Ex Parte Warren

Board of Patent Appeals and Interferences

Mar 9, 2011

10728488 (B.P.A.I. Mar. 9, 2011)

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.
10/728,488 12/05/2003 Marc S. Warren 3321A 9743
7590 03/10/2011
David M. Warren
655 Oakland Ave.
Cedarhurst, NY 11516
EXAMINER
JOHNSON, GREGORY L
ART UNIT PAPER NUMBER
3691
MAIL DATE DELIVERY MODE
03/10/2011 PAPER
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.
PTOL-90A (Rev. 04/07)

UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE BOARD OF PATENT APPEALS
AND INTERFERENCES
____________

Ex parte MARC S. WARREN
___________

Appeal 2010-000815
Application 10/728,488
Technology Center 3600
____________

Before HUBERT C. LORIN, ANTON W. FETTING, and
JOSEPH A. FISCHETTI, Administrative Patent Judges.

LORIN, Administrative Patent Judge.

DECISION ON APPEAL1

1 The two-month time period for filing an appeal or commencing a civil
action, as recited in 37 C.F.R. § 1.304, or for filing a request for rehearing,
as recited in 37 C.F.R. § 41.52, begins to run from the “MAIL DATE”
(paper delivery mode) or the “NOTIFICATION DATE” (electronic delivery
mode) shown on the PTOL-90A cover letter attached to this decision.
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STATEMENT OF THE CASE
Marc S. Warren (Appellant) seeks our review under 35 U.S.C. § 134
(2010) of the final rejection of claims 1-7 and 9-12. We have jurisdiction
under 35 U.S.C. § 6(b) (2010).

SUMMARY OF DECISION
We AFFIRM and enter a NEW GROUND of rejection pursuant to 37
C.F.R. 41.50(b). 2

THE INVENTION
This invention is “a method of distribution and management of
interest in a property or security among a group of investors.” Specification
1:4-6.
Claim 1, reproduced below, is illustrative of the subject matter on
appeal.
1. A method for managing the assets of holders of
rights in a property, comprising the steps of:
acquiring shares of ownership in a property
represented by a security and issued by a business
enterprise, the shares of ownership being acquired
by an administrator, wherein each of the shares
constitutes a set of rights, wherein an individual
one of the rights in the set of rights is a different
kind of right from another one of the rights in the
set of rights, there being at least two different

2 Our decision will make reference to the Appellant’s Appeal Brief (“Br.,”
filed Apr. 8, 2009) and the Examiner’s Answer (“Answer,” mailed Jul. 22,
2009).

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kinds of rights in the set of rights, said individual
right comprising at least one of an equity right, a
non-equity right, a right to receive a dividend or
portion of the dividend, a right to receive an
interest payment or portion thereof, a right to
receive rent, a right to real property, a right to a
warrant, a right to a stock split, a right to
conversion between classes of securities, a residual
right, a voting right, a right to receive capital
appreciation, and wherein one or more of said
rights may have a time limitation;
dividing the set of rights into portions by the
administrator, each of the portions having at least
one of the rights, wherein a kind of right that is
present in a first of the portions is absent in a
second of the portions; and
establishing a market in the portions by the
administrator, wherein in said market, there is a
selling of the portions to investors and a
repurchasing of the portions from the investors,
said repurchasing enabling a holder of one of said
portions to regain a divided-out right from one of
said investors.

THE REJECTIONS
The Examiner relies upon the following as evidence of
unpatentability:
Earle
Wohlstadter
Wallman
Brisbois
Changanti
US 5,262,942
US 2002/0198833 A1
US 6,601,044 B1
US 2004/0267647 A1
US 2005/0080705 A1
Nov. 16, 1993
Dec. 26, 2002
Jul. 29, 2003
Dec. 30, 2004
Apr. 14, 2005
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Tripp
Sugahara
US 2007/0027787 A1
US 7,310,616 B2
Feb. 1, 2007
Dec. 18, 2007
Barron’s Dictionary of Finance and Investment Terms 639 (6th ed.
2003) [Hereinafter, Barron’s].

The following rejections are before us for review:
1. Claims 1-7 and 9-12 are rejected under 35 U.S.C. §101 as being
directed to non-statutory subject matter.
2. Claims 1-4 and 12 are rejected under 35 U.S.C. §103(a) as
being unpatentable over Wohlstadter, Chaganti, Brisbois, Tripp,
and Barron’s.
3. Claims 5-7 and 11 are rejected under 35 U.S.C. §103(a) as
being unpatentable over Wohlstadter, Chaganti, Brisbois, Tripp,
Barron’s, and Sugahara.
4. Claim 9 is rejected under 35 U.S.C. §103(a) as being
unpatentable over Wohlstadter, Chaganti, Brisbois, Tripp,
Barron’s, and Earle.
5. Claim 10 is rejected under 35 U.S.C. §103(a) as being
unpatentable over Wohlstadter, Chaganti, Brisbois, Tripp,
Barron’s, and Wallman.

ISSUES
The first issue is whether claims 1-7 and 9-12 are directed to non-
statutory subject matter under 35 U.S.C. § 101.
The second issue is whether claims 1-4 and 12 are unpatentable under
35 U.S.C. §103(a) over Wohlstadter, Chaganti, Brisbois, Tripp, and
Barron’s.
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The third issue is whether claims 5-7 and 11 are unpatentable under
35 U.S.C. §103(a) over Wohlstadter, Chaganti, Brisbois, Tripp, Barron’s,
and Sugahara.
The fourth issue is whether claim 9 is unpatentable under 35 U.S.C.
§103(a) as being unpatentable over Wohlstadter, Chaganti, Brisbois, Tripp,
Barron’s, and Earle.
The fifth issue is whether claim 10 is unpatentable under 35 U.S.C.
§103(a) over Wohlstadter, Chaganti, Brisbois, Tripp, Barron’s, and
Wallman.

ANALYSIS
The rejection of claims 1-7 and 9-12 under 35 U.S.C. §101 as being directed
to non-statutory subject matter.
The Appellant and the Examiner dispute whether claim 1 is directed
to statutory subject matter under § 101. Br.3-5 and Answer 17-19.
We find that claims 1-7 and 9-12 are drawn to non-statutory subject
matter as they encompass an abstract idea. The law in the area of patent-
eligible subject matter for process claims has recently been clarified by the
Supreme Court in Bilski v. Kappos, 130 S.Ct. 3218, No. 08-964, 2010 WL
2555192 (U.S. June 28, 2010). The Court held that the term “process” as
used in 35 U.S.C. § 101, does not categorically exclude business methods.
Bilski, 130 S.Ct. at 3228-3229.
The Court is unaware of any argument that the
“ordinary, contemporary, common meaning,”
Diehr, supra, at 182, 101 S.Ct. 1048, of “method”
excludes business methods. Nor is it clear what a
business method exception would sweep in and
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whether it would exclude technologies for
conducting a business more efficiently.
Bilski, 130 S. Ct. at 3222.

“At the same time, some business method patents raise special
problems in terms of vagueness and suspect validity.” Bilski, 130 S. Ct. at
3229. (citing eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 397
(2006))(Kennedy, J., concurring).
In searching for a limiting principle, this Court's
precedents on the unpatentability of abstract ideas
provide useful tools. See infra, at 12-15. Indeed, if
the Court of Appeals were to succeed in defining a
narrower category or class of patent applications
that claim to instruct how business should be
conducted, and then rule that the category is
unpatentable because, for instance, it represents an
attempt to patent abstract ideas, this conclusion
might well be in accord with controlling precedent.
Bilski, 130 S.Ct. at 3229 (2010).
Claims 1-7 and 9-12 are drawn to business methods. Taking claim 1
as representative, the broadest reasonable construction of the claimed
process in light of the Specification as it would be interpreted by one of
ordinary skill in the art is that it provides a series of instructions that do no
more than instruct an administrator to acquire shares of ownership in a
property, where each share constitutes a set of rights, divide the set of rights
into portions, and establish a market in the portions. The claim encompasses
any use of the concept of an administrator to acquiring shares of ownership
in a property, where each share constitutes a set of rights, dividing the set of
rights into portions, and establishing a market in the portions.
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We now turn to the question of whether the claimed process subject
matter is patent-eligible under 35 U.S.C. § 101. Various factors must be
considered and weighed when analyzing claims as a whole before reaching a
conclusion on patent subject matter eligibility.
The factors relevant in this case are the lack of an express or implied
recitation in the claims to a particular machine or transformation and that the
claims are a mere statement of a general concept.
Claim 1 does not contain any express or implied recitation of a
particular machine. See Br. 18 (“[p]resent claims 1 and 12 do not recite a
computer “).
Claim 1 also does not contain any express or implied transformation
of a particular article. As to the Appellant’s argument that claim 1 recites a
transformation of a security, which is an article (Br. 19-20), a security is not
an article.
The Supreme Court has defined “manufacture” (in
its verb form) as “the production of articles for use
from raw or prepared materials by giving these
materials new forms, qualities, properties, or
combinations, whether by hand-labor or by
machinery.” Diamond v. Chakrabarty, 447 U.S.
303, 308 (1980)(emphasis added)(quoting Am.
Fruit Growers, Inc. v. Brogdex Co., 283 U.S. 1, 11
(1931)). The term is used in the status in its non
form, Bayer AG v. Housey Pharms., Inc., 340 F.3d
1367, 1373 (Fed. Circ. 2003), and therefore refers
to “articles” resulting from the process of
manufacture. The same dictionary the Supreme
Court relied on for its definition of “manufacture”
in turn defines “article” as “a particular substance
or commodity: as, an article of merchandise; and
article of clothing; salt is a necessary article.” 1
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Century Dictionary 326 (Willam Dwight Whiney
ed., 1895)(emphasis in original).
In re Nuijten, 500 F.3d 1346, 1356 (Fed. Cir. 2007). “[A]rtificiality is
insufficient by itself to render something a ‘manufacutre.’” Id. at 1356.
As we have reasonably broadly construed it, the subject matter of
claim 1 is a series of instructions for an administrator to acquiring shares of
ownership in a property, where each share constitutes a set of rights,
dividing the set of rights into portions, and establishing a market in the
portions The vague instructions listed in the claim do no more than instruct
how business should be conducted; that is for an administrator to acquiring
shares of ownership in a property, where each share constitutes a set of
rights, dividing the set of rights into portions, and establishing a market in
the portions. The claim covers any use of this concept. In the words of
Gottschalk v. Benson, 409 U.S. 63, 72 (1972), the claimed process “would
wholly pre-empt the [concept of an administrator acquiring shares of
ownership in a property, where each share constitutes a set of rights,
dividing the set of rights into portions, and establishing a market in the
portions] and in practical effect would be a patent on the [concept] itself.”
For the foregoing reasons, based upon consideration of all the relevant
factors with respect to claims 1-7 and 9-13 as a whole, claims 1-7 and 9-13
are held to claim an abstract idea and are therefore rejected as ineligible
subject matter under 35 U.S. C § 101. Since our reasoning in finding claims
1-7 and 9-13 direct to non-statutory subject matter under § 101 differs from
that of the Examiner, we reverse the Examiner’s rejection and designate our
reasoning above as a new ground of rejection.

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The rejection of claims 1-4 and 12 under 35 U.S.C. §103(a) as being
unpatentable over Wohlstadter, Chaganti, Brisbois, Tripp, and Barron’s.
The Appellant argues claims 1-4 and 12 as a group. Br. 20-26. We
select claim 1 as the representative claim for this group, and the remaining
claims 2-4 stand or fall with claim 1. 37 C.F.R. § 41.37(c)(1)(vii) (2010).
The Appellant reproduces passages from the cited prior art that the
Examiner cited in support of the rejection. Br. 20-23. Then the Appellant
concludes, “[b]ut there does not appear to be any teaching in any one of the
references that teaches or even suggests the presently claimed subject matter.
There is no overriding theme in any of the references to show the general
concept of the presently claimed invention, and therefore, there can be no
motivation to combine the references.” Br. 23.
In as much as the Appellant may be arguing that the references
themselves do not contain a motivation or suggestion to combine the prior
art, the Appellant is arguing an overly-strict standard of obviousness. “The
obviousness analysis cannot be confined by a formalistic conception of the
works teaching, suggestion, and motivation, or by overemphasis on the
importance of published articles and the explicit content of issued patents.”
KSR Int’l Co. v. Teleflex Inc., 550 US 398, 419 (2007). “As our precedents
make clear, however, the analysis need not seek out precise teachings
directed to the specific subject matter of the challenged claims, for a court
can take account of the inferences and creative steps that a person of
ordinary skill in the art would employ.” KSR Int’l Co., 550 U.S. at 418.
Further, the Appellant’s argument does not address the combination
made by the Examiner. For example, the Appellant argues that “[t]here is no
mention, suggestion, or teaching by Wohlstadter of the division of the set of
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rights embodied in a security into one or more of the rights, representing a
fraction or portion of the rights embodied by the security, followed by the
establishment of a market.” Br. 24. However, Tripp was cited in the
rejection to teach dividing the set of rights into portions by the Administrator
and establishing a market in the portions by the administrator. Answer 6-7.
See also Answer 19-20. The Examiner reasons that the combination of the
teachings of Wohlstadter and Tripp would be nothing more than the
combination of old elements that would perform the same function as they
did separately and reasons that the result of the combination would be
predictable. Answer 7.
The Supreme Court emphasized that “the principles laid down in
Graham reaffirmed the ‘functional approach’ of Hotchkiss, 11 How. 248.”
KSR, 550 U.S. at 415. (citing Graham, 383 U.S. at 12 (emphasis added)),
and reaffirmed principles based on its precedent that “[t]he combination of
familiar elements according to known methods is likely to be obvious when
it does no more than yield predictable results.” KSR, 550 U.S. at 416. The
operative question in this “functional approach” is “whether the
improvement is more than the predictable use of prior art elements according
to their established functions.” KSR, 550 U.S. at 417.
The Appellant’s argument does not address whether the improvement
is more than the predictable use of prior art elements according to their
established functions. The Appellant’s argument does not address the
Examiner’s rationale in finding that the combination of prior art renders the
method of claim 1 obvious.
The Examiner has established a prima facie showing of obviousness,
which the Appellant has not overcome. Accordingly, we find that the
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Appellant has not overcome the rejection of claims 1 and 12, and claims 2-4,
dependent thereon, under 35 U.S.C. § 103(a) over Wohlstadter, Chaganti,
Brisbois, Tripp, and Barron’s.

The rejection of claims 5-7 and 11 under 35 U.S.C. §103(a) as being
unpatentable over Wohlstadter, Chaganti, Brisbois, Tripp, Barron’s, and
Sugahara.
The Appellant argues claims 5-7 and 11 as a group. Br. 26. We select
claim 5 as the representative claim for this group, and the remaining claims
6, 7, and 11 stand or fall with claim 5. 37 C.F.R. § 41.37(c)(1)(vii) (2010).
To traverse the rejection of claim 5, the Appellant asserts that: “The
fact that Sugahara can provide for a repurchasing feature does not show such
a feature would be incorporated advantageously in claim 1 in combination
with the teachings of all the other cited references. Thus, there is no
motivation to combine the references.” Br. 26.
The Appellant’s argument with respect to these claims simply state,
that there is no motivation to combine the references – without responding to
the Examiner’s reasoning in establishing a prima facie case of obviousness
(see Answer 10-11). “It is not the function of this court to examine the
claims in greater detail than argued by an appellant, looking for nonobvious
distinctions over the prior art.” In re Baxter Travenol Labs, 952 F.2d 388,
391 (Fed. Cir. 1991). See also In re Wiseman, 596 F.2d 1019, 1022 (CCPA
1979) (arguments must first be presented to the board).
The Examiner has established a prima facie showing of obviousness,
which the Appellant has not overcome. Accordingly, we find that the
Appellant has not overcome the rejection of claims 5-7 and 11 under 35
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U.S.C. § 103(a) over Wohlstadter, Chaganti, Brisbois, Tripp, Barron’s, and
Sugahara.

The rejection of claim 9 under 35 U.S.C. §103(a) as being unpatentable over
Wohlstadter, Chaganti, Brisbois, Tripp, Barron’s, and Earle.
To traverse the rejection of claim 9, the Appellant argues: “The fact
that Earle can provide for a feature of disbursing dividends does not show
how such a feature would be incorporated advantageously in claim 1 in
combination with the teachings of all the other cited references. Thus, there
is no motivation to combine the references.” Br. 26-27.
For the same reason as discussed above with regards to claim 5, we
find the Appellant’s argument unpersuasive. The Examiner has established
a prima facie showing of obviousness (see Answer 12-13), which the
Appellant has not overcome. Accordingly, we find that the Appellant has
not overcome the rejection of claim 9 under 35 U.S.C. § 103(a) over
Wohlstadter, Chaganti, Brisbois, Tripp, Barron’s, and Earle.

The rejection of claim 10 under 35 U.S.C. §103(a) as being unpatentable
over Wohlstadter, Chaganti, Brisbois, Tripp, Barron’s, and Wallman.
To traverse the rejection of claim 10, the Appellant argues: “The fact
that Wallman can provide for a feature of handling the voting rights does not
show how such a feature would be incorporated advantageously in claim 1
in combination with the teachings of all the other cited references. Thus,
there is no motivation to combine the references.” Br. 27.
For the same reason as discussed above with regards to claim 5, we
find the Appellant’s argument unpersuasive. The Examiner has established
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a prima facie showing of obviousness (see Answer 13-14), which the
Appellant has not overcome. Accordingly, we find that the Appellant has
not overcome the rejection of claim 10 under 35 U.S.C. § 103(a) over
Wohlstadter, Chaganti, Brisbois, Tripp, Barron’s, and Wallman.

DECISION
The decision of the Examiner to reject claims 1-7 and 9-12 is
affirmed.
This decision contains a new ground of rejection pursuant to
37 C.F.R. § 41.50(b) (effective September 13, 2004, 69 Fed. Reg. 49960
(August 12, 2004), 1286 Off. Gaz. Pat. Office 21 (September 7, 2004)). 37
C.F.R. § 41.50(b) provides “[a] new ground of rejection pursuant to this
paragraph shall not be considered final for judicial review.”
37 C.F.R. § 41.50(b) also provides that the Appellant, WITHIN TWO
MONTHS FROM THE DATE OF THE DECISION, must exercise one of
the following two options with respect to the new ground of rejection to
avoid termination of the appeal as to the rejected claims:
• (1) Reopen prosecution. Submit an appropriate amendment of the
claims so rejected or new evidence relating to the claims so rejected,
or both, and have the matter reconsidered by the examiner, in which
event the proceeding will be remanded to the examiner . . . .
• (2) Request rehearing. Request that the proceeding be reheard under
§ 41.52 by the Board upon the same record . . . .

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AFFIRMED; 37 C.F.R. § 41.50(b)

MP

David M. Warren
655 Oakland Ave.
Cedarhurst NY 11516