Ex Parte Studnitzer et al

Patent Trials and Appeals Board

Apr 17, 2019

14074667 - (D) (P.T.A.B. Apr. 17, 2019)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
14/074,667 11/07/2013
12684 7590 04/19/2019
Lempia Summerfield Katz LLC/CME
20 South Clark Street
Suite 600
Chicago, IL 60603
FIRST NAMED INVENTOR
Ari Studnitzer
UNITED STATES DEPARTMENT OF COMMERCE
United States Patent and Trademark Office
Address: COMMISSIONER FOR PATENTS
P.O. Box 1450
Alexandria, Virginia 22313-1450
www .uspto.gov
ATTORNEY DOCKET NO. CONFIRMATION NO.
4672-13012AUS 1080
EXAMINER
GAW,MARKH
ART UNIT PAPER NUMBER
3692
NOTIFICATION DATE DELIVERY MODE
04/19/2019 ELECTRONIC
Please find below and/or attached an Office communication concerning this application or proceeding.
The time period for reply, if any, is set in the attached communication.
Notice of the Office communication was sent electronically on above-indicated "Notification Date" to the
following e-mail address(es):
mail@lsk-iplaw.com
docket-us@lsk-iplaw.com
pair_lsk@firsttofile.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte ARI STUDNITZER, ZACHARY BONIG, RYAN EA VY, and
FRANK KMIEC
Appeal2017-007390
Application 14/074,667
Technology Center 3600
Before MAHSHID D. SAADAT, ERIC S. FRAHM, and
STEVEN M. AMUNDSON, Administrative Patent Judges.
FRAHM, Administrative Patent Judge.
DECISION ON APPEAL
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Application 14/074,667
STATEMENT OF THE CASE
Introduction
Appellant1 appeals under 35 U.S.C. § 134(a) from a final rejection of
claims 1-20. We have jurisdiction under 35 U.S.C. § 6(b ).
We affirm-in-part.
Appellant's Disclosed Invention
Appellant's disclosed invention relates to a financial instrument or
"electronic" trading system, such as a futures exchange, that provides (i) a
contract market where financial instruments like futures and options are
traded; and (ii) centralized "clearing" where all trades are confirmed,
matched, and settled (Title; Spec. ,r,r 1-5). More specifically, the disclosed
and claimed invention pertains to a system ( claims 1, 2, and 20) and
computer-implemented method ( claim 11) for reproducing a particular state
of an electronic marketplace for one or more financial products (i.e., running
simulations) by sequentially processing previously received transactions
from a financial transaction processing system to obtain the reproduced prior
state of the electronic marketplace (Spec. ,r,r 106, 150-166; Abs.; Figs. 1, 4,
5; independent claims 1, 2, 11, 20).
Exemplary Claim
Claims 1 (system), 2 (system), 11 (computer-implemented method),
and 20 (system in means-plus-function format) are independent, with claims
3-10 depending from system claim 2, and claims 12-19 depending from
1 Appellant is the Applicant, Chicago Mercantile Exchange, Inc., which,
according to the Appeal Brief, is the applicant and real part in interest (App.
Br. 2).
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computer-implemented method claim 11. Claim 1, with emphases added, is
illustrative:
1. A system for reproducing a particular state of an
electronic marketplace for one or more financial products, the
particular state resulting from sequential processing, by a
financial transaction processing system, of each of a plurality of
financial transactions as they were received from a plurality of
market participants, the processing of each of which caused an
associated change in at least an intermediate state of the
electronic marketplace from a prior state thereof which resulted
from a previously received financial transaction, the system
compnsmg:
a first logic component coupled with a memory and
operative to receive each of the plurality of financial transactions
and operative to store data representative thereof in the memory,
the data being operative to cause the associated change in
the state of the electronic marketplace if processed by the
financial transaction processing system; and
a second logic component coupled with the memory and
operative, subsequent to the receipt of the plurality of
transactions and the storage of data representative thereof in the
memory, to receive an indication of a particular prior state of
the electronic market place [sic] to be reproduced and retrieve a
subset of the data stored in the memory representative of only the
plurality of previously received transactions the sequential
processing of which would cumulatively result in the particular
prior state of the electronic marketplace to be reproduced, the
second logic component being further operative to sequentially
process each of the plurality of previously received transactions
represented by the retrieved subset of data from the memory to
obtain the reproduced prior state of the electronic marketplace.
Examiner's Rejections
(1) Claims 1-20 stand rejected under 35 U.S.C § 101 as being directed
to patent-ineligible subject matter. Final Act. 2-5; Ans. 2--4. This rejection
includes rejections of:
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(a) claims 1-10 under§ 101 as being directed to non-statutory
subject matter (such as a signal per se, i.e., a transitory storage medium or
product), which is not directed to one of the four statutory categories of
subject matter (Ans. 2--4); and
(b) claims 1-20 under § 101 as being directed to a judicial
exception ( e.g., the abstract idea of performing financial data modification
and simulation, a fundamental economic practice, or an accounting system),
without significantly more (Final Act. 2-5; Ans. 4--16; Advisory Action
mailed Oct. 6, 2016, p. 2, ,r,r 8, 13).
(2) The Examiner rejected claims 1-20 under 35 U.S.C. § 103 as
being unpatentable over the combination of Weber et al. (US 2004/0186803
Al; published Sept. 23, 2004) taken with various other prior-art references.
Final Act. 5-27.
Issues on Appeal
Based on Appellants' arguments in the Appeal Brief (App. Br. 5-20)
and the Reply Brief (Reply Br. 2-11 ), in light of the Examiner's response to
Appellants' arguments in the Appeal Brief ( Ans. 4--21 ), the following issues
are presented on appeal:
(1) Did the Examiner err in rejecting claims 1-10 under 35 U.S.C.
§ 101 as being directed to non-statutory subject matter ( e.g., a transitory
storage device) because the "system" comprising a "memory" and (a) "a first
logic component" and "a second logic component" ( claim 1 ), and/or (b)
"transaction receiver" and "transaction retriever" ( claim 2), as defined by
Appellant's Specification, and as recited in claims 1-10, can be a transitory
signal or some other type of non-statutory medium?
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(2) Did the Examiner err in rejecting claims 1-20 under 35 U.S.C.
§ 101, as being directed to a judicial exception ( e.g., the abstract idea of a
fundamental economic practice), without significantly more?
(3) Did the Examiner err in rejecting claims 1-20 as being
unpatentable over the combination of Weber taken with various other prior-
art references because Weber, and specifically paragraph 13 of Weber, fails
to teach or suggest the system, method, and computer-implemented method
for reproducing a particular state of an electronic marketplace for one or
more financial products using sequential processing to reproduce a particular
prior state of the electronic marketplace, as recited in claims 1, 2, 11, and
20?
PRINCIPLES OF LAW
We first note "[ w ]hether a [patent] claim is drawn to patent-eligible
subject matter is an issue of law that [is] review[ed] de nova." SiRF Tech.,
Inc. v. Int'! Trade Comm'n, 601 F.3d 1319, 1331 (Fed. Cir. 2010) (emphasis
added).
An invention is patent eligible if it claims a "new and useful process,
machine, manufacture, or composition of matter." 35 U.S.C. § 101. This
threshold analysis of whether a claim is directed to one of the four statutory
categories of invention, i.e., a process, machine, manufacture, or
composition of matter, is referred to as "Step l" in the patent-eligibility
inquiry under § 101. However, the Supreme Court has long interpreted
§ 101 to include implicit exceptions: "[l]aws of nature, natural phenomena,
and abstract ideas" are not patentable. Mayo Collaborative Servs. v.
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Prometheus Labs., Inc., 566 U.S. 66, 70 (2012) (brackets in original) (citing
Diamond v. Diehr, 450 U.S. 175, 185 (1981)).
In determining whether a claim falls within an excluded category, we
are guided by the Supreme Court's two-step framework, described in Mayo
and Alice. Alice Corp. v. CLS Banklnt'l, 573 U.S. 208, 217-18 (2014)
(citing Mayo, 566 U.S. at 75-77). In accordance with that framework, we
first determine what concept the claim is "directed to." See id. at 219 ("On
their face, the claims before us are drawn to the concept of intermediated
settlement, i.e., the use of a third party to mitigate settlement risk."); see also
Bilski v. Kappas, 561 U.S. 593, 611 (2010) ("Claims 1 and 4 in petitioners'
application explain the basic concept of hedging, or protecting against
risk.").
Concepts determined to be abstract ideas, and thus patent ineligible,
include certain methods of organizing human activity, such as fundamental
economic practices (Alice, 573 U.S. at 219-20; Bilski, 561 U.S. at 611 );
mathematical formulas (Parker v. Flook, 437 U.S. 584, 594--95 (1978)); and
mental processes (Gottschalkv. Benson, 409 U.S. 63, 69 (1972)). Concepts
determined to be patent eligible include physical and chemical processes,
such as "molding rubber products" (Diamond v. Diehr, 450 U.S. 175, 191
( 1981) ); "tanning, dyeing, making water-proof cloth, vulcanizing India
rubber, smelting ores" (id. at 182 n.7 (quoting Corning v. Burden, 56 U.S.
(15 How.) 252, 267---68 (1854))); and manufacturing flour (Benson, 409 U.S.
at 69 (citing Cochrane v. Deener, 94 U.S. 780, 785 (1876))).
In Diehr, the claim at issue recited a mathematical formula, but the
Supreme Court held "[a] claim drawn to subject matter otherwise statutory
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does not become nonstatutory simply because it uses a mathematical
formula." Diehr, 450 U.S. at 176; see also id. at 192 ("We view
respondents' claims as nothing more than a process for molding rubber
products and not as an attempt to patent a mathematical formula."). Having
said that, the Supreme Court also indicated that a claim "seeking patent
protection for that formula in the abstract ... is not accorded the protection
of our patent laws, ... and this principle cannot be circumvented by
attempting to limit the use of the formula to a particular technological
environment." Id. ( citing Benson and Flook); see, e.g., id. at 187 ("It is now
commonplace that an application of a law of nature or mathematical formula
to a known structure or process may well be deserving of patent
protection.").
If the claim is "directed to" an abstract idea, we tum to the second
step of the Alice and Mayo framework, where "we must examine the
elements of the claim to determine whether it contains an 'inventive
concept' sufficient to 'transform' the claimed abstract idea into a patent-
eligible application." Alice, 573 U.S. at 221 (quotation marks omitted). "A
claim that recites an abstract idea must include 'additional features' to
ensure 'that the [claim] is more than a drafting effort designed to
monopolize the [abstract idea]."' Id. (quoting Mayo, 566 U.S. at 77).
"[M]erely requir[ing] generic computer implementation[] fail[ s] to transform
that abstract idea into a patent-eligible invention." Id.
The PTO recently published revised guidance in the Federal Register
concerning the application of§ 101. 2019 Revised Patent Subject Matter
Eligibility Guidance, 84 Fed. Reg. 50 (Jan. 7, 2019) (hereinafter, "Revised
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Guidance") (https://www.govinfo.gov/content/pkg/FR-2019-01-07 /pdf/
2018-28282.pdf).
Under the Revised Guidance, we first look to whether the claim
recites:
( 1) any judicial exceptions, including certain groupings of
abstract ideas (i.e., mathematical concepts, certain methods of
organizing human activity such as a fundamental economic
practice, or mental processes); 2 and
(2) additional elements that integrate the judicial exception
into a practical application (see MPEP § 2106.0S(a}-(c),
(e}-(h)). 3
Only if a claim (1) recites a judicial exception and (2) does not
integrate that exception into a practical application, do we then look to
whether the claim:
(3) adds a specific limitation beyond the judicial exception
that are not "well-understood, routine, conventional" in the field
(see MPEP § 2106.0S(d)); or
( 4) simply appends well-understood, routine, conventional
activities previously known to the industry, specified at a high
level of generality, to the judicial exception. 4
See Revised Guidance.
2 Referred to as "Revised Step 2A, Prong l" in the Revised Guidance
(hereinafter, "Step 2A(i)").
3 Referred to as "Revised Step 2A, Prong 2" in the Revised Guidance
(hereinafter, "Step 2A(ii)").
4 Items (3) and ( 4) continue to be collectively referred to as "Step 2B" of the
Supreme Court's two-step framework, described in Mayo and Alice.
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Step 2A(i)-Abstract Idea
Informed by judicial precedent, the recent 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:
(a) Mathematical concepts-mathematical relationships,
mathematical formulas or equations, mathematical calculations;
(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 instructions); and
( c) Mental processes----concepts performed in the human
mind (including an observation, evaluation, judgment, opinion).
Under the Revised Guidance, if the claim does not recite a judicial
exception (a law of nature, natural phenomenon, or subject matter within the
enumerated groupings of abstract ideas above), then the claim is patent
eligible at Step 2A(i). This determination concludes the eligibility analysis,
except in situations identified in the Revised Guidance. 5
However, if the claim recites a judicial exception (i.e., an abstract idea
enumerated above, a law of nature, or a natural phenomenon), the claim
5 In the rare circumstance in which an Examiner believes a claim limitation
that does not fall within the enumerated groupings of abstract ideas should
nonetheless be treated as reciting an abstract idea, the procedure described in
the Revised Guidance for analyzing the claim should be followed. See
Revised Guidance, Section III.C.
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requires further analysis for a practical application of the judicial exception
in Step 2A(ii).
Step 2A(ii)-Practical Application
If a claim recites a judicial exception in Step 2A (i), we determine
whether the recited judicial exception is integrated into a practical
application of that exception in Step 2A(ii) by: (a) identifying whether there
are any additional elements recited in the claim beyond the judicial
exception( s ); and (b) evaluating those additional elements individually and
in combination to determine whether they integrate the exception into a
practical application.
The seven identified "practical application" sections of the MPEP, 6
cited in the Revised Guidance under Step 2A(ii), are:
(1) MPEP § 2106.0S(a) Improvements to the Functioning of a
Computer or to Any Other Technology or Technical Field
(2) MPEP § 2106.0S(b) Particular Machine
(3) MPEP § 2106.0S(c) Particular Transformation
(4) MPEP § 2106.0S(e) Other Meaningful Limitations
(5) MPEP § 2106.0S(f) Mere Instructions to Apply an
Exception
(6) MPEP § 2106.0S(g) Insignificant Extra-Solution Activity
(7) MPEP § 2106.0S(h) Field of Use and Technological
Environment
6 See MPEP § 2106.0S(a}-(c), (e}-(h). Citations to the MPEP herein refer to
revision [R-08.2017].
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If the recited judicial exception is integrated into a practical
application as determined under one or more of the MPEP sections cited
above, then the claim is not directed to the judicial exception, and the patent-
eligibility inquiry ends. If not, then analysis proceeds to Step 2B.
Step 2B - "Inventive Concept" or "Significantly More"
Under judicial precedent, it is possible that a claim that does not
"integrate" a recited judicial exception under Step 2A(ii) is nonetheless
patent eligible. For example, the claim may recite additional elements that
render the claim patent eligible even though a judicial exception is recited in
a separate claim element. 7 The Federal Circuit has held claims eligible at
the second step of the Alice/Mayo test (USPTO Step 2B) because the
additional elements recited in the claims provided "significantly more" than
the recited judicial exception (e.g., because the additional elements were
unconventional in combination). 8 Therefore, if a claim has been determined
to be directed to a judicial exception under Revised Step 2A, we must
evaluate the additional elements individually and in combination under Step
2B to determine whether they provide an inventive concept (i.e., whether the
additional elements amount to significantly more than the exception itself). 9
7 See, e.g., Diehr, 450 U.S. at 187.
8 See, e.g., Amdocs (Isr.), Ltd. v. Openet Telecom, Inc., 841 F.3d 1288, 1300,
1304 (Fed. Cir. 2016); BASCOM Global Internet Servs., Inc. v. AT&T
Mobility LLC, 827 F.3d 1341, 1349-52 (Fed. Cir. 2016); DDR Holdings,
LLC v. Hotels.com, L.P., 773 F.3d 1245, 1257-59 (Fed. Cir. 2014).
9 We note the patent-eligibility inquiry may contain underlying issues of
fact. Mortg. Grader, Inc. v. First Choice Loan Servs. Inc., 811 F.3d 1314,
1325 (Fed. Cir. 2016). In particular, "[t]he question of whether a claim
element or combination of elements is well-understood, routine and
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Under the Revised Guidance, we must consider in Step 2B whether an
additional element or combination of elements: (1) "Adds a specific
limitation or combination of limitations that are not well-understood,
routine, conventional activity in the field, which is indicative that an
inventive concept may be present;" or (2) "simply appends well-understood,
routine, conventional activities previously known to the industry, specified
at a high level of generality, to the judicial exception, which is indicative
that an inventive concept may not be present." See Revised Guidance,
III.B. 10
In the Step 2B analysis, an additional element ( or combination of
elements) is not well-understood, routine, or conventional unless the
examiner finds an evidentiary basis, and expressly supports a rejection in
writing with, one or more of the following:
1. A citation to an express statement in the
specification or to a statement made by an applicant during
prosecution that demonstrates the well-understood, routine,
conventional nature of the additional element(s).
conventional to a skilled artisan in the relevant field is a question of fact."
Berkheimerv. HP Inc., 881 F.3d 1360, 1368 (Fed. Cir. 2018).
10 In accordance with existing Step 2B guidance, an Examiner's conclusion
that an additional element ( or combination of elements) is well understood,
routine, conventional activity must be supported with a factual
determination. For more information concerning evaluation of well-
understood, routine, conventional activity, see MPEP § 2106.05( d), as
modified by the USPTO Berkheimer Memorandum (USPTO Commissioner
for Patents Memorandum dated Apr. 9, 2018, "Changes in Examination
Procedure Pertaining to Subject Matter Eligibility, Recent Subject Matter
Eligibility Decision (Berkheimer v. HP, Inc.)" (hereinafter "Berkheimer
Memo").
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2. A citation to one or more of the court decisions
discussed in MPEP § 2106.0S(d)(II) as noting the well-
understood, routine, conventional nature of the additional
element( s ).
3. A citation to a publication that demonstrates the
well-understood, routine, conventional nature of the additional
element( s ).
4. A statement that the examiner is taking official
notice of the well-understood, routine, conventional nature of the
additional element( s ).
See Berkheimer Memo.
The analysis in Step 2B further determines whether an additional
element or combination of elements:
(a) Adds a specific limitation or combination of
limitations that are not well-understood, routine, conventional
activity in the field, which is indicative that an inventive concept
may be present; or
(b) simply appends well-understood, routine,
conventional activities previously known to the industry,
specified at a high level of generality, to the judicial exception,
which is indicative that an inventive concept may not be present.
Revised Guidance; see Berkheimer Memo.
If the Examiner or the Board determines under Step 2B that the
element ( or combination of elements) amounts to significantly more than the
exception itself, the claim is eligible, thereby concluding the eligibility
analysis.
However, if a determination is made that the element and combination
of elements does not amount to significantly more than the exception itself,
the claim is ineligible under Step 2B, and the claim should be rejected for
lack of subject-matter eligibility.
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ANALYSIS
Issue (1): Rejection of Claims 1-10 Under§ 101
Independent claims 1 and 2 recite, in pertinent part: "A system for
reproducing a particular state of an electronic marketplace for one or more
financial products, ... the system comprising: [i] "a first logic component
coupled with a memory ... and a second logic component" ( claim 1)
(emphases added); and [ii] "a transaction receiver coupled with a memory ...
and a transaction retriever" ( claim 2) ( emphases added).
The Examiner rejected claims 1-10 under § 101 as being directed to
non-statutory subject matter (such as a signal per se, i.e., a transitory storage
medium or product), which is not directed to one of the four statutory
categories of subject matter (Ans. 2--4). The Examiner's rejection is based
upon a finding that paragraphs 44, 108, 152, 155, 156, and 158 of
Appellant's Specification support an interpretation that the recited (i)
first/second logic components of claim 1 and transaction receiver/retriever of
claim 2 encompass computer code per se (see Ans. 3--4), which is stored in a
(ii) memory that is not limited to non-transitory media, but according to
paragraph 315 of Appellant's Specification, can include a signal per se
(Ans. 4).
Appellant cites (App. Br. 2-5; Reply Br. 2-7) to various paragraphs of
the Specification (Spec. ,r,r 108, 150-158, 160, 161; see also Figs. 4, 5) as
support for the subject matter recited in claims 1 and 2, and contend that
claims 1 and 2 are directed to statutory subject matter under 35 U.S.C. § 101.
We have reviewed Appellant's arguments and find them unpersuasive, for
the following reasons:
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Paragraph 108 of the Specification, cited by Appellant for supporting
the interpretation that the non-signal storage device is non-transitory (Reply
Br. 2-7) merely describes the composition of Appellant's disclosed and
claimed modules of system 100 as being "software, hardware or a
combination thereof':
The electronic trading system 100 may be physically
implemented with one or more mainframe, desktop or other
computers, such as the computer 2500 described below with
respect to Figure 25, reconfigurable logic components, network
switches, gateways, routers and other communications devices
operative to facilitate communications within the electronic
trading system 100 and between the electronic trading system
100 and the market participants. Logically, the electronic
trading system 100 implements numerous functions/functional
modules each of which, as will be described, may be
implemented in software, hardware or a combination thereof, as
single standalone component or combination of interconnected
components or in combination with another
function/functional module.
Spec. ,r 108 ( emphasis added).
Appellant contends that while "the Examiner's rejection focuses on
the term 'system' and the possibility that the system may be implemented
solely in software, claims 1-10 recite hardware components" (Reply Br. 7).
We disagree. Under the broadest reasonable interpretation, in light of the
Specification (namely, paragraphs 108, 151, 152, and 321-324 and Figure
4), the logic components and transaction receiver/retriever ( elements 402
and 406 shown in Fig. 4) recited in independent claims 1 and 2 can be purely
"software" (Spec. ,r 108) and "may be implemented as logic, such as
computer program logic" (Spec. ,r,r 151, 152).
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Paragraphs 321-324 of the Specification support this understanding.
For example, paragraph 321 discloses the invention "can be implemented in
digital electronic circuitry, or in computer software" ( emphasis added).
Paragraph 322 describes that "the disclosure is considered to include any one
or more of a computer-readable medium or a distribution medium and other
equivalents and successor media, in which data or instructions may be
stored," and paragraph 323 states "the present system encompasses software,
firmware, and hardware implementations" ( emphasis added). Finally,
paragraph 324 discloses that "[i]n accordance with various embodiments of
the present disclosure, the methods described herein may be implemented by
software programs executable by a computer system" ( emphasis added).
We agree with the Examiner (see Ans. 3--4 citing Spec. ,r,r 152, 155,
156, 158) that the transaction receiver 402 and transaction retriever 406 are
described by Appellant in the Specification as capable of being
"implemented as computer program logic stored in a memory." We also
agree with the Examiner that paragraph 315 of the Specification describes
"memory" as "including but not limited to random access memory, read-
only memory, programmable read-only memory, electrically programmable
read only memory ... or disk, optical media and the like" (Ans. 4).
Regarding the "system," "logic components," "transaction receiver,"
and "transaction retriever" recited in claims 1 and 2, we find PTAB
precedential opinion Ex parte Mewherter, 107 USPQ2d 1857, 1862 (PT AB
2013) is on point and controlling. Under Mewherter, the scope of a
"computer readable storage medium" was held to encompass transitory
media such as signals or carrier waves, where, as here, the Specification
does not expressly disclaim transitory forms. Moreover, to the extent the
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scope of the "system" of claims 1 and 2 broadly covers both statutory and
non-statutory (transitory signal) embodiments, "[t]he four categories [of
§ 101] together describe the exclusive reach of patentable subject matter. If
a claim covers material not found in any of the four statutory categories, that
claim falls outside the plainly expressed scope of§ 101 even if the subject
matter is otherwise new and useful." In re Nuijten, 500 F.3d 1346, 1354
(Fed. Cir. 2007).
We note that Appellant is not precluded from amending claims 1 and
2 to overcome this rejection, 11 e.g., by amending claims 1 and 2 to read "a
first/second non-transitory logic component" and "a non-transitory
transaction receiver/retriever"). Nor is Appellant precluded from amending
the Specification to specifically define "logic components" and/or
"computer-readable medium" to include only statutory storage media.
Guidance on this point is provided in U.S. Patent & Trademark Office,
Subject Matter Eligibility of Computer Readable Media, 1351 Off. Gaz. Pat.
Office 212 (Feb. 23, 2010) ("A claim drawn to such a computer readable
medium that covers both transitory and non-transitory embodiments may be
amended to narrow the claim to cover only statutory embodiments to avoid a
rejection under 35 U.S.C. § 101 by adding the limitation 'non-transitory' to
the claim."). See also U.S. Patent & Trademark Office, Evaluating Subject
Matter Eligibility Under 35 USC§ 101 (August 2012 Update) (pp. 11-14),
available at http://www.uspto.gov/patents/law/exam/10 !_training_
aug2012.pdf (noting that while the recitation "non-transitory" is a viable
11 The Examiner indicates that "appropriate correction is required" (Ans. 4),
suggesting the an appropriate amendment may cure the problem.
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option for overcoming the presumption that those media encompass signals
or carrier waves, merely indicating that such media are "physical" or
"tangible" will not overcome such presumption).
Applying this guidance here, we find Appellant's Specification does
not provide a definition that clearly and unequivocally disclaims the claim
term "system" ( claims 1 and 2) from encompassing transitory media such as
propagated signals. 12 We note further that Appellant does not allege that,
and Appellant's Specification is silent as to whether, all disclosed and
claimed system and system components are non-transitory only ( and not
transitory).
On this record, we are not persuaded the Examiner's broader reading
(see Ans. 2--4) is overly broad or unreasonable. 13 In other words, the record
supports the finding that the "system" comprising a memory and (a) "a first
logic component" and "a second logic component" ( claim 1 ), and/ or (b)
"transaction receiver" and "transaction retriever" ( claim 2), as defined by
Appellant's Specification, and as recited in claims 1-10, can be a transitory
signal or some other type of non-statutory medium. As a result, Appellant
has not shown the Examiner erred in rejecting claims 1-10 under 35 U.S.C.
§ 101 as being directed to non-statutory subject matter ( e.g., a transitory
12 See Openwave Sys., Inc. v. Apple Inc., 808 F.3d 509, 513-14 (Fed. Cir.
2015); Omega Eng'g., Inc. v. Raytek Corp., 334 F.3d 1314, 1323-26 (Fed.
Cir. 2003). Ambiguous language cannot support disavowal. Omega,
334 F.3d at 1324; see also Schindler Elevator Corp. v. Otis Elevator Co.,
593 F.3d 1275, 1285 (Fed. Cir. 2010).
13 Because "applicants may amend claims to narrow their scope, a broad
construction during prosecution creates no unfairness to the applicant or
patentee." In re ICON Health & Fitness, Inc., 496 F.3d 1374, 1379 (Fed.
Cir. 2007) ( citation omitted).
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storage device). Accordingly, we sustain the Examiner's rejection under
35 U.S.C. § 101 of claims 1-10 as being directed to non-statutory subject
matter.
Issue (2): Rejection of Claims 1-20 Under§ 101
The Examiner rejected claims 1-20 under § 101 as being directed to a
judicial exception (e.g., the abstract idea of performing financial data
modification and simulation, a fundamental economic practice, or an
accounting system), without significantly more (Final Act. 2-5; Ans. 4--16;
Advisory Action mailed Oct. 6, 2016, p. 2 ,r,r 8, 13). More specifically, the
Examiner finds the claims to be directed to the abstract ideas of (i)
"performing financial data modification and transaction simulations" (Final
Act. 3; Adv. Act. p. 2 ,r 5; Ans. 6); (ii) an "[a]ccounting system" (Adv. Act.
p. 2 ,r 8); and (iii) a process which is a fundamental economic practice (Adv.
Act. 2 i1 13).
Step 1
Under Step 1 in the patent-eligibility inquiry under § 101, in
accordance with the Revised Guidance, we determine whether a claim is
directed to one of the four statutory categories of invention, i.e., a process,
machine, manufacture, or composition of matter.
As discussed supra (in the previous section regarding the § 101
rejection of claims 1-10), system claims 1 and 2 are system claims that
cover transitory media/systems. For similar reasons, system claim 20, which
recites "means for receiving" and a "memory" corresponding to the
first/second logic components of claim 1 and transaction receiver/retriever of
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claim 2, 14 also covers a transitory medium/system. Therefore, independent
claims 1, 2 (as well as claims 3-10 depending from claim 2), and 20 are
directed to non-statutory, and thus, patent-ineligible subject matter. This
determination concludes the eligibility analysis for claims 1-10 and 20.
Thus, we sustain the Examiner's rejection of claims 1-10 and 20 under
35 U.S.C. § 101 as being directed to non-statutory or patent-ineligible
subject matter.
Based on Appellant's arguments (App. Br. 5-14; Reply Br. 7-9), the
issue remaining before us is whether claims 11-19 are directed to a judicial
exception without significantly more.
For the reasons that follow, we conclude that claims 11-19 are
directed to a judicial exception ( a fundamental economic practice which is
within the enumerated groupings of abstract ideas above) in Step 2A (i).
However, even if the recited claim limitations recite a judicial exception and
thus fall within the enumerated groupings of abstract ideas - namely, certain
methods of organizing human activity ( e.g., fundamental economic
principles or practices), we determine the recited judicial exception of claims
11-19 is integrated into a practical application of that exception under Step
2A(ii). Since the recited judicial exception is integrated into a practical
14 Notably, Appellant cites the same portions of the Drawings (Figs. 4, 5)
and Specification (Spec. ,r,r 151-153, 160, 161) for support of the
first/second logic components of claim 1 and transaction receiver/retriever of
claim 2, as for the two "means for receiving" recited in the system of claim
20 (see App. Br. 2-5, Summary of Claimed Subject Matter for claims 1, 2,
20).
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application, claims 11-19 are not directed to the judicial exception. Our
reasoning follows.
Step 2A(i): Do Claims 11-19 Recite a Judicial Exception?
Claims 11-19, as computer-implemented method claims, recite one of
the enumerated categories ( e.g., a process) of eligible subject matter in
35 U.S.C. § 101. Therefore, as to claims 11-19, we continue our analysis
under Step 2A(i) of the Revised Guidance to determine whether the claims
( 1) recite a judicial exception ( a law of nature, natural phenomenon, or
subject matter within the enumerated groupings of abstract ideas above); and
(2) are patent eligible.
We conclude claims 11-19 do not recite the judicial exceptions of
either natural phenomena or laws of nature. Therefore, we evaluate de nova
whether claims 11-19 recite one or more abstract ideas based upon the
Revised Guidance and the legal precedents of our reviewing courts.
We have reviewed the Examiner's subject-matter-eligibility rejection
of claims 11-19 (Final Act. 2-5) in light of Appellant's contentions that the
Examiner has erred (App. Br. 5-14; Reply Br. 7-9). Further, we have
reviewed the Examiner's response to Appellant's arguments (Ans. 4--16).
Based upon our review of the record, we find a preponderance of the
evidence supports the Examiner's determination that claims 11-19 recite an
abstract idea under Step 2A(i). However, particular arguments advanced by
Appellant (see generally App. Br. 5-14; Reply Br. 7-9) with respect to
method claims 11-19 are persuasive that these claims recite limitations that
integrate that exception into a practical application under Step 2A(ii). We
highlight and address specific findings and arguments for emphasis as
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follows, using claim 11 as exemplary of computer-implemented method
claims 11-19.
Claim 11 recites certain methods of organizing human activity-
fundamental economic principles or practices (including hedging, insurance,
mitigating risk). Specifically, claim 11 recites a computer-implemented
method of reproducing an electronic marketplace for financial products
using a financial transaction processing system to process financial data (see
claim 11) representative of the buying/selling of futures contracts to mitigate
credit risk (see Title; Spec. ,r,r 1-17). This is also made clear by the field of
Appellant's invention, a financial instrument trading system, or futures
exchange, for trading futures contracts (Title; Spec. ,r 1 ).
Claim 11 recites a method of "financial transaction processing" to
reproduce the "state of an electronic marketplace," including (i) receiving
and storing financial transaction data ( e.g., in the first receiving step), and
(ii) receiving an indication of a state of an electronic marketplace, retrieving
a subset of the data, and sequentially processing certain transactions
represented by the subset of data to obtain another state of the electronic
marketplace (e.g., in the second receiving step). We agree with the
Examiner that claims 11-19 recite "'receiving/retrieving financial data,
processing/monitoring data, generating data, and storing data" (Ans. 6), and
therefore claims 11-19 recite the abstract ideas of (i) "performing financial
data modification and transaction simulations" (Final Act. 3; Adv. Act. p. 2
,r 5; Ans. 6); (ii) an "[a]ccounting system" (Adv. Act. p. 2 ,r 8); and (iii) a
process which is a fundamental economic practice (Adv. Act. 2 ,r 13). As a
result, claims 11-19 recite certain methods of organizing human activity-
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fundamental economic principles or practices (including mitigating risk),
and thus an abstract idea.
The Federal Circuit has explained that, in determining whether claims
are patent-eligible under Section 101, "the decisional mechanism courts now
apply is to examine earlier cases in which a similar or parallel descriptive
nature can be seen-what prior cases were about, and which way they were
decided." Amdocs (Isr.) Ltd. v. Openet Telecom, Inc., 841 F.3d 1288, 1294
(Fed. Cir. 2016). The Federal Circuit also noted in that decision that
"examiners are to continue to determine if the claim recites (i.e., sets forth or
describes) a concept that is similar to concepts previously found abstract by
the courts." Id. at 1294 n.2.
Thus, like the concept of intermediated settlement in Alice and the
concept of hedging in Bilski, the concept of processing financial transactions
recited in Appellant's claims 11-19 "is a fundamental economic practice
long prevalent in our system of commerce." Alice, 573 U.S. 216 (citations
and internal quotation marks omitted).
In addition, at least the following decisions from our reviewing court
have found many types of fundamental commercial practices patent
ineligible: OIP Technologies, Inc. v. Amazon.com, Inc., 788 F.3d 1359 (Fed.
Cir. 2015) ( offer-based price optimization); buySAFE, Inc. v. Google, Inc.,
765 F.3d 1350 (Fed. Cir. 2014) (transaction guaranty); Personalized Media
Communications, L.L.C. v. Amazon, Inc., 671 F. App'x 777 (mem.) (Fed. Cir.
2016) (receiving instructions for ordering); Macropoint, LLC v. Fourkites,
Inc., 671 F. App'x 780 (mem.) (Fed. Cir. 2016) (tracking freight); Wireless
Media Innovations, LLC v. Maher Terminals, LLC, 636 F. App'x 1014
(mem.) (Fed. Cir. 2016) (monitoring shipping containers); America's
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Collectibles Network Inc. v. Jewelry Channel, Inc. USA, 672 F. App'x 997
(mem.) (Fed. Cir. 2017) (conducting reverse auction by adjusting price and
inventory); and Easy Web Innovations, LLC v. Twitter, Inc., No. 2016-2066,
2017 WL 1969492 (Fed. Cir. 2017) (receiving, authenticating, and
publishing data). The Supreme Court additionally guides that contractual
relations constitute "a fundamental economic practice long prevalent in our
system of commerce." Bilski v. Kappas, 561 U.S. 593, 611 (2010); see also
Alice, 573 U.S. 221-22, as cited in buySAFE, Inc. v. Google, Inc., 765 F.3d
1350, 1354 (Fed. Cir. 2014). Applying this guidance here, we observe
independent claim 11 recites the abstract idea of performing financial data
modification and transaction simulations (see Final Act. 3; Adv. Act. 2; Ans.
6).
Our reviewing court has also concluded abstract ideas include the
concepts of collecting data, recognizing certain data within the collected data
set, and storing the data in memory. Content Extraction & Transmission
LLC v. Wells Fargo Bank, Nat. Ass 'n, 776 F.3d 1343, 1347 (Fed. Cir. 2014).
Additionally, when claimed in a certain way, "collecting, displaying, and
manipulating data" is an abstract idea. Intellectual Ventures I LLC v.
Capital One Fin. Corp., 850 F.3d 1332, 1340 (Fed. Cir. 2017).
Under the broadest reasonable interpretation standard, 15 we conclude
claim 11, describing the configuration and functions of the processor,
15 During prosecution, claims must be given their broadest reasonable
interpretation when reading the claim language in light of the specification
as it would be interpreted by one of ordinary skill in the art. In re Am. Acad.
of Sci. Tech Ctr., 367 F.3d 1359, 1364 (Fed. Cir. 2004). Under this
standard, we interpret claim terms using "the broadest reasonable meaning
of the words in their ordinary usage as they would be understood by one of
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memory, and financial transaction processing system that would ordinarily
occur when processing financial transactions, such as the trading of futures
contracts, recites a certain method of organizing human activity in the form
of commercial interactions, particularly, financial transaction processing
which is a fundamental economic practice.
Thus, under Step 2A(i), we conclude the "computer implemented
method for reproducing a particular state of an electronic marketplace for
one or more financial products" of claim 11 recites a judicial exception, and
more particularly conclude claims 11-19 as a whole, under our Revised
Guidance, recite certain methods of organizing human activity, i.e., a
fundamental economic practice, and thus an abstract idea.
Step 2A(ii): Judicial Exception Integrated into a Practical
Application?
If the claims recite a patent-ineligible abstract idea, as we conclude
above under Step 2A(i), we proceed to the "practical application" Step 2A(ii),
in which we determine whether the recited judicial exception is integrated
into a practical application of that exception by: (a) identifying whether
there are any additional elements recited in the claim beyond the judicial
exception( s ); and (b) evaluating those additional elements individually and
in combination to determine whether they integrate the exception into a
practical application.
ordinary skill in the art, taking into account whatever enlightenment by way
of definitions or otherwise that may be afforded by the written description
contained in the applicant's specification." In re Morris, 127 F.3d 1048,
1054 (Fed. Cir. 1997).
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Appellant contends "the claims are directed to receiving and storing
data indicative of transactions, each of which would cause a change in state
of an electronic marketplace if processed thereby," and thus "the claims are
directed to solving a technical problem in complex data processing systems,
such as electronic marketplaces, wherein any particular system state is the
product, i.e. cumulative result, of the previously processed transactions
which le[d] to that state" (Reply Br. 8). Appellant also contends "[t]he
claims are not directed to reproducing a 'marketplace,' but "are directed to
'reproducing a particular state of an electronic marketplace"' (Reply Br. 9).
Based upon Appellant's arguments and the written support provided
by Appellant's Specification cited supra, we conclude claim 11 integrates
the abstract idea into a practical application as determined under at least one
of the MPEP sections cited above. 16 Specifically, we find Appellant's
argument persuasive that the functions of reproducing any particular
marketplace state which is the product, i.e. cumulative result, of the
previously processed transactions which led to that state is an improvement
in the technical field of financial transaction processing and simulation. See
Reply Br. 3; and see MPEP § 2106.0S(a) or, alternatively,§ 2106.0S(e)
"Other Meaningful Limitations."
Concerning these "other meaningful limitations," we find guidance in
the Manual for Patent Examining Procedure section 2106.05( e ), which
summarizes and relies upon our reviewing court's holdings in Diamond v.
16 For example, see MPEP § 2106.0S(a) "Improvements to the Functioning
of a Computer or to Any Other Technology or Technical Field" or
§ 2106.0S(e) "Other Meaningful Limitations."
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Diehr, cited supra, and Classen Immunotherapies Inc. v. Biogen IDEC
( decision on remand from the Supreme Court, which had vacated the lower
court's prior holding of ineligibility in view of Bilski v. Kappas).
In Diehr, the Court evaluated the additional non-abstract limitations,
and "found them to be meaningful because they sufficiently limited the use
of the [ abstract idea] mathematical equation to the practical application of
molding rubber products." MPEP § 2106( e) ( citing Diehr, 450 U.S. at 184,
187).
In Classen, the Court held that, although the analysis step was an
abstract mental process that collected and compared known information, the
[practical application] immunization step was meaningful because it
integrated the results of the analysis into a specific and tangible method that
resulted in the method "moving from abstract scientific principle to specific
application." MPEP § 2106(e) (citing Classen, 659 F.3d at 1066-68).
Although the recited elements of claim 11, such as "a financial
transaction processing system" including "a processor coupled with a
memory" for receiving, storing, retrieving subsets of transaction data, and
sequentially processing financial transaction data may encompass a
fundamental economic practice, the claim's additional elements integrate
this fundamental economic practice into a practical application and reflect an
improvement in the functioning of a computer, or an improvement to other
technology or technical field. By sequentially processing financial
transaction data in the manner recited in claim 11, the particular state of an
electronic marketplace is reproduced by obtaining the reproduced prior state
of the electronic marketplace through sequential processing of previously
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received financial transaction data using subsets of data "representative of
only the plurality of previously received transactions the sequential
processing of which would cumulatively result in the particular prior state of
the electronic marketplace to be reproduced," and based on an indication of
a particular prior state of the electronic marketplace to be reproduced.
These limitations therefore integrate the abstract idea into a practical
application because the limitations reflect a technological improvement and
use the abstract idea in a meaningful way beyond linking the idea to a
particular environment (i.e., the limitations perform a simulation by
reproducing a particular state of an electronic marketplace). Accordingly,
we conclude, when claim 11 is considered as a whole, the recited judicial
exception is integrated into a practical application as determined under either
MPEP sections 2106.06(a) or 2106.0S(e) cited above, such that the claim is
patent eligible.
Because claim 11, and thus claims 12-19 depending respectively
therefrom, recite a judicial exception ( a fundamental economic practice
which is an within the enumerated abstract ideas above) under Step 2A(i),
and additional limitations integrate the abstract idea into a practical
application under Step 2A(ii), in accordance with the Revised Guidance, we
conclude the claims are patent eligible. This determination concludes the
eligibility analysis with regard to claims 11-19. For these reasons, under the
Revised Guidance, we are persuaded that the Examiner erred in concluding
claims 11-19 are judicially excepted from patentability, and we do not
sustain the Examiner's§ 101 rejection of claims 11-19.
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Issue (3): Rejections Under§ 103
The Examiner rejected claims 1-20 under 35 U.S.C. § 103 as being
unpatentable over the combination of Weber taken with various other prior-
art references. Final Act. 5-27. The Examiner relies on paragraph 13 of
Weber as teaching or suggesting nearly every claim limitation recited in
independent claims 1, 2, 11, and 20 (Final Act. 5-10, 20-21; Ans. 16-20).
Specifically, the Examiner cites paragraph 13 as teaching the (i) computer-
implemented method having two receiving steps ( claim 11 ); and (ii) systems
( claims 1, 2, 20) comprising first/second logic components ( claim 1 ),
transaction receiver/retriever ( claim 2), and two means for receiving ( claim
20) (id.).
Appellant contends (App. Br. 17-19) that Weber fails to disclose
reproducing a prior state of an electronic marketplace from the price of a
fund, nor the second logic component and associated functions recited in
claim 1. Appellant also contends (Reply Br. 8-10) that Weber obtains
previously obtained results as claimed, and specifically by performing a data
lookup (i.e., retrieving a subset of stored data), and sequentially processing
the previously received transactions represented by the subset of data. We
agree with Appellant's contentions that the Examiner's prima facie case
relying on Weber is deficient.
The Examiner does not adequately explain how each claim limitation
is met by paragraph 13. In other words, the Examiner does not clearly map
each limitation of each claim to specific elements, sentences, or even
portions of paragraph 13 of Weber ( or other portions of Weber's drawings or
description). Although Weber's paragraph 13 describes "a method for
permitting efficient trading of shares of a fund," receives and stores a set of
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fund sensitivity coefficients, creates a proxy portfolio for use in calculating
estimated fund values, and creates a hedging portfolio, Weber is silent as to
performing the modeling or simulation performed in Appellant's claims 1-
20, including reproducing a particular state of an electronic marketplace for
financial products using sequential processing by a financial transaction
processing system of each of a plurality of financial transactions as they
were received from a plurality of market participants, the processing of each
of which caused an associated change in at least an intermediate state of the
electronic marketplace from a prior state thereof which resulted from a
previously received financial transaction, including the multiple
steps/ elements recited in the body of each independent claim ( claims 1, 2,
11, 20).
Appellant has shown the Examiner erred in rejecting claims 1-20 as
being unpatentable over the combination of Weber taken with various other
prior-art references because Weber, and specifically paragraph 13 of Weber,
fails to teach or suggest the system, method, and computer implemented
method for reproducing a particular state of an electronic marketplace for
one or more financial products using sequential processing to reproduce a
particular prior state of the electronic marketplace, as recited in claims 1, 2,
11, and 20. Accordingly, we do not sustain the Examiner's obviousness
rejections of claims 1-20, which are all based on Weber as a primary
reference.
CONCLUSIONS
(1) The Examiner did not err in rejecting claims 1-10 and 20 under
35 U.S.C § 101 as being directed to non-statutory subject matter; but the
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Examiner erred in rejecting claims 11-19 under 35 U.S.C § 101 as being
directed to patent-ineligible subject matter without significantly more.
(2) The Examiner erred in rejecting claims 1-20 under 35 U.S.C.
§ 103 as being unpatentable over the base reference of Weber taken with
various other prior-art references.
DECISION
(1) We affirm the Examiner's rejection of claims 1-10 and 20 under
35 U.S.C. § 101, as being directed to non-statutory subject matter (e.g., a
transitory storage device).
(2) We reverse the Examiner's rejection of claims 11-19 under
35 U.S.C. § 101, as being directed to a judicial exception (e.g., a
fundamental economic practice which is an abstract idea), without
significantly more.
(3) We reverse the Examiner's rejections of claims 1-20 under
35 U.S.C. § 103 over the base reference of Weber taken with various other
prior-art references.
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-IN-PART
31