Ex Parte Lutnick et al

Patent Trial and Appeal Board

Jan 31, 2017

12406260 (P.T.A.B. Jan. 31, 2017)

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.
12/406,260 03/18/2009 HOWARD W. LUTNICK 09-2307 5080
63710 7590
INNOVATION DIVISION
CANTOR FITZGERALD, L.P.
110 EAST 59TH STREET (6TH FLOOR)
NEW YORK, NY 10022
EXAMINER
GOODBODY, JOAN T
ART UNIT PAPER NUMBER
CSDM
NOTIFICATION DATE DELIVERY MODE
02/02/2017 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
lkoro vich @ c antor. com
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PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte HOWARD W. LUTNICK, BIJOY PAUL,
and MICHAEL SWEETING
Appeal 2015-002531
Application 12/406,260
Technology Center 3600
Before HUBERT C. LORIN, BIBHU R. MOHANTY, and
BRADLEY B. BAYAT, Administrative Patent Judges.
BAYAT, Administrative Patent Judge.
DECISION ON APPEAL1
STATEMENT OF THE CASE
Appellants2 appeal under 35 U.S.C. § 134(a) from the Examiner’s
final rejection of claims 1—21, 23—41, and 43^49. We have jurisdiction
under 35 U.S.C. § 6(b).
We AFFIRM.
1 Our decision references Appellants’ Appeal Brief (“Appeal Br.,” filed
Sept. 29, 2014), Reply Brief (“Reply Br.,” filed Jan. 7, 2015), and the
Examiner’s Answer (“Ans.,” mailed Nov. 7, 2014) and Final Office Action
(“Final Act.,” mailed Aug. 30, 2013).
2 Appellants identify “CFPH, L.P.” as the real party in interest (Appeal Br.
4).
Appeal 2015-002531
Application 12/406,260
Appellants’ claimed invention relates to exchange trading financial
instruments. (Spec. 15:19—25, 16:5—8). Claim 1, reproduced below, is
illustrative of the subject matter on appeal.
1. An exchange system comprising:
a data bus, wherein the data bus communicatively
coupling an event engine and a matching engine, and wherein
the data bus is configured to deliver instructions from the event
engine to the matching engine;
the matching engine configured to:
receive indications of orders, wherein each order defines
a respective side of a trade for a financial instrument;
add each of the orders to a respective one of a queue of
buy orders and a queue of sell orders for the financial
instrument;
determine that at least a first order in the queue of buy
orders and a second order in the queue of sell orders match, and
execute a trade that fulfill the first order and the second
order;
the event engine configured to:
receive an indication of an occurrence of an event;
in response to receiving the indication of occurrence of
the event, determine that an adjustment to an order is
conditioned on at least one criteria associated with the
occurrence;
determine that the at least one criteria associated with the
occurrence on which the order is conditioned is satisfied; and
in response to the determination, transmit, through the
data bus, to the matching engine, an indication to adjust the
order.
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Appeal 2015-002531
Application 12/406,260
THE REJECTIONS
The Examiner relies upon the following as evidence of
unpatentability:
Duesterwald US 2003/0192035 A1
Marks de Chabris US 2007/0067231 A1
Nafeh US 2007/0233594 A1
Walsky US 2008/0097893 A1
The following rejections are before us for revie
1. Claims 1—21, 23—41, and 43^49 stand rejected under 35U.S.C. § 101
as being directed to ineligible subject matter.
2. Claims 1, 12—19, 24—26, 28—32, and 43—47 stand rejected under 35
U.S.C. § 103(a) as being unpatentable over Nafeh and Walsky.
3. Claims 2, 10, 11, 20, 21, 39, 40, and 48 stand rejected under 35 U.S.C.
§ 103(a) Nafeh, Walsky, and Duesterwald.
4. Claims 3—9, 23, 27, 33—38, 41, and 49 stand rejected under 35 U.S.C.
§ 103(a) Nafeh, Walsky, Duesterwald, and Mark de Chabris.
ANALYSIS
Non-statutory Subject Matter
The Supreme Court has set forth “a framework for distinguishing
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. 2347, 2355 (2014) {citing Mayo, 132 S. Ct. 1289, 1296-97
(2012)). According to the Supreme Court’s framework, it must first be
determined whether the claims at issue are directed to one of those concepts
(i.e., laws of nature, natural phenomena, and abstract ideas) Id. If so, a
Oct. 9, 2003
Mar. 22, 2007
Oct. 4, 2007
Apr. 24, 2008
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Application 12/406,260
second determination must be made to 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. Id. (quoting Mayo, 132 S. Ct. at 1298).
To that end, regarding the first part of the Alice inquiry, the Examiner
finds that the claims are directed to “the abstract idea of a method of trading
on an exchange using ‘engines’” and therefore ineligible subject matter
under 35 U.S.C. § 101 (Ans. 4). With regard to the second part of the Alice
inquiry, the Examiner determines that the “use of a generic ‘exchange’ or
public ‘exchange’ with an event engine and matching engine does not limit
the claims sufficiently or add concrete ties to make the claims less abstract.”
(id. at 4—5). The Examiner has applied this analysis to all the claims in the
rejection.
Appellants first argue that “the Examiner has made a factual finding
with no evidence at all in violation of the Administrative Procedure Act”
(Reply Br. 10). According to Appellants, the Examiner does not identify
“any of the court specified categories of abstract ideas or give any reasoning
at all to justify the claim of abstractness” (id.).
We do not agree. As noted above, the Examiner identifies the abstract
idea to which the claims as a whole are directed. This is sufficient to
identify the judicially excluded category under Alice. There is no
requirement to make factual findings or produce evidence in making a
rejection under 35 U.S.C. § 101. See e.g., “July 2015 Update: Subject
Matter Eligibility” to the “2014 Interim Guidance on Subject Matter
Eligibility (2014 IEG) published on Dec. 16, 2014 (79 Fed. Reg. 74618)”:
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Application 12/406,260
The courts consider the determination of whether a claim is
eligible (which involves identifying whether an exception such
as an abstract idea is being claimed) to be a question of law.
Accordingly, courts do not rely on evidence that a claimed
concept is a judicial exception, and in most cases resolve the
ultimate legal conclusion on eligibility without making any
factual findings.
Id. at 6 (emphasis added). Evidence may be helpful in certain situations
where, for instance, facts are in dispute. But it is not always necessary. It is
not necessary in this case. We note that the Appellants have put forward no
rebuttal evidence showing claim 1 is not directed to an abstract idea.
Appellants’ second argument is that the invention “uses specifically
arranged technology of engines to perform concrete actions of trading.”
(Reply Br. 10). According to Appellants, “[t]his specific application of
trading using engines is not manifestly abstract and therefore is not an
abstract idea.” {id. at 11).
We do not agree. The Court in Alice also addressed claims directed to
electronic trading — specifically trading through a third-party intermediary.
The Court concluded that the claims were “drawn to the concept of
intermediated settlement” and that “intermediated settlement, like hedging
[in Bilski], is an ‘abstract idea’ beyond the scope of § 101.” Alice at 2356.
Accordingly, Appellants’ argument does not apprise us of error in the
Examiner’s determination that the claims are directed to an abstract idea.
Third, Appellants argue that “the Examiner fails to show that each and
every limitation of each and every claim taken both together and separately
do not add significantly more than the alleged abstract idea.” (Reply Br. 11).
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Fourth, Appellants contend that the claims “recite a novel and non-
obvious structure for an exchange system or method of operating an
exchange.” {id.). According to Appellants, “[a]s described in the
specification, these arrangements improve over traditional exchanges and
therefore add significantly more to the alleged abstract idea of trading on an
exchange using engines.” {id.).
Appellants’ argument regarding “novel and non-obvious structure” is
not a persuasive argument. An abstract idea does not transform into an
inventive concept just because the prior art does not disclose or suggest it.
We also note that the Appellants have not pointed to any specific
improvement in computer technology or any other technology or technical
field described in the Specification.
As in Alice, “the claims do not, for example, purport to improve the
functioning of the computer itself,” “[n]or do they effect an improvement in
any other technology or technical field.” Alice at 2359. As in Alice, the
functions performed by the claimed engines amount to “basic functions of a
computer.” {id.). For example, in the method of claim 16, the recited
functions of receiving conditions, receiving indications, determining events,
and transmitting instructions to adjust orders through a bus, matching
orders, and executing trades are all well-understood, routine, conventional
activities previously known to the industry. Claim 32 similarly recites steps
of receiving an indication, determining conditions, and transmitting
instructions to adjust an order through a bus. As in Alice, “each step does no
more than require a generic computer to perform generic computer
functions.” Alice at 2359. Cf. id. (“[T]he use of a computer to obtain data,
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Application 12/406,260
adjust account balances, and issue automated instructions ... are ‘well-
understood, routine, conventional activities] ’ previously known to the
industry.”) The Specification supports the view that the computer
implementation is purely conventional. See Specification page 9, lines
27—29 (“the various processes described herein may be implemented by,
e.g., appropriately programmed general purpose computers, special purpose
computers and computing devices.”).
Regarding the claimed “matching engine” the Specification discloses
that matching engine 207 “may include general purpose processors
configured to matching orders ... via hardware and/or software” (Spec.
19:20-23). Regarding the claimed “event engine” the Specification
similarly discloses that “event engine 213 may include a processor, a
memory, and/or any other component.” (Spec. 24:4—8). The matching and
event engines may be implemented in a single general purpose computer.
See Spec. 28:25—26 (“a bus may directly couple event engine and matching
engine in a same machine.”). Adjusting an order may be implemented by
simply accessing and updating a memory location in the general purpose
computer. See Spec. 30: 24—26 (“memory location may be accessed (e.g.,
by the event engine or some other component) and information may be read
and/or changed to adjust an order.” Executing software and allowing
communication between software components via memory locations is “one
of the most basic functions of a computer.” Alice at 2359. Indeed, nearly
every computer will include a data bus configured to allow communication
between programs via memory locations. Cf. Alice at 2360 (“Nearly every
computer will include a ‘communications controller’ and ‘data storage unit’
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Application 12/406,260
capable of performing the basic calculation, storage, and transmission
functions required by the method claims.”)
Thus, “the claims at issue amount to ‘nothing significantly more’ than
an instruction to apply the abstract idea [] using some unspecified, generic
computer.” Alice at 2360.We reach the same conclusion as to system claims
1 and 49. As in Alice, “[t]he method claims recite the abstract idea
implemented on a generic computer; the system claims recite a handful of
generic computer components configured to implement the same idea.”
Alice at 2360. “[T]he mere recitation of a generic computer cannot
transform a patent-ineligible abstract idea into a patent-eligible invention.
Stating an abstract idea ‘while adding the words ‘apply it” is not enough for
patent eligibility.” Alice at 2358.
Accordingly, Appellants’ arguments do not apprise us of error in the
rejection under 35 U.S.C. § 101.
Obviousness
Independent claim 1 requires, inter alia, an event engine configured to
“in response to receiving the indication of occurrence of the event,
determine that an adjustment to an order is conditioned on at least one
criteria associated with the occurrence” (Appeal Br. 54, Claims App.).
Independent claims 16, 32, and 49 contain similar limitations.
The Examiner finds the above limitation of claim 1 disclosed in Nafeh
at paragraphs 85—91 and 471 480 (Final Act. 10). The Examiner finds an
identical limitation in claim 49 disclosed in paragraphs 488 493 of Nafeh
{id. at 39).
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Application 12/406,260
Appellants argue that the Examiner has not established a prima facie
showing of unpatentability (Appeal Br. 13—16, 50-51). According to
Appellants, “a conditional contract (i.e., a contract that pays out in some
instances) is not a teaching or suggestion regarding an adjustment to an
order” (id. at 16).
In response, the Examiner cites to paragraphs 8, 17, 54, and 88 of
“Mather” disclosing, e.g., a trading widget, electronic exchange, and an
order placement module (see Ans. 9—13).
We are persuaded by Appellants’ arguments. A rejection based on
§103 clearly must rest on a factual basis. The Examiner has the initial duty
of supplying the factual basis for the rejection and may not resort to
speculation, unfounded assumptions, or hindsight reconstruction to supply
deficiencies in its factual basis.
Based on the record before us, the Examiner has not shown where and
how these limitations are found in the prior art. As noted above, the final
rejection merely cites to paragraphs 85—91, 471—480, and 488-493 of Nafeh
without any further explanation (aside from a note regarding the Examiner’s
interpretation of “event”). We have reviewed the cited paragraphs in Nafeh
and we fail to see how they teach the disputed claim limitation. And in the
Answer in response to Appellants’ arguments, the Examiner erroneously
cites to and relies on various portions of “Mather” (see Ans. 10-13), which
is not of record as prior art in the rejections before us.
Accordingly, we do not sustain the rejection of independent claim 1,
and independent claims 16, 32, and 49, which contain a similar limitation
and stand rejected based on the same deficient findings as in claim 1. For
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Application 12/406,260
the same reasons, we do not sustain the rejections of dependent claims 2—15,
17—21, 23—31, 33—41, and 43^48. Cf. In re Fritch, 972 F.2d 1260, 1266
(Fed. Cir. 1992) (“dependent claims are nonobvious if the independent
claims from which they depend are nonob vious”).
DECISION
The Examiner’s rejection of claims 1—21, 23—41, and 43 49 under 35
U.S.C. § 101 is affirmed.
The Examiner’s rejections of claims 1—21, 23—41, and 43 49 under 35
U.S.C. § 103(a) are reversed.
No time period for taking any subsequent action in connection with
this appeal may be extended under 37 C.F.R. § 1.136(a)(l)(iv).
AFFIRMED
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