Ex Parte Wolf et al

Patent Trial and Appeal Board

May 24, 2018

13534416 (P.T.A.B. May. 24, 2018)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
13/534,416 06/27/2012
12684 7590 05/29/2018
Lempia Summerfield Katz LLC/CME
20 South Clark Street
Suite 600
Chicago, IL 60603
FIRST NAMED INVENTOR
Brian M. Wolf
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/l 1013BUS 1176
EXAMINER
WONG, ERIC TAK WAI
ART UNIT PAPER NUMBER
3692
NOTIFICATION DATE DELIVERY MODE
05/29/2018 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
Exparte BRIAN M. WOLF, JOHNF. CURRAN, JAMES W. FARRELL,
PAULJ. CALLAWAY, BARRYL. GALSTER, ANDREW MILNE,
GIUSEPPE SCIMECA, PEARCE PECK-WALDEN, and JAMES WILCOX
Appeal2016-007431
Application 13/534,416 1
Technology Center 3600
Before: ROBERT E. NAPPI, CATHERINE SHIANG, and
SCOTT B. HOWARD, Administrative Patent Judges.
HOWARD, Administrative Patent Judge.
DECISION ON APPEAL
Appellants appeal under 35 U.S.C. § 134(a) from the Examiner's
Final Rejection of claims 1, 3, 9--14, 16, and 22-27, which constitute all of
the claims pending in this application. Claims 2, 4--8, 15, 17-21, and 28-30
have been cancelled. See App. Br. 12-14, 16 (Claims App.). We have
jurisdiction under 35 U.S.C. § 6(b ).
We AFFIRM.
1 Appellants identify Chicago Mercantile Exchange Inc. as the real party in
interest. App. Br. 2.
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Application 13/534,416
THE INVENTION
According to Appellants, the disclosed and claimed invention "relates
to software, systems and methods for electronic trading in a commodities
exchange, derivatives exchange or similar business involving tradable items
where orders from buyers are matched with orders from sellers." Spec. i-f 1.2
Claim 1, reproduced below, is illustrative of the claimed subject
matter:
1. A computer implemented method for improving the
efficiency of a trading system, the system comprising a
processor, the method comprising:
receiving, by the processor from at least one market
participant of a plurality of market participants, a first order for
a first instrument and a second order for a second instrument,
the first and second orders having a relationship there between
from which at least a third order for a third instrument may be
implied;
selectively generating, by the processor, the implied third
order based on the first and second orders; and
preventing by the processor, the generation of the implied
third order when the best bid price in the market for the third
instrument is within a threshold number of price ticks of the
best ask price in the market for the third instrument, when a
delivery month of the third instrument is a defined delivery
month, when a delivery month for the third instrument is the
current month, when a likelihood of receiving an order, at a
better price with respect to a resting counter order thereto, for
the third instrument satisfying the relationship between the first
and second orders from one of the plurality of market
participants exceeds a threshold, and/or when the implied third
order will not improve a spread between a best bid price and a
best ask price in the market for the third instrument and
otherwise making the generated implied third order available in
2 The Specification contains two paragraphs identified as paragraph 1. See
Spec. 1. The quoted section is from the second paragraph identified as
paragraph 1.
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a market for the third instrument for trading by the plurality of
market participants.
REFERENCES
The prior art relied upon by the Examiner as evidence in rejecting the
claims on appeal is:
Milne
("Milene '633")
Milne
("Milne '536")
US 2010/0174633 Al July 8, 2010
US 2011/0066536 Al Mar. 17, 2011
REJECTIONS
Claims 1, 3, 9-14, 16, and 22-27 stand rejected under 35 U.S.C. § 101
as being directed to patent-ineligible subject matter. Final Act. 2---6; Adv.
Act. 2---6.
Claims 1, 3, 9-12, 14, 16, 21-25, and 27 stand rejected under 35
U.S.C. §102(b) as being anticipated by Milne '633. Final Act. 7-9; Adv.
Act. 6.
Claims 13 and 26 stand rejected under 35 U.S.C. § 103(a) as being
unpatentable over Milne '633 in view of Milne '536. Final Act. 10-11.
ANALYSIS
We have reviewed the Examiner's rejection in light of Appellants'
arguments that the Examiner erred. In reaching this decision, we have
considered all evidence presented and all arguments made by Appellants. 3
3 Rather than reiterate the entirety of the arguments of Appellants and the
positions of the Examiner, we refer to the Appeal Brief (filed Nov. 23, 2015,
"App. Br."); the Reply Brief (filed July 20, 2016, "Reply Br."); the Final
Office Action (mailed June 25, 2015 "Final Act."); the Advisory Action
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We are not persuaded by Appellants' arguments regarding the pending
claims. Instead, we agree with and adopt as our own: (1) the findings and
reasons set forth by the Examiner in the action from which this appeal is
taken (Final Act. 2-11); and (2) the reasons and rebuttals set forth in the
Advisory Action and the Examiner's Answer in response to Appellants'
arguments (Adv. Act. 2---6; Ans. 2-14). We incorporate such findings,
reasons, and rebuttals herein by reference unless otherwise noted. However,
we highlight and address specific findings and arguments for emphasis as
follows.
I. Section 101 Discussion
A. Appellants 'Arguments
Appellants argue because the Examiner did not rely on objective
evidence and the claims do not preempt a fundamental business practice, the
Examiner erred in determining the claims are directed to an abstract idea:
In particular, the Examiner has not shown, e.g. by objective
evidence, and a person of ordinary skill in the art would not
find, that the claims are directed to, nor do they pre-empt or
otherwise tie up a fundamental economic practice, such as the
operation of an economic market to buy and sell, nor directed to
methods of organizing human activities, an idea in and of itself
or a mathematical relationship or formula.
App. Br. 4--5; see also Reply Br. 4 ("Further, the claimed invention does not
pre-empt all use of an abstract idea but instead recite a specific and discrete
implementation.").
Instead, according to Appellants, the claims are directed to a
patentable system for improvements in the "technical field of transaction
(mailed Sept. 4, 2015 Adv. Act."); and the Examiner's Answer (mailed May
20, 2016 "Ans.") for the respective details.
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processing and risk management by reducing transactional load on the
system." Reply 5. The claims are not directed to "a routine, a long standing
business practice nor conventional activity previously known in the industry,
or a generic computerization thereof' and, instead, "[t]he claimed system at
least solves the technical problem of reducing transactional load of resource
intensive operations." Id.; see also Reply Br. 2 ("Appellants submit that the
combination of elements in Appellants' claims perform functions which are
not merely generic and at least some of the problems solved by Appellants'
invention are specifically rooted in technology, specifically in electronic
transaction processing systems where unnecessary transactions consume
limited available processing resources.").
Appellants further argue that the pending claims are similar to those
found patent-eligible in DDR4 and Enfzsh. 5 Reply Br. 2-3. Specifically,
Appellants argue the pending claims are "directed to solving a
transaction/data processing-centric problem. As with the invention of DDR,
Appellants' claims do not generically recite 'use of a communications
network' to perform a business practice, but instead recites a specific way to
restrict the number of open/pending transactions of a given participant." Id.
at 2. Appellants further argue the "combination of steps recited show that
the claim is not to an abstract idea, but rather that the steps impose
meaningful limits that allow for evaluation of the transactional environment
and selective prevention of transaction generation, thereby minimizing
wasted computations resources and improving the overall efficiency of the
system." Id. at 3 (citing Spec. i17).
4 DDR Holdings, LLC v. Hotel.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014).
5 Enfzsh, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016).
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Appellants further argue that even if the claims are directed to an
abstract idea, the claims amount to something more than the abstract idea.
See App. Br. 5-8; Reply Br. 1--4. Specifically, according to Appellants, "the
claimed invention solves the technical problem of devoting significant
computational resources to the calculating implied orders when some of
those calculations may be unnecessary." App. Br. 6. Appellants further
contend that "[t]he claimed invention solves this problem via novel
evaluation of the transactional environment and selective prevention of
transaction generation, thereby minimizing wasted computations resources
and improving the overall efficiency of the system." Id. Thus, Appellants
argue, "[t]he claims include meaningful limitations that are 'other than what
is well-understood, routine and conventional in the field' and do not seek to
monopolize the exception." Id. at 7.
B. Examiner's Determinations and Conclusions
Applying the two-step Alice/Mayo6 framework, the Examiner
concludes the claims are directed to patent-ineligible subject matter. See
Final Act. 2-7; Adv. Act. 2---6; Ans. 2-12. Specifically, the Examiner
determines that "the claim is directed to suppression of implied contract
generation, which is a fundamental economic practice and therefore an
abstract idea." Final Act. 2. The Examiner further determines "that the
courts have recently found claims drawn to concepts involving human
activity relating to commercial practices ineligible" and that pending claims,
which are directed to managing market data, "is similar to the commercial
6 Alice Corp. Pty. Ltd. v. CLS Bank Int'!, 134 S. Ct. 2347 (2014); Mayo
Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66 (2012).
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practices that have been found by the courts to be abstract ideas." Id. at 2-
3; 7 see also Ans. 4--5. 8
The Examiner further determines that a determination of patent
eligibility under section 101 is a matter of law and does not require
evidentiary support. Ans. 2--4. Instead "the Examiner [may] identif[y]
abstract ideas ... by correlating the claimed invention to examples of other
inventions identified by the courts as being abstract ideas." Id. at 3. The
Examiner further determines that preemption is not a requirement for
determining whether or not a claim is patent-eligible. Adv. Act. 2--4; Ans.
6-7. The Examiner also determines that Appellants' "argument regarding
novelty is not persuasive because judicial exceptions need not be old or
long-prevalent, and even newly discovered judicial exceptions are still
exceptions, despite their novelty." Ans. 7.
7 Citing Alice, 134 S. Ct. 2347; Ultramercial Inc. v. Hulu LLC, 722 F.3d
1335 (Fed. Cir. 2013), vacated and remanded, Wildtangent, Inv. v.
Ultramercial LLC, 134 S. Ct. 2870 (2014) (remanding for consideration in
light of Alice, 134 S. Ct. 2347); Content Extraction & Transmission LLC v.
Wells Fargo Bank, Nat'! Assoc., 776 F.3d 1343 (Fed. Cir. 2016); buySAFE,
Inc. v. Google, Inc., 765F.3d 1350 (Fed. Cir. 2014); OIP Tech., Inc. v.
Amazon.com, Inc., 788 F.3d 1359 (Fed. Cir. 2017).
8 Citing buySAFE, 765F.3d 1350; Bilski v. Kappas, 561 U.S. 593 (2010);
Alice, 134 S. Ct. 2347; Dealertrack, Inc. v. Huner, 674 F.3d 1315 (Fed. Cir.
2012); Bancorp Servs. L.L.C. v. Sun Life Assur. Co of Canada, 687 F.3d
1266 (Fed. Cir. 2012); Planet Bingo, LLC v. VKGS LLC, 576 Fed. Appx.
1005 (Fed. Cir. 2014); Gametek LLC v. Zynga Inc., 597 Fed. Appx. 644
(Fed. Cir. 2015); Accenture Global Serv., GmbH v. Guidewire Software,
Inc., 728 F.3d 1336 (Fed. Cir. 2013); Ultramercial, 722 F.3d 1335; In re
Ferguson, 558 F.3d 1359 (Fed. Cir. 2009); In re Maucorps, 609 F.2d 481
(CCPA 1979); GrafflRoss Holdings LLP v. Federal Home Loan Mortg.
Corp., 892 F.Supp.2d 190 (D.D.C. 2012), aff'd, 604 Fed. Appx. 930 (Fed.
Cir. 2015).
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The Examiner further determines that, "[ v ]iewed as a whole, the
additional claim elements do not provide meaningful limitations to transform
the abstract idea into a patent eligible application of the abstract idea such
that the claims amount to significantly more than the abstract idea itself."
Final Act. 5; see also Adv. Act. 4--6; Ans. 8-12. Specifically, the Examiner
determines "the claims do not include an improvement to another
technology or technical field, an improvement to the functioning of the
computer itself, or meaningful limitations beyond generally linking the use
of an abstract idea to a particular technological environment." Adv. Act. 4.
The Examiner further determines the claims are just directed to generic
components and routine functions:
[T]he limitations, in the instant claims, are done by the
generically recited computer products. The generically recited
computer elements such as "processor", "memory", and "logic"
do not add a meaningful limitation to the abstract idea because
they would be routine in any computer implementation. The
steps for data gathering and processing do not add a meaningful
limitation to the method as they would be routinely used by
those of ordinary skill in the art in order to apply the abstract
idea.
Adv. Act. 4; see also Ans. 8 (determining "the additional limitations are
merely drawn to a generic, routine, well-understood, and conventional
application of computing technology"). The Examiner also determines the
Specification "recites general computer products" and "does not contribute
any technically-specific computer algorithm or code, but rather merely states
that the claimed steps may be performed by the generic modules with the
expectation that one of ordinary skill in the art would be capable of
implementation without further instruction." Ans. 8-9. The Examiner
further determines that there is no need to find a lack of novelty in order to
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determine the claims describes generic components used in a routine
fashion:
Appellant argues that the additional limitations cannot be
conventional because they are unsupported by prior art (see
Appeal Brief, pg. 5). However, the argument is not persuasive
because the terms "routine, well-understood, and conventional"
are used to describe the generic application of the computing
technology and should not be confused with novelty.
Id. at 10.
C. Analysis
1. Law Governing Patent-Eligible Subject Matter
Patent-eligible subject matter is defined in § 101 of the Patent Act,
which recites:
Whoever invents or discovers any new and useful process,
machine, manufacture, or composition of matter, or any new
and useful improvement thereof, may obtain a patent therefor,
subject to the conditions and requirements of this title.
There are, however, three judicially created exceptions to the broad
categories of patent-eligible subject matter in § 101: laws of nature, natural
phenomena, and abstract ideas. Alice, 134 S. Ct. at 2354; Mayo, 566 U.S. at
70-71. Although an abstract idea, itself, is patent-ineligible, an application
of the abstract idea may be patent-eligible. Alice, 134 S. Ct. at 2355. Thus,
we must consider "the elements of each claim both individually and 'as an
ordered combination' to determine whether the additional elements
'transform the nature of the claim' into a patent-eligible application." Id.
(citing Mayo, 566 U.S. 79). The claim must contain elements or a
combination of elements that are "sufficient to ensure that the patent in
practice amounts to significantly more than a patent upon the [abstract idea]
itself." Id. (citing Mayo, 566 U.S. 79).
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The Supreme Court set forth a two-part "framework for distinguishing
patents that claim laws of nature, natural phenomena, and abstract ideas
from those that claim patent-eligible applications of those concepts." Id. at
2355.
Id.
First, we determine whether the claims at issue are directed to
one of those patent-ineligible concepts. [Mayo,] 132 S. Ct., at
1296-1297. If so, we then ask, "[w]hat else is there in the
claims before us?" Id., at--, 132 S. Ct., at 1297. To answer
that question, we consider the elements of each claim both
individually and "as an ordered combination" to determine
whether the additional elements "transform the nature of the
claim" into a patent-eligible application. Id., at--, 132 S.
Ct., at 1298, 1297. We have described step two of this analysis
as a search for an "'inventive concept"'-i.e., 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 [ineligible concept] itself." Id., at--, 132 S. Ct., at
1294.
"The 'abstract idea' step of the inquiry calls upon us to look at the
'focus of the claimed advance over the prior art' to determine if the claim's
'character as a whole' is directed to excluded subject matter." Affinity Labs
of Tex. v. DirectTV, LLC, 838 F.3d 1253, 1257 (Fed. Cir. 2016) (quoting
Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1353 (Fed. Cir.
2016)); see also Enfzsh, 822 F.3d at 1335. There is no definitive rule to
determine what constitutes an "abstract idea." Rather, the Federal Circuit
has explained that "both [it] and the Supreme Court have found it sufficient
to compare claims at issue to those claims already found to be directed to an
abstract idea in previous cases." Enfzsh, 822 F.3d at 1334; see also Amdocs
(Israel) Ltd. v. Openet Telecom, Inc., 841F.3d1288, 1294 (Fed. Cir. 2016)
(explaining that, in determining whether claims are patent eligible under
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§ 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").
Under the second step of the Alice/Mayo framework, we examine the
claim limitations "more microscopically," (Electric Power, 830 F.3d at
1354), to determine whether they contain "additional features" sufficient to
"'transform the nature of the claim' into a patent-eligible application."
Alice, 134 S. Ct. at 2355, 2357 (quoting Mayo, 566 U.S. at 78). "Mere
recitation of concrete, tangible components is insufficient to confer patent
eligibility to an otherwise abstract idea. Rather, the components must
involve more than performance of well-understood, routine, conventional
activit[ies] previously known to the industry." In re TL! Commc 'ns LLC
Patent Litig., 823 F.3d 607, 613 (Fed. Cir. 2016) (citing Alice, 134 S. Ct. at
2359).
2. Abstract Idea
In determining whether claims are patent eligible under § 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, 841 F.3d at 1294. The
Examiner identifies over a dozen decisions in which the courts have
determined similar claims directed to business methods to be directed to
abstract ideas. See footnotes 5 and 6, supra. Appellants have not addressed
those cases or provided any persuasive reasoning as to why that are not
similar to the claims at issue.
We agree with the Examiner that, based on the identified cases, that
pending claims are directed to subject matter that the Supreme Court and
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Federal Circuit have determined are abstract idea. Accordingly, we adopt
the Examiner's determination and conclusions. See Ex parte Frye, 94
USPQ2d 1072, 1075 (BPAI 2010) (precedential) ("If an appellant fails to
present arguments on a particular issue - or, more broadly, on a particular
rejection-the Board will not, as a general matter, unilaterally review those
uncontested aspects of the rejection."). Moreover, as discussed below, we
are not persuaded by any of Appellants' arguments that the Examiner's
determination was in error.
3. Objective Evidence
Appellants have not cited any cases in support of the argument that
the Examiner erred by not citing any objective evidence to support the
conclusion that the claim is directed to an abstract idea. See App. Br. 4--5. 9
Despite Appellants providing no legal support for the proposition that
objective evidence is required to support a conclusion that a claim is directed
to patent-ineligible subject matter, we conducted an independent review of
the cases and conclude that although objective evidence may be cited in
support of the claims being directed to an abstract idea, there is no per se
requirement that the Examiner do so.
We start with Supreme Court jurisprudence on patent-eligible subject
matter. Having reviewed the Supreme Court cased addressing section 101,
the Court has never stated or implied that objective evidence is required to
establish that the claimed subject matter is no patent-eligible.
9 We note Appellants did not address the Examiner's analysis of the
relevant case law. Compare Ans. 3--4 (discussing relevant Supreme Court
decisions), with Reply Br. 5---6, (not addressing cases cited by the Examiner).
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As the Examiner noted, in two cases, Alice and Bilski, the Court cited
objective evidence as part of its discussion. 10 Ans. 3--4. However, in neither
cases did the Court state or imply that objective evidence must be
considered. See Bilski, 561 U.S. at 611; Alice, 134 S. Ct. at 2356. Instead,
in both cases, the Court focused not on the objective evidence, but on the
comparison of the claims at issues to previous claims considered by the
Court. For example, in Alice, the Court focused on the similarities between
the claims at issue with those found to be directed to an abstract idea in
Bilski:
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. Like the risk hedging in Bilski, the
concept of intermediated settlement is " 'a fundamental
economic practice long prevalent in our system of commerce.' "
Ibid.; see, e.g., Emery, Speculation on the Stock and Produce
Exchanges of the United States, in 7 Studies in History,
Economics and Public Law 283, 346-356 (1896) (discussing
the use of a "clearing-house" as an intermediary to reduce
settlement risk). The use of a third-party intermediary (or
"clearing house") is also a building block of the modem
economy. See, e.g., Yadav, The Problematic Case of
Clearinghouses in Complex Markets, 101 Geo. L.J. 387, 406-
412 (2013); J. Hull, Risk Management and Financial
Institutions 103-104 (3d ed. 2012). Thus, intermediated
settlement, like hedging, is an "abstract idea" beyond the scope
of§ 101.
Alice, 134 S. Ct. at 2356 (emphasis added). Similarly, in Bilski, although the
Court references objective evidence, the focus of its analysis focused on the
10 In Bilski, none of the references were prior art. See Bilski, 561 U.S. at
611. In Alice, one of the references was prior art. See Alice 134 S. Ct. at
2356.
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similarities and differences with the instant claims and those in other section
101 cases:
In light of these precedents,[llJ it is clear that petitioners'
application is not a patentable "process." Claims 1 and 4 in
petitioners' application explain the basic concept of hedging, or
protecting against risk: "Hedging is a fundamental economic
practice long prevalent in our system of commerce and taught
in any introductory finance class." 545 F.3d, at 1013 (Rader, J.,
dissenting); see, e.g., D. Chorafas, Introduction to Derivative
Financial Instruments 75-94 (2008); C. Stickney, R. Weil, K.
Schipper, & J. Francis, Financial Accounting: An Introduction
to Concepts, Methods, and Uses 581-582 (13th ed.2010); S.
Ross, R. Westerfield, & B. Jordan, Fundamentals of Corporate
Finance 743-744 (8th ed.2008). The concept of hedging,
described in claim 1 and reduced to a mathematical formula in
claim 4, is an unpatentable abstract idea, just like the
algorithms at issue in Benson and Flook. Allowing
petitioners to patent risk hedging would pre-empt use of this
approach in all fields, and would effectively grant a monopoly
over an abstract idea.
Bilski, 561 U.S. at 611-12 (emphasis added).
Similarly enlightening is the Court's decision in Mayo. Although the
Court considered statements in the Specification concerning the state of the
art in determining that one of the recited steps of the claim was well known,
the Court did not consider any evidence, either intrinsic or extrinsic, for the
other two limitations or the combination of all three limitations. See Mayo,
566 U.S. at 78-79. Moreover, the Court emphasized that the issue before
them "rests upon an examination of the particular claims before us in light of
11 Immediately prior to the quoted paragraph, the decision discusses the
holdings in Gottschalkv. Benson, 409 U.S. 63 (1972), Parker v. Flook, 437
U.S. 584 (1978), and Diamond v. Diehr, 450 U.S. 175 (1981). See Bilski,
561 U.S. at 609-11
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the Court's precedents." Id. at 72; see also id. at 82 (holding "[t]he claim
before us presents a case for patentability that is weaker than the (patent-
eligible) claim in Diehr and no stronger than the (unpatentable) claim in
FlooR').
Moreover, none of the other recent cases, such as Benson, Flook,
Diehr, or Association for Molecular Pathology v. Myriad Genetics, Inc., 569
U.S. 576 (2013), cite to any objective evidence. Instead, the analysis in
those cases focuses solely on a comparison of the claims at issue to those
that the Court had previously ruled upon. Thus, although the Supreme Court
cases indicate that a court can consider objective evidence, such as to show
something is a fundamental business practice or well-known medical
procedure, there is no requirement to do so.
Similarly, Federal Circuit precedent also makes it clear that no
extrinsic evidence is required. First, similar to the Supreme Court cases
discussed above, the Federal Circuit has adopted a common-law approach to
determine whether or not claims are directed to patent-eligible subject
matter:
Instead of a definition, then, 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. See, e.g., Elec.
Power Grp., 830 F.3d at 1353-54. That is the classic common
law methodology for creating law when a single governing
definitional context is not available. See generally Karl N.
Llewellyn, The Common Law Tradition: Deciding Appeals
(1960). This more flexible approach is also the approach
employed by the Supreme Court. See Alice, 134 S.Ct. at 2355-
57. We shall follow that approach here.
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Amdocs, 841 F.3d at 1294 (footnote omitted). That is, the Federal Circuit
has adopted an approach in which the claims in dispute are compared to
claims that have already been adjudicated, not to objective evidence.
Second, the procedural setting for many cases resolving section 101
disputes prohibits consideration of extrinsic, objective evidence. That is, the
Federal Circuit has held "that in many cases it is possible and proper to
determine patent eligibility under 35 U.S.C. § 101 on a Rule 12(b )( 6)
motion." Genetic Tech. Ltd. v. Merial L.L.C., 818 F.3d 1369, 1373-74 (Fed.
Cir. 2016) (citing OIP, 788 F.3d at 1362; Content Extraction, 776 F.3d at
1351; buySAFE, 765 F.3d at 1355); see also Secured Mail Sols. LLC v.
Universal Wilde, Inc., 873 F.3d 905, 912 (Fed. Cir. 2017) (deciding§ 101
question "at the motion to dismiss stage based on intrinsic evidence from the
[patent's] specification without need for 'extraneous fact finding outside the
record."'); FairWarning IP LLCv. Iatric Sys., Inc., 839 F.3d 1089, 1097
(Fed. Cir. 2016). As a general matter, a motion to dismiss is based solely on
the complaint, accepting as true the factual allegations made in the
complaint. See, e.g., BASCOM, 827 F.3d at 1347 (applying the law of the
Fifth Circuit); Aatrix Software, Inc. v. Green Shades Software, Inc., No.
2017-1452,_F.3d_, 2018 WL 843288, *2 (Fed. Cir. Feb. 14, 2018)
(applying the law of the Eleventh Circuit). 12 Thus, the Federal Circuit has
adopted an approach that would normally preclude the consideration of
extrinsic evidence.
12 The Federal Circuit reviews dismissal of a complaint for failure to state a
claim under the law of the regional circuit. E.g., BASCOM, 827 F.3d at
1347.
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Accordingly, based on the above analysis, there is no per se rule
requiring the Examiner to cite objective evidence to support a rejection of
the claims as directed to patent-ineligible subject matter.
Although there is no per se rule requiring the Examiner to cited
objective evidence, there may be some circumstances where evidence of
some sort is required to support a rejection. Specifically, in the context of a
motion to dismiss, the Federal Circuit has "acknowledged ... that plausible
factual allegations may preclude dismissing a case under § 101 where, for
example, 'nothing on th[ e] record ... refutes those allegations as a matter of
law or justifies dismissal under Rule 12(b)(6)."' FairWarning, 839 F.3d at
1097 (quoting BASCOM, 827 F.3d at 1352); see also Aatrix 2018 WL
843288, *2.
For example, in Fair Warning, the Federal Circuit held that patent
owner did not raise sufficient factual claims to prevent the resolution of
patent eligibility during a motion to dismiss and, accordingly, the district
court properly granted the motion:
FairWaming argues that the district court wrongly found facts
outside of the pleadings and construed disputed facts in a light
unfavorable to FairWaming. It argues that the court erred in
finding, on a motion to dismiss, that the '500 patent is not
necessarily rooted in computer technology. It points to the
ability of its system and method to collect and analyze disparate
data sources in real time. And it claims that the court, drawing
all reasonable inferences in its favor, could not resolve this
issue on a motion to dismiss. We disagree. As we explained
above, the practices of collecting, analyzing, and displaying
data, with nothing more, are practices "whose implicit
exclusion from § 101 undergirds the information-based
category of abstract ideas." Elec. Power, 830 F.3d at 1355.
The district court correctly dismissed Fair Warning's
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purportedly factual claims as insufficient to impart patent
eligibility.
FairWarning, 839 F.3d at 1097-98 (emphasis added).
On the other hand, in Aatrix, the Federal Circuit vacated a motion to
dismiss and reversed the denial of a motion to amend where the proposed
amended complaint added "concrete allegations ... that individual elements
and the claimed combination are not well-understood, routine, or
conventional activity. There are also concrete allegations regarding the
claimed combination's improvement to the functioning of the computer."
Aatrix, 2018 WL 843288, *5. The Federal Circuit further determined that
there was "no proper basis for rejecting those allegations as a factual
matter." Id. Accordingly, the Court held "[i]n light of the allegations made
by Aatrix, the district court could not conclude at the Rule 12(b)(6) stage
that the claimed elements were well-understood, routine, or conventional."
Id. at *6.
Similarly instructive is the Federal Circuit's decision reversing in part
a grant of summary judgment of patent invalidity in Berkheimer v. HP Inc.,
881F.3d1360 (Fed. Cir. 2018). In that case, the Court held that although
the determination on "whether a claim element or combination of elements
is well-understood, routine and conventional to a skilled artisan in the
relevant field is a question of fact, ... not every § 101 determination
contains genuine disputes over the underlying facts material to the § 101
inquiry." Id. at 1368. 13 In cases where "there is no genuine issue of material
fact regarding whether the claim element or claimed combination is well-
13 We note that unlike Appellants' argument in this case (which is directed to
the first step of the Alice/Mayo framework), Berkheimer involves a specific
issue under the second step of the Alice/ Mayo framework.
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understood, routine, conventional to a skilled artisan in the relevant field,
this issue can be" summarily decided, whether by a motion to dismiss or
summary judgment motion. Id.
Relying on statements in the specification, the patent owner argued
"that the claimed combination improves computer functionality through the
elimination of redundancy and the one-to-many editing feature, which
provides inventive concepts." Id. at 1369. More specifically, the
specification "describes an inventive feature that stores parsed data in a
purportedly unconventional manner. This eliminates redundancies,
improves system efficiency, reduces storage requirements, and enables a
single edit to a stored object to propagate throughout all documents linked to
that object." Id. The Federal Circuit held those "improvements in the
specification, to the extent they are captured in the claims, create a factual
dispute regarding whether the invention describes well-understood, routine,
and conventional activities ... so we must analyze the asserted claims and
determine whether they capture these improvements." Id. (citations
omitted).
With respect to claim 1, the Federal Circuit affirmed the summary
judgement of patent invalidity. Id. at 1369--70. Specifically, the Court held
that although the claim "recites a method of archiving including parsing
data, analyzing and comparing the data to previously stored data, and
presenting the data for reconciliation when there is a variance," the claim
"does not recite any of the purportedly unconventional activities disclosed in
the specification." Id. at 1369. On the other hand, the Federal Circuit
reversed the grant of summary judgment with respect to claims 4--7, which
"contain limitations directed to the arguably unconventional inventive
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concept described in the specification. Claim 4 recites 'storing a reconciled
object structure in the archive without substantial redundancy,"' which,
"according to the specification, provides benefits that improve computer
functionality." Id. at 1370.
Based on the cases discussed above, we are not persuaded by
Appellants' arguments that the Examiner erred in not relying on objective
evidence. First, with regard to whether or not the claims are directed to an
abstract idea, Appellants merely criticize the Examiner for not relying on
objective evidence but do not provide any factual evidence of their own, let
alone sufficient factual evidence to create a genuine issue of material fact.
See App. Br. 4--5. Further, the Examiner has provided a reasoned rationale
showing the claims recite features similar to those found by the courts to be
abstract ideas, which Appellants have not addressed. Final Act. 3.
Accordingly, the Examiner did not err in concluding the claims are directed
to an abstract idea.
Second, with regard to the second step of the Alice/ Mayo framework,
the Examiner does rely on objective evidence. Specifically, just like the
Supreme Court in Mayo, 14 the Examiner relies on the specification to show
the claimed invention involves the "use of generic technical features" and
"generic computer products" that "serve their well-known functions." Adv.
Act. 4-5(citing Spec. i-f 78); see also Ans. 8-9 (citing Spec. i-fi-164, 78).
Moreover, the Examiner finds that "the specification does not contribute any
technically-specific computer algorithm or code, but rather merely states that
the claimed steps may be performed by the generic modules with the
14 See Mayo, 566 U.S. at 78-79.
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expectation that one of ordinary skill in the art would be capable of
implementation without further instruction." Ans. 9. Therefore, Appellants'
argument that the Examiner erred by not relying on objective evidence is not
supported by the record and does not persuade us that the Examiner erred.
4. Preemption
We are also not persuaded by Appellants' arguments that the claims
do not preempt or monopolize the field. Although the extent of preemption
is a consideration, the absence of complete preemption is not dispositive.
See, e.g., Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379
(Fed. Cir. 2015) ("While preemption may signal patent ineligible subject
matter, the absence of complete preemption does not demonstrate patent
eligibility."); Ultramercial, 722 F.3d at 1346 ("[T]he Supreme Court has
stated that, even if a claim does not wholly pre-empt an abstract idea, it still
will not be limited meaningfully if it contains only insignificant or token
pre- or post-solution activity-such as identifying a relevant audience, a
category of use, field of use, or technological environment.").
5. Solving a Technical Problem
We are also not persuaded of Examiner error based on Appellants'
argument that the claims are directed to a technological problem.
Appellants' argument is based on conclusory attorney statements, without a
citation to evidence or cases involving similar claims which support
Appellant's assertion. Moreover, Appellants have not attempted to
distinguish the over a dozen cases cited by the Examiner that held similar
claims to be directed to an abstract idea.
In addition to the cases cited by the Examiner, we find two additional
Federal Circuit cases instructive. First, in CyberSource, the Court held that
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claims such as these which can be performed by a human thought alone is an
abstract idea:
Thus, claim 3 's steps can all be performed in the human mind.
Such a method that can be performed by human thought alone
is merely an abstract idea and is not patent-eligible under § 101.
Methods which can be performed entirely in the human mind
are unpatentable not because there is anything wrong with
claiming mental method steps as part of a process containing
non-mental steps, but rather because computational methods
which can be performed entirely in the human mind are the
types of methods that embody the "basic tools of scientific and
technological work" that are free to all men and reserved
exclusively to none.
CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1373 (Fed. Cir.
2011) (quoting Gottschalkv. Benson, 409 U.S. 63, 67 (1972)) (footnote
omitted). Although the claims will be practiced faster using the
computational power of a computer, the simple investing rules of the
preventing step can also be done by a person using their mind or pen and
paper.
Second, in SmartGene, the Court found claims patent-ineligible
because they did "no more than call on a 'computing device,' with basic
functionality for comparing stored and input data and rules, to do what
doctors do routinely." SmartGene, Inc. v. Adv. Bio. Labs. SA, 555 Fed.
Appx. 950, 954 (Fed. Cir. 2014). While SmartGene is a non-precedential
decision, it nonetheless provides another example of claims held to recite an
abstract idea. In the instant case, the recited "preventing by the processor
step" is nothing more than a system (i.e., computer) to adjust the processing
of data using mathematical comparisons and rule-based processes. The
claims at issue in SmartGene relied upon "expert rules" for "'evaluating and
selecting' from a stored 'plurality of different therapeutic treatment
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regimens."' Id. at 951-952. The "expert rules" in SmartGene are analogous
to rule set forth in the preventing step.
6. Something More
We agree with and adopt the Examiner's determinations and
conclusions regarding the claims not providing any meaningful limitations to
transform the abstract idea into a patent eligible application of the abstract
idea. Appellants have not argued persuasively the claims include an
improvement to another technology or technical field, an improvement to the
functioning of the computer itself, or meaningful limitations beyond
generally linking the use of an abstract idea to a particular technological
environment. Instead, the claims are broadly written and can be performed
by generic computer components used in a conventional manner.
Appellants' reliance on the patent eligibility examples is not
persuasive. Although Appellants contend that the claims are similar to the
examples found to be directed to patent-eligible subject matter, Appellants'
contentions are conclusory and fail to link the arguments to claim limitations
recited in the claims. See App. Br. 6-7. Instead, for the reasons given in the
Answer (Ans. 10-12), those example are not applicable to the claims on
appeal.
We are also not persuaded by Appellants' argument that the claims is
similar to one found patent-eligible in DDR. First, as our reviewing court
held in DDR, "not all claims purporting to address Internet-centric
challenges are eligible for patent." DDR, 773 F.3d at 1258. As the Federal
Circuit recognized:
For example, in our recently-decided Ultramercial opinion, the
patentee argued that its claims were "directed to a specific
method of advertising and content distribution that was
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previously unknown and never employed on the Internet
before." 772 F.3d at 714. But this alone could not render its
claims patent-eligible. In particular, we found the claims to
merely recite the abstract idea of "offering media content in
exchange for viewing an advertisement," along with "routine
additional steps such as updating an activity log, requiring a
request from the consumer to view the ad, restrictions on public
access, and use of the Internet." Id. at 715-16.
Id. Because, for the reasons set forth in the Answer, Appellants have merely
identified routine additional steps, they are insufficient to render the claims
patent-eligible.
Moreover, we disagree with Appellants' assertion that the claims in
this case are directed to a computer-centric problem similar to that in DDR.
In DDR, the Court found that the claims "do not merely recite the
performance of some business practice known from the pre-Internet world
along with the requirement to perform it on the Internet. Instead, the
claimed solution is necessarily rooted in computer technology in order to
overcome a problem specifically arising in the realm of computer networks."
Id. at 1257. Unlike the claims in DDR, the claims in this case are merely
adopting a pre-existing business practice, in this case generating in some
circumstances an implied order based on two received orders, for use with
computer technology.
Instead of DDR, this case is similar to Electric Power, in which our
reviewing court found the claims patent-ineligible because "[t]he claims at
issue do not require any nonconventional computer, network, or display
components, or even a 'non-conventional and non-generic arrangement of
known, conventional pieces,' but merely call for performance of the claimed
information collection, analysis, and display functions 'on a set of generic
computer components' and display devices." Electric Power, 830 F.3d at
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1355 (citing BASCOM, 827 F.3d at 1349--52). Similarly, the claims in this
case merely recite the use of generic computer components and conventional
computer networks. Such an arrangement is not patent eligible. Id.
7. Conclusion on Patentable Subject Matter
For the reasons set forth above, the claims are directed to an abstract
idea and did not contain limitations, either considered separately or together,
that provide something more than the abstract idea sufficient to transform
the claim into patentable subject matter. Accordingly, we sustain the
Examiner's rejection of claims 1, 3, 9--14, 16, and 22-27 as directed to
patent-ineligible subject matter.
II. Prior Art Rejections
Appellants argue the Examiner erred in finding Milne '663 discloses
"preventing by the processor, the generation of the implied third order," as
recited in claim 1. See App. Br. 8-10; Reply Br. 4--5. Specifically,
Appellants argue "Milne '633 discloses filtering already generated implied
orders from being published in the market data but Milne '633 neither
teaches nor suggests preventing their generation in the first place as required
by Appellants' claims." App. Br. 9; see also Reply Br. 4--5.
Appellants further argue the Examiner's claim construction is
incorrect. See App. Br. 1 O; Reply Br. 4. Specifically, Appellants argue
"limiting reporting of an order IS NOT the same as preventing the
generation of that order in the first place if for no other reason than the
generating of an order requires the expenditure of computational resources
which Appellants' claimed system avoids." App. Br. 10. According to
Appellants, the Specification draws a distinction between preventing
generation of an order and preventing an implied order from being listed:
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Applicants strenuously disagree with the Examiner's
interpretation and submit that one of ordinary skill in the art
would understand that generating an order and then listing or
publishing that order in a market are not the same. In fact,
Applicants distinguish these two events in their Specification at
para[graph] 46 which states" ... the disclosed embodiments
suppress or otherwise prevent the computation of the implied
front-month contract order 318 and the subsequent listing
thereof' in conjunction with para[graph] 48 which states "[i]t
will be appreciated that for the purpose of keeping a particular
bid/ask spread close, once calculated, an implied order may
simply be prevented from being listed."
Reply Br. 4.
The Examiner concludes the disputed claim limitation is broad
enough to encompass preventing an initially generated implied order from
being generated in the market:
Applicant argues that Milne fails to disclose preventing the
generation of the implied order as claimed. The argument is not
persuasive because even though the implied order is initially
generated in Milne, the order is still prevented from being
generated in the market. Here, limiting the reporting of such
orders to certain markets is equivalent to preventing generation
of those orders in the other markets.
Adv. Act. 6; see also Ans. 13 ("However, Examiner disagrees because
'generation', under broadest reasonable interpretation, does not limit the
claim to only the initial generation of an order. That is, an order may be
initially generated and then subsequently generated in certain markets.").
Based on that claim construction, the Examiner finds Milne '633 discloses
the disputed limitation. Final Act. 7-8 (citing Milne '633 i-fi-187-93).
During examination of a patent application, a claim is given its
broadest reasonable construction "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
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Ctr., 367 F.3d 1359, 1364 (Fed. Cir. 2004) (quoting In re Bond, 910 F.2d
831, 833 (Fed. Cir. 1990)). 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 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). "[T]he
protocol of giving claims their broadest reasonable interpretation ... does
not include giving claims a legally incorrect interpretation" "divorced from
the specification and the record evidence." Microsoft Corp. v. Proxyconn,
Inc., 789 F.3d 1292, 1298 (Fed. Cir. 2015) (quoting In re Skvorecz, 580 F.3d
1262, 1267 (Fed. Cir. 2009) and In re NTP, Inc., 654 F.3d 1279, 1288 (Fed.
Cir. 2011)), overruled on other grounds by Aqua Products, Inc. v. Mata!,
872 F.3d 1290 (Fed. Cir. 2017).
Based on the entirety of the Specification, we are not persuaded by
Appellants' argument that the Examiner erred in construing the claim. In the
Appeal Brief, Appellants identified Specification paragraphs 43--47, 50, 51,
and 57. See App. Br. 2-3 (setting forth the summary of the claimed
invention). Those paragraphs support the Examiner's claim construction.
For example, paragraph 46, relied on by Appellants in the Reply
Brief, states that "the disclosed embodiments may also improve the
efficiency of the trading system 100 by reducing the number of implied
orders which must be calculated, listed and managed, thereby minimizing
the calculations that the trading system 100 must undertake and reduces the
messages that are transmitted via market data." Spec. i-f 46 (emphasis
added). The Specification continues in the next paragraph-which
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Appellants do not discuss-to indicate that the invention also covers
embodiments in which the implied order is initially calculated but not listed:
It will be appreciated that for the purpose of keeping a
particular bid/ask spread close, once calculated, an implied
order may simply be prevented from being listed. While not
necessarily reducing the computation load on the trading
system 100, such an implementation would also improve
system 100 efficiency by reducing message traffic as well as
minimizing resources consumed due to listing and managing
the implied orders.
Spec. i-f 4 7 (emphasis added).
Similarly, paragraph 50 discusses how "an implied order generator
508 ... selectively generate[ s] the implied third order based on the first and
second orders and make[s] the computed implied third order available in a
market for the third instrument for trading by the plurality of market
participants." Spec. i-f 50 (emphasis added). The Specification continues by
describing how the implied order generator may also operate "to prevent, at
least, the availability of the implied third order, such as by preventing it from
being listed in the order book for the third instrument, when the market for
the third instrument is determined to be substantially liquid." Spec. i-f 51.
Taken as a whole, these paragraphs link generating an implied order to
generating an implied order that is listed, or not, in the market.
Similarly, paragraph 57 states that "[t]he operation also includes
selectively generating, by the processor 402, the implied third order based on
the first and second orders and making the computed implied third order
available in a market for the third instrument for trading by the plurality of
market participants (block 604)." As with the other sections discussed
above, that paragraph 57 focuses not on any internal generation of an
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implied order, but selectively generating an implied order for availability in
the market.
Accordingly, based on the disclosure in the Specification, we agree
with the Examiner's construction that the claim is broad enough to
encompass a processor that generates implied orders but only selectively
generates the orders for the market. Because Appellants' arguments are not
commensurate with the scope of the claims, they are unpersuasive. See In re
Self, 671F.2d1344, 1348 (CCPA 1982).
Accordingly, we sustain the Examiner's rejection of claim 1, along
with the rejection of claims 14 and 27, which are argued on the same
grounds, and dependent claims 3, 9-12, 16, 21-25, and 27, which are not
argued separately. See App. Br. 10.
With respect to dependent claims 13 and 26, Appellants merely
contend that because the additional reference used in the rejection of these
claims (Milne '536) do not cure the shortcomings of Milne '633 applied
against claim 1, the Examiner failed to make a prima facie case of
obviousness for these claims. App. Br. 10-11. Because we determine that
the rejection of claim 1 is not erroneous for the reasons discussed above, we
sustain the rejections of these claims.
DECISION
For the above reasons, we affirm the Examiner's decisions rejecting
claims 1, 3, 9-14, 16, and 22-27.
No time period for taking any subsequent action in connection with
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this appeal may be extended under 37 C.F.R. § 1.136(a)(l )(iv). See
37 C.F.R. § 41.50(f).
AFFIRMED
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