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Patent Trials and Appeals Board

Nov 29, 2019

12953818 - (D) (P.T.A.B. Nov. 29, 2019)

UNITED STA TES p A TENT AND TRADEMARK OFFICE APPLICATION NO. FILING DATE 12/953,818 11/24/2010 63710 7590 12/02/2019 INNOVATION DIVISION CANTOR FITZGERALD, L.P. 110 EAST 59TH STREET (6TH FLOOR) NEW YORK, NY 10022 FIRST NAMED INVENTOR Matthew W. Claus 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. 05-6278-C2 4195 EXAMINER KHATTAR, RAJESH ART UNIT PAPER NUMBER 3693 NOTIFICATION DATE DELIVERY MODE 12/02/2019 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): patentdocketing@cantor.com lkorovich@cantor.com phowe@cantor.com PTOL-90A (Rev. 04/07) UNITED STATES PATENT AND TRADEMARK OFFICE BEFORE THE PATENT TRIAL AND APPEAL BOARD Ex parte MATTHEW W. CLAUS, JAMES R. DRISCOLL, GREGORY P. MANNING, and JOSEPH C. NOVIELLO Appeal2018-001047 Application 12/953,818 Technology Center 3600 Before ANTON W. PETTING, NINA L. MEDLOCK, and MATTHEWS. MEYERS, Administrative Patent Judges. MEDLOCK, Administrative Patent Judge. DECISION ON APPEAL Appeal2018-001047 Application 12/953,818 STATEMENT OF THE CASE Appellant1 appeals under 35 U.S.C. § 134(a) from the Examiner's final rejection of claims 60-75 and 77-86. We have jurisdiction under 35 U.S.C. § 6(b ). We REVERSE. CLAIMED INVENTION The claimed invention "relates generally to electronic trading and more specifically to a system and method for generating and displaying composite values and receiving and executing composite trading orders" (Spec. 1, 11. 6-8). Claims 60, 72, and 84 are the independent claims on appeal. Claim 60, reproduced below with bracketed notations added, is illustrative of the claimed subject matter: 60. A method comprising: [ (a)] determining by at least one computer processor that a plurality of different trading products being electronically traded among a plurality of computers via a communications network are related to but different from a first trading product, in which a quantity of the first trading product is determined to be substantially equivalent to a quantity of each of the plurality of trading products; 1 We use the term "Appellant" to refer to "applicant" as defined in 37 C.F.R. § 1. 4 2. Our decision references Appellant's Appeal Brief (" Appeal Br.," filed June 27, 2017) and Reply Brief ("Reply Br.," filed November 10, 2017), and the Examiner's Answer ("Ans.," mailed September 12, 2017) and Final Office Action ("Final Act.," mailed January 27, 2017). Appellant identifies the real party in interest as BGC Partners, Inc. Appeal Br. 2. 2 Appeal2018-001047 Application 12/953,818 [ (b)] receiving, from a remote device by at least one computer processor in electronic communication with the remote device via an electronic communications network, market data from at least one market center, in which the market data relates to the first trading product and the plurality of different trading products; [ ( c)] determining, by at least one computer processor, based at least in part on the market data, a composite value for the first trading product and the plurality of different trading products; [ ( d)] generating, by at least one computer processor, based on the composite value, a composite trading order; [ ( e)] determining, by at least one computer processor, based on the composite trading order, at least one constituent trading order that is configured to satisfy at least a portion of the composite trading order, and [(f)] transmitting, by at least one computer processor on behalf of the trader, the at least one constituent trading order to the at least one market center. REJECTION Claims 60-75 and 77-86 are rejected under 35 U.S.C. § 101 as directed to a judicial exception without significantly more. ANALYSIS Under 35 U.S.C. § 101, an invention is patent eligible if it claims a "new and useful process, machine, manufacture, or composition of matter." 35 U.S.C. § 101. The Supreme Court, however, has long interpreted§ 101 to include an implicit exception: "[l]aws of nature, natural phenomena, and abstract ideas" are not patentable. Alice Corp. v. CLS Bank Int 'l, 573 U.S. 208,216 (2014). The Supreme Court, in Alice, reiterated the two-step framework previously set forth in Mayo Collaborative Services v. Prometheus 3 Appeal2018-001047 Application 12/953,818 Laboratories, Inc., 566 U.S. 66 (2012), "for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts." Alice Corp., 573 U.S. at 217. The first step in that analysis is to "determine whether the claims at issue are directed to one of those patent-ineligible concepts." Id. If the claims are not directed to a patent-ineligible concept, e.g., an abstract idea, the inquiry ends. Otherwise, the inquiry proceeds to the second step where the elements of the claims are considered "individually and 'as an ordered combination'" to determine whether there are additional elements that "'transform the nature of the claim' into a patent-eligible application." Id. (quoting Mayo, 566 U.S. at 79, 78). This is "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 217-18 ( alteration in original). In rejecting the pending claims under 35 U.S.C. § 101, the Examiner determined that the claims are directed to transmitting a constituent trading order to the market, the constituent trading order is based on a composite trading order which is derived from a composite value for the first trading product and the plurality of related but different trading products available in the market in which a quantity of [the] first trading product is determined to be substantially equal to a quantity of each of the plurality of trading products[,] i.e., to conducting a trade, which the Examiner concluded is a fundamental economic practice and, therefore, an abstract idea (Final Act. 2--4). The Examiner also determined that the claims do not include additional elements that are sufficient to amount to significantly more than the abstract idea itself (id. at 4--5). 4 Appeal2018-001047 Application 12/953,818 After Appellant's briefs were filed, and the Examiner's Answer mailed, the U.S. Patent and Trademark Office (the "USPTO") published revised guidance on January 7, 2019 for use by USPTO personnel in evaluating subject matter eligibility under 35 U.S.C. § 101. 2019 REVISED PATENT SUBJECT MATTER ELIGIBILITY GUIDANCE, 84 Fed. Reg. 50, 57 (Jan. 7, 2019) (the "2019 Revised Guidance"). That guidance revised the US PTO' s examination procedure with respect to the first step of the Mayo/Alice framework by (1) "[p ]roviding groupings of subject matter that [are] considered an abstract idea"; and (2) clarifying that a claim is not "directed to" a judicial exception if the judicial exception is integrated into a practical application of that exception. Id. at 50. The 2019 Revised Guidance, by its terms, applies to all applications, and to all patents resulting from applications, filed before, on, or after January 7, 2019. Id. Independent Claim 60 and Dependent Claims 61-71 and 86 The first step in the Mayo/Alice framework, as mentioned above, is to determine whether the claims at issue are "directed to" a patent-ineligible concept, e.g., an abstract idea. Alice Corp., 573 U.S. at 217. This first step, as set forth in the 2019 Revised Guidance (i.e., Step 2A), is a two-prong test; in Step 2A, Prong One, we look to whether the claim recites a judicial exception, e.g., one of the following three groupings of abstract ideas: (1) mathematical concepts; (2) certain methods of organizing human activity, e.g., fundamental economic principles or practices, commercial or legal interactions; and (3) mental processes. 2019 Revised Guidance, 84 Fed. Reg. at 54. If so, we next consider whether the claim includes additional elements, beyond the judicial exception, that "integrate the uudicial] exception into a practical application," i.e., that apply, rely on, or 5 Appeal2018-001047 Application 12/953,818 use the judicial exception in a manner that imposes a meaningful limit on the judicial exception, such that the claim is more than a drafting effort designed to monopolize the judicial exception ("Step 2A, Prong Two"). Id. at 54--55. Only if the claim (1) recites a judicial exception and (2) does not integrate that exception into a practical application do we conclude that the claim is "directed to" the judicial exception, e.g., an abstract idea. As described in more detail below, we are persuaded that the Examiner erred in determining that claim 60 is directed to an abstract idea. The Federal Circuit has explained that "the 'directed to' inquiry applies a stage-one filter to claims, considered in light of the specification, based on whether 'their character as a whole is directed to excluded subject matter."' Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1335 (Fed. Cir. 2016) (quoting Internet Patents Corp. v. Active Network, Inc., 790 F.3d 1343, 1346 (Fed. Cir. 2015)). It asks whether the focus of the claims is on a specific improvement in relevant technology or on a process that itself qualifies as an "abstract idea" for which computers are invoked merely as a tool. See id. at 1335-36. Here, the Specification is entitled "SYSTEM AND METHOD FOR PROCESSING COMPOSITE TRADING ORDERS," and describes, in the Background section, that electronic trading systems have gained widespread acceptance in recent years for trading a wide variety of items ( e.g., goods, services, financial instruments, and commodities) and that many of these systems allow traders to submit trading orders for particular trading products to market centers (Spec. 2, 11. 2-8). The Specification describes that although traders typically deal in one trading product and one market center at a time, financial markets and trading strategies have evolved such that 6 Appeal2018-001047 Application 12/953,818 traders find it more beneficial to deal in more than one trading product and more than one market center (id. at 2, 11. 8-12). "Sometimes there may be insufficient liquidity in the market centers to fill a particular trading order for a particular trading product or group of trading products" and, in that situation, the Specification describes that the process of identifying alternative trading products and/or market centers where there is sufficient liquidity may be so time consuming as to cause a trader to miss opportunities for making beneficial trades (id. at 2, 11. 12-23). The claimed invention is intended to address "the disadvantages and problems associated with prior electronic trading systems" by providing a system comprising a processor operable to generate and display a composite value (i.e., a single value that represents a weighted quantity of related trading products that is available for trade in various market centers, e.g., $10M ten-year equivalent bonds) based at least in part on market data received from one or more market centers ( e.g., notes and bonds of differing maturities that are available for trade in the market centers); the processor is further operable to receive a composite trading order from a trader for all or a portion of the composite value and to generate a plurality of constituent trading orders that, when filled, combine to satisfy the composite trading order (id. at 3, 11.2-11 and 6, 11. 2-17). More particularly, the Specification discloses that, using the composite trading order, the present invention automatically generates multiple constituent trading orders in order to aggress, substantially simultaneously, across liquidity pools of related trading products such that there is likely to be sufficient liquidity in the market centers to fill the constituent trading orders (id. at 3, 11. 18-27). Thus, for example, if a 7 Appeal2018-001047 Application 12/953,818 composite trading order is received for all of the composite value, i.e., $1 OM ten-year bonds, the system, using current market data, automatically generates multiple constituent orders ( e.g., an order for $6M ten-year notes, an order for $3M two-year notes, and an order for $I.5M five-year notes), which, in combination, satisfy the composite trading order (i.e., are equivalent to $1 OM face value ten-year notes). And the constituent orders are transmitted to one or more market centers for execution (id. at 22, 1. 25 - 23, 1. 20). Consistent with this disclosure, claim 60 recites a method comprising: ( 1) determining that a plurality of different trading products are related to a first trading product and that a quantity of the first trading product is equivalent to a quantity of each of the plurality of related trading products, i.e., determining by at least one computer processor that a plurality of different trading products being electronically traded among a plurality of computers via a communications network are related to but different from a first trading product, in which a quantity of the first trading product is determined to be substantially equivalent to a quantity of each of the plurality of trading products (step (a)); (2) receiving, from at least one market center, data related to the first trading product and the plurality of trading products and determining a composite value based on the market data, i.e., receiving, from a remote device by at least one computer processor in electronic communication with the remote device via an electronic communications network, market data from at least one market center, in which the market data relates to the first trading product and the plurality of different trading products; [and] 8 Appeal2018-001047 Application 12/953,818 determining, by at least one computer processor, based at least in part on the market data, a composite value for the first trading product and the plurality of different trading products ( steps (b) and ( c) ); (3) generating a composite trading order based on the composite value, and determining at least one constituent trading order that satisfies at least a portion of the composite trading order, i.e., generating, by at least one computer processor, based on the composite value, a composite trading order; [and] determining, by at least one computer processor, based on the composite trading order, at least one constituent trading order that is configured to satisfy at least a portion of the composite trading order ( steps ( d) and ( e) ); and ( 4) "transmitting ... the at least one constituent trading order to the at least one market center" (step (f)). Applying the 2019 Revised Guidance, we are persuaded that even if claim 60 recites an abstract idea, i.e., a fundamental economic practice and, therefore, a method of organizing human activity, as the Examiner determined, the Examiner has not sufficiently established that the claim fails to either integrate the abstract idea into a practical application or recite significantly more than an abstract idea. We agree with the Examiner that the additional elements recited in claim 60, beyond the abstract idea, are the recited "at least one computer processor"; "a remote device"; and "an electronic communication network," by which the computer processor is in electronic communication with the remote device - elements that, as the Examiner observes, are recited at a high level of generality (Final Act. 4 ). We also acknowledge that these elements are described in the Specification as generic components (see, e.g., Spec. 9, 1. 8 - 10, 1. 3; id. at 11, 1. 31 - 12, 1. 6). Yet, the mere presence of generic components is not sufficient to disqualify a claim from patent 9 Appeal2018-001047 Application 12/953,818 eligibility. See Enfish, 822 F.3d at 1338 ("[W]e are not persuaded that the invention's ability to run on a general-purpose computer dooms the claims."). Thus, for example, as the court explained in BASCOM, "an inventive concept can be found in the non-conventional and non-generic arrangement of known, conventional pieces." BASCOM Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1350 (Fed. Cir. 2016); see also id. at 1352 (holding claims patent eligible where they "recite a specific, discrete implementation of the abstract idea," in contrast to implementing the abstract idea "on generic computer components, without providing a specific technical solution beyond simply using generic computer concepts in a conventional way"). The Examiner determined here, as described above, that the pending claims are directed to conducting a trade. Yet, claim 60 goes beyond merely conducting a trade, i.e., receiving a trading order and transmitting the order to a market center for execution. Instead, the computer processor of claim 60 first determines a composite value based on market data, i.e., a weighted quantity of related trading products. It then automatically generates multiple constituent trading orders based on a composite trading order for all or a portion of the composite value - constituent orders that in combination satisfy the composite trading order - and transmits the constituent orders to one or more market centers for execution. The Examiner notes in the Final Office Action that the computer processor is recited at a high level of generality, and asserts that the processor comprises "a microprocessor, memory and other computer related components which are performing their routine, well-understood and conventional function[ s] similar to what has been found by the courts (in 10 Appeal2018-001047 Application 12/953,818 Alice) not to be adding significantly more to the underlying abstract idea" (Final Act. 4). But, the Examiner has not addressed whether the claimed functionality entails an improvement to electronic trading technology. The Specification details, as described above, the shortcomings associated with then existing electronic trading systems, including, in particular, the difficulties involved in identifying alternative trading products and/or market centers in situations where insufficient liquidity threatens to delay or inhibit the successful execution of a trading strategy. The present invention addresses this shortcoming by determining a single composite value representing multiple trading products in various market centers - a value that a trader may use to submit, in a single action, a composite trading order based on related trading products according to specifications and preferences input by the trader. Using the composite trading order, the present invention automatically generates multiple constituent trading orders that combine to satisfy the composite trading order and transmits the constituent orders to one or more market centers for execution. The Specification describes that the system, thus, not only saves a trader the time and calculations involved in separately preparing and inputting trading orders for related trading products; the system identifies the liquidity pools and appropriate weightings among trading products and market centers such that there is likely to be sufficient liquidity in the market centers to satisfy the constituent trading orders (Spec. 3, 11. 21-27). The Examiner has not addressed whether this functionality, viewed in light of Appellant's Specification, entails an improvement to electronic trading technology. And, as such, the Examiner has not established that claim 60 fails to integrate the asserted abstract idea into a practical 11 Appeal2018-001047 Application 12/953,818 application. Therefore, we do not sustain the Examiner's rejection of independent claim 60 under 35 U.S.C. § 101. For the same reasons, we also do not sustain the Examiner's rejection of dependent claims 61-71 and 86. Independent Claims 72 and 84 and Dependent Claims 73-75, 77-83, and 85 Independent claims 72 and 84 include language substantially similar to the language of independent claim 60. We are persuaded that the Examiner erred in rejecting claims 72 and 84 under 35 U.S.C. § 101 for the same reasons set forth above with respect to claim 60. Therefore, we do not sustain the Examiner's rejection under 35 U.S.C. § 101 of independent claims 72 and 84, and claims 73-75, 77-83, and 85, which depend therefrom. In summary: 60-75, 77- 101 86 CONCLUSION Eligibility REVERSED 12 60-75, 77- 86