Ex Parte Naylor et al

Patent Trial and Appeal Board

May 23, 2018

11529018 (P.T.A.B. May. 23, 2018)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO.
111529,018
132787 7590
Docket Clerk-GOLD
P.O. Drawer 800889
Dallas, TX 75380
FILING DATE FIRST NAMED INVENTOR
0912712006 Mark Jeremy Melville Naylor
05/25/2018
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.
GOLDll-00107 8424
EXAMINER
HAMILTON, LALITA M
ART UNIT PAPER NUMBER
3691
NOTIFICATION DATE DELIVERY MODE
05/25/2018 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):
patents@munckwilson.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte MARK JEREMY MEL VILLE NAYLOR,
ALFRED NEIL FLETCHER, and
HARRY JUSTIN BARMAN
Appeal2016-007775 1
Application 11/529,0182
Technology Center 3600
Before JOSEPH A. FISCHETTI, BIBHU R. MOHANTY, and
MATTHEWS. MEYERS, Administrative Patent Judges.
MEYERS, Administrative Patent Judge.
DECISION ON APPEAL
STATEMENT OF THE CASE
Appellants appeal under 35 U.S.C. § 134(a) from the Examiner's
Final Rejection of claims 1, 4, 6-9, and 11-26. We have jurisdiction under
35 U.S.C. § 6(b).
We AFFIRM.
1 Our decision references Appellants' Appeal Brief ("Appeal Br.," filed
December 7, 2015) and Reply Brief ("Reply Br.," filed August 15, 2016),
the Examiner's Answer ("Ans.," mailed June 15, 2016), and Final Office
Action ("Final Act.," mailed February 6, 2015).
2 Appellants identify Goldman, Sachs & Co., as the real party in interest
(Appeal Br. 2).
Appeal2016-007775
Application 11/529,018
CLAIMED INVENTION
Appellants' claims relate generally to "a system for efficiently
aggregating and processing trades having similar transactional
characteristics" (Spec. 1, 11. 7-9).
Claims 1, 7, 1 7, 21, and 24 are the independent claims on appeal.
Claim 1, reproduced below with minor formatting changes and added
bracketed notations, is illustrative of the subject matter on appeal:
1. A processor-implemented method of managing
commodities or securities trades, said method comprising:
[a] establishing a plurality of firm accounts, with a
computer system including at least one computer processor, each
firm account corresponding to at least one counterparty;
[b] for each firm account, receiving requests, via the
computer system, to execute a plurality of trades;
[ c] for each firm account, identifying trades with similar
characteristics as related trades with the computer system,
wherein said similar characteristics include trades in the same
commodities or securities, with the same trade and settle dates,
and of the same buy or sell type;
[ d] for each firm account, aggregating, with the computer
system, the related trades to create a first aggregated trade order
between the firm account and an internal wash account;
[ e] aggregating, with the computer system, the first
aggregated trade orders to create a second aggregated trade
order; and
[ f] transmitting, via the computer system, the second
aggregated trade order to a broker account for execution.
REJECTION
Claims 1, 4, 6-9, and 11-26 are rejected under 35 U.S.C. § 101 as
directed to non-statutory subject matter.
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ANALYSIS
Non-statutory subject matter
Appellants argue the claims as a group. See Appeal Br. 10-18; Reply
Br. 2---6. We select independent claim 1 as representative. Claims 4, 6-9,
and 11-26 stand or fall with independent claim 1. See 37 C.F.R.
§ 41.37(c)(l)(iv).
Alice Corp. Pty. Ltd. v. CLS Bank International, 134 S. Ct. 2347
(2014) identifies a two-step framework for determining whether claimed
subject matter is judicially-excepted from patent eligibility under § 101.
According to Alice step one, "[w]e must first determine whether the
claims at issue are directed to a patent-ineligible concept," such as an
abstract idea. Alice, 134 S. Ct. at 2355.
The "directed to" inquiry[] cannot simply ask whether the claims
involve a patent-ineligible concept, because essentially every
routinely patent-eligible claim involving physical products and
actions involves a law of nature and/or natural phenomenon-
after all, they take place in the physical world. See Mayo, 132 S.
Ct. at 1293 ("For all inventions at some level embody, use,
reflect, rest upon, or apply laws of nature, natural phenomena, or
abstract ideas.") Rather, the "directed to" inquiry applies a stage-
one filter to claims, considered in light of the specification, based
on 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); see Genetic Techs. Ltd. v.
Merial L.L.C., 818 F.3d 1369, 1375 (Fed. Cir. 2016) (inquiring
into "the focus of the claimed advance over the prior art").
Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1335 (Fed. Cir. 2016). "The
'abstract idea' step of the inquiry calls upon us to 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 Texas, LLC
v. DIRECTV, LLC, 838 F.3d 1253, 1257 (Fed. Cir. 2016) (citing Elec. Power
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Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1353 (Fed. Cir. 2016); Enfish, 822
F.3d at 1335.
In rejecting claim 1under35 U.S.C. § 101, the Examiner determines
that the claims, considered as a whole, are directed to "a fundamental
economic practice," and more particularly, "are directed to managing
commodities or securities and trade aggregation" (Final Act. 2). The
Examiner further determines the claims "are not directed to improvements to
another technology or technical fields; are not directed to improvements to
the functioning of the computer itself; and are not directed to meaningful
limitations beyond generally linking the use of an abstract idea to a
particular technological environment" (id.). Thus, the Examiner concludes
that "the claims are not directed to significantly more than the abstract idea
itself' (id. at 3).
In response, Appellants argue that the Examiner has improperly over-
generalized the claims as being "directed to the abstract idea of managing
commodities or securities trades" (Appeal Br. 12-13, 17; see also Reply Br.
2-5). Appellants also argue that "[t]he technique of processing a plurality of
computer trade requests with the creation and transmission of a second
aggregated trade order is absolutely dependent on computer systems and a
technology that did not exist before the time of computers" (Appeal Br. 13;
see also id. at 12 (citing DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d
1245 (Fed. Cir. 2014)). We cannot agree.
We are not persuaded of Examiner error by Appellants' argument that
independent claim 1, considered as a whole, is not broadly "directed to
managing commodities or securities and trade aggregation" (see Final Act.
2; cf Appeal Br. 12-13, 17; Reply Br. 2-5). In making this determination,
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Application 11/529,018
we note that the Specification discloses the present invention relates "to a
system for efficiently aggregating and processing trades having similar
transactional characteristics" (Spec. 1 ). According to the Specification,
[t]he present system involves conversion of a single trade into
two trades, i.e., each trade between a firm account and a
counterparty account is first turned into two trades. One of these
two trades is a purely internal trade between the firm account and
another internal account, hereinafter referred to as "wash
account." The other trade that is generated is between the wash
account and the counterparty account.
(Spec. 2-3). And, taking independent claim 1 as representative, the claimed
subject matter is generally directed to a "method of managing commodities
or securities trades" including steps for "establishing ... accounts,"
"receiving requests ... to execute a plurality of trades" for each account,
"identifying trades with similar characteristics" for each account,
"aggregating ... related trades to create a first aggregated trade order
between the firm account and an internal wash account," for each account,
"aggregating ... the first aggregated trade orders to create a second
aggregated trade order," and "transmitting ... the second aggregated trade
order to a broker account for execution." Thus, we agree with the Examiner
that claim 1 is directed generally towards "managing commodities or
securities and trade aggregation" (see Final Act. 2), and is similar to certain
fundamental economic and conventional business practices that our
reviewing courts have found patent ineligible, like intermediated settlement
(see Alice, 134 S. Ct. at 2356-57), creating a contractual relationship in
guaranteeing performance of an online transaction (see buySAFE, Inc. v.
Google, Inc., 765 F.3d 1350, 1352, 1355 (Fed. Cir. 2014)), "verifying the
validity of a credit card transaction over the Internet" (CyberSource Corp. v.
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Retail Decisions, Inc., 654 F.3d 1366, 1370 (Fed. Cir. 2011)), and using
advertising as a currency on the Internet ( Ultramercial, Inc. v. Hulu, LLC,
772 F.3d 709, 716 (Fed. Cir. 2014)).
Furthermore, as in Alice, we need not labor to delimit the precise
contours of the "abstract ideas" category in this case. It is enough to
recognize that there is no meaningful distinction in the level of abstraction
between the concept of risk hedging in Bilski v. Kappas, 561 U.S. 593, 609-
10 (2010) and the concept of aggregating trades at issue here. Both are
squarely within the realm of "abstract ideas" as the Court has used that term.
See Alice, 134 S. Ct. at 2357. We also note that claims involving data
collection, analysis, and display are directed to an abstract idea. See Elec.
Power, 830 F.3d at 1353 (holding that "collecting information, analyzing it,
and displaying certain results of the collection and analysis" are "a familiar
class of claims 'directed to' a patent ineligible concept"); see also In re TL!
Commc 'ns LLC Patent Litig., 823 F.3d 607, 611 (Fed. Cir. 2016);
FairWarning IP, LLC v. Iatric Sys., Inc., 839 F.3d 1089, 1093-94 (Fed. Cir.
2016). Here, independent claim 1, unlike the claims found non-abstract in
prior cases, uses generic computer technology (see, e.g., Spec. 9-13) to
"receiv[ e] requests," classify, i.e., "identifying trades with similar
characteristics," analyze, i.e., "aggregating," and present trade information,
i.e., "transmitting," and does not recite an improvement to a particular
computer technology. See, e.g., McRO, Inc. v. Bandai Namco Games Am.,
Inc., 837 F.3d 1299, 1314--15 (Fed. Cir. 2016) 1314--15 (finding claims not
abstract because they "focused on a specific asserted improvement in
computer animation"). Thus, independent claim 1 is directed to a patent-
ineligible abstract idea.
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We are also unpersuaded by Appellants' contention that the claimed
invention is necessarily rooted in computer technology (Appeal Br. 15-16).
We first note that the claimed invention does not address a problem unique
to the Internet or computer networks. Cf Intellectual Ventures I LLC v.
Capital One Bank (USA), 792 F.3d 1363, 1371 (Fed. Cir. 2015) ("claims
here do not address problems unique to the Internet, so DDR has no
applicability"). Here, the Specification discloses that "[t]he invention may
be practiced using any conventional computer systems capable of conveying
transactional information between the firm and its counterparties" (Spec. 9).
The Specification merely requires that "systems must be appropriately
configured to include a wash account and perform the internal aggregate
trade processing steps proposed herein" (see id.). Here, the focus of
independent claim 1 is not on any technological advancement, but rather on
the performance of an abstract idea "for which computers are invoked
merely as a tool." See Enfish, 822 F.3d at 1336.
Turning to the second step of the Alice framework, rather than reciting
additional elements that amount to "significantly more" than the abstract
idea, the pending claims, at best, "add" only "a computer system including at
least one computer processor," i.e., a generic data processing system (see,
e.g., Spec. 9-10), which does not satisfy the inventive concept (cf Reply Br.
4). Although the steps of independent claim 1 are "dependent on computer
systems" (Appeal Br. 12), that is not sufficient to transform the abstract idea
into patent-eligible subject matter. See, e.g., DDR Holdings, 773 F.3d at
1256 (internal quotation marks omitted) ("[A]fter Alice, there can remain no
doubt: recitation of generic computer limitations does not make an
otherwise ineligible claim patent-eligible. The bare fact that a computer
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exists in the physical rather than purely conceptual realm 'is beside the
point.'").
And, similar to the situation in Electric Power, we find nothing
sufficient to remove the claims from the class of subject matter ineligible for
patenting. As the court explained in Electric Power, "merely selecting
information, by content or source, for collection, analysis, and display does
nothing significant to differentiate a process from ordinary mental processes,
whose implicit exclusion from § 101 undergirds the information-based
category of abstract ideas." Elec. Power Grp., 830 F.3d at 1355.
Here, Appellants argue that the claims amount to significantly more
than the abstract idea because "the operations recited in Claim 1 combine to
create an ordered combination that is not well-understood, routine, or
conventional and that is not previously known to the industry" (Appeal Br.
16). However, Appellants' argument provides no evidence that the argued
limitations add inventiveness, as opposed to the application of conventional,
well-known analytical steps. See Ultramercial, 772 F.3d at 716 ("[T]he
claimed sequence of steps comprises only 'conventional steps, specified at a
high level of generality,' which is insufficient to supply an 'inventive
concept."') (Citing Alice, 134 S. Ct. at 2357) (internal citations omitted).
And, as the Examiner points out, the Specification discloses that "[t]he
invention may be practiced using any conventional computer systems
capable of conveying transactional information between the firm and its
counterparties. However, such systems must be appropriately configured to
include a wash account and perform the internal aggregate trade processing
steps proposed herein" (Ans. 4 (citing Spec. 9)). Furthermore, there is no
indication in the record that any specialized computer hardware or other
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"inventive" computer components are required. Thus, independent claim 1
merely employs generic computer components to perform generic computer
functions, i.e., "receiving requests," classifying, i.e., "identifying trades with
similar characteristics," analyzing, i.e., "aggregating," and presenting trade
information, i.e., "transmitting," which is not enough to transform an
abstract idea into a patent-eligible invention.
Also, considered as an ordered combination, we are unclear as to how
"computer system including at least one computer processor" adds anything
that is not already present when the steps of the method are considered
separately. Here, Appellants argue that "the operations recited in Claim 1
combine to create an ordered combination that is not well-understood,
routine, or conventional and that is not previously known to the industry"
(Appeal Br. 16; see also Reply Br. 4) transforms the claim into a patent-
eligible application of the abstract idea.
However, Appellants do not adequately show how the claimed steps
are technically done such that they are not routine, conventional functions of
a generic computer. See Intellectual Ventures, 792 F.3d at 1370 ("Rather,
the 'interactive interface' simply describes a generic web server with
attendant software, tasked with providing web pages to and communicating
with the user's computer."). In this regard, Appellants have not established
that the claimed invention relates to a software-based invention that
improves the performance of the computer system itself. And it is well-
settled that "merely recit[ing] the abstract idea ... with the requirement to
perform it on the Internet, or to perform it on a set of generic computer
components ... would not contain an inventive concept." See Bascom
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Global Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1350
(Fed. Cir. 2016).
Appellants last argue that the claims are not directed to an abstract
idea because "Claim 1 is clearly not attempting to patent the mere concept of
managing commodities and securities trades" (Appeal Br. 12). Appellants'
argument is not persuasive.
Although the Supreme Court has described "the concern that drives
this exclusionary principle [i.e., the exclusion of abstract ideas from patent
eligible subject matter] as one of pre-emption," Alice, 134 S. Ct. at 2354,
characterizing pre-emption as a driving concern for patent eligibility is not
the same as characterizing pre-emption as the sole test for patent eligibility.
"The Supreme Court has made clear that the principle of preemption is the
basis for the judicial exceptions to patentability" and "[f]or this reason,
questions on preemption are inherent in and resolved by the§ 101 analysis."
Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir.
2015) (citing Alice, 134 S. Ct. at 2354). Although "preemption may signal
patent ineligible subject matter, the absence of complete preemption does
not demonstrate patent eligibility." Id.
In view of the foregoing, we sustain the Examiner's rejection under
35 U.S.C. § 101 of independent claim 1, and claims 4, 6-9, and 11-26,
which fall with independent claim 1.
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DECISION
The Examiner's rejection of claims 1, 4, 6-9, and 11-26 under
35 U.S.C. § 101 is affirmed.
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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