Ex Parte Lutnick et al

Patent Trial and Appeal Board

Sep 25, 2018

10015738 (P.T.A.B. Sep. 25, 2018)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
10/015,738 12/12/2001
63710 7590 09/27/2018
INNOVATION DIVISION
CANTOR FITZGERALD, L.P.
110 EAST 59TH STREET (6TH FLOOR)
NEW YORK, NY 10022
FIRST NAMED INVENTOR
Howard W. Lutnick
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.
01-1030 3474
EXAMINER
KAZIMI, HAN! M
ART UNIT PAPER NUMBER
3691
NOTIFICATION DATE DELIVERY MODE
09/27/2018 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 HOWARD W. LUTNICK, GLENN D. KIRWIN,
JOAN KIRWIN, ANDREW C. GILBERT,
and MARY ANN GILBERT
Appeal2017-005996
Application 10/015,738 1
Technology Center 3600
Before ALLEN R. MacDONALD, JOSEPH P. LENTIVECH, and
MICHAEL J. ENGLE, Administrative Patent Judges.
ENGLE, Administrative Patent Judge.
DECISION ON APPEAL
Appellants appeal under 35 U.S.C. § 134(a) from a final rejection of
claims 28--45, which are all of the claims pending in the application. We
have jurisdiction under 35 U.S.C. § 6(b ).
We AFFIRM.
Technology
According to the Specification, the application relates to "trading of
future contracts for intangible assets" such as "future royalties or revenues
from artistic works or future salaries of professionals." Spec. Abstract.
1 Appellants state that the real party in interest is CFPH, LLC. App. Br. 3.
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Application 10/015,738
Illustrative Claim
Independent claim 28 is illustrative and reproduced below:
28. A non-transitory, machine-readable medium having stored
thereon a plurality of instructions that when executed by a
processor cause the processor to:
receive an indication of a contractual obligation between a
first party and a second party, in which the contractual obligation
obligates the first party to make a payment to the second party,
and in which the contractual obligation obligates the second
party to make a performance at the direction of the first party;
receive information about a futures contract based on the
contractual obligation, in which the futures contract obligates a
holder of the futures contract to make the payment to the second
party in place of the first party, and in which the futures contract
entitles the holder of the futures contract to direct the
performance of the second party;
receive a request for information about secondary trading
of the futures contract;
in response to receiving the request, provide at least one
term relevant to secondary trading of the futures contract;
receive an indication of a desire to purchase the futures
contract from a trader; and
in response to receiving the indication of the desire,
execute a trade fulfilling the desire, remove a prior entity from
being the holder of the futures contract, and make the trader the
holder of the futures contract.
Rejection
Claims 28--45 stand rejected under 35 U.S.C. § 101 as being directed
to ineligible subject matter. Final Act. 2.
Related Case
Appellants note that an appeal also was filed in continuation
application 13/614,240 (Appeal No. 2017-006207). App. Br. 3.
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Application 10/015,738
ANALYSIS
Legal Background
Section 101 defines patentable subject matter, but the Supreme Court
has "long held that this provision contains an important implicit exception"
that "[l]aws of nature, natural phenomena, and abstract ideas are not
patentable." Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S.
66, 70 (2012) (quotation omitted). Accordingly, in applying the§ 101
exception, the Supreme Court cautioned:
[W]e must distinguish between patents that claim the building
blocks of human ingenuity and those that integrate the building
blocks into something more, thereby transforming them into a
patent-eligible invention. The former would risk
disproportionately tying up the use of the underlying ideas, and
are therefore ineligible for patent protection. The latter pose no
comparable risk of pre-emption, and therefore remain eligible for
the monopoly granted under our patent laws.
Alice Corp. v. CLS Bankint'l, 134 S. Ct. 2347, 2354--55 (2014) (quotations
omitted). "Eligibility under 35 U.S.C. § 101 is a question of law, based on
underlying facts." SAP Am., Inc. v. InvestPic, LLC, 898 F.3d 1161, 1166
(Fed. Cir. 2018).
To determine patentable subject matter, the Supreme Court has set
forth a two-part test. "First, we determine whether the claims at issue are
directed to one of those patent-ineligible concepts" of "laws of nature,
natural phenomena, and abstract ideas." Alice, 134 S. Ct. at 2355. "The
inquiry often is whether the claims are directed to 'a specific means or
method' for improving technology or whether they are simply directed to an
abstract end-result." RecogniCorp, LLC v. Nintendo Co., 855 F.3d 1322,
1326 (Fed. Cir. 2017). A court must be cognizant that "all inventions at
some level embody, use, reflect, rest upon, or apply laws of nature, natural
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phenomena, or abstract ideas" (Mayo, 566 U.S. at 71), and "describing the
claims at ... a high level of abstraction and untethered from the language of
the claims all but ensures that the exceptions to § 101 swallow the rule."
Enfzsh, LLC v. Microsoft Corp., 822 F.3d 1327, 1337 (Fed. Cir. 2016).
Instead, "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).
In the second step, we "consider the elements of each claim both
individually and 'as an ordered combination' to determine whether the
additional elements 'transform the nature of the claim' into a patent-eligible
application." Alice, 134 S. Ct. at 2355 (quoting Mayo, 566 U.S. at 79, 78).
The Supreme Court has "described step two of this analysis as a 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. (quotation omitted).
Step One
For step one in the Alice/Mayo framework, Appellants argue that "the
Examiner fails to make a prima facie showing that the alleged abstract ideas
of 'trading futures contract for intangible assets' [i]s abstract" because "the
Examiner makes a factual finding without any evidence." App. Br. 6.
We are not persuaded by this argument. The Federal Circuit has held
that "[t]he § 101 inquiry 'may contain underlying factual issues."' Mortg.
Grader, Inc. v. First Choice Loan Servs. Inc., 811 F.3d 1314, 1325 (Fed.
Cir. 2016) ( quoting Accenture Glob. Servs., GmbH v. Guidewire Software,
Inc., 728 F.3d 1336, 1341 (Fed. Cir. 2013)). Yet the Federal Circuit also has
explained that "not every § 101 determination contains genuine disputes
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over the underlying facts material to the § 101 inquiry." Berkheimer v. HP
Inc., 881 F.3d 1360, 1368 (Fed. Cir. 2018); see also BSG Tech LLC v.
BuySeasons, Inc., 899 F.3d 1281, 1290-91 (Fed. Cir. 2018). Instead, the
Federal Circuit has suggested that many§ 101 cases either (A) will not
involve any factual disputes or (B) alleged factual issues are not genuine
because they are, for example, not material or not persuasive. Id.; Mortg.
Grader, 811 F.3d at 1325-26; see also Arrhythmia Research Tech., Inc. v.
Corazonix Corp., 958 F.2d 1053, 1055-56 (Fed. Cir. 1992) ("Although
determination of this question may require findings of underlying facts
specific to the particular subject matter and its mode of claiming, in this case
there were no disputed facts material to the issue.").
For example, in the context of a motion to dismiss in district court, the
Federal Circuit has held that "plausible factual allegations may preclude
dismissing a case under § 101 where, for example, nothing on the record
refutes those allegations as a matter of law." Fair Warning IP, LLC v. Iatric
Sys., Inc., 839 F.3d 1089, 1097 (Fed. Cir. 2016) (quotation omitted,
emphasis added). In that same case, however, the Federal Circuit also held
that the patent owner's "purportedly factual claims" about the invention
being "rooted in computer technology" were "insufficient" to avoid a motion
to dismiss because another Federal Circuit decision already held that
"collecting, analyzing, and displaying data" was an abstract idea. Id. at
1097-98.
Here, the Examiner has relied on the claim language and case law to
reach a legal conclusion that the claims are directed to an abstract idea. See
Final Act. 2-3. Appellants, on the other hand, have not identified any
genuine factual dispute, instead arguing only that the Examiner did not
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introduce additional factual evidence. App. Br. 6. Given Federal Circuit
precedent and the record here, Appellants' argument is insufficient to create
a genuine factual dispute precluding the application of§ 101.
With respect to whether "trading futures contracts for intangible
assets" is a "fundamental economic practice," Appellants similarly argue
that "the Examiner presents no evidence of the fundamentality of this
economic practice" or "the long prevalence of these alleged abstract ideas."
App. Br. 6. We note first that independent claim 28-the only claim argued
with particularity-is not limited to "intangible" assets, instead merely
requiring "a performance" without specifying what that performance is ( e.g.,
the performance could be creating and delivering tangible goods). We also
note that the Specification discusses at length how futures exchanges and
standardized contract terms for futures of tangible goods were conventional.
See Spec. 1: 12-3 :25. Regardless, case law shows that such contracts are a
fundamental economic practice that has been long prevalent. For example,
the Federal Circuit affirmed a PT AB panel's decision that claims for
"creating a source of funds based on present value of future retirement
payments" were directed to "an economic practice long prevalent in our
system of commerce." Ret. Capital Access Mgmt. Co. LLC v. US. Bancorp,
611 F. App'x 1007 (Fed. Cir. 2015) (Rule 36), aff'ing, 2014 WL 4229953, at
*7 (PTAB Aug. 22, 2014). Future retirement payments are analogous to
examples of intangible assets disclosed in the Specification, such as "future
salary income." Spec. 3:30-33. More generally, the courts have long dealt
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with futures contracts, 2 including futures contracts on intangible assets. 3 As
above, Appellants have not provided evidence or argument showing there is
any genuine factual dispute whether the trading of futures contracts
(including on intangible assets) is a fundamental economic practice long
prevalent in our system of commerce. See also In re Villena,_ F. App'x
_, 2018 WL 4145863 (Fed. Cir. Aug. 29, 2018) (unpublished) (holding a
claim was directed to "a fundamental economic practice" and "[p ]rospective
sellers and buyers have long valued property and doing so is necessary to the
functioning of the residential real estate market," yet citing only to two
Supreme Court decisions rather than further factual evidence).
Step Two
For the second step of the Alice/Mayo framework, Appellants recite
the entirety of independent claim 28 ( other than the preamble) and argue that
"the Examiner has not made any showing that ... any of the [ recited]
limitations taken both together and separately is not significantly more than
'trading futures contract for intangible assets."' App. Br. 7. However, the
2 E.g., Hansen v. Boyd, 161 U.S. 397 (1896) (involving wheat futures at the
Chicago Board of Trade); United States v. Hudson, 299 U.S. 498, 499
(1937) ("Respondent bought on May 3, and sold on May 23 and 29, all in
1934, certain futures contracts"); Hubbard v. Lowe, 226 F. 135 (S.D.N.Y.
1915) ( addressing the Cotton Futures Act).
3 E.g., P & C Inv. Club v. Becker, 520 F. Supp. 120, 122 n.1 (E.D. Pa. 1981)
("the Congress has expressly recognized the fundamental similarity between
futures contracts in traditional tangible commodities and futures contracts in
intangibles"); Evanston Bank v. Conticommodity Servs., Inc., 623 F. Supp.
1014, 1020 (N.D. Ill. 1985) ("In addition to the better known futures in
agricultural commodities such as com and pork bellies, the commodities
markets regularly sell futures contracts for a wide variety of both tangibles
and intangibles, including financial instruments.").
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abstract idea cannot provide the inventive concept. BSG Tech, 899 F.3d
1281, 1290 ("It has been clear since Alice that a claimed invention's use of
the ineligible concept to which it is directed cannot supply the inventive
concept that renders the invention 'significantly more' than that ineligible
concept."). Listing the entirety of a claim fails to distinguish the abstract
idea from anything beyond the abstract idea. For example, limitations such
as "receive an indication of a desire to purchase the futures contract from a
trader"; "execute a trade fulfilling the desire"; and "make the trader the
holder of the futures contract" are part of the Examiner's abstract idea of
"trading futures contracts for intangible assets," not something more than the
abstract idea. Similarly, the Examiner considered the dependent claims yet
did not find anything beyond the abstract idea (Final Act. 3), and Appellants
do not identify any specific limitation from any dependent claim that
constitutes an inventive concept beyond the abstract idea. App. Br. 7.
Appellants also argue that because the claims are "novel and non-
obvious," they "must then add something more." App. Br. 7-8. Yet the
Supreme Court has held that "[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." Diamond v. Diehr, 450 U.S. 175, 188-
89 (1981). Thus, "under the Mayo/Alice framework, a claim directed to a
newly discovered law of nature (or natural phenomenon or abstract idea)
cannot rely on the novelty of that discovery for the inventive concept
necessary for patent eligibility." Genetic Techs. Ltd. v. Merial L.L. C., 818
F.3d 1369, 1376 (Fed. Cir. 2016).
Accordingly, we sustain the Examiner's rejection of claims 28--45.
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DECISION
For the reasons above, we affirm the Examiner's decision rejecting
claims 2 8--4 5.
No time period for taking any subsequent action in connection with
this appeal may be extended under 37 C.F.R. § 1.136(a). See 37 C.F.R.
§ 41.50(±).
AFFIRMED
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