, routine and conventional because of a lack of prior art rejection
is also unpersuasive. "[P]atent-eligibility does not tun1 on ease of execution
or obviousness of application. Those are questions that are examined under
separate provisions of the Patent Act." Rapid Litig. kfgmt. Ltd. v.
Cell::Direct, Inc., 827 F.3d 1042, 1052 (Fed. Cir. 2016). Thus, merely
because the Examiner has not presented a rejection under 35 U.S.C. §§ l 02
or 103 does not overcome a 35 U.S.C. § 101 rejection. Although the second
step in the Alice/lviayo fiamework is termed a search for an "inventive
concept," the analysis is not an evaluation of novelty or non-obviousness,
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but rather, a search for "an elernent or combination of elernents that is
'sufficient to ensure that the patent in practice amounts to significantly more
than a patent upon the [ineligible concept] itself."' See Alice, 573 U.S. at
218.
Moreover, if the reason for a lack of prior art rejection stems from the
novelty of the claimed abstract idea itself, then such novelty is not
persuasive of subject matter eligibility of the claims. "[A] claim for a new
abstract idea is still an abstract idea." Synopsys, Inc. v. Mentor Graphics
Corp., 839 F.3d 1138, 1151 (Fed. Cir. 2016).
Remaining Issues
Appellants argue:
As opposed to preempting the entire idea of financial
transactions involving payments between traders based on final
settlement values of traded securities, the claims, instead, are
directed to a specific, novel and patentable system for indirectly
moving monetary value among accounts of traders specifically
within the environment of a central counter-party based trading
system where, due to the novation by the central counter-party in
any transaction, direct movement between accounts is not
permitted. The claims require a specific structure which does not
preempt all methods of moving monetary value among trader
accounts.
App. Br. 6.
This argument is also unpersuasive. "While 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). Moreover, "[w]here a patent's
claims are deemed only to disclose patent ineligible subject matter under the
Mayo framework, as they are in this case, preemption concerns are fully
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addressed and made moot." OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d
1359, 1362-63 (Fed. Cir.), cert, denied, 136 S. Ct. 701 (2015).
Conclusion
For the aforementioned reasons, we sustain the Examiner's rejection
of claim 1 and of the remaining pending claims, argued together as a group.
App. Br. 5-17.
DECISION
The Examiner's rejection of claims 1-23 is affirmed.
No time period for taking any subsequent action in connection with
this appeal may be extended. See 37 C.F.R. § 1.136(a)(l)(iv).
AFFIRMED
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