Jarrod WilcoxDownload PDFPatent Trials and Appeals BoardAug 2, 201912778542 - (D) (P.T.A.B. Aug. 2, 2019) Copy Citation 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. 12/778,542 05/12/2010 Jarrod Wilcox 109988-1 6617 21125 7590 08/02/2019 NUTTER MCCLENNEN & FISH LLP SEAPORT WEST 155 SEAPORT BOULEVARD BOSTON, MA 02210-2604 EXAMINER PUTTAIAH, ASHA ART UNIT PAPER NUMBER 3695 NOTIFICATION DATE DELIVERY MODE 08/02/2019 ELECTRONIC Please find below and/or attached an Office communication concerning this application or proceeding. The time period for reply, if any, is set in the attached communication. Notice of the Office communication was sent electronically on above-indicated "Notification Date" to the following e-mail address(es): docket@nutter.com PTOL-90A (Rev. 04/07) UNITED STATES PATENT AND TRADEMARK OFFICE ____________________ BEFORE THE PATENT TRIAL AND APPEAL BOARD ____________________ Ex parte JARROD WILCOX ____________________ Appeal 2018-005082 Application No. 12/778,5421 Technology Center 3600 ____________________ Before ST. JOHN COURTNEY III, MARC S. HOFF, and JENNIFER MCKEOWN, Administrative Patent Judges. HOFF, Administrative Patent Judge. DECISION ON APPEAL STATEMENT OF THE CASE Appellant appeals under 35 U.S.C. § 134 from a Final Rejection of claims 1–8 and 19.2 We have jurisdiction under 35 U.S.C. § 6(b). We affirm. Appellant’s invention is a method for identifying an allocation of investment resources among a plurality of investments. The method comprises the steps of generating a representation of a first joint probability distribution of investor attributes, at least one of which is a representation of 1 Appellant states that the real party in interest is Wealthmate, Inc. App. Br. 1. 2 Claims 9–18 have been cancelled. Appeal 2018-005802 Application No. 12/778,542 2 risk aversion, and of a plurality of attributes for a set of investments; generating an objective function that incorporates the representation of the first joint probability distribution; and optimizing, using a microprocessor, an allocation of investment resources for the plurality of investments according to the objective function. Spec. 2. Claim 1 is reproduced below: A method for identifying an allocation of investment resources among a plurality of investments to construct an investment portfolio for an investor, the method comprising: generating a representation of a first joint probability distribution of one or more investor attributes, at least one of which is a representation of the probability distribution of risk aversion as a random variable, and one of a plurality of attributes for a set of investments to be allocated; generating an objective function that incorporates the representation of the first joint probability distribution, including the representation of the probability distribution of risk aversion as a random variable; and optimizing, using a microprocessor, an allocation of investment resources for each of the plurality of investments according to the objective function. Claims 1–8 and 19 stand rejected under 35 U.S.C. § 101 as being directed to patent-ineligible subject matter. ISSUE 1. Is the claimed invention directed to an abstract idea? 2. Does the claimed invention include significantly more than an abstract idea so as to transform the claim into a patent-eligible application of that abstract idea? Appeal 2018-005802 Application No. 12/778,542 3 PRINCIPLES OF LAW An invention is patent-eligible if it claims a “new and useful process, machine, manufacture, or composition of matter.” 35 U.S.C. § 101. However, the Supreme Court has long interpreted 35 U.S.C. § 101 to include implicit exceptions: “[l]aws of nature, natural phenomena, and abstract ideas” are not patentable. See, e.g., Alice Corp. v. CLS Bank Int’l, 573 U.S. 208, 216 (2014) (citation omitted). In determining whether a claim falls within an excluded category, we are guided by the Supreme Court’s two-step framework, described in Mayo and Alice. Id. at 217–18 (citing Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 75–77 (2012)). In accordance with that framework, we first determine what concept the claim is “directed to.” See Alice, 573 U.S. at 219 (“On their face, the claims before us are drawn to the concept of intermediated settlement, i.e., the use of a third party to mitigate settlement risk.”); see also Bilski v. Kappos, 561 U.S. 593, 611 (2010) (“Claims 1 and 4 in petitioners’ application explain the basic concept of hedging, or protecting against risk.”). Concepts determined to be abstract ideas, and thus patent ineligible, include certain methods of organizing human activity, such as fundamental economic practices (Alice, 573 U.S. at 219–20; Bilski, 561 U.S. at 611); mathematical formulas (Parker v. Flook, 437 U.S. 584, 594–95 (1978)); and mental processes (Gottschalk v. Benson, 409 U.S. 63, 67 (1972)). Concepts determined to be patent eligible include physical and chemical processes, such as “molding rubber products” (Diamond v. Diehr, 450 U.S. 175, 192 (1981)); “tanning, dyeing, making water-proof cloth, vulcanizing India rubber, smelting ores” (id. at 182 n.7 (quoting Corning Appeal 2018-005802 Application No. 12/778,542 4 v. Burden, 56 U.S. (15 How.) 252, 267–68 (1854))); and manufacturing flour (Benson, 409 U.S. at 69 (citing Cochrane v. Deener, 94 U.S. 780, 785 (1876))). In Diehr, the claim at issue recited a mathematical formula, but the Supreme Court held that “[a] claim drawn to subject matter otherwise statutory does not become nonstatutory simply because it uses a mathematical formula.” Diehr, 450 at 176; see also id. at 191 (“We view respondents’ claims as nothing more than a process for molding rubber products and not as an attempt to patent a mathematical formula.”). Having said that, the Supreme Court also indicated that a claim “seeking patent protection for that formula in the abstract . . . is not accorded the protection of our patent laws, . . . and this principle cannot be circumvented by attempting to limit the use of the formula to a particular technological environment.” Id. (citing Benson and Flook); see, e.g., id. at 187 (“It is now commonplace that an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection.”). If the claim is “directed to” an abstract idea, we turn to the second step of the Alice and Mayo framework, where “we must examine the elements of the claim to determine whether it contains an ‘inventive concept’ sufficient to ‘transform’ the claimed abstract idea into a patent- eligible application.” Alice, 573 U.S. at 221 (citation omitted). “A claim that recites an abstract idea must include ‘additional features’ to ensure ‘that the [claim] is more than a drafting effort designed to monopolize the [abstract idea].’” Id. (alterations in original) (quoting Mayo, 566 U.S. at Appeal 2018-005802 Application No. 12/778,542 5 77). “[M]erely requir[ing] generic computer implementation[] fail[s] to transform that abstract idea into a patent-eligible invention.” Id. The PTO recently published revised guidance on the application of § 101. USPTO’s January 7, 2019 Memorandum, 2019 Revised Patent Subject Matter Eligibility Guidance (“Memorandum”). Under that guidance, we first look to whether the claim recites: (1) any judicial exceptions, including certain groupings of abstract ideas (i.e., mathematical concepts, certain methods of organizing human interactions such as a fundamental economic practice, or mental processes); and (2) additional elements that integrate the judicial exception into a practical application (see MPEP § 2106.05(a)–(c), (e)–(h)). Only if a claim (1) recites a judicial exception and (2) does not integrate that exception into a practical application, do we then look to whether the claim: (3) adds a specific limitation beyond the judicial exception that are not “well-understood, routine, conventional” in the field (see MPEP § 2106.05(d)); or (4) simply appends well-understood, routine, conventional activities previously known to the industry, specified at a high level of generality, to the judicial exception. See Memorandum, 84 FR at 56 Appeal 2018-005802 Application No. 12/778,542 6 ANALYSIS SECTION 101 REJECTION Appellant argues that the claimed invention is not directed to an abstract idea. Appellant contends that the Examiner ignored substantial aspects of the claims, that the portions ignored are novel and unobvious, and that the ignored portion “solves a long standing and important problem.” App. Br. 8. DOES THE CLAIM RECITE AN ABSTRACT IDEA? STEP 2A, PRONG ONE Appellant’s argument does not persuade us that the claimed invention is not directed to an abstract idea. Independent claim 1 recites a method for identifying an allocation of investment resources across a plurality of investments. The method includes: (a) generating a representation of a first joint probability distribution of investor attributes, at least one of which is a representation of the probability distribution of risk aversion, and one of a plurality of attributes for a set of investments to be allocated; (b) generating an objective function that incorporates the representation of the first joint probability distribution; and (c) Optimizing, using a microprocessor, an allocation of investment resources among the plurality of investments (according to the objective function). The Memorandum includes “certain methods of organizing human activity” as a category of abstract idea to which an invention may be directed. Examples of such methods include “fundamental economic Appeal 2018-005802 Application No. 12/778,542 7 principles or practices (including hedging, insurance, mitigating risk); commercial or legal interactions (including agreements in the form of contracts; legal obligations; advertising, marketing or sales activities or behaviors; business relations); managing personal behavior or relationships or interactions between people (including social activities, teaching, and following rules or instructions). Memorandum, 84 Fed. Reg. at 52. We determine, that the claim 1 limitations of identifying an allocation of resources among a plurality of investments according to a determined joint probability distribution that leads to a generated objective function, and optimizing such allocation among said plurality of investments, recite an abstract idea that falls into the subcategory of a fundamental economic practice, i.e., of investment resource allocation.3 See Final Act. 6. We do not 3 Alice, 573 U.S. at 219–20 (concluding that use of a third party to mediate settlement risk is a “fundamental economic practice” and thus an abstract idea); id. (describing the concept of risk hedging identified as an abstract idea in Bilski as “a method of organizing human activity”); Bilski, 561 U.S. at 611–612 (concluding that hedging is a “fundamental economic practice” and therefore an abstract idea); Bancorp, 687 F.3d at 1280 (concluding that “managing a stable value protected life insurance policy by performing calculations and manipulating the results” is an abstract idea); Inventor Holdings, LLC v. Bed Bath & Beyond, Inc., 876 F.3d 1372, 1378– 79 (Fed. Cir. 2017) (holding that concept of “local processing of payments for remotely purchased goods” is a “fundamental economic practice, which Alice made clear is, without more, outside the patent system.”); OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1362–63 (Fed. Cir. 2015) (concluding that claimed concept of “offer-based price optimization” is an abstract idea “similar to other ‘fundamental economic concepts’ found to be abstract ideas by the Supreme Court and this court’’); buySAFE, Inc. v. Google, Inc., 765 F.3d. 1350, 1355 (Fed. Cir. 2014) (holding that concept of “creating a contractual relationship—a ‘transaction performance guaranty’” is an abstract idea); In re Comiskey, 554 F.3d 967, 981 (Fed. Cir. 2009) (claims directed to “resolving a legal dispute between two parties by the Appeal 2018-005802 Application No. 12/778,542 8 agree with Appellant that the Examiner ignored substantial aspects of the claims; in fact, the Examiner recognized that that all the limitations of the claims were to be considered in considering whether the claims are directed to an abstract idea. See App. Br. 8; Final Act. 6. It is uncontroversial that the concept of managing an investment portfolio, and allocating resources among various components of an investment portfolio, is a well-known, long-performed economic practice. Appellant admits that the particular abstract idea concerning optimal allocation of investments upon which Appellant improved (Markowitz’s method) has been known for over fifty years. Spec. ¶ 1. We agree with the decision of a human arbitrator” are ineligible); Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 715 (Fed Cir. 2014) (holding that claim “describ[ing] only the abstract idea of showing an advertisement before delivering free content” is patent ineligible); In re Ferguson, 558 F.3d 1359, 1364 (Fed Cir. 2009) (holding methods “directed to organizing business or legal relationships in the structuring of a sales force (or marketing company)” to be ineligible); Credit Acceptance Corp. v. Westlake Servs., 859 F.3d 1044, 1054 (Fed. Cir. 2017) (“The Board determined that the claims are directed to the abstract idea of ‘processing an application for financing a purchase’ . . . We agree.”); Interval Licensing LLC, v. AOL, Inc., 896 F.3d 1335, 1344–45 (Fed. Cir. 2018) (concluding that “[s]tanding alone, the act of providing someone an additional set of information without disrupting the ongoing provision of an initial set of information is an abstract idea,” observing that the district court “pointed to the nontechnical human activity of passing a note to a person who is in the middle of a meeting or conversation as further illustrating the basic, longstanding practice that is the focus of the [patent ineligible] claimed invention.”); Voter Verified, Inc. v. Election Sys. & Software, LLC, 887 F.3d 1376, 1385 (Fed. Cir. 2018) (finding the concept of “voting, verifying the vote, and submitting the vote for tabulation,” a “fundamental activity” that humans have performed for hundreds of years, to be an abstract idea); In re Smith, 815 F.3d 816, 818 (Fed. Cir. 2016) (concluding that “[a]pplicants’ claims, directed to rules for conducting a wagering game” are abstract). Appeal 2018-005802 Application No. 12/778,542 9 Examiner that the claimed concept of resource allocation across a portfolio is sufficiently similar to the concept of hedging at issue in Bilski, or sufficiently similar to the concept of managing a stable value protected life insurance policy as in Bancorp (Bancorp Servs., LLC v. Sun Life Co. of Canada (U.S.), 687 F.3d 1266 (Fed. Cir. 2012)), to constitute a fundamental economic practice such as found in other case law. See Final Act. 6. Appellant’s argument that “the remainder of the claim is novel and unobvious” is not persuasive of error. App. Br. 8. Whether the claimed invention is rejected based on prior art under §§ 102 and 103 is an inquiry distinct from whether the subject matter of the invention is patent-eligible under § 101. Appellant’s suggested comparison of this invention with the facts of previous PTAB decisions is also unpersuasive. App. Br. 9–11. We do not agree with Appellant that the facts of any of the cited cases are sufficiently similar to the factual circumstances of this invention for any of the prior decisions to be pertinent. Accordingly, we conclude that the claimed invention recites an abstract idea, i.e., a fundamental economic practice, which is one of the categories of abstract ideas identified in the Revised Guidance. 84 Fed. Reg. at 52. INTEGRATED INTO A PRACTICAL APPLICATION (STEP 2A, PRONG TWO) We next evaluate whether the claims integrate the identified abstract idea of identifying an allocation of resources among a plurality of investments according to a determined joint probability distribution that leads to a generated objective function, and optimizing such allocation among said plurality of investments, into a practical application. See Memorandum, 84 Fed. Reg. at 51. We consider whether there are any Appeal 2018-005802 Application No. 12/778,542 10 additional elements beyond the abstract ideas that, individually or in combination, “integrate the [abstract ideas] into a practical application, using one or more of the considerations laid out by the Supreme Court and the Federal Circuit.” Id. at 54–55. Under the Memorandum, the following exemplary considerations are indicative that an additional element (or combination of elements) may have integrated the exception into a practical application: • An additional element reflects an improvement in the functioning of a computer, or an improvement to other technology or technical field; • an additional element that applies or uses a judicial exception to effect a particular treatment or prophylaxis for a disease or medical condition; • an additional element implements a judicial exception with, or uses a judicial exception in conjunction with, a particular machine or manufacture that is integral to the claim; • an additional element effects a transformation or reduction of a particular article to a different state or thing; and • an additional element applies or uses the judicial exception in some other meaningful way beyond generally linking the use of the judicial exception to a particular technological environment, such that the claim as a whole is more than a drafting effort designed to monopolize the exception. 84 Fed. Reg. at 55. Applying the considerations from the Memorandum to the invention under appeal, we determine that Appellant discloses an improvement to the underlying abstract idea of optimizing investment allocation for a client having certain characteristics, rather than any improvement in the functioning of a computer, or an improvement to other technology or Appeal 2018-005802 Application No. 12/778,542 11 technical field. We determine that the claimed invention is clearly not concerned with prophylaxis for a disease or medical condition. As Appellant discloses only a generic microprocessor on which to execute the steps of the claimed method, we determine that the claimed invention does not recite an additional element that implements the claimed abstract ideas with a particular machine or manufacture. See Spec. ¶ 70. Further, Applicant makes no specific argument concerning the integration of the recited abstract idea into a practical application. Thus, under Step 2A, Prong Two (MPEP §§ 2106.05(a)–(c) and (e)–(h)), we conclude that claim 1 does not integrate the judicial exception into a practical application. THE INVENTIVE CONCEPT, STEP 2B Because we determine that each independent claim is directed to a judicial exception, we “consider the elements of each claim both individually and ‘as an ordered combination’ to determine whether the additional elements” add enough to transform the “nature of the claim” into “significantly more” than the judicial exception. See Alice, 573 U.S. at 217–18, 221–22 (quoting Mayo, 566 U.S. at 78–79). Under Mayo/Alice step two, we “look with more specificity at what the claim elements add, in order to determine ‘whether they identify an “inventive concept” in the application of the ineligible subject matter’ to which the claim is directed.” Affinity Labs of Tex., LLC v. DIRECTV, LLC, 838 F.3d 1253, 1258 (Fed. Cir. 2016) (quoting Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1353 (Fed. Cir. 2016)). An “inventive concept” requires more than Appeal 2018-005802 Application No. 12/778,542 12 “well-understood, routine, conventional activity already engaged in” by the relevant community. Rapid Litig. Mgmt. Ltd. v. CellzDirect, Inc., 827 F.3d 1042, 1047 (Fed. Cir. 2016) (quoting Mayo, 566 U.S. at 79–80). But a “non-conventional and non-generic arrangement of known, conventional pieces” may provide an “inventive concept” satisfying step two. Bascom Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1350 (Fed. Cir. 2016). Appellant claims a method for identifying an allocation of investment resources to construct an investment portfolio, which includes the steps of generating a representation of a first joint probability distribution of one or more attributes; generating an objective function that incorporates that representation; and optimizing an allocation of investment resources according to the objective function. The claimed invention includes the additional element of “using a microprocessor” in the step of optimizing. Appellant discloses a method for assisting investors to better allocate investment resources that seeks to overcome expressed disadvantages with the Markowitz mean-variance optimization model (as well as other models). Spec. ¶ 23. Appellants disclose generating a representation of the joint probability distribution of investor and investment attributes. Spec. ¶ 33. Appellants then generate an objective function for subsequent portfolio optimization. Id. Appellants explain that optimization of allocation weights for the investment portfolio can be done by a number of different optimizing algorithms. Spec. ¶ 69. Appellant discloses no features or requirements of any computer hardware required to perform the inventive method other than “[a]n appropriate computational apparatus of requisite memory storage and Appeal 2018-005802 Application No. 12/778,542 13 processing speed.” Appellant discloses that one embodiment could benefit from “parallel processors,” without further elaboration. Spec. ¶ 70. We determine that while Appellant discloses method steps to be performed, and disclose what they term to be improvements to a prior art abstract idea of optimizing investment allocation, Appellant discloses and claim generic computer components used conventionally. Further, we are not persuaded that Appellant provides a non-generic arrangement of known, conventional elements. Rather, we conclude that the disclosed and claimed invention uses generic computer components as a mere tool to implement the abstract mental process of generating a representation of a joint probability distribution, generating an objective function that incorporates a representation of that joint probability distribution, and optimizing an allocation of investment resources according to that objective function. As Appellant has not disclosed any features that would both (a) amount to “significantly more” than the abstract idea of allocation of investment resources among a plurality of investments and (b) would be considered as other than “well-understood, routine, and conventional,” these claim limitations fail to indicate the presence of an inventive concept that would transform the nature of the claim. We further find that Appellant’s disclosure, discussed supra, is specified at a high level of generality. Appellant argues that the claims are directed to “significantly more” than the Examiner’s identified abstract idea of “constructing an investment portfolio.” App. Br. 12. Appellant asserts that the claim recites an ordered combination of steps “that solves 50 year old problems in the art.” Id. Appellant’s position is that the claims are patent eligible because “they specifically outline the unconventional manner in which risk aversion is Appeal 2018-005802 Application No. 12/778,542 14 modeled within a joint probability distribution in order to solve a 50 year old problem,” and the claims are narrowly drafted so as not to preempt other ways of constructing an investment portfolio. App. Br. 13. Although Appellant summarizes DDR Holdings, Bascom, and Amdocs, and suggest generally that the claimed invention is similar to the inventions detailed in those cases, Appellant’s argument does not persuade us that the claimed abstract idea is integrated into a practical application. As Appellant mentions, the Amdocs court held that the claims were patent- eligible because they recited an ordered combination that “amount[ed] to an invention that is not merely a routine or conventional use of technology, produce[d] an unconventional result,” and is narrowly drawn to avoid preemption concerns. App. Br. 13; Amdocs (Israel) Ltd., v. Openet Telecom, Inc., 841 F.3d at 1298. The Bascom court found patent eligibility due to the inventive concept of “the installation of a filtering tool at a specific location, remote from the end-users, with customizable filtering features specific to each end user,” providing the benefits of a filter on a local computer and of a filter on the ISP server. Bascom, 827 F.3d at 1347. “The claims do not merely recite the abstract idea of filtering content along with the requirement to perform it on the Internet . . . [R]ather, they recite a specific, discrete implementation of the abstract idea of filtering content,” and “a technical improvement over prior art ways of filtering such content.” Id. at 1348. In DDR Holdings, the court concluded that the claimed solution, though directed to an abstract idea, was nevertheless patent-eligible because it “is necessarily rooted in computer technology in order to overcome a problem Appeal 2018-005802 Application No. 12/778,542 15 specifically arising in the realm of computer networks.” DDR Holdings LLC, v. Hotels.com, L.P., 773 F.3d 1245, 1253 (Fed. Cir. 2014). We determine that unlike Amdocs, Appellant does not disclose or claim an invention beyond a routine or conventional use of technology. Unlike Bascom, Appellant does not disclose or claim a specific, discrete implementation of an abstract idea; rather, they claim an improvement to the underlying abstract idea. Unlike DDR Holdings, Appellant does not recite an invention that is necessarily rooted in computer technology, to overcome a problem specifically arising in the realm of computer networks; rather, Appellant claims a mental process, to solve a business problem that does not arise in the realm of computer networks, that constitutes an improvement to a previously known abstract idea. Appellant’s arguments concerning previous PTAB decisions are also unpersuasive of Examiner error. App. Br. 13–15. Appellant has not demonstrated that the facts of any particular decision are sufficiently similar to the facts concerning the invention under appeal. The decisions in which the Board found a specific technical improvement are particularly inapposite, as Appellant here has disclosed only an improvement to the underlying abstract idea of optimizing investment resource allocation. Appellant’s general argument that dependent claims 3, 6, and 7 are separately patent-eligible is similarly unpersuasive. App. Br. 19. Each of these dependent claims requires only a further mathematical calculation that refines the underlying abstract idea of optimizing investment resource Appeal 2018-005802 Application No. 12/778,542 16 allocation. We do not agree with Appellant’s allegation that any of these claims “improve the functioning of the computer.” Id. CONCLUSION CONCERNING PATENT ELIGIBILITY Because we conclude that the claimed invention recites a judicial exception, to wit, one or more abstract ideas; does not integrate those abstract ideas into a practical application; and does not add a specific limitation beyond the judicial application that is not well-understood, routine, and conventional, we conclude that the claims are not directed to patent-eligible subject matter. We sustain the Examiner’s § 101 rejection of claims 1–8 and 19. CONCLUSION 1. The claimed invention is directed to an abstract idea. 2. The claimed invention does not recite significantly more than the abstract idea so as to transform the claim into a patent-eligible application of the abstract idea. ORDER The Examiner’s decision to reject claims 1-8 and 19 under 35 U.S.C. § 101 is affirmed. TIME PERIOD No time period for taking any subsequent action in connection with this appeal may be extended under 37 C.F.R. § 1.136(a)(1)(iv). AFFIRMED Copy with citationCopy as parenthetical citation