14299821 - (D) (P.T.A.B. Oct. 9, 2019)

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Patent Trials and Appeals BoardOct 9, 2019

14299821 - (D) (P.T.A.B. Oct. 9, 2019)

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. 14/299,821 06/09/2014 David C. CUSHING 107945.000069 3651 145584 7590 10/09/2019 Prince Lobel Tye LLP One International Place Suite 3700 Boston, MA 02110 EXAMINER BORLINGHAUS, JASON M ART UNIT PAPER NUMBER 3693 NOTIFICATION DATE DELIVERY MODE 10/09/2019 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): docketing@princelobel.com PTOL-90A (Rev. 04/07) UNITED STATES PATENT AND TRADEMARK OFFICE ________________ BEFORE THE PATENT TRIAL AND APPEAL BOARD ________________ Ex parte DAVID C. CUSHING, M. MITCH BULAJIC, ROHIT D’SOUZA, and KENNETH KRAMER1 ________________ Appeal 2019-000258 Application 14/299,821 Technology Center 3600 ________________ Before CARL W. WHITEHEAD JR., BRADLEY W. BAUMEISTER, and NABEEL U. KHAN, Administrative Patent Judges. Opinion for the Board filed by Administrative Patent Judge BRADLEY W. BAUMEISTER, Administrative Patent Judge. Opinion Concurring filed by Administrative Patent Judge CARL W. WHITEHEAD JR., Administrative Patent Judge. DECISION ON APPEAL 1 We use the word “Appellant” to refer to “applicant” as defined in 37 C.F.R. § 1.42. Appellant identifies the real party in interest as ITG SOFTWARE SOLUTIONS, INC. Appeal Brief filed March 23, 2018 (“Appeal Br.”) 2. Appeal 2019-000258 Application 14/299,821 2 STATEMENT OF THE CASE Appellant appeals under 35 U.S.C. § 134(a) from the Examiner’s final rejection of claims 13–17, which constitute all of the pending claims. Appeal Br. 6–16. These claims stand rejected under 35 U.S.C. § 101 as being directed to patent-ineligible subject matter. Final Action mailed April 21, 2017 (“Final Act.”) 2–3. We have jurisdiction under 35 U.S.C. § 6(b). We affirm. CLAIMED SUBJECT MATTER Appellant describes the present invention as follows: A computer implemented method and system for executing block trades for a security includes steps or devices for receiving a block trade request, at a computer system. The block request includes data representing a quantity of shares of the security to be traded over a period of time. The computer system divides the period of time into a plurality of time bins. A computer system, for the received block trade request, computes, for each time bin, a number of shares to be traded as a trading target based on at least historical trading volumes using predictive analysis. For a first time bin, a computer system generates executable trade orders for a number of shares to be traded that is substantially equal to the trading target for the first time bin. A computer system executes at least a portion of the executable trade orders in a trade forum within each time bin in the future. Abstract. Appeal 2019-000258 Application 14/299,821 3 Independent claim 13 represents the appealed claims.2 It is reproduced below with formatting modified for clarity and emphasis added to the claim language that recites an abstract idea: 13. A system for executing block trades for a security, comprising: [1] an algorithmic trading computer server electronically coupled with at least one electronic trade order matching system, said algorithmic trading computer server configured to: [a] receive an electronic block trade request including data representing a quantity of shares of the security to be traded over a period of time and an electronic trading strategy to be employed to carry out said electronic block trade request, [b] compute, for each of a plurality of time bins, a number of shares to be traded as a trading target based on at least historical trading volumes using predictive analysis and said trading strategy, each said time bins being shorter than said period of time, and said trading target being less than said quantity of shares of the security to be traded over said period of time, and [c] generate an electronic communication containing data reflecting an executable electronic trade orders for a quantity of shares to be traded that is less than or equal to the trading target for the first time bin, and [d] electronically transmit the electronic communication to the at least one trade order matching system for execution. 2 Appellant argues all of the claims together as a group. See Appeal Br. 6– 16. Accordingly, we select independent claim 1 as representative. 37 C.F.R. § 41.37(c)(1)(iv). Appeal 2019-000258 Application 14/299,821 4 PRINCIPLES OF LAW A. SECTION 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. However, the U.S. 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. E.g., Alice Corp. v. CLS Bank Int’l, 573 U.S. 208, 216 (2014). In determining whether a claim falls within an excluded category, we are guided by the Court’s two-step framework, described in Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66 (2012), and Alice. Alice, 573 U.S. at 217–18 (citing Mayo, 566 U.S. at 75–77). 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, 191 (1981)); “tanning, dyeing, making water-proof cloth, vulcanizing India Appeal 2019-000258 Application 14/299,821 5 rubber, smelting ores” (id. at 182 n.7 (quoting Corning v. Burden, 56 U.S. 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 Court held that “a claim drawn to subject matter otherwise statutory does not become nonstatutory simply because it uses a mathematical formula.” Diehr, 450 U.S. at 187; 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 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 77). “[M]erely requir[ing] generic computer implementation[] fail[s] to transform that abstract idea into a patent-eligible invention.” Id. Appeal 2019-000258 Application 14/299,821 6 B. USPTO SECTION 101 GUIDANCE In January 2019, the United States Patent and Trademark Office (“USPTO”) published revised guidance on the application of 35 U.S.C. § 101. USPTO, 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. 50 (Jan. 7, 2019) (“2019 Guidance”). Under the 2019 Guidance, we first look to whether the claim recites the following: (1) any judicial exceptions, including certain groupings of abstract ideas (i.e., mathematical concepts, certain methods of organizing human activities 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)). 2019 Guidance, 84 Fed. Reg. 52–55. 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 is 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. 2019 Guidance, 84 Fed. Reg. 56. Appeal 2019-000258 Application 14/299,821 7 ANALYSIS Step 2A, Prong 1 Under step 2A, prong 1, of the 2019 Guidance, we first look to whether the claim recites any judicial exceptions, including certain groupings of abstract ideas (i.e., mathematical concepts, certain methods of organizing human activities such as a fundamental economic practice, or mental processes). 84 Fed. Reg. 52–55. The Examiner determines that the claims are “directed to ‘a system and method for executing trades of securities according to predefined strategies. As such, the claimed invention is directed toward a fundamental economic practice and thus an abstract idea.” Final Act. 2 (citing Spec. 2). Limitation [1.a] recites “receive [a] . . . block trade request including data representing a quantity of shares of the security to be traded over a period of time and an electronic trading strategy to be employed to carry out said electronic block trade request.” This limitation reasonably can be characterized as reciting a certain method of organizing human activity, such as fundamental economic practices, commercial or legal interactions, or sales activities. The 2019 Guidance expressly recognizes certain methods of organizing human activity as constituting patent-ineligible abstract ideas. 84 Fed. Reg. 52. Accordingly, limitation [1.a] reasonably can be interpreted as reciting a patent-ineligible abstract idea. Limitation [1.b] recites the following language: [b] compute, for each of a plurality of time bins, a number of shares to be traded as a trading target based on at least historical trading volumes using predictive analysis and said trading strategy, each said time bins being shorter than said period of time, and said trading target being less than said quantity of shares of the security to be traded over said period of time. Appeal 2019-000258 Application 14/299,821 8 Computing numbers of security shares to be traded reasonably can be interpreted as constituting a mathematical concept—specifically, performing mathematical calculations. Computing numbers of security shares to be traded alternatively can be interpreted reasonably as constituting a mental process that can be performed either in the human mind or with the aid of pencil and paper. The 2019 Guidance expressly recognizes performing both mathematical concepts and mental processes as constituting patent-ineligible abstract ideas. 84 Fed. Reg. 52. Accordingly, limitation [1.b] reasonably can be interpreted as reciting patent-ineligible abstract ideas. Limitation [1.c] recites “generate a[] . . . communication containing data reflecting an executable electronic trade orders for a quantity of shares to be traded that is less than or equal to the trading target for the first time bin.” Generating a communication reasonably can be characterized as a mental process that can be performed in the human mind, such as observations, evaluations, judgments, and opinions. The 2019 Guidance expressly recognizes mental processes as constituting a patent-ineligible abstract idea. 84 Fed. Reg. 52. Accordingly, limitation [1.c] reasonably can be characterized as reciting a patent-ineligible abstract idea. Limitation [1.d] recites “transmit the . . . communication to the at least one trade order matching system for execution.” Transmitting a communication containing trade order data (e.g. number of shares) reasonably can be characterized as a certain method or organizing human activity—a commercial or legal interaction or sales activities. The 2019 Guidance expressly recognizes certain methods of organizing human activity as constituting patent-ineligible abstract ideas. 84 Fed. Reg. 52. Appeal 2019-000258 Application 14/299,821 9 Accordingly, limitation [1.d] reasonably can be characterized as reciting a patent-ineligible abstract idea. For these reasons, each of limitations [1.a]–[1.d] reasonably can be characterized as reciting patent-ineligible subject matter under step 2A, prong 1, of the 2019 Guidance. Step 2A, Prong 2 Under step 2A, prong 2, of the 2019 Guidance, we next analyze whether claim 13 recites additional elements that integrate the judicial exception into a practical application. 84 Fed. Reg. 52–55. In addition to being characterized as reciting an abstract idea, limitation [1.a], which recites “receive an electronic block trade request,” alternatively can be characterized reasonably as merely constituting insignificant pre-solution activity: An example of pre-solution activity is a step of gathering data for use in a claimed process, e.g., a step of obtaining information about credit card transactions, which is recited as part of a claimed process of analyzing and manipulating the gathered information by a series of steps in order to detect whether the transactions were fraudulent. MPEP § 2106.05(g). Similarly, claim 13’s final step of “electronically transmit[ting] the electronic communication to the at least one trade order matching system for execution” does not add any meaningful limitations to the abstract idea because it reasonably may be characterized as merely being directed to the insignificant post-solution activity of transmitting data. E.g., Apple, Inc. v. Ameranth, Inc., 842 F.3d 1229, 1241–42 (Fed. Cir. 2016) (holding that printing or downloading generated menus constituted insignificant extra- solution activity). Appeal 2019-000258 Application 14/299,821 10 Appellant argues that “the claims are nonconventional, resulting in a computer based invention that does thing that a human could never do, are technical in nature, and solve a technical problem, thereby improving both the performance of a computer and of electronic trading technology.” Appeal Br. 6. In support of this proposition, Appellant more specifically argues: the claimed server(s) have access to real-time and historical market data and real-time analytic data; and to other servers on the communication network. Specification p. 3, lines 11–23. The servers not only can handle more complex trades and handle more equities, but the electronic connections to real-time market information as well as the historical and derived market data, allows it to process multiple indicators on a continual basis. Id. at 7. Appellant similarly argues “[a] fair reading of claim 13 reveals that it is directed to a new kind of computer that sits within the electronic trading infrastructure and performs new, never before done activities. The specification makes clear that the invention is technological.” Id. at 12. This argument is unpersuasive. Our reviewing court held that where an “invention makes the trader faster and more efficient, not the computer . . . [, it] is not a technical solution to a technical problem.” Trading Techs. Int’l v. IBG LLC, 921 F.3d 1084, 1090 (Fed. Cir. 2019); see also id. at 1093 (claims abstract where “they recite a purportedly new arrangement of generic information that assist traders in processing information more quickly”). This holding of Trading Techs. comports with the court’s prior decisions. For example, in Credit Acceptance Corp. v. Westlake Servs., 859 F.3d 1044, 1055 (Fed. Cir. 2017) our reviewing court held that “mere automation of manual processes using generic computers does not constitute a patentable improvement in computer technology.” Appeal 2019-000258 Application 14/299,821 11 For these reasons, Appellant does not persuade us that claim 13 is directed to an improvement in the function of a computer or to any other technology or technical field. MPEP § 2106.05(a). Nor has Appellant persuasively demonstrated that claim 13 directed to a particular machine or transformation. MPEP §§ 2106.05(b), (c). Nor has Appellant persuasively demonstrated that claim 13 adds any other meaningful limitations. MPEP § 2106.05(e). Accordingly, Appellant has not persuaded us that claim 13 integrates the recited abstract ideas into a practical application within the meaning of the 2019 Guidance. 84 Fed. Reg. 52–55. Step 2B Under step 2B of the 2019 Guidance, we next analyze whether claim 13 adds any specific limitation beyond the judicial exception that is not “well-understood, routine, conventional” in the field. 84 Fed. Reg. 56; MPEP § 2106.05(d). The Examiner determines that the claims’ additional limitations pertaining to computer system components “are recited at a high level of generality and are recited as performing generic computer functions routinely used in computer applications.” Final Act. 2. The Examiner also reasons that “the claimed invention is not performing a generic computation[,] but rather a specific computation[,] but that does not negate the fact that performing computations is a well-understood, routine and conventional computer function.” Examiner’s Answer mailed Aug. 10, 2018 at 9. Appellant’s Specification supports the Examiner’s determination that the additional claim elements are well-understood, routine, and conventional. For example, Appellant’s Specification explains that the Appeal 2019-000258 Application 14/299,821 12 invention entails having plural servers on a network with individual servers running on different trading strategies and having access to various appropriate trading forums. Spec. 4–5. The Specification further explains that the present invention’s advantage over the prior art is that the servers can handle more complex trades than trades that are executed manually by human traders. Id. at 5. That is, the Specification explains that the improvements relate to making more complex trading algorithms. But the fact that Appellant’s claims may recite very specific approaches for optimizing portfolios does not mean the claims recite improvements to the functioning of a computer or to any other technology or technical field. See, e.g., Flook, 437 U.S. at 593 (“respondent incorrectly assumes that if a process application implements a principle in some specific fashion, it automatically falls within the patentable subject matter of § 101.”). “It has been clear since Alice that a claimed invention’s use of the ineligible concept to which it is directed cannot supply the inventive concept that renders the invention ‘significantly more’ than that ineligible concept.” BSG Tech LLC v. BuySeasons, Inc., 899 F.3d 1281, 1290 (Fed. Cir. 2018). Unlike the Specification’s disclosure of an improvement to the abstract idea of trading, Appellant’s Specification does not disclose any improvements to the underlying technology of the servers. See Credit Acceptance Corp. v. Westlake Servs., 859 F.3d 1044, 1056–57 (Fed. Cir. 2017) (indicating that the claims’ failure to provide details as to any non- conventional software can serve as a factor in determining whether the claims recite significantly more than an abstract idea or “simply instruct the practitioner to implement the abstract idea . . . on a generic computer.”). Appeal 2019-000258 Application 14/299,821 13 For these reasons, we determine that claim 13 does not recite additional elements that amount to significantly more than the judicial exception within the meaning of the 2019 Guidance. 84 Fed. Reg. 52–55; MPEP § 2106.05(d). Preemption Regarding Appellant’s arguments concerning preemption (Appeal Br. 15–16), we recognize that the Supreme Court has described “the concern that drives this exclusionary principle [i.e., the exclusion of abstract ideas from patent eligible subject matter] as one of pre-emption.” Alice, 573 U.S. at 216. However, characterizing preemption as a driving concern for patent eligibility is not the same as characterizing preemption as the sole test for patent eligibility. As our reviewing court has explained: “The Supreme Court has made clear that the principle of preemption is the basis for the judicial exceptions to patentability” and “[f]or this reason, questions on preemption are inherent in and resolved by the § 101 analysis.” Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015) (citing Alice, 573 U.S. at 216). Although “preemption may signal patent ineligible subject matter, the absence of complete preemption does not demonstrate patent eligibility.” Id. Accordingly, we sustain the Examiner’s rejection of claim 13 under 35 U.S.C. § 101 as being directed to patent-ineligible subject matter. We, likewise, sustain the 101 rejection of claims 14–17, which Appellant does not argue separately. Appeal Br. 6–16. Appeal 2019-000258 Application 14/299,821 14 CONCLUSION In summary: Claims Rejected Basis Affirmed Reversed § 101 13–17 Overall Outcome 13–17 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). See 37 C.F.R. § 1.136(a)(1)(iv). AFFIRMED UNITED STATES PATENT AND TRADEMARK OFFICE ________________ BEFORE THE PATENT TRIAL AND APPEAL BOARD ________________ Ex parte DAVID C. CUSHING, M. MITCH BULAJIC, ROHIT D’SOUZA, and KENNETH KRAMER Appeal 2019-000258 Application 14/299,821 15 ________________ Appeal 2019-000258 Application 14/299,821 Technology Center 3600 ________________ Before CARL W. WHITEHEAD JR., BRADLEY W. BAUMEISTER, and NABEEL U. KHAN, Administrative Patent Judges. WHITEHEAD JR., Administrative Patent Judge, concurring. Alice/Mayo—Step 2 (Inventive Concept) Step 2B identified in the Revised Guidance Step 2B Appellant contends the claim configuration to, “submit to configure an algorithmic trading computer server to be able to generate and transmit a serious of electronic communications based on a received block trade order and a received trading strategy was not well-understood, routine and conventional, and the Examiner has provided no evidence that it was. Reply Brief 3. Appellant further contend: Since this determination has factual underpinnings, the rejection should be withdrawn for this reason alone. See Berkheimer v. HP Inc., 881 F.3d 1360 (Fed. Cir. 2018); April 19, 2018, Memorandum from the Deputy Commissioner for Patent Examination Policy, “Changes in Examination Procedure Pertaining to Subject Matter Eligibility, Recent Subject Matter Eligibility Decision (Berkheimer v. HP, Inc.)”; see also Aatrix Appeal 2019-000258 Application 14/299,821 16 Software, Inc. v. Green Shades Software, Inc., 882 F.3d 1121 (Fed. Cir. 2018). Reply Brief 3. The 2019 Guidance, Section III (B) (footnote 36) states (emphasis added): In accordance with existing guidance, an examiner’s conclusion that an additional element (or combination of elements) is well understood, routine, conventional activity must be supported with a factual determination. For more information concerning evaluation of well-understood, routine, conventional activity, see MPEP 2106.05(d), as modified by the USPTO Berkheimer Memorandum. Accordingly, based upon the 2019 Guidance, I believe the Berkheimer issue should be addressed within the majority opinion. It is noted, the Berkheimer Memorandum, Section III (A)(1), states (emphasis added): A specification demonstrates the well-understood, routine, conventional nature of additional elements when it describes the additional elements as well-understood or routine or conventional (or an equivalent term), as a commercially available product, or in a manner that indicates that the additional elements are sufficiently well-known that the specification does not need to describe the particulars of such additional elements to satisfy 35 U.S.C. § 112(a). A finding that an element is well- understood, routine, or conventional cannot be based only on the fact that the specification is silent with respect to describing such element. The Examiner determines, “Generic computer system components recited as performing generic computer functions that are well-understood, Appeal 2019-000258 Application 14/299,821 17 routine and conventional activities amount to no more than implementing the abstract idea with a computerized system.” Final Action 2. The Berkheimer Memorandum, Section III (A), states when formulating rejections, “[i]n a step 2B analysis, an additional element (or combination of elements) is not well-understood, routine or conventional unless the examiner finds, and expressly supports a rejection in writing.” The Berkheimer Memorandum3 provides four illustrations for the Examiner to follow to provide support, the second4 of the four illustrations requires the Examiner to provide factual determination support from, “[a] citation to one or more of the court decisions discussed in MPEP § 2106.05(d)(II) as noting the well-understood, routine, conventional nature of the additional element(s).” The Examiner supports the determination: [T]he functions performed by the computer system in the claimed invention are well-understood, routine and conventional computer functions. The claimed invention receives a request, performs a computation, generates a message and transmits that message to another computer system. These functions are well- understood, routine and conventional computer functions. [See] MPEP §2106.05(d). Answer 9. Consequently, I agree with the Examiner’s determination that the additional claim elements are well-understood, routine, and conventional 3 Berkheimer Memorandum Section III (A). 4 Berkheimer Memorandum Section III (A)(2). Appeal 2019-000258 Application 14/299,821 18 and that the determination is properly based upon a factual determination as specified in the Berkheimer Memorandum, Section III (A)(2).