Ex Parte Thorpe et al

Patent Trial and Appeal Board

Dec 21, 2017

12261249 (P.T.A.B. Dec. 21, 2017)

United States Patent and Trademark Office
UNITED STATES DEPARTMENT OF COMMERCE
United States Patent and Trademark Office
Address: COMMISSIONER FOR PATENTS
P.O.Box 1450
Alexandria, Virginia 22313-1450
www.uspto.gov
APPLICATION NO. FILING DATE FIRST NAMED INVENTOR ATTORNEY DOCKET NO. CONFIRMATION NO.
12/261,249 10/30/2008 Christopher Thorpe H2021-700310 4098
37462 7590 12/26/2017
LANDO & ANASTASI, LLP
ONE MAIN STREET, SUITE 1100
CAMBRIDGE, MA 02142
EXAMINER
KHATTAR, RAJESH
ART UNIT PAPER NUMBER
3693
NOTIFICATION DATE DELIVERY MODE
12/26/2017 ELECTRONIC
Please find below and/or attached an Office communication concerning this application or proceeding.
The time period for reply, if any, is set in the attached communication.
Notice of the Office communication was sent electronically on above-indicated "Notification Date" to the
following e-mail address(es):
docketing @ L ALaw .com
CKent@LALaw.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte CHRISTOPHER THORPE and DAVID C. PARKES
Appeal 2016-0038281
Application 12/261,2492
Technology Center 3600
Before PHILIP J. HOFFMANN, TARA L. HUTCHINGS, and
ALYSSA A. FINAMORE, Administrative Patent Judges.
HUTCHINGS, Administrative Patent Judge.
DECISION ON APPEAL
STATEMENT OF THE CASE
Appellants appeal under 35 U.S.C. § 134(a) from the Examiner’s final
rejection of claims 1 and 3—24. We have jurisdiction under 35 U.S.C. § 6(b).
We AFFIRM.
1 Our decision references Appellants’ Appeal Brief (“Br.,” filed Oct. 5,
2015), and the Examiner’s Answer (“Ans.,” mailed Jan. 22, 2016) and Final
Office Action (“Final Act.,” mailed Mar. 5, 2015).
2 Appellants identify “PRESIDENT AND FELLOWS OF HARVARD
COLLEGE” as the real party in interest. Br. 4.
Appeal 2016-003828
Application 12/261,249
CLAIMED INVENTION
Claims 1,19, and 20 are the independent claims on appeal. Claim 1,
reproduced below, is illustrative of the claimed subject matter:
1. A computer implemented method for facilitating
exchange of assets bundled into one or more baskets of assets
that maintains secrecy of the assets, the method comprising:
accepting submission of a plurality of baskets by a clearing
system comprising at least one computer based processor,
wherein the plurality of baskets include a plurality of secret
offers associated with a plurality of assets, wherein each secret
offer includes an obfuscation of at least a quantity and an identity
of an asset;
determining, by the clearing system, overlapping offers for
an asset, wherein the act of determining overlapping offers for
the asset includes resolving the plurality of secret offers
associated with the plurality of assets, wherein each secret offer
is associated with at least one asset, and determining matching
trades of the obfuscated quantities and obfuscated identities of
assets;
determining any remainder from the overlapping offers,
including any portion of remaining supply or demand from the
obfuscated quantities and obfuscated identities of the plurality of
assets;
generating a remainder basket for clearing any remainder,
wherein the remainder basket includes at least one secret offer
associated with an asset; and
generating, by the clearing system, proof information for
verifying the overlapping offers in the plurality of baskets,
including the plurality of secret offers associated with the
plurality of assets and proof information for the remaining supply
or demand in the remainder basket, including the at least one
secret offer associated with the asset.
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REJECTION
Claims 1 and 3—24 are rejected under 35U.S.C. § 101 as directed to
non-statutory subject matter.
ANALYSIS
Independent Claims 1, 19, and 20, and Dependent Claims 7, 10—18,
and 21—23
Appellants argue independent claims 1,19, and 20 as a group. See
Br. 7—17. We select independent claim 1 as representative. The remaining
claims stand or fall with claim 1. See 37 C.F.R. § 41.37(c)(l)(iv).
Under 35 U.S.C. § 101, an invention is patent-eligible if it claims a
“new and useful process, machine, manufacture, or composition of matter.”
35 U.S.C. § 101. The Supreme Court, however, has long interpreted § 101
to include an implicit exception: “[ljaws of nature, natural phenomena, and
abstract ideas” are not patentable. Alice Corp. Pty. Ltd. v. CLS Banklnt’l,
134 S. Ct. 2347, 2354 (2014).
The Supreme Court, in Alice, reiterated the two-step framework
previously set forth in Mayo Collaborative Services v. Prometheus
Laboratories, Inc., 566 U.S. 66 (2012), “for distinguishing patents that claim
laws of nature, natural phenomena, and abstract ideas from those that claim
patent-eligible applications of those concepts.” Alice Corp., 134 S. Ct.
at 2355. The first step in that analysis is to “determine whether the claims at
issue are directed to one of those patent-ineligible concepts.” Id. If the
claims are not directed to a patent-ineligible concept, e.g., an abstract idea,
the inquiry ends. Otherwise, the inquiry proceeds to the second step where
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the elements of the claims are considered “individually and ‘as an ordered
combination’” to determine whether there are additional elements that
“‘transform the nature of the claim’ into a patent-eligible application.” Id.
(quoting Mayo, 566 U.S. at 78).
The Court acknowledged in Mayo, that “all inventions at some level
embody, use, reflect, rest upon, or apply laws of nature, natural phenomena,
or abstract ideas.” Mayo, 566 U.S. at 71. We, therefore, look to whether the
claims focus on a specific means or method that improves the relevant
technology or are, instead, directed to a result or effect that itself is the
abstract idea, and merely invoke generic processes and machinery.
See Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1336 (Fed. Cir. 2016).
Here, in rejecting the pending claims under § 101, the Examiner finds
that the “claims are directed to the abstract idea of carrying out an exchange
of assets by maintaining secrecy of the assetsf,] which is a fundamental
economic practice.” Final Act. 2. The Examiner further finds that the
additional elements or combination of elements in the claims amount to no
more than “mere instructions to implement the abstract idea on a computer,”
using “generic computer structure that. . . perform[s] generic computer
functions that are well-understood, routine, and conventional activities
previously known to the pertinent industry.” Id. Viewed as a whole, the
Examiner determines that the elements “do not provide meaningful
limitations to transform the abstract idea into a patent eligible application of
the abstract idea.” Id. at 2—3.
Appellants argue that the Examiner erred in finding that the claims are
directed to an abstract idea under step one of the Mayo!Alice framework.
Specifically, Appellants assert that the Examiner mischaracterizes the claims
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as “carrying out an exchange of assets by maintaining secrecy of the assets,”
because it is impossible for a purchaser or winning bidder to maintain
secrecy of what was conveyed at the end of the transaction. Br. 8. Yet, the
preamble to claim 1 recites that the method “facilitates] exchange of assets
bundled into one or more baskets that maintains secrecy of the assets.” The
claimed steps comprise: (1) accepting submission of a plurality of baskets,
which include a plurality of secret offers associated with a plurality of
assets; (2) determining overlapping offers for an asset; (3) determining any
remainder from the overlapping offers; (4) generating a remainder basket;
and (5) generating proof information for verifying the overlapping offer.
The Background section of Appellants’ Specification describes that
“institutions often enter and exit multi-million dollar positions in equities by
trading‘baskets’with investment banks.” Spec. 1,11. 10-11. These trades
occur several times a week for baskets of equities “worth hundreds of
millions or even billions of dollars.” Id. at 1,11. 17—18. In executing these
trades, institutions reveal only aggregate statistics about the equities to
maintain secrecy regarding the equities in the baskets. Id. at 1,11. 11—14.
“A large body of evidence shows that this fear of revealing the underlying
equities is justified.” Id. at 1,11. 14—15.
Here, it is evident from Appellants’ Specification, including the
Background section and claim language, that the focus of the claims is on
facilitating an exchange of assets.3 Like the risk hedging in Bilski, the
3 We articulate the abstract idea at a higher level of abstraction than the
Examiner. However, an abstract idea can generally be described at different
levels of abstraction. See Apple, Inc. v. Ameranth, Inc., 842 F.3d 1229,
1240-41 (Fed. Cir. 2016).
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concept of facilitating an exchange of assets is a fundamental practice long
prevalent in our system of commerce, i.e., an abstract idea. See Bilski v.
Kappos, 561 U.S. 593, 611 (2010).
We are not persuaded by Appellants’ argument that the claims are
similar to the claims found patent-eligible in DDR Holdings, LLC v.
Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014), because the claims do not
recite the performance of a business practice known from the pre-Internet
world along with the requirement to perform it on the Internet. See Br. 8—9.
In DDR Holdings, the Federal Circuit determined that, although the patent
claims at issue involved conventional computers and the Internet, the claims
addressed a challenge particular to the Internet, i.e., retaining website
visitors who, if adhering to the routine, conventional functioning of Internet
hyperlink protocol, would be transported instantly away from a host’s
website after “clicking” on an advertisement and activating a hyperlink.
DDR Holdings, 773 F.3d at 1257. The Federal Circuit, thus, held that the
claims were directed to statutory subject matter because they recite a
solution “necessarily rooted in computer technology in order to overcome a
problem specifically arising in the realm of computer networks.” Id.
No such technological advance is evident in the claimed invention.
Unlike the situation in DDR Holdings, Appellants do not identify any
problem particular to computer networks and/or the Internet that the claims
allegedly overcome. Instead, Appellants contend that “[conventional sealed
bid auctions do not generate proof regarding the underlying bids, and the
only way to do so in a convention [sic] approach would be to unseal the
bids.” Br. 9. But Appellants describe a problem relating to the business
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practice for maintaining secrecy in the exchange of assets, not a technical
problem rooted in computer technology.
We are not persuaded by Appellants’ argument that the Examiner
does not meet the burden to establish a proper rejection under 35 U.S.C.
§101. See Br. 9-10, 17. In particular, Appellants charge that “the Examiner
has not supported his allegation of the abstract idea with any record
evidence,” and does not “provide analysis of the ‘additional elements or
combination of elements’ recited in dependent claims” as allegedly required
by the Administrative Procedures Act. Id. at 9. Yet, there is no requirement
in Alice, Bilski, or elsewhere that requires the Office to provide evidence to
support a determination that a claim is directed to an abstract idea, or to
expressly address every word of every claim.
Instead, the USPTO carries its procedural burden when its rejection
satisfies the requirements of 35 U.S.C. § 132 by notifying the applicant of
the reasons for rejection, “‘together with such information and references as
may be useful in judging of the propriety of continuing the prosecution of
[the] application.’” In re Jung, 637 F.3d 1356, 1362 (Fed. Cir. 2011)
(brackets in original, quoting 35 U.S.C. § 132). Here, in rejecting the
pending claims under § 101, the Examiner analyzed the claims using the
Mayo/Alice two-step framework. The Examiner, thus, notified Appellants of
the reasons for the rejection “together with such information and references
as may be useful in judging of the propriety of continuing the prosecution of
[the] application.” 35 U.S.C. § 132. In doing so, the Examiner set forth a
proper rejection under § 101.
Turning to step two of the Mayo!Alice framework, Appellants argue
that claim 1 adds specific limitations other than what is well-understood,
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routine, and convention in the field, and describes unconventional steps.
Br. 11—12. In this regard, Appellants assert that the claims recite elements
that are not taught or suggested by the prior art. Id. However, although the
second step in the MayolAlice framework is termed a search for an
“inventive concept,” the analysis is not an evaluation of novelty or non­
obviousness, but rather, a search for “an element or combination of elements
that is ‘sufficient to ensure that the patent in practice amounts to
significantly more than a patent upon the [patent-ineligible concept] itself.’”
Alice Corp., 134 S. Ct. at 2355 (quoting Mayo, 566 U.S. at 73). A novel and
non-obvious claim directed to a purely abstract idea is, nonetheless, patent-
ineligible. See Mayo, 566 U.S. at 90; see also Diamond v. Diehr, 450 U.S.
175, 188—89 (1981) (“The ‘novelty’ of any element or steps in a process, or
even of the process itself, is of no relevance in determining whether the
subject matter of a claim falls within the categories of possibly patentable
subject matter.”).
We also are not persuaded by Appellants’ argument that the “cited
references provide additional evidence that the claims do not preempt any
abstract idea.” Br. 12. Preemption is not the test for eligibility under § 101.
Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1377 (Fed.
Cir. 2015) (“Where a patent’s claims are deemed only to disclose patent
ineligible subject matter under the Mayo framework, as they are in this case,
preemption concerns are fully addressed and made moot.”).
Citing DDR Holdings, Appellants argue that the claimed solution is
necessarily rooted in computer technology because the step of “generating
. . . proof information,” as recited in claim 1, “[could not] be performed
realistically without a computer.” Br. 12. As an initial matter, claim 1 does
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not recite that a computer performs the “generating” step. But even if claim
1 required generating by a computer, generic computer limitations do not
suffice to render patent-eligibility. DDR Holdings, 773 F.3d at 1256
(“[A]fter Alice, there can remain no doubt: recitation of generic computer
limitations does not make an otherwise ineligible claim patent-eligible.”)
(citing Alice, 134 S. Ct. at 2358).
Appellants assert that the claimed solution “represents improvements
in the application of obfuscation (e.g., encryption) ‘another technology or
technical field’ by implementing and resolving problems of secret offer
submission, secret reconciliation, liquidity solutions, and generation of proof
information that does not comprise known encryption technology.” Br. 13.
Appellants contend that the claimed invention improves operation of the
computer and a technical field, is a practical application of an abstract idea,
and, as an ordered combination, recites significantly more than the abstract
idea. Id. at 13—17.
Yet, the relevant question, which Appellants do not address
persuasively, is how the claim elements individually, or as an ordered
combination, amount to an inventive concept that converts an abstract idea
into patent-eligible subject matter. Here, the claims do not focus on how any
of the steps leads to an improvement in encryption technology; instead, the
focus of the claims remains at a high level (e.g., determining overlapping
offers, determining any remainder from the overlapping offers, including
any portion of remaining supply or demand from the obfuscated quantities
and obfuscated identities, and generating proof information for verifying
overlapping offers). Broadly construed, the claim elements individually do
not require any particular algorithm or technology for the obfuscation. As
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an ordered combination, there is no indication that there is some non-
con ventional and non-generic arrangement of known, conventional elements
that leads to an improvement in encryption technology.
Appellants argue that the claims satisfy the machine-or-transformation
test for determining whether a claim is patent-eligible. Br. 15 (citing Bilski
v. Kappos, 130 S. Ct. 3218 (2010)). Specifically, Appellants contend that:
(1) the claimed “clearing system” recites a particular machine under the
machine prong; and (2) “transform[ing] obfuscated offers into reconciled
transactions, an obfuscated remainder, and validation (proof) information for
any observer to determine correctness” meets the transformation prong. Id.
We disagree. The claimed clearing system, for example, does not recite any
structural limitations to satisfy the machine prong of the test. And the
alleged transformation of obfuscated offers merely manipulates abstractions,
which does not meet the transformation prong of the test. See Bilski, 545
F.3d 943, 963 (Fed. Cir. 2008) (“Purported transformations or manipulations
simply of public or private legal obligations or relationships, business risks,
or other such abstractions cannot meet the test.”). Moreover, even if claim 1
satisfied the machine-or-transformation test, the Supreme Court emphasized
in Mayo that satisfying the machine-or-transformation test, by itself, is not
sufficient to render a claim patent-eligible, because not all transformations or
machine implementations infuse an otherwise ineligible claim with an
‘inventive concept.’” See Mayo, 132 S. Ct. at 1301. Here, Appellants do
not persuade us that the claims recite any such “inventive concept” at step
two of the analysis.
We have considered all of Appellants’ arguments. But none
persuades us that the Examiner erred in rejecting claim 1 under 35 U.S.C.
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§ 101. Therefore, we sustain the Examiner’s rejection under 35 U.S.C.
§ 101 of independent claim 1, and independent claims 19 and 20, which fall
with claim 1. We also sustain the rejection of dependent claims 7 and 10-18
and 21—23 under 35 U.S.C. § 101 of claims, because the Examiner need not
provide an on-the-record analysis of the elements individually and as an
ordered combination. See Br. 17.
Dependent Claims 3 and 4
Appellants argue that claim 3 as an ordered combination is patent-
eligible and “[t]he Examiner fails to consider how the combined encrypted
bid and digital commitment enables the disclosed functions of validating
submitted bids in the context of proving the operations on secret values have
been executed correctly.” Br. 17—18. Yet, the relevant inquiry concerns
whether the elements, considered individually and as an ordered
combination, transform the nature of the claim into a patent-eligible
application. Here, Appellants do not explain why “providing functions for
obfuscation,” as recited in claim 3, amounts to an inventive concept that
converts an abstract idea into patent-eligible subject matter when considered
as an ordered combination. The claims do not sufficiently recite why
“providing functions for obfuscation” leads to an improvement in
technology, such as encryption technology. For example, the claimed
“functions for obfuscation,” considered individually or as an ordered
combination, broadly cover any routine function for obfuscation.
Therefore, we sustain the Examiner’s rejection of dependent claim 3
under 35 U.S.C. § 101. We also sustain the rejection under 35 U.S.C. § 101
of claim 4, which depends from claim 3.
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Dependent Claims 5 and 6
Appellants argue that the additional limitations recited in claims 5
and 6, as an ordered combination, are patent-eligible and “the Examiner fails
to consider or address how these elements and functions yield the admitted
novel and non-obvious methods and systems, and how these operations are
represented by known encryption techniques.” Br. 18. Yet claim 5 recites
“performing a secrecy preserving operation,” and claim 6 recites that the
secrecy preserving operation includes “at least one of addition, subtraction,
equality determination, and inequality determination on secret values.”
Here, we fail to see, and Appellants fail to persuasively explain, how
the features recited in claims 5 and 6 amount to an inventive concept that
converts an abstract idea into patent-eligible subject matter when considered
as an ordered combination. Performing a “secrecy preserving operation”
that includes at least one of addition, subtraction, equality determination, and
inequality determination on secret values is simply not enough to transform
the patent-ineligible abstract idea into a patent-eligible invention.
Accordingly, we sustain the rejection of claims 5 and 6 under 35 U.S.C.
§101.
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Dependent Claims 8, 9, and 24
Appellants advance a similar line of arguments with respect to claims
8, 9, and 24, as advanced for claims 5 and 6. Namely, Appellants focus on
the novelty and non-obviousness of the ordered combination of elements as
evidence that the ordered combination recites significantly more than the
abstract idea. See Br. 18—19. Yet, Appellants do not persuasively explain
why the additional recitations of claims 8, 9, and 24, when considered as an
ordered combination, amount to an inventive concept under step two, and no
such inventive concept is evident from the claimed arrangement. Therefore,
we sustain the Examiner’s rejection of dependent claims 8, 9, and 24 under
35U.S.C. § 101.
DECISION
The Examiner’s rejection of claims 1 and 3—24 under 35 U.S.C. § 101
is affirmed.
No time period for taking any subsequent action in connection with
this appeal may be extended under 37 C.F.R. § 1.136(a)(l)(iv).
AFFIRMED
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