Ex Parte Tenorio

Board of Patent Appeals and Interferences

Aug 11, 2008

09750617 (B.P.A.I. Aug. 11, 2008)

UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE BOARD OF PATENT APPEALS
AND INTERFERENCES
____________

Ex parte NOEL TENORIO
____________

Appeal 2008-1659
Application 09/750,617
Technology Center 3600
____________

Decided: August 11, 2008
____________

Before LINDA E. HORNER, ANTON W. FETTING, and
JOSEPH A. FISCHETTI, Administrative Patent Judges.

HORNER, Administrative Patent Judge.

DECISION ON APPEAL
STATEMENT OF THE CASE
Noel Tenorio (Appellant) seeks our review under 35 U.S.C. § 134 of
the final rejection of claims 1-70. We have jurisdiction under 35 U.S.C.
§ 6(b) (2002).
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SUMMARY OF DECISION
We AFFIRM-IN-PART.

THE INVENTION
The Appellant’s claimed invention relates to a system and method for
negotiating using improved matching criteria (Spec. 1:7-8). Claim 1,
reproduced below, is representative of the subject matter on appeal.
1. A computer-implemented system for
conducting an automatic negotiation, comprising:
a database operable to store profiles for
parties to the negotiation, each profile specifying
values for one or more parameters being
negotiated, these values reflecting a desirable
outcome of the negotiation for the associated
party; and
a matching server operable to:
access an offer from a first party
containing values for one or more of the
parameters being negotiated;
compute a distance between the
values in the offer and the values in the
profile of a second party;
if the distance is acceptably small,
cause the offer to be accepted by the second
party to conclude the negotiation; and
if the distance is not acceptably small,
automatically modify one or more values in
the offer such that the distances between the
modified offer and the profiles of the first
and second parties are acceptably small
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simultaneously and, in response, cause the
modified offer to be accepted by both the
first and second parties to conclude the
automatic negotiation.

THE REJECTIONS
The Examiner relies upon the following as evidence of
unpatentability:
May US 2002/0116317 A1 Aug. 22, 2002
Li US 2003/0004850 A1 Jan. 2, 2003
The following rejections are before us for review:
1. Claims 1-4, 8-21, 25-37, 41-54, and 58-70 are rejected under
35 U.S.C. § 102(e) as anticipated by May.
2. Claims 5-7, 22-24, 38-40, and 55-57 are rejected under 35 U.S.C.
§ 103(a) as unpatentable over May and Li.

ISSUES
The issues before us are whether the Appellant has shown that the
Examiner erred in rejecting claims 1-4, 8-21, 25-37, 41-54, and 58-70 as
anticipated by May and claims 5-7, 22-24, 38-40, and 55-57 as unpatentable
over May and Li. These issues turn, in part, on whether May discloses
automatically modifying values in an offer such that the distances between
the modified offer and the profiles of first and second parties to the
negotiation are acceptably small simultaneously.

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FINDINGS OF FACT
We find that the following enumerated findings are supported by at
least a preponderance of the evidence. Ethicon, Inc. v. Quigg, 849 F.2d
1422, 1427 (Fed. Cir. 1988) (explaining the general evidentiary standard for
proceedings before the Office).
1. May discloses systems and methods for electronic trading of
financial instruments, such as derivatives (May 1:¶0002).
2. May discloses that dealers in the system can enter credit
preferences (i.e., a profile), which preferences are methods or rules
selected by the user to use to screen prices (bids or offers) and
trades (May 11:¶0188).
3. May discloses that even if there is not a market in a desired
instrument, an end-user (client) may create a market for the
instrument by initiating a reverse auction by sending out a
Request-For-Price (RFP) to selected dealers and posting either a
bid or an offer in the desired instrument (May 30:¶0374).
4. The RFP contains the client’s values (e.g., price) for a parameter
being negotiated.
5. The RFP is filtered using the dealers’ credit preferences and, if
proper credit for the sender is validated, the system sends out the
RFP to all selected dealers (May 30:¶¶0375-0377).
6. A dealer can then elect to respond to the RFP by submitting a
change to the bid (e.g. counteroffer) (May 30:¶0377).
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7. The system presents the counteroffer to the client, and the client
can decide to execute at the counteroffer price or negotiate. In the
event the client decides to negotiate, messages continue to be
exchanged between the client and the dealer until they reach an
agreement on price (May 30:¶0378).
8. As such, May’s system allows the client and dealer to modify
values in the offer to negotiate toward a mutually-acceptable
distance between the modified offer and the profiles of the client
and dealer.
9. May does not disclose that its system automatically modifies one
or more values in an offer such that distances between the
modified offer and profiles of the client and dealer are acceptably
small simultaneously.
10. Li also relates to the management of an on-line auction (Li
1:¶0001).
11. Li describes that in a reverse auction, a buyer submits a request-
for-quotation (RFQ) to prospective suppliers, the suppliers submit
bids in response to the RFQ, and if the constraints imposed by the
buyer and the constraints imposed by a particular seller are met, a
transaction between the parties is feasible (Li 1:¶¶0005-0006).
12. Li describes that in a typical auction, there will be numerous
suppliers for which a transaction is feasible and the buyer must
then determine the optimal award schedule, i.e., the optimal
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combination of suppliers together with the list of items to be
ordered from each supplier (Li 1:¶0006).
13. Li’s system determines the optimal award schedule by taking into
account the weight assigned by the buyer to a performance
attribute (i.e., quality) and the value of the performance attribute
for a particular candidate supplier and assigning a performance
penalty (Li 2:¶0018).
14. In particular, the optimization engine calculates individualized
performance penalties for each performance attribute for a supplier
and sums these penalties for each supplier according to that
attribute’s assigned weight (Li 9:¶0141).
15. The optimization engine then determines an optimal award
schedule by minimizing an objective function subject to the buyer
and seller constraints, taking into account the price offered by that
supplier and a penalty associated with the supplier’s performance
in any buyer-specified performance attributes (Li 9:¶0143).
16. Thus, Li uses an optimization process that compares the suppliers’
bids to the buyer’s rules and constraints and ranks each supplier
based on the distance between each supplier’s offer (profile values)
and the buyer’s rules and constraints (profile values) using the sum
of the weighted distances for each parameter.

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PRINCIPLES OF LAW
“A claim is anticipated only if each and every element as set forth in
the claim is found, either expressly or inherently described, in a single prior
art reference.” Verdegaal Bros. v. Union Oil Co. of California, 814 F.2d
628, 631 (Fed. Cir. 1987).
“Section 103 forbids issuance of a patent when ‘the differences
between the subject matter sought to be patented and the prior art are such
that the subject matter as a whole would have been obvious at the time the
invention was made to a person having ordinary skill in the art to which said
subject matter pertains.’” KSR Int'l Co. v. Teleflex Inc., 127 S. Ct. 1727,
1734 (2007). The question of obviousness is resolved on the basis of
underlying factual determinations including (1) the scope and content of the
prior art, (2) any differences between the claimed subject matter and the
prior art, (3) the level of skill in the art, and (4) where in evidence, so-called
secondary considerations. Graham v. John Deere Co., 383 U.S. 1, 17-18
(1966). See also KSR, 127 S. Ct. at 1734 (“While the sequence of these
questions might be reordered in any particular case, the [Graham] factors
continue to define the inquiry that controls.”)

ANALYSIS
Rejection of claims 1-4, 8-21, 25-37, 41-54, and 58-70 under 35 U.S.C.
§ 102(e) as anticipated by May
The Appellant contends the Examiner erred in rejecting claim 1 as
anticipated by May, because “[n]o disclosure of a server that automatically
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modifies values in an offer, causes the modified offer to be accepted, and
conclude[s] an automatic negotiation was found in May” (App. Br. 8). We
agree. Specifically, we find that while May’s system allows the client and
dealer to modify values in the offer to negotiate toward a mutually-
acceptable distance between the modified offer and the profiles of the client
and dealer (Fact 8), May does not disclose that its system automatically
modifies one or more values in the offer (Fact 9). As such, we will not
sustain the rejection of independent claim 1 or its dependent claims 2-4 and
8-15.
The Appellants further contend that “[w]ith respect to independent
claims 16, 17, 18, 33, 49, 50, 66, 67, 68, 69, 70, each of these claims
includes limitations similar to those discussed above in connection with
claim 1” (App. Br. 8). We agree that independent claims 16, 17, 18, 66, 67,
and 68 each requires, similar to claim 1, automatically modifying one or
more values in the offer such that the distances between the modified offer
and the profiles of the first and second parties are acceptably small
simultaneously. For the same reasons provided in our analysis of claim 1,
we will also not sustain the rejection of independent claims 16, 17, 18, 66,
67, and 68, and corresponding dependent claims 19-21 and 25-32.
Independent claims 33, 49, 50, 69, and 70 are broader in scope than
claim 1 with respect to the argued limitation, because these claims do not
require the modification of the offer to occur automatically. For example,
independent claim 33, directed to software, requires only that the software is
operable to modify one or more values in the offer. This language is broad
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enough to cover software that is programmed to allow one of the parties to
make the modification, as it does not require that the modification is made
“automatically.” May discloses allowing the parties to modify the offer on-
line until they reach a mutually-acceptable agreement (Facts 1-8). As such,
the Appellant has failed to persuade us of error in the Examiner’s rejection
of independent claims 33, 49, 50, 69, and 70 under 35 U.S.C. § 102(e) as
anticipated by May. The Appellant’s argument as to the legal standard
applied by the Examiner (App. Br. 9; Reply Br. 7) is moot in view of the fact
that the Appellant’s argument for independent claims 33, 49, 50, 69, and 70
is not commensurate in scope with the claimed invention.
The Appellant further argues that May is not properly citable as prior
art under 35 U.S.C. § 102(e), because the Examiner declined to make a
showing that the provisional application, on which May relies for its priority
claim, properly supports the subject matter relied upon by the Examiner to
make the rejection in compliance with 35 U.S.C. § 112, first paragraph
(App. Br. 9). The issue boils down to one of burdens of proof. The
Appellant is arguing that the Examiner must make a showing of where
support can be found in the provisional application prior to the Appellant
presenting a specific challenge to the priority claim of the reference. We
need not reach this issue, however, because the Examiner did provide a
showing on page 11 of the Answer. The Appellant’s Reply Brief is
conspicuously silent as to any challenge to this showing. As such, the
Appellant has waived any argument that the Examiner’s reliance on May as
prior art is improper.
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The Appellant has failed to persuade us of error in the Examiner’s
rejection of independent claims 33, 49, 50, 69, and 70 as anticipated by May.
The Appellant does not present any arguments for the separately
patentability of dependent claims 34-37, 41-48, 51-54 and 58-65. As such,
these claims fall for the same reasons as their respective independent claims.

Rejection of claims 5-7, 22-24, 38-40, and 55-57 under 35 U.S.C. § 103(a)
as unpatentable over May and Li
Claims 5-7 and 22-24 depend from independent claims 1 and 18,
respectively. As we found supra, May fails to anticipate claims 1 and 18.
The Examiner did not rely on Li to teach automatically modifying one or
more values in an offer. Thus, the Examiner has failed to set forth a prima
facie case of obviousness of claims 5-7 and 22-24.
Claims 38-40 and 55-57 depend from independent claims 33 and 50,
respectively. As we found supra, May anticipates claims 33 and 50. As
such, we must examine the Appellant’s arguments with respect to
patentability of these corresponding dependent claims.
The Appellant argues that “the proposed combination of May and Li
fails to disclose or suggest the specific way in which distance is calculated
according to claim 5, where ‘distance’ is a distance between values in an
offer from a first party and values in a profile of a second party” (App. Br.
10).1 We disagree. Li discloses an optimization process that compares

1 The Appellant relied on these same arguments for patentability of claims
38-40 and 55-57 (App. Br. 11).
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suppliers’ bids to a buyer’s rules and constraints and ranks each supplier
based on the distance between each supplier’s offer (profile values) and the
buyer’s rules and constraints (profile values) using the sum of the weighted
distances for each parameter (Facts 10-16).
The Appellant further argued that the Examiner failed to provide
proper motivation for combining the teachings of May and Li (App. Br. 11).
The Examiner found motivation to combine “in the fact that both May and
Li disclose and suggest auction management systems in which parameters
are used in negotiation; however, May is silent as to formulas that may be
used in determining which offers to accept and reject” (Ans. 10). We agree
that both May and Li relate to auction management systems (Facts 1 and
10). We also find the Examiner’s explanation of motivation to combine is a
reasonable articulation of why one having ordinary skill in the art at the time
of the invention would have had a reason to employ Li’s optimization
process in May’s system. In particular, Li’s optimization system provides a
specific way to sift through numerous potential suppliers who have
responded to an RFQ in order to provide a client, in an automated fashion,
with a preferred list of suppliers, rather than requiring the client to sift
through all of the possible suppliers itself (Facts 11-15). May’s system
similarly allows a client to send out an RFP and receive counteroffers from
multiple bidders (suppliers). As such, Li’s optimization process for
determining an optimal award between competing suppliers would provide
an obvious improvement to May’s system and would be a predictable use of
Li’s optimization engine according to its established function. See KSR, 127
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S. Ct. at 1740 (“[I]f a technique has been used to improve one device, and a
person of ordinary skill in the art would recognize that it would improve
similar devices in the same way, using the technique is obvious unless its
actual application is beyond his or her skill.”) As such, the Appellant has
not persuaded us of error in the Examiner’s rejection of claims 38-40 and
55-57 as unpatentable over May and Li.

CONCLUSIONS
We conclude the Appellants have shown that the Examiner erred in
rejecting claims 1-4, 8-21, 25-32, and 66-68 under 35 U.S.C. § 102(e) as
anticipated by May and claims 5-7 and 22-24 under 35 U.S.C. § 103(a) as
unpatentable over May and Li. The Appellants have not shown that the
Examiner erred in rejecting claims 33-37, 41-54, 58-65, 69, and 70 under
35 U.S.C. § 102(e) as anticipated by May and claims 38-40 and 55-57 under
35 U.S.C. § 103(a) as unpatentable over May and Li.

DECISION
The decision of the Examiner to reject claims 1-32 and 66-68 is
reversed. The decision of the Examiner to reject claims 33-65, 69, and 70 is
affirmed.
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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.
§ 1.136(a)(1)(iv) (2007).

AFFIRMED-IN-PART

FISCHETTI, Administrative Patent Judge, concurring in result.
Appellant seeks the disqualification of May as a reference because,
according to Appellant as set forth in its Appeal Brief on pages 9 and 10, the
Examiner had relied on the provisional dates for May which Appellant
asserts would not allow May as a reference if the provisional applications do
not support the written description requirement of 35 U.S.C. § 112, first
paragraph, and that the burden is on the Examiner to make such a showing.
Prior to this, the record reveals that the first instance of any substantive
challenge to the provisional dates of the May reference occurred on page 2
of an after final Response filed on October 14, 2005.
The prosecution history further reveals that the Examiner at the onset,
beginning with the first action, based the rejections on the merits of the
claims in this application using May US 2002/0116317. Specifically,
starting with the first office action dated December 16, 2004, claims 1-4,
8-21, 25-37, 41-54, and 58-70 were rejected under 35 U.S.C. § 102(e) as
being anticipated by May, and claims 5-7, 22-24, 38-40, and 55-57 were
rejected under 35 U.S.C. § 103(a) as being unpatentable over May in view of
Li. Appellant responded by a Response dated April 22, 2005, listing, inter
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alia, a litany of elements starting on page 24 and ending on page 28 directed
to the legal standards for anticipation under 35 U.S.C. § 102, one of which
standards included noting that a prior publication must be complete,
enabling and meaningful. However, such mere boilerplate listing of the
constituent parts of a statute cannot qualify as a response under
37 C.F.R. § 1.111. 37 C.F.R. § 1.111 (b) states, in pertinent part, that any
such challenge must be
…reduced to a writing which distinctly and
specifically points out the supposed errors in the
examiner’s action and must reply to every ground
of objection and rejection in the prior Office
action. The reply must present arguments pointing
out the specific distinctions believed to render the
claims, including any newly presented claims,
patentable over any applied references.
Since the Response dated April 22, 2005 failed to challenge the Examiner’s
use of the provisional dates distinctly and specifically, the Response dated
April 22, 2005 did not contain any challenge to the May provisional dates.
However, in the after final Response dated October 14, 2005
Appellant did raise the issue with somewhat more particularity. Even if this
challenge were found to be sufficiently specific and definite as required
under 37 C.F.R. § 1.111 (b), it was waived nonetheless under
37 C.F.R. § 1.111 (a)(1) because it was untimely presented.
37 C.F.R. § 1.111 (a)(1) states in pertinent part that if
…after the first examination (§ 1.104) is adverse in
any respect, the applicant or patent owner, if he or
she persists in his or her application for a patent or
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reexamination proceeding, must reply and request
reconsideration or further examination, with or
without amendment. See §§1.135 and 1.136 for
time for reply to avoid abandonment.
The language of the rule is clear, if one wants to persist (meaning follow-up
without discontinuity) in prosecuting an application, then the applicant must
reply to the adverse point in the reply immediately following the action
which contained the adverse point. Since Applicant’s response was a bona
fide effort to advance prosecution but contained no challenge to the
provisional dates of May, prosecution continued to be advanced, but only as
to those issues responded to under the provisions of 37 C.F.R. § 1.111.
Appellant thus waived its challenge to the provisional date issue at this
point.

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