Ex Parte Stubbs et alDownload PDFPatent Trials and Appeals BoardMay 23, 201914336123 - (D) (P.T.A.B. May. 23, 2019) Copy Citation UNITED STA TES p A TENT AND TRADEMARK OFFICE APPLICATION NO. FILING DATE FIRST NAMED INVENTOR 14/336,123 07/21/2014 Robert A. Stubbs 27997 7590 05/28/2019 Hultquist IP P.O. Box 14329 Research Triangle Park, NC 27709 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. 166.0013 9808 EXAMINER JACOB, WILLIAM J ART UNIT PAPER NUMBER 3696 NOTIFICATION DATE DELIVERY MODE 05/28/2019 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): hip@hultquistip.com PTOL-90A (Rev. 04/07) UNITED STATES PATENT AND TRADEMARK OFFICE BEFORE THE PATENT TRIAL AND APPEAL BOARD Ex parte ROBERT A. STUBBS and VISHV JEET Appeal 2018-003 7 65 Application 14/336, 123 Technology Center 3600 Before JOHN A. EV ANS, JAMES W. DEJMEK and MICHAEL M. BARRY, 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 1-34. Appeal Br. 1. We have jurisdiction under 35 U.S.C. § 6(b). We AFFIRM. 2 1 Appellants state the real party in interest is Axioma, Inc. Appeal Br. 1. 2 Rather than reiterate the arguments of Appellants and the Examiner, we refer to the Appeal Brief (filed August 28, 2017, "Appeal Br."), the Reply Brief (filed February 22, 2018, "Reply Br."), the Examiner's Answer (mailed December 26, 2017, "Ans."), the Advisory Action (mailed June 1, 2017, "Adv. Act."), the Final Action (mailed March 7, 2017, "Final Act."), Appeal 2018-003 7 65 Application 14/336,123 STATEMENT OF THE CASE The claims relate to methods for calculating factor-based performance attribution results for investment portfolios using factor and specific return models such that the correlation between the attributed factor and specific contributions is reduced. Spec. 1: 5-9. Invention Claims 1, 7, 13, 19, 23, and 29 are independent. An understanding of the invention can be derived from a reading of Claim 1, which is reproduced below: 1. A computer-implemented method for computing and reporting the performance attribution of a set of portfolio holdings over time comprising: [a]3 electronically receiving and storing by a programmed computer a set of dates defining an attribution time horizon to be analyzed; [b] for each date, electronically receiving and storing by the programmed computer a historical portfolio of holdings having investment weights in a set of investible assets; [ c] for each date, electronically receiving and storing by the programmed computer a set of factors and a set of factor exposures for each investible asset in the historical portfolio of holdings as of that date; [ d] for each date, electronically receiving and storing or calculating and storing by the programmed computer a factor return for each factor exposure as of that date; and the Specification ( filed July 21, 2014 and amended May 23, 2017, "Spec.") for their respective details. 3 Bracketed letters added for ease of reference. 2 Appeal 2018-003 7 65 Application 14/336,123 [ e] for each date, electronically receiving and storing or calculating and storing by the programmed computer specific returns for all investible assets in the portfolio as of that date; [ fJ for each date, computing factor contributions by combining the investment weights of the historical portfolio, the factor exposures and the factor returns as of that date; [g] for each date, computing specific contributions by combining the investment weights of the historical portfolio and the specific returns as of that date; [h] computing one or more mathematical models using time series regression that describes a relationship between a time series of specific contributions as a function of the time series of factor contributions; [i] selecting a preferred mathematical model from those computed; Li] computing an adjusted set of factor contributions and specific contributions utilizing the preferred mathematical model to produce a realized correlation between the factor contributions and the specific contributions closer to zero; [k] computing a performance attribution for the historical portfolios of holdings based on the adjusted set of factor and specific contributions; and [l] electronically outputting the performance attribution results using an output device. Rejections Claims 1-34 stand rejected under 35 U.S.C. § 101 as directed to patent-ineligible subject matter without significantly more. Final Act. 5---6. Claims 1, 4--7, 10-13, 16-19, 22, 23, 26-29, and 32-34 stand rejected under 35 U.S.C. § 103 as unpatentable over Bell et al. (US 2013/0080310 Al; Mar. 28, 2013) ("Bell"), Kapoustin (US 2015/0039652 Al; Feb. 5, 2015), and Madhavan et al. (US 7,752,099 B2; July 6, 2010) ("Madhavan"). 3 Appeal 2018-003 7 65 Application 14/336,123 Claims 2, 3, 8, 9, 14, 15, 20, 21, 24, 25, 30, and 31 stand rejected under 35 U.S.C. § 103 as unpatentable over Bell, Kapoustin, Madhavan, and Pruitt (US 7,668,773 Bl; Feb. 23, 2010). ANALYSIS We have reviewed the rejections of Claims 1-34 in light of Appellants' arguments that the Examiner erred. We have considered in this decision only those arguments Appellants actually raised in the Briefs. Any other arguments which Appellants could have made but chose not to make in the Briefs are deemed to be waived. See 37 C.F.R. § 4I.37(c)(l)(iv) (2016). We are not persuaded that Appellants identify reversible error. Upon consideration of the arguments presented in the Appeal Brief and Reply Brief, we agree with the Examiner that all the pending claims are unpatentable. We adopt as our own the determinations and reasons set forth in the rejection from which this appeal is taken and in the Examiner's Answer, to the extent consistent with our analysis below. We provide the following explanation to highlight and address specific arguments and determinations primarily for emphasis. We consider Appellants' arguments seriatim, as they are presented in the Appeal Brief, pages 22-30, and Reply Brief, pages 3--4. CLAIMS 1-34: INELIGIBLE SUBJECT MATTER Appellants argue all claims as a group in view of the limitations of Claim 1 and the commensurate limitations of Claims 7, 13, 19, 23, and 29. See Appeal Br. 22-25, 28-29; Reply Br. 3. Therefore, we decide the appeal of the § 101 rejections with reference to Claim 1, and refer to the rejected 4 Appeal 2018-003 7 65 Application 14/336,123 claims collectively herein as "the claims." See 37 C.F.R. § 4I.37(c)(l)(iv); In re King, 801 F.2d 1324, 1325 (Fed. Cir. 1986). Preemption. Appellants contend the claims do not seek to tie up any judicial exception so that others cannot practice it. Appeal Br. 22-24. Although preemption may denote patent ineligibility, its absence does not demonstrate patent eligibility. See FairWarning, IP, LLC v. Iatric Sys., Inc., 839 F.3d 1089, 1098 (Fed. Cir. 2016). For claims covering a patent-ineligible concept, preemption concerns "are fully addressed and made moot" by an analysis under the Mayo/Alice framework. Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015). We conduct such an analysis below. In response to Supreme Court and Federal Circuit opinions, the USPTO has issued updated guidance. We review this appeal within the framework of the Revised Guidance, 4 which specifies and particularizes the Mayo/Alice framework. 35 us.c. § 101 Section 101 provides that a patent may be obtained for "any new and 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 "[l]aws 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 4 USPTO, 2019 Revised Patent Subject Matter Eligibility Guidance, 84(4) Fed. Reg. 50--57 (January 7, 2019) ("Revised Guidance," "Rev. Guide."). 5 Appeal 2018-003 7 65 Application 14/336,123 aims to promote. Alice Corp. v. CLS Bankint'l, 573 U.S. 208,216 (2014) (quoting Ass 'nfor Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 589 (2013)); see also Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 72-78 (2012); Diamond v. Diehr, 450 U.S. 175, 185 (1981). Under the mandatory 2019 Revised Guidance, we consider whether Appellants' claims recite: 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 Manual of Patent Examining Procedure (MPEP) § 2106.05(a}-(c), (e}-(h)). 5 Only if a claim, (1) recites a judicial exception, and (2) does not integrate that exception into a practical application, do we then reach the issue of 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 simply appends well-understood, routine, conventional activities previously known to the industry, specified at a high level of generality, to the judicial exception. 5 All references to the MPEP are to Rev. 08.2017 (Jan. 2018). 6 Appeal 2018-003 7 65 Application 14/336,123 A. Judicial Exceptions. The Revised Guidance extracts and synthesizes key concepts identified by the courts as abstract ideas to explain that the abstract idea exception includes the following groupings of subject matter, when recited as such in a claim limitation(s) (that is, when recited on their own or per se): (a) mathematical concepts, 6 i.e., mathematical relationships, mathematical formulas, equations, 7 and mathematical calculations8; (b) certain methods of organizing human activity-fundamental economic principles or practices (including hedging, insurance, mitigating risk); commercial or legal interactions (including agreements in the form of contracts; legal obligations; advertising, marketing or sales activities or behaviors; business relations); managing personal behavior or relationships or interactions between people (including social activities, teaching, and following rules or 6 Bilski v. Kappas, 561 U.S. 593, 611 (2010) ("The concept of hedging ... reduced to a mathematical formula ... is an unpatentable abstract idea."). 7 Diehr, 450 U.S. at 191 ("A mathematical formula as such is not accorded the protection of our patent laws"); Parker v. Flook, 437 U.S. 584, 594 (1978) ("[T]he discovery of [a mathematical formula] cannot support a patent unless there is some other inventive concept in its application."). 8 SAP Am., Inc. v. InvestPic, LLC, 898 F.3d 1161, 1163 (Fed. Cir. 2018) (holding that claims to a "series of mathematical calculations based on selected information" are directed to abstract ideas). 7 Appeal 2018-003 7 65 Application 14/336,123 instructions)9; and (c) mental processes 10----concepts performed in the human mind (including observation, evaluation, judgment, opinion). 11 The limitations of Claim 1 are analyzed in Table I as they correspond to abstract ideas as set forth in the Revised Guidance: Table I A ... method for computing and reporting the performance attribution of a set of portfolio holdings over time comprising: [a] . . . receiving and storing . . . a set of dates defining an attribution time horizon to be analyzed; (a) Mathematical concepts- mathematical relationships, mathemati formulas or equations, mathematical calculations. Rev. Guide. 52, 52 n.12 "mere data gathering." Additional element adds insignificant extra- solution activity to the judicial exception. Rev. Guide. 55, 55 n.31. 9 Alice, 573 U.S. at 219--20 (concluding that use of a third party to mediate settlement risk is a "fundamental economic practice" and thus an abstract idea); see Rev. Guide. 52 n.13 (for a more extensive listing of "certain methods of organizing human activity" that have been found to be abstract ideas). 10 If a claim, under its broadest reasonable interpretation, covers performance in the mind but for the recitation of generic computer components, then it is still in the mental processes category unless the claim cannot practically be performed in the mind. See Rev. Guide. 52 n.14; see Intellectual Ventures I LLCv. Symantec Corp., 838 F.3d 1307, 1318 (Fed. Cir. 2016) ("[W]ith the exception of generic computer-implemented steps, there is nothing in the claims themselves that foreclose them from being performed by a human, mentally or with pen and paper."). 11 Mayo, 566 U.S. at 71 ("'[M]ental processes[] and abstract intellectual concepts are not patentable, as they are the basic tools of scientific and technological work"' (quoting Gottschalk v. Benson, 409 U.S. 63, 67 (1972))). 8 Appeal 2018-003 7 65 Application 14/336,123 [b] for each date, ... receiving and storing ... a historical portfolio of holdings having investment weights in a set of investible assets; [ c] for each date, ... receiving and storing ... a set of factors and a set of factor exposures for each investible asset in the historical portfolio of holdings as of that date; [d] for each date, ... receiving and storing or calculating and storing ... a factor return for each factor exposure as of that date; [ e] for each date, ... receiving and storing or calculating and storing ... specific returns for all investible assets in the portfolio as of that date; [ fJ for each date, computing factor contributions by combining the investment weights of the historical portfolio, the factor exposures and the factor returns as of that date; [g] for each date, computing specific contributions by combining the investment weights of the historical portfolio and the specific returns as of that date; [h] computing one or more mathematical models using time series regression that describes a relationship between a time series of specific contributions as a function of the time series of factor contributions; "mere data gathering." "mere data gathering." "receiving and storing"-"mere data gathering"; "calculating"----( a) Mathematical concepts "receiving and storing"-"mere data gathering"; "calculating"----( a) Mathematical concepts. (a) Mathematical concepts. (a) Mathematical concepts. (a) Mathematical concepts. 9 Appeal 2018-003 7 65 Application 14/336,123 [i] selecting a preferred mathematical model from those computed; rn computing an adjusted set of factor contributions and specific contributions utilizing the preferred mathematical model to produce a realized correlation between the factor contributions and the specific contributions closer to zero; [k] computing a performance attribution for the historical portfolios of holdings based on the adjusted set of factor and specific contributions; and [l] ... outputting the performance attribution results using an output device. See Rev. Guid. 52, 52 n.12 ( citing SAP Am., 898 F.3d at 1163 (holding that claims to a "series of mathematical calculations based on selected information" were directed to abstract ideas)). (a) Mathematical concepts. (a) Mathematical concepts. "post-solution activity." Additional element adds insignificant extra- solution activity to the judicial exception. Rev. Guid. 55 n.31. Under the broadest reasonable interpretation, the limitations of Claim 1 (as recited in Table I above) recite a method for computing factor-based performance attribution for a set of investment portfolio holdings by performing a series of mathematical calculations ( computing, selecting, and using of a mathematical model (time series regression) on factor and specific returns such that the correlation between attributed factor and specific contributions is brought closer to zero) and outputting the results of the calculations. The Federal Circuit recently held similar claims for providing statistical analysis of investment data as "nothing but a series of mathematical calculations based on selected information and the 10 Appeal 2018-003 7 65 Application 14/336,123 presentation of the results of those calculations" and, thus, directed to the abstract idea of "selecting certain information, analyzing it using mathematical techniques, and reporting or displaying the results of the analysis." SAP Am., 898 F.3d at 1163, 1167. Furthermore, the Supreme Court has held claims directed to "analyzing information ... by mathematical algorithms, without more" to be within the realm of abstract ideas. Elec. Power Group, LLC v. Alstom S.A., 830 F.3d 1350, 1354 (Fed. Cir. 2016) (citing cases, including Flook, 437 U.S. at 589--90, and Benson, 409 U.S. at 67). We also agree with the Examiner that "the claims are analogous to organizing and transforming information through mathematical correlations (held abstract in Digitech) ... and a mathematical procedure for converting one form of numerical representation to another (held abstract in Benson)." Final Act. 4 (emphasis added) (citing Digitech Image Techs., LLC v. Elec.for Imaging, Inc., 758 F.3d 1344, 1350 (Fed. Cir. 2014); Benson, 409 U.S. at 65). Appellants argue that as with the claims "in DDR Holdings, McRo [sic], and Amdocs, the present claims considered as a whole ... do not simply use a computer to automate what was done previously, but rather advantageously improve upon what was previously done with a computer, solving a computer specific problem." Appeal Br. 25 (citing DDR Holdings, LLC v. Hotels.com L.P., 773 F.3d 1245 (Fed. Cir. 2014); McRO, Inc. v. Bandai Namco Games Am., 837 F.3d 1299 (Fed. Cir. 2016); Amdocs (Isr.) Ltd. v. Openet Telecom, Inc., 841 F.3d 1288, 1294 (Fed. Cir. 2016)); see also Appeal Br. 28. Appellants further argue the patent-eligible claims in Trading Tech----directed to "a method and system for electronic trading of 11 Appeal 2018-003 7 65 Application 14/336,123 stocks, bonds, futures, option and similar products"-are "akin to" their claims. Appeal Br. 28-29 (citing Trading Tech. Int'!, Inc. v. CQC, Inc., 675 F. App'x 1001 (Fed. Cir. 2017) (non-precedential)). According to Appellants, "the present invention is necessarily rooted in computer technology and provides a particular solution to addressing problems as opposed to merely claiming the idea of a solution or outcome." Appeal Br. 18. We disagree. The patent-eligible claim at issue in DDR Holdings recited limitations for providing a composite web page based on a link activation occurring at a remote computer, thereby addressing "a challenge particular to the Internet." DDR Holdings, 773 F.3d at 1257-58 ("We caution, however, that not all claims purporting to address Internet-centric challenges are eligible for patent."). In McRO, a "specific asserted improvement in computer animation, i.e., the automatic use of rules of a particular type," was held not abstract. McRO, 837 F.3d at 1314. The claims in Amdocs "entail[ ed] an unconventional technological solution ( enhancing data in a distributed fashion) to a technological problem ( massive record flows which previously required massive databases)." Amdocs, 841 F.3d at 1300. More specifically, the claims were "tied to a specific structure of various components (network devices, gatherers, IS Ms, a central event manager, a central database, a user interface server, and terminals or clients)" such that the components were "purposefully arrange[ d] ... in a distributed architecture to achieve a technological solution to a technological problem specific to computer networks." Id. at 1301. The claims in Trading Tech. recited an improvement in existing 12 Appeal 2018-003 7 65 Application 14/336,123 graphical user interface devices including a "specific structure and concordant functionality of [a] graphical user interface ... removed from abstract ideas." Trading Tech., 675 F. App'x. at 1004. By contrast, Appellants describe their problem to be solved (misleading results for an investment portfolio analysis due to inaccurate data correlations) as one rooted in the particular calculations and data methods employed, not in the hardware or software used to implement their invention. See Abstract, Spec. 1:7-14, 12: 11-13-2; Appeal Br. 12. Moreover, Appellants' Claim 1 recites only broad and generic technological elements (i.e., "computer-implemented," "electronically," "by a programmed computer," and "output device"). 12 Thus, contrary to Appellants' arguments, Claim 1 is not analogous to the patent-eligible claims in DDR Holdings, McRO, Amdocs, or Trading Tech. In the Reply Brief, Appellants dispute the Examiner's statement in the Answer that "[p ]roof that a process is a long standing commercial practice is not required" in determining the claims recite an abstract idea, i.e., a fundamental economic practice. Reply Br. 3. To the contrary, Appellants assert that such proof or evidence is required, in accordance with case law and PTO guidelines, and that the Examiner has not provided it. J d. We disagree with Appellants. Such a requirement for providing facts or evidence only relates to step two of the Mayo/Alice framework: 12 "[P]erformance of a claim limitation using generic computer components does not necessarily preclude the claim limitation from being in the mathematical concepts grouping." Rev. Guide. 52 n.14 (citing Benson, 409 U.S. at 67). 13 Appeal 2018-003 7 65 Application 14/336,123 Our decisions in Berkheimer and Aatrix are narrow: to the extent it is at issue in the case, whether a claim element or combination is well-understood, routine, and conventional is a question of fact. This inquiry falls under step two in the § 101 framework, in which 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." Berkheimer v. HP Inc., 890 F.3d 1369, 1374 (Fed. Cir. 2018) (emphasis added) ( citations omitted). Thus, the Examiner did not need to provide evidence that the asserted abstract idea was "a long standing commercial practice" under step one of the Mayo/Alice framework. 13 To the extent Appellants are arguing the Examiner has applied USPTO examination guidance documents improperly, such alleged procedural errors by the Examiner may not be addressed through appeal, but instead by petitioning the Director of the United States Patent and Trademark Office for supervisory review. See 3 7 C.F .R. § 1.181. The Director has not delegated this supervisory authority to the Board. Therefore, we conclude Claim 1 recites performing a series of mathematical calculations based on selected information, i.e., a mathematical concept, which the Revised Guidance identifies as a type of abstract idea. 13 Nevertheless, the Examiner provides evidence that the claims recite a mathematical concept, which the Revised Guidance identifies as another type of abstract idea. See Final Act. 4 ( citing similar claims held to be abstract in Digitech and Benson as evidence that Appellants' claims recite a mathematical concept). 14 Appeal 2018-003 7 65 Application 14/336,123 B. Integration of the judicial exception into a practical application. Where, as here, we determine the claim recites a judicial exception, we look to determine the presence of additional elements that integrate the judicial exception into a practical application. The Revised Guidance is "designed to more accurately and consistently identify claims that recite a practical application of a judicial exception [] and thus are not 'directed to' a judicial exception." Rev. Guide. 53. The Revised Guidance identifies several exemplary considerations for when a claim may recite an additional element ( or combination of elements) such that the judicial exception has been integrated into a practical application, which we address below. See id. at 55. For the reasons that follow, we conclude that Appellants' claims do not integrate the judicial exception into a practical application. See MPEP §§ 2106.05(a)-(c) and (e)-(h). We have considered the additional elements both individually and "'as an ordered combination,"' and determine that "the computer components ... 'ad[d] nothing ... that is not already present when the steps are considered separately"' and simply recite implementing a mathematical concept on a generic computer. Alice, 573 U.S. at 225 (quoting Mayo, 566 U.S. at 79). We address the relevant "practical application" MPEP sections below: MPEP § 2106.05(a) "Improvements to the Functioning of a Computer or To Any Other Technology or Technical Field." & MPEP § 2106.05(±) "Mere Instructions To Apply An Exception." "In determining patent eligibility, examiners should consider whether the claim 'purport(s) to improve the functioning of the computer itself" or 15 Appeal 2018-003 7 65 Application 14/336,123 "'any other technology or technical field."' MPEP § 2106.05(a). Although Claim 1 recites various computing elements, Appellants present no persuasive evidence that practicing the claim results in an improvement to the functioning of the computer. The claim is silent regarding specific components----or a particular arrangement----directed to an improved machine, apparatus, computer, processor, memory, server, output device, network element, etc. Appellants purport that their claims as a whole "improve upon what was previously done with a computer" (Appeal Br. 25), but the claims recite functions that are merely part of an abstract idea, viz., a mathematical concept, which is being applied on a computer. See Rev. Guide. 55 n.30, citing Benson, 409 U.S. at 63 (holding that merely implementing a mathematical principle on a general-purpose computer is a patent-ineligible abstract idea). In other words, Claim 1 is not focused on an improvement to computers or software as tools, but rather uses a computer as a tool to execute the judicial exception. See Rev. Guide. 55, 55 n.30; Credit Acceptance Corp. v. Westlake Servs., 859 F.3d 1044, 1055 (Fed. Cir. 2017). In order to transform a judicial exception into a patent-eligible application, the additional element or combination of elements must do "'more than simply stat[ e] the Uudicial exception] while adding the words 'apply it."' Alice, 573 U.S. at 221 (quoting Mayo, 566 U.S. at 72). MPEP § 2106.05(b) Particular Machine. At the outset, we note that the Bilski machine-or-transformation test is only applicable to the method (process) claims on appeal. This section of the MPEP guides: "When determining whether a claim recites significantly 16 Appeal 2018-003 7 65 Application 14/336,123 more than a judicial exception, examiners should consider whether the judicial exception is applied with, or by use of, a particular machine." MPEP § 2106.05(b); see also Bilski, 561 U.S. at 604 ("[T]he machine-or- transformation test is a useful an important clue, and investigative tool" for determining whether a claim is patent eligible under § 101 ). MPEP § 2106.05(b) provides further guidance regarding what constitutes a particular machine: [A]s described in MPEP §2106.05(±), additional elements that invoke computers or other machinery merely as a tool to perform an existing process will generally not amount to significantly more than a judicial exception. See, e.g., Versata Development Group v. SAP Am., 793 F.3d 1306, 1335 (Fed. Cir. 2015) ( explaining that in order for a machine to add significantly more, it must "play a significant part in permitting the claimed method to be performed, rather than function solely as an obvious mechanism for permitting a solution to be achieved more quickly"). Claim 1 recites computing elements including a "computer-implemented" method that performs various functions "electronically ... by a programmed computer" and outputs results using an "output device." 14 But the claim is silent regarding specific limitations directed to a particular machine, nor do Appellants direct our attention to such specific elements in the claim or Specification. "[T]he mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention." Alice, 573 U.S. at 223; see also BASCOM 14 Independent Claims 13 and 23 recite the same computing elements as independent Claim 1. Similarly, independent Claims 7, 19, and 29 recite "computer-implemented" systems including "a memory," "a processor," and an "output device." 17 Appeal 2018-003 7 65 Application 14/336,123 Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1348 (Fed. Cir. 2016) ("An abstract idea on 'an Internet computer network' or on a generic computer is still an abstract idea"). Applying this reasoning here, we conclude Claim 1 is not directed to a particular machine, but rather merely implement an abstract idea using generic computer components. Thus, we conclude the claim fail to satisfy the "tied to a particular machine" prong of the Bilski machine-or-transformation test. MPEP § 2106.05(c) Particular Transformation. This section of the MPEP guides: "Another consideration when determining whether a claim recites significantly more is whether the claim effects a transformation or reduction of a particular article to a different state or thing." "[T]ransformation and reduction of an article to a different state or thing is the clue to patentability of a process claim that does not include particular machines." Bilski, 561 U.S. at 658 (quoting Benson, 409 U.S. at 70). Claim 1 recites performing a series of mathematical calculations using selected information. These data operations are not a transformation or reduction of an article into a different state or thing constituting patent- eligible subject matter. "The mere manipulation or reorganization of data ... does not satisfy the transformation prong." CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1375 (Fed. Cir. 2011). Applying this guidance here, we conclude Claim 1 fails to satisfy the transformation prong of the Bilski machine-or-transformation test. MPEP § 2106.05(e) Other Meaningful Limitations & MPEP § 2106.05(h) Field ofUse and Technological Environment. The MPEP guides: 18 Appeal 2018-003 7 65 Application 14/336,123 For a claim that is directed to a judicial exception to be patent-eligible, it must include additional features to ensure that the claim describes a process or product that applies the exception in a meaningful way, such that it is more than a drafting effort designed to monopolize the exception. The claim should add meaningful limitations beyond generally linking the use of the judicial exception to a particular technological environment to transform the judicial exception into patent- eligible subject matter. MPEP § 2106.05(e). Further, the Supreme Court has stated that, even if a claim does not wholly pre-empt an abstract idea, it still will not be limited meaningfully if it contains only insignificant or token pre- or post-solution activity-such as identifying a relevant audience, a category of use, field of use, or technological environment. Ultramercial, Inc. v. Hulu, LLC, 722 F.3d 1335, 1346 (Fed. Cir. 2013); see MPEP if 2106.05(h). We agree with the Examiner's conclusion that the claims do not add meaningful limitations beyond generally linking the use of the judicial exception to a particular technological environment. Final Act. 4. As the Examiner explains, the additional limitations of Claim 1 are nothing more than generic computer components, which do not amount to significantly more than an abstract idea. Id. at 4--5. In particular, Claim 1 's additional recitation of a "computer-implemented" method that performs various functions "electronically ... by a programmed computer" and outputs results using an "output device" fails to integrate the abstract idea into a practical application because it does no more than generally link the use of a judicial exception to a particular technological environment or field of use, that is, a computerized method. See Rev. Guide. 55. This reasoning applies 19 Appeal 2018-003 7 65 Application 14/336,123 similarly to the computer-implemented methods of independent Claims 13 and 23, and the computer systems of independent Claims 7, 19, and 29. MPEP § 2106.05(g) Insignificant Extra-Solution Activity. Claim 1 's "receiving" and "storing" of various inputs are merely data gathering steps that amount to insignificant extra-solution activity that is insufficient to confer patent eligibility. Rev. Guide. 55, 55 n.31. Claim 1 's "outputting" step also recites insignificant extra-solution activity in the form of post-solution activity. Id. "' [M]erely presenting the results of abstract processes of collecting and analyzing information, without more (such as identifying a particular tool for presentation), is abstract as an ancillary part of such collection and analysis."' SAP Am., 898 F.3d at 1167 (quoting Elec. Power, 830 F.3d at 1354). In view of the foregoing, we conclude the claims do not recite additional elements that integrate the judicial exception into a practical application and, thus, are "directed to" a judicial exception, namely an abstract idea. C. Well-understood, routine, conventional; specified at a high level of generality. Because the claims recite a judicial exception and do not integrate that exception into a practical application, we must then reach the issue of whether the claims add a specific limitation beyond the judicial exception that is not "well-understood, routine, conventional" in the field. Rev. Guide. at 56. It is indicative of the absence of an inventive concept where the claims simply append well-understood, routine, conventional activities previously known to the industry, specified at a high level of generality, to 20 Appeal 2018-003 7 65 Application 14/336,123 the judicial exception. Id. Here, the Examiner determines "the claims do not move beyond a general link of the use of an abstract idea to a particular, albeit well-understood, routine and conventional technological environment." Final Act. 4. The Examiner explains that "[ u ]nder Alice, merely applying or executing the abstract idea on one or more generic computer system ( e.g., a computer system comprising a generic database; a generic element (NIC) for providing website access, etc.; a generic element for receiving user input; and a generic display on the computer, in any of their forms) to carry out the abstract idea more efficiently fails to cure patent ineligibility." Id. at 4--5 (citing Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat. Ass 'n, 776 F.3d 1343, 1347 (Fed. Cir. 2014); Mortg. Grader, Inc. v. First Choice Loan Serv. Inc., 811 F.3d 1314, 1324-25 (Fed. Cir. 2016)); see also Ans. 16 ("[T]he extraneous limitations recited by the claims ( e.g., computer- implemented [ ... ] a programmed computer [ ... ] electronically receiving, etc.) fail to offer significantly more, because said structure recites generic computing technology, which is insufficient under Alice Corporation."). This determination is amply supported by, and fully consistent with the Specification, which describes the computing elements of Appellants' invention at a high level of generality, requiring no more than a general-purpose computer with generic computing elements. Spec. 16: 11- 18:23, Fig. 5 (showing a block diagram of a generic computer-based system with generic components). Appellants argue the claims recite a lengthy series of steps, which "when taken as an ordered combination[,] provide unconventional steps 21 Appeal 2018-003 7 65 Application 14/336,123 confining the abstract idea to a particular useful application." Appeal Br. 25. We disagree. These steps "simply provide further narrowing of what are still mathematical operations. They add nothing outside the abstract realm." SAP Am., 898 F.3d atl 169 (citing Mayo, 566 U.S. at 88-89); see also Flook, 437 U.S. at 594--95 (holding a narrow mathematical formula unpatentable ). Additionally, to the extent Appellants assert the lack of an adequate rejection under 35 U.S.C. §§ 102 or 103 suggests the instant claims do not recite well-understood, routine, or conventional activities (see Appeal Br. 24), we are not persuaded. Subject-matter eligibility under 35 U.S.C. § 101 is a requirement separate from other patentability inquiries. See Mayo, 566 U.S. at 90 (recognizing that the§ 101 inquiry and other patentability inquiries "might sometimes overlap," but that "shift[ing] the patent-eligibility inquiry entirely to these [other] sections risks creating significantly greater legal uncertainty, while assuming that those sections can do work that they are not equipped to do"); Diehr, 450 U.S. at 190 ("The question ... of whether a particular invention is novel is 'wholly apart from whether the invention falls into a category of statutory subject matter."' ( citations omitted)). Therefore, we conclude that the claims, viewing their limitations "both individually and as an ordered combination," do not recite significantly more than the judicial exception to transform the claim into patent-eligible subject matter. See Alice, 573 U.S. at 217 (internal quotations omitted) (quoting Mayo, 566 U.S. at 79). In view of the foregoing, we sustain the rejection of Claims 1-34 under 35 U.S.C. § 101. 22 Appeal 2018-003 7 65 Application 14/336,123 CLAIMS 1-34: REJECTIONS UNDER 35 U.S.C. § 103 Claims 1, 4-7, 10-13, 16-19, 22, 23, 26-29, and 32-34 In rejecting Claim 1, the Examiner finds, inter alia, that Bell discloses a computer-implemented method for computing and reporting a performance attribution for a set of portfolio holdings over time. Final Act. 6 ( citing Bell, Abstract, ,r,r 5, 68); see also Ans. 7, 17. More specifically, the Examiner finds Bell teaches limitations [a]-[ d] and [ fJ of Claim 1. Final Act. 6 ( citing Bell, Abstract, ,r,r 13, 16, 60-66, 68, 71, 102, 103). The Examiner relies on Kapoustin for teaching limitations [ e] and [h] of Claim 1, which recite "for each date, computing factor contributions by combining the investment weights of the historical portfolio, the factor exposures and the factor returns as of that date," and "selecting a preferred mathematical model from those computed." Ans. 7-8, 12 (citing Kapoustin ,r,r 81, 85, 104--108, 191, Claim 15); see also Final Act. 7. The Examiner explains that "in a method of reporting invest [sic] portfolio performance, Kapoustin teaches taking the weights of historical member factor exposure ... , which when combined with the factor returns taught by Bell, teaches [the "computing factor contributions"] limitation." Ans. 7-8; Final Act. 7. The Examiner explains that "Kapoustin further teaches selecting a model for measuring performance" with its disclosure of "estimating factor performances and member factor exposures via linear regression" (Kapoustin ,r 106, emphasis added). Ans. 8 (citing Kapoustin ,r,r 104--108). In view of Kapoustin's disclosure of "a desire to improve methods of measuring the performance of groups of entities" (Kapoustin ,r 4), as addressed by Kapoustin's disclosed method (id. ,r 7), the Examiner concludes "[i]t would have been obvious to 23 Appeal 2018-003 7 65 Application 14/336,123 an ordinary artisan to modify the teachings of Bell, to further include the combining of entity weights, factor exposures along with factor returns [ as taught by Kapoustin], in order to improve measuring the performance of portfolio investments." Ans. 8; Final Act. 7. Appellants argue the Examiner's rationale for modifying Bell to include the alleged teachings of Kapoustin is inadequate because it is "purely conclusory," "not otherwise supported by the relied upon items," and "unrelated to the disclosed purposes of the present invention." Appeal Br. 26; see Reply Br. 4. We disagree. "As long as some motivation or suggestion to combine the references is provided by the prior art taken as a whole, the law does not require that the references be combined for the reasons contemplated by the inventor." In re Beattie, 974 F.2d 1309, 1312 (Fed. Cir. 1992). As the Supreme Court explained in KSR Int 'l Co. v. Teleflex, Inc., 550 U.S. 398, 419 (2007), "[i]n determining whether the subject matter of a patent claim is obvious, neither the particular motivation nor the avowed purpose of the patentee controls." Rather, "any need or problem known in the field of endeavor at the time of invention and addressed by the patent can provide a reason for combining the elements in the manner claimed." Id. at 420. The Examiner's articulated rationale for combining the teachings of Bell and Kapoustin is adequate, as it is drawn directly from the Kapoustin reference and describes a reason to implement Kapoustin's method. Final Act. 7 ( citing Kapoustin ,r 4); Ans. 7-8. Contrary to Appellants' arguments, the Examiner's rationale to combine is neither conclusory nor unsupported, and its relationship to Appellants' avowed purpose is of no moment. Thus, 24 Appeal 2018-003 7 65 Application 14/336,123 the Examiner has sufficiently "articulated reasoning with some rational underpinning to support the legal conclusion of obviousness" (see In re Kahn, 441 F.3d 977, 988 (Fed. Cir. 2006) (cited with approval in KSR, 550 U.S. at 418)). Further, Appellants do not point to any evidence of record that the combinations would be "uniquely challenging or difficult for one of ordinary skill in the art" or "represented an unobvious step over the prior art." Leapfrog Enters. Inc. v. Fisher-Price, Inc., 485 F.3d 1157, 1162 (Fed. Cir. 2007) (citing KSR, 550 U.S. at 418-19). Nor do Appellants provide objective evidence of secondary considerations, which our reviewing court guides "operates as a beneficial check on hindsight." Cheese Sys., Inc. v. Tetra Pak Cheese and Powder Sys., 725 F.3d 1341, 1352 (Fed. Cir. 2013). The Examiner relies on Madhavan for teaching limitation Li] of Claim 1, which recites "computing an adjusted set of factor contributions and specific contributions utilizing the preferred mathematical model to produce a realized correlation between the factor contributions and the specific contributions closer to zero." Final Act. 7-8. In particular, the Examiner finds Madhavan teaches this limitation with its disclosures of adjusting computed factor loadings (which represent sensitives of stock returns to the variations in factor returns) to reduce estimation error by performing, e.g., a Bayesian method that filters out noise numerically during the in-sample estimation process. See id. (citing Madhavan 5:14--41, 6:10-15, Claim 9). Appellants argue the Final Office Action "incorrectly concludes that Madhavan 'teaches using Bayesian adjusting of factor loading to filter out noise, which is equivalent to bringing the factor and specific contributions closer to zero"' because it "erroneously reads language out of the claim 25 Appeal 2018-003 7 65 Application 14/336,123 which actually reads 'correlation between the factor contributions and the specific contributions close 15 to zero' and not contributions." Appeal Br. 26 ( emphasis omitted); see Reply Br. 4. Appellants also assert the Examiner's finding "makes no sense" because "[ t ]he Bayesian adjustment of factor loadings can be done perfectly ( and is often done in commercial factor risk models) and the present problem would still exist." Appeal Br. 26-27. Appellants' arguments are unpersuasive because they do not persuasively rebut the Examiner's findings that the cited disclosures of Madhavan teach the disputed limitation. In particular, Appellants do not present any persuasive evidence to support the assertion that implementing Madhavan's techniques for adjusting factor loadings would not result in a correlation between the factor and stock returns that is "closer to zero." Appellants' argument that Madhavan's Bayesian adjustment would not solve the problem addressed by Claim 1 is at best conclusory because Appellants fail to proffer facts to show why such a Bayesian adjustment would not produce "a realized correlation between the factor contributions and the specific contributions closer to zero." Arguments of counsel cannot take the place of factually supported objective evidence. In re Huang, 100 F.3d 135, 139-140 (Fed. Cir. 1996). Attorney argument is not evidence, In re Pearson, 494 F.2d 1399, 1405 (CCPA 1974), nor can it take the place of evidence lacking in the record. Meitzner v. Mindick, 549 F.2d 775, 782 (CCPA 1977). Lawyer's arguments and conclusory statements that are 15 Here, Appellants misquote Claim 1, which recites "closer to zero," not "close to zero." We treat this as a typographical error and assume Appellants intended to quote the claim language accurately. 26 Appeal 2018-003 7 65 Application 14/336,123 unsupported by factual evidence, as is the case here, are entitled to little probative value. In re Geisler, 116 F.3d 1465, 1470 (Fed. Cir. 1997). Appellants further argue the relied upon paragraphs of Madhavan "do not support the recited rational [sic] for modifying Bell." Appeal Br. 27. Appellants' argument is unpersuasive. The Examiner articulates a rationale for combining the teachings of Bell and Kapoustin-"in order to more accurately and meaningfully analyze risk in a portfolio"-that is drawn directly from the Madhavan reference and describes a reason to implement Madhavan's method. Final Act. 9 (citing Madhavan 1:20-21). We find this reason adequate to support the Examiner's proposed combination, and Appellants do not present any persuasive evidence to the contrary. See Beattie, 974 F.2d at 1312, KSR, 550 U.S. at 419--20. Thus, the Examiner has sufficiently "articulated reasoning with some rational underpinning to support the legal conclusion of obviousness" (see Kahn, 441 F .3d at 988 (cited with approval in KSR, 550 U.S. at 418)). In the Reply Brief, Appellants' quote paragraph 7 of Kapoustin as evidence that the Examiner read words out of the claim when rejecting limitation [h] of Claim 1. Reply Br. 3. It appears Appellants' argument is in response to the Examiner's citation of Kapoustin, paragraph 7, in the Answer to explain the proposed rationale to combine Bell's and Kapoustin's teachings. Ans. 8 ( citing Kapoustin ,r 7). Appellants' argument is unpersuasive because it is not responsive to the Examiner's rejection, which relies on the combined teachings of Bell, Kapoustin, and Madhavan, not Kapoustin alone. Final Act. 6-9; see Ans. 7- 9. Each reference cited by the Examiner must be read, not in isolation, but 27 Appeal 2018-003 7 65 Application 14/336,123 for what it fairly teaches in combination with the prior art as a whole. See In re Merck & Co., Inc., 800 F.2d 1091, 1097 (Fed. Cir. 1986); see also In re Keller, 642 F.2d 413,425 (CCPA 1981) (explaining that when the rejection is based on a combination of references, one cannot show nonobviousness by attacking references individually). The relevant inquiry is whether the claimed subject matter would have been obvious to those of ordinary skill in the art in light of the combined teachings of those references. Keller, 642 F.2d at 425. Here, contrary to Appellants' argument, the Examiner does not map the disputed limitation to paragraph 7 of Kapoustin, but rather cites portions of Bell, Kapoustin ( other than paragraph 7), and Madhavan in rejecting it. See Final Act. 7-9 ( citing Bell ,r,r 65----67; Kapoustin ,II 08; Madhavan 5:14--41); Ans. 7-8 (additionally citing Kapoustin ,r,r 104--107). In view of the foregoing, Appellants' arguments that "the final rejection does not consider and appreciate claims as a whole," and employed impermissible "hindsight" in combining the cited prior art references, are unpersuasive. See Appeal Br. 29. For the reasons discussed above, we are unpersuaded of Examiner error. Accordingly, we sustain the Examiner's§ 103 rejection of Claim 1. For similar reasons, we also sustain the Examiner's§ 103 rejection of independent Claims 7, 13, 19, 23, and 29, which recite similar limitations and were not argued separately with particularity. See Appeal Br. 25; see also 37 C.F.R. § 4I.37(c)(l)(iv). Further, we sustain the Examiner's rejections of Claims 4--7, 10-13, 16-19, 22, 23, 26-29, and 32-34, which depend therefrom and were not argued separately with particularity. See Appeal Br. 25, 27; see also 37 C.F.R. § 4I.37(c)(l)(iv). 28 Appeal 2018-003 7 65 Application 14/336,123 Claims 2, 3, 8, 9, 14, 15, 20, 21, 24, 25, 30, and 31 Appellants argue the Examiner errs because Pruitt does not teach or suggest "wherein the time series regression model is a linear function of a set of factor contributions," as recited in Claim 2. Appeal Br. 27-28. In particular, Appellants assert "the relied upon text of Pruitt does not refer to 'linear regression' and does not include the word 'regression,"' but instead "refer[ s] to optimization of linear variables and uses the term 'number of iterations."' Id. at 27. Appellants' argument is unpersuasive. Here, the Examiner finds, and we agree, that the combination of Bell, Kapoustin, Madhavan, and Pruitt (i.e., not Pruitt alone) teaches the disputed limitation. See Ans. 10 (citing, e.g., Kapoustin ,r 106, Pruitt 36:35---65); see also Final Act. 7-10; Ans. 17-18 (additionally citing Pruitt 37:36-53, Fig. 2 (item 62)). Setting aside whether or not the cited disclosures of Pruitt teach or suggest the disputed limitation, the Examiner also finds, and we agree, that Kapoustin's disclosure of using a linear regression model to estimate factor performances and member factor exposures teaches claim 2. Ans. 10, citing Kapoustin ,r 106 ("When estimating factor performances and member factor exposures via linear regression, multiple approaches can be used to limit the impact of outliers and overweight more recent observations."). Appellants do not persuasively rebut this finding in the Reply Brief. See Reply Br. 3--4. Thus, Appellants do not persuade us the Examiner errs in finding the combination of Bell, Kapoustin, Madhavan, and Pruitt teaches or suggests "wherein the time series regression model is a linear function of a set of factor contributions." See Merck, 800 F .2d at 1097; see also Keller, 642 F.2d at 425. 29 Appeal 2018-003 7 65 Application 14/336,123 Appellants further argue the proposed motivation to combine Bell and Pruitt is "simply lacking from the prior art" and is "inadequate with respect to all the claims, when it comes to the solutions presented to the problems addressed by the present invention, which is providing a realized correlation between the factor contributions and the specific contributions closer to zero." Appeal Br. 28. Appellants' argument is unpersuasive. In rejecting Claim 2, the Examiner reasons that "[a]s Pruitt teaches it is desirous to develop a method for evaluating the integrity of a model portfolio ... [,] [i]t would have been obvious to an ordinary artisan to modify Bell, to include consideration of a linear regression model in order to evaluate a portfolio." Final Act. 10 (citing Pruitt 13:62); Ans. 7-8. As an initial matter, the fact that the Examiner's motivation differs from the avowed purpose of Appellants' invention is of no moment. See Beattie, 974 F.2d at 1312, KSR, 550 U.S. at 419-20. Further, Appellants' argument does not explain with specificity how or why the alleged motivation and accompanying citation in Pruitt are conclusory or otherwise lack support. Appellants also do not point to any evidence of record that the combinations would be "uniquely challenging or difficult for one of ordinary skill in the art" or "represented an unobvious step over the prior art." Leapfrog, 485 F.3d at 1162 (citation omitted). Nor do Appellants provide objective evidence of secondary considerations. See Cheese Sys., 725 F.3d at 1352. Additionally, because Claim 2 merely implements the obvious limitations of Claim 1 using a known type of model, a linear regression (see, e.g., Kapoustin ,r 106; Ans. 18 n.1 ), we see no reason in the record before us why a skilled artisan would not "be able to fit the teachings of multiple patents 30 Appeal 2018-003 7 65 Application 14/336,123 together like pieces of a puzzle," as the skilled artisan is "a person of ordinary creativity, not an automaton." KSR, 550 U.S. at 420-21. In other words, the claimed subject matter exemplifies the principle that "[t ]he combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results." KSR, 550 U.S. at 416. For the reasons discussed above, we are unpersuaded of Examiner error. Accordingly, we sustain the Examiner's§ 103 rejection of Claim 2. For similar reasons, we also sustain the Examiner's§ 103 rejection of Claims 3, 8, 9, 14, 15, 20, 21, 24, 25, 30, and 31, which were argued together with Claim 2. See Appeal Br. 27-28; see also 37 C.F.R. § 4I.37(c)(l)(iv). DECISION We affirm the rejection of Claims 1-34 under 35 U.S.C. § 101. We affirm the rejections of Claims 1-34 under 35 U.S.C. § 103. 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 31 Copy with citationCopy as parenthetical citation