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Patent Trials and Appeals Board

Oct 23, 2019

13295420 - (D) (P.T.A.B. Oct. 23, 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.
13/295,420 11/14/2011 Richard K. MacWilliams 2904.0020002 4162
26111 7590 10/23/2019
STERNE, KESSLER, GOLDSTEIN & FOX P.L.L.C.
1100 NEW YORK AVENUE, N.W.
WASHINGTON, DC 20005
EXAMINER
LIU, CHIA-YI
ART UNIT PAPER NUMBER
3695
NOTIFICATION DATE DELIVERY MODE
10/23/2019 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):
e-office@sternekessler.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

Ex parte RICHARD K. MACWILLIAMS
and JOHN ANDREW MCQUOWN
____________

Appeal 2019-0000531
Application 13/295,4202
Technology Center 3600
____________

Before MURRIEL E. CRAWFORD, BIBHU R. MOHANTY, and
MATTHEW S. MEYERS, Administrative Patent Judges.

MEYERS, Administrative Patent Judge.

DECISION ON APPEAL

STATEMENT OF THE CASE

Appellant appeals under 35 U.S.C. § 134(a) claims 1–18 and 23–29.
We have jurisdiction under 35 U.S.C. § 6(b).
We AFFIRM.

1 Our decision references Appellant’s Appeal Brief filed June 26, 2018
(“Appeal Br.”) and the Examiner’s Answer mailed July 26, 2018 (“Ans.”)
and the Non-Final Office Action mailed June 26, 2017 (“Final Act.”).
2 We use the word “Appellant” to refer to “applicant” as defined in 37
C.F.R. § 1.42. Appellant identifies eBond Advisors LLC, as the real party in
interest (Appeal Br. 4).
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CLAIMED INVENTION
Appellant’s claims “relate generally to investment vehicles, and, more
particularly, to bonds and credit default swaps” (Spec. ¶ 2).
Claims 1, 7, 13, and 29 are the independent claims on appeal. Claim
1, reproduced below with bracketed notations added, is illustrative of the
claimed subject matter:
1. A method comprising:
[a] receiving, by one or more computing devices, a
payment based on a cost of a credit default swap contract on an
exchangeable bond instrument, wherein the exchangeable bond
instrument is exchangeable, according to prescribed conversion
requirements, for an enhanced bond instrument, and wherein the
enhanced bond instrument includes a reference to the credit
default swap as specified by the prescribed conversion
requirements;
[b] purchasing, by the one or more computing devices, in
accordance with the prescribed conversion requirements, the
credit default swap contract specified by the prescribed
conversion requirements, wherein the purchased credit default
swap contract secures a principal payout for an investor in the
enhanced bond instrument in an event of default;
[c] delivering, by the one or more computing devices, in
accordance with the prescribed conversion requirements, the
credit default swap contract to an account held at a clearing
member; and
[d] instructing, by the one or more computing devices, in
accordance with the prescribed conversion requirements, a bond
indenture trustee to convert the exchangeable bond instrument to
the enhanced bond instrument, the conversion comprising:
[d1] changing, by the bond indenture trustee and in
accordance with the prescribed conversion requirements, a
CUSIP identifier of the exchangeable bond instrument to a
different CUSIP identifier corresponding to the enhanced bond
instrument;
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[d2] monitoring, by a trustee different from the clearing
member, the account on behalf of the investor in the enhanced
bond instrument; and
[d3] delivering the enhanced bond instrument to the
investor.
REJECTION
Claims 1–18 and 23–29 are rejected under 35 U.S.C. § 101 as directed
to a judicial exception without significantly more.
ANALYSIS
Patent-Ineligible Subject Matter
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.”
See 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. E.g., Alice Corp. Pty.
Ltd. 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 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 [P]etitioners’ application explain the basic concept of hedging, or
protecting against risk.”).
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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
rubber, smelting ores” (id. at 182 n.7 (quoting Corning v. Burden, 56 U.S.
252, 267–68 (1853))); 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 U.S. at 176, and 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. 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.”), and 191 (citing Benson and Flook).
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
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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 (quotation marks 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. (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.
The PTO recently published revised guidance on the application of
§ 101. 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed.
Reg. 50 (Jan. 7, 2019) (“2019 Revised Guidance, 84 Fed. Reg.”). 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
activity such as a fundamental economic practice, or mental processes); and
(2) additional elements that integrate the judicial exception into a
practical application, i.e., that “apply, rely on, or 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.” See 2019 Revised Guidance, 84 Fed. Reg. 53; see also
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:
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(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.
See 2019 Revised Guidance, 84 Fed. Reg. 56.
Independent Claims 1, 7, and 13, and Dependent Claims 2–6, 8–12, and 23–
28
Appellant argues claims 1–18 and 23–28 as a group (see Appeal Br.
15–29). We select independent claim 1 as representative. Claims 2–18 and
23–28 stand or fall with independent claim 1. See 37 C.F.R.
§ 41.37(c)(1)(iv).
With regard to the first step of the Mayo/Alice framework, the
Examiner states that the claims recite “the abstract idea of receiving payment
based on cost, purchasing swap contract based on conversion requirements,
instructing [a] trustee to convert bond, changing [an] identifier, and
monitoring [an] account” (Non-Final Act. 2; Ans. 5–6). The Examiner
states further that “the claims are directed to [a] fundamental economic
practice because the concept relates to agreements between people (purchase
swap contracts on a bond), performance of financial transactions
(purchasing/exchanging) and mitigating risks (enhanced bond reduces risk)”
(Ans. 7).
In response, Appellant first argues that the Examiner’s rejection is
improper because “[t]he Examiner fails to provide the necessary evidence or
rationale to show that the claims are directed to a fundamental economic
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practice” (Appeal Br. 22). More particularly, Appellant argues that “[t]he
Examiner provides no factual support for its allegation that the purported
abstract idea is a ‘fundamental economic practice,’ let alone provide any
examples of the claimed concepts being practiced in the past” (id. at 22–23).
We cannot agree.
Under the first prong of step 2A of the 2019 Revised Guidance, we
first determine if the claims recite an abstract idea. In this regard, the
Specification is titled “SYSTEMS, METHODS, AND COMPUTER
PROGRAM PRODUCTS FOR CREATION AND TRADING OF
ENHANCED BONDS,” and relates “generally to investment vehicles, and,
more particularly, to bonds and credit default swaps” (Spec. ¶ 2). The
Specification describes that “[t]he current market structure . . . makes it
difficult for investors to purchase bonds of a particular issuer at the precise
default risk they desire” (id. ¶ 7) and suffers from “the high transaction costs
involved with buying and trading bonds” (id. ¶ 8). The Specification
identifies that “[c]redit default swaps (‘CDS’) are a type of derivative
investment that allow one party to transfer the default risk of an asset to
another party” (id. ¶ 31), but notes several drawbacks with traditional CDS
related to multiplicity of transactions and associated costs (see, e.g., Spec.
¶¶ 32–35). To address these drawbacks, the present invention discloses “a
new type of investment termed an enhanced bond (or “eBond”) is created
that combines corporate bonds with CDS contracts for those same corporate
bonds” (id. ¶ 35), and thus, provides investors with the ability “to purchase
bonds with a specific desired risk regardless of issuer and provide a
mechanism for dealers to significantly reduce transaction costs compared to
those available today” (id. ¶ 9; cf. Ans. 4).
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Taking independent claim 1 as representative, the claimed subject
matter recites “[a] method” including steps for “receiving . . . a payment
based on a cost of a credit default swap contract on an exchangeable bond
instrument . . . according to prescribed conversion requirements” which
include “a reference to the credit default swap,” “purchasing . . . in
accordance with the prescribed conversion requirements, [a] credit default
swap contract,” “delivering . . . in accordance with the prescribed conversion
requirements, the credit default swap contract to an account held at a
clearing member,” “instructing . . . in accordance with the prescribed
conversion requirements, a bond indenture trustee to convert the
exchangeable bond instrument to the enhanced bond instrument.” The
method includes additional steps for the conversion which require the bond
indenture trustee to change the “CUSIP identifier of the exchangeable bond
instrument,” monitor “the account on behalf of the investor in the enhanced
bond instrument,” and “deliver[] the enhanced bond instrument to the
investor.”
Understood in light of the Specification, we agree with the Examiner
that independent claim 1 broadly recites
the steps of receiving payment based on cost of credit default
swap contract on an exchangeable bond instrument wherein the
exchangeable bond instrument is exchangeable according to
prescribed conversion requirements for an enhanced bond
instrument and wherein the enhanced bond instrument includes
a reference to the credit default swap as specified by the
prescribed conversion requirements, purchasing the credit
default swap contract in accordance with prescribed conversion
requirements wherein the purchased credit default swap contract
secures a principal payout for an investor in the enhanced bond
instrument in an event of default, delivering credit default swap
contract to an account held at a clearing member, instructing
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bond indenture trustee to convert the exchangeable bond
instrument to enhanced bond instrument, the conversion
comprising changing by the bond indenture trustee and in
accordance with the prescribed conversion requirements a
CUSIP identifier of the exchangeable bond instrument to a
different CUSIP identifier corresponding to the enhanced bond
instrument, monitoring by a trustee different from the clearing
member the account on behalf of the investor in the enhanced
bond instrument and delivering the enhanced bond instrument to
an investor.

(Non-Final Act. 2–3). We also agree with the Examiner that “[t]hese steps
describe the concept of receiving payment based on cost, purchasing swap
contract based on conversion requirements, instructing trustee to convert
bond, changing identifier, and monitoring account, such as intermediate
settlement in Alice” (id. at 3). Therefore, when viewed through the lens of
the 2019 Revised Guidance, the Examiner’s analysis depicts the claimed
subject matter as being directed to ineligible subject matter which may be
categorized as one of the ineligible “methods of organizing human activity”
that include “fundamental economic principles or practices (including
hedging, insurance, mitigating risk)” and “commercial or legal interactions
(including agreements in the form of contracts; legal obligations;
advertising, marketing or sales activities or behaviors; business relations),”
and thus an abstract idea. See 2019 Revised Guidance, 84 Fed. Reg. 52.
Having concluded that claim 1 recites a judicial exception, i.e., an
abstract idea, we turn to the second prong of step 2A of the 2019 Revised
Guidance and determine whether the claims recite a practical application of
the recited judicial exception. Here we look to see if, for example, (i) any
additional elements of the claims reflects an improvement in the functioning
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of a computer or to another technological field, (ii) an application of the
judicial exception with, or by use of, a particular machine, (iii) a
transformation or reduction of a particular article to a different state or thing,
or (iv) a use of the judicial exception in some other meaningful way beyond
generally linking the use of the judicial exception to a particular
technological environment. See 2019 Revised Guidance, 84 Fed. Reg. 55;
See also MPEP § 2106.05(a)–(c), (e)–(h).
Appellant argues that the present claims are similar to the patent-
eligible claims in McRO, Inc. v. Bandai Namco Games Am., Inc., 837 F.3d
1299 (Fed. Cir. 2016), and patent-eligible because independent claim 1, for
example, “recites a specific process for establishing the desired credit-
enhanced position, including an unconventional ‘conversion’ of an
‘exchangeable bond instrument’ for an ‘enhanced bond instrument’ that
‘includes a reference to the credit default swap as specified by the
prescribed conversion requirements’” (Appeal Br. 18, 19 (“The claims of
the instant application are directed to a specific improved process for
establishing the above-described credit-enhanced investment position, and
not to the resulting investment position itself”)). However, independent
claim 1, unlike the claims found non-abstract in prior cases, uses generic
computer technology to send and receive (i.e., receive a payment, deliver to
an account, instruct a trustee, delivery to the investor), process (i.e., purchase
the credit swap, change CUSIP), and monitor data, and does not recite an
improvement to a particular computer technology. (See Spec. ¶¶ 54 (“[T]he
exchanges can be performed on a trading platform that permits trading based
on the requirements provided by the bond indenture and published exchange
requirements.”) 68, and 100–103); see, e.g., McRO, 837 F.3d at 1314–15
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(Finding claims not abstract because they “focused on a specific asserted
improvement in computer animation.”).
Appellant further argues that “[t]he claims of the instant application
are directed to a specific improved process for establishing the above-
described credit-enhanced investment position, and not to the resulting
investment position itself”, and as such, “as in McRO, it is the incorporation
of the unconventional conversion of an exchangeable bond to a completely
new enhanced bond, and the recited requirements associated with the
exchange, that enable an investor to establish her credit-enhanced position”
(Appeal Br. 19 (citing McRO, 837 F.3d at 1314), and 21 (“[T]he claimed
process sets forth specific steps intended to simplify the requirements of the
investor to establish a particular position and reduce risks and administration
typically associated with CDS contracts.”)). We cannot agree.
In McRO, the Federal Circuit premised its determination that the
claims were patent-eligible, not merely on the specificity of the claimed
animation scheme, but rather on the fact that the claims, when considered as
a whole, were directed to a technological improvement over the existing,
manual 3-D animation techniques and used limited rules in a process
specifically designed to achieve an improved technological result in
conventional industry practice. We are not persuaded that a comparable
situation is presented here. As our reviewing court has made clear, “relying
on a computer to perform routine tasks more quickly or more accurately is
insufficient to render a claim patent eligible.” OIP Techs., Inc. v.
Amazon.com, Inc., 788 F.3d 1359, 1363 (Fed. Cir. 2015).
We further note that there is a fundamental difference between
technological or computer functionality improvements, on the one hand, and
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uses of existing computers as tools to perform a particular task, on the other.
Here, the Specification discloses that “the methods illustrated by flowcharts
300 of FIG. 3, 400 of FIG. 4, 500 of FIG. 5, and 600 of FIG. 6,[] can be
implemented in system 900” (Spec. ¶¶ 100, 101 (Stating “[c]omputer
system 900 includes one or more processors, such as processor 904.
Processor 904 can be a special purpose or a general purpose processor.”)).
Indeed, the Federal Circuit applied this distinction in Enfish, LLC v.
Microsoft Corp., 822 F.3d 1327, 1335–36 (Fed. Cir. 2016) in rejecting a 35
U.S.C. § 101 challenge at the step one stage of the Mayo/Alice analysis
because the claims at issue focused on a specific type of data structure, i.e., a
self-referential table for a computer database, designed to improve the way a
computer carries out its basic functions of storing and retrieving data, and
not on asserted advances in uses to which existing computer capabilities
could be put. Id. at 1335–36.
We also find no indication in the Specification that the claimed
invention effects a transformation or reduction of a particular article to a
different state or thing. Here, Appellant argues
the present claims recite a transformation that takes place when
an exchangeable bond is converted to an enhanced bond, which
involves the transformation of documents associated with the
exchangeable bond, a CUSIP identifier associated with the bond,
and data representative of physical documents. (See, e.g., Spec,
¶¶ 67, 80.) This transformation does not simply result in new
contract terms added to the existing exchangeable bond, but a
new financial instrument with its own registered identifier, that
can be traded in the same manner as any other bond issued by a
bond issuer, and that would be associated with bond issuer's
credit rating. (Spec, ¶ 43, claims 23–25.) This new financial
instrument does not merely impart legal rights to purchase a
financial instrument or commodity as in In re Bilski; rather, the
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resulting enhanced bond is the actual instrument purchased
by an investor.
(Appeal Br. 25 (“[T]he claims of the instant application effect an actual
transformation to a new security via a specific process.”), and 28–29).
However, any alleged transformation due to the “instructing” and
“changing” steps recited by independent claim 1 are, at best, merely the
manipulation of data, which is not sufficient to meet the transformation
prong under 35 U.S.C. § 101. See Gottschalk v. Benson, 409 U.S. 63, 71–72
(1972) (a computer based algorithm that merely transforms data from one
form to another is not patent-eligible).
Appellant also argues that the present claims are not directed to a
fundamental economic practice because “the claims of the instant
application allow others to perform exchanges of securities, including bonds
for enhanced bonds, without infringing upon the claims” (Appeal Br. 20–
22), and as such, the present “claims do not prevent an exchange of a bond
for an asset-backed security backed by the bond and an enhancement
product (e.g., a CDS)” (id. at 22). However, Appellant’s preemption
argument does not alter our 35 U.S.C. § 101 analysis. Preemption concerns
are fully addressed and made moot where a patent’s claims are deemed to
disclose patent ineligible subject matter under the two-part framework
described in Mayo and Alice. Ariosa Diagnostics, Inc. v. Sequenom, Inc.,
788 F.3d 1371, 1379 (Fed. Cir. 2015). “While preemption may signal patent
ineligible matter, the absence of complete preemption does not demonstrate
patent eligibility.” Id.
Turning to Step 2B of the 2019 Revised Guidance, we determine
whether the additional elements: (1) add a specific limitation or
combination of limitations that is not well-understood, routine, and
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conventional activity in the field, which is indicative that an inventive
concept may be present; or (2) simply appends well-understood, routine,
conventional activities previously known to the industry, specified at a high
level of generality, to the judicial exception, which is indicative that an
inventive concept may not be present. See 2019 Revised Guidance,
84 Fed. Reg. 56.
Addressing the second step of the Mayo/Alice framework, the
Examiner states the claims “do not include additional elements that are
sufficient to amount to significantly more than the judicial exception
because the additional computer elements, which are recited at a high level
of generality, provide conventional computer functions that do not add
meaningful limits to practicing the abstract idea” (Non-Final Act. 2). More
particularly, the Examiner states
[t]he claims recite additional limitation one or more “computing
devices[,]” “storage device[,]” “memory device” to perform the
receiving, purchasing, delivering, instructing, changing,
monitoring and delivering steps. The devices are recited at a
high level of generality and are recited as performing generic
computer functions routinely used in computer applications.
Generic computer components recited as performing generic
computer functions that are well-understood, routine and
conventional activities amount to no more than implementing
the abstract idea with a computerized system. The use of
generic computer components to receive, purchase, delivery,
instruct, change, monitor and delivering data based on human
instructions does not impose any meaningful limit on the
computer implementation of the abstract idea.
(Id. at 4). We agree with the Examiner that the additional elements taken
alone or in combination do not result in anything more than conventional
computer implementation. And, considered as an ordered combination, the
“one or more computing devices” recited by independent 1 add nothing that
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is not already present when the limitations are considered separately.
Viewed as a whole, independent claim 1 simply recites a series of steps
related to “the abstract idea of receiving payment based on cost, purchasing
swap contract based on conversion requirements, instructing [a] trustee to
convert bond, changing [an] identifier, and monitoring [an] account” (Non-
Final Act. 2; Ans. 5–6). See Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709,
716 (Fed. Cir. 2014) (“[T]he claimed sequence of steps comprises only
‘conventional steps, specified at a high level of generality,’ which is
insufficient to supply an ‘inventive concept.’”) (citing Alice, 573 U.S. at
221). The claims do not, for example, purport to improve the functioning of
the computer itself. Nor do they effect an improvement in any other
technology or technical field, as discussed above with respect to prong two
of step 2A. Instead, independent claim 1 amounts to nothing significantly
more than an instruction to apply the abstract idea using “one or more
computing devices,” which under our precedents, is not enough to transform
an abstract idea into a patent-eligible invention. See id. at 226.
Appellant argues that “[t]he Examiner provides no evidence or
explanation whatsoever to support that the claims recite well-understood,
conventional, or routine features previously known to the industry” (Appeal
Br. 25–28 (citing Berkheimer v. HP, Inc., 881 F.3d 1360 (Fed. Cir. 2018))).
Appellant’s argument is not persuasive, at least because it could not
be clearer from Alice, that under step two of the Mayo/Alice framework
(i.e., step 2B), the elements of each claim are considered both individually
and “as an ordered combination” to determine whether the additional
elements, i.e., the elements other than the abstract idea itself, “transform the
nature of the claim” into a patent-eligible application. Alice Corp.,
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573 U.S. at 217. See Mayo, 566 U.S. at 72–73 (Requiring that “a process
that focuses upon the use of a natural law also contain other elements or a
combination of elements, sometimes referred to as an ‘inventive concept,’
sufficient to ensure that the patent in practice amounts to significantly more
than a patent upon the natural law itself.”) (emphasis added). Stated
differently, the inventive concept under step two of the Mayo/Alice test
cannot be the abstract idea itself:
It is clear from Mayo that the “inventive concept” cannot be the
abstract idea itself, and Berkheimer . . . leave[s] untouched the
numerous cases from this court which have held claims ineligible
because the only alleged “inventive concept” is the abstract idea.
Berkheimer v. HP, Inc., 890 F.3d 1369, 1374 (Fed. Cir. 2018) (Moore, J.,
concurring); see also BSG Tech LLC v. BuySeasons, Inc., 899 F.3d 1281,
1290–91 (Fed. Cir. 2018) (“Our precedent has consistently employed this
same approach. If a claim’s only ‘inventive concept’ is the application of an
abstract idea using conventional and well-understood techniques, the claim
has not been transformed into a patent-eligible application of an abstract
idea.”).
As discussed above, there is no indication here that the steps, recited
in independent claim 1, require any specialized computer or inventive
computer components — the Specification indicates just the opposite (see,
e.g., Spec. ¶¶ 100–103). Here, the only claim element in independent claim
1 beyond the abstract idea is the claimed “one or more computing devices,”
i.e., generic componentry, operating in its routine and ordinary capacity to
send, receive, process, and monitor data.
Finally, to the extent Appellant maintains that the claimed invention is
patent-eligible, i.e., that claim 1 amounts to “significantly more” than an
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abstract idea, because “the process recited in the claims is markedly different
from past conventional industry practice, as recognized by the Examiner at
least based on the lack of any prior art rejections” (Appeal Br. 19), Appellant
misapprehends the controlling precedent.
Neither a finding of novelty nor a non-obviousness determination
automatically leads to the conclusion that the claimed subject matter is
patent-eligible. Although the second step in the Mayo/Alice framework is
termed a search for an “inventive concept,” the analysis is not an evaluation
of novelty or non-obviousness, but rather, a search for “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.’” Alice, 573 U.S. at 217–18 (citation omitted).
“Groundbreaking, innovative, or even brilliant discovery does not by itself
satisfy the § 101 inquiry.” Ass’n for Molecular Pathology, 569 U.S. at 591.
A novel and non-obvious claim directed to a purely abstract idea is,
nonetheless, patent-ineligible. See Mayo, 566 U.S. at 90; see also Diamond,
450 U.S. at 188–89 (“The ‘novelty’ of any element or steps in a process, or
even of the process itself, is of no relevance in determining whether the
subject matter of a claim falls within the § 101 categories of possibly
patentable subject matter.”).
Appellant’s other arguments, including those directed to now-
superseded USPTO guidance, have been considered but are not persuasive
of error. (See 2019 Revised Guidance, 84 Fed. Reg. 51 (“Eligibility-related
guidance issued prior to the Ninth Edition, R-08.2017, of the MPEP
(published Jan. 2018) should not be relied upon.”)).
Appeal 2019-000053
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We are not persuaded, on the present record, that the Examiner erred
in rejecting independent claim 1 under 35 U.S.C. § 101. Therefore, we
sustain the Examiner’s rejection of independent claim 1, and claims 2–18
and 23–28, which fall with independent claim 1.
Independent Claim 29
Addressing independent claim 29 separately, Appellant argues that “in
addition to being patent-eligible for the reasons set forth above, independent
claim 29 recites additional language clarifying that the claim amounts to
significantly more than any purported abstract idea” (Appeal Br. 30). More
particularly, Appellant argues that independent claim 29 is patent eligible
because “the preamble of independent claim 29 recites: ‘An improved
method for establishing a position in both a bond instrument and a credit
default swap contract on the bond instrument, wherein the improvement
comprises.’” (id. at 29–30). We cannot agree.
Instead, we find that the feature argued by Appellant, i.e., “an
improved method,” fails to distinguish independent claim 29 from the
underlying abstract idea identified by the Examiner, i.e., “the abstract idea of
receiving payment based on cost, purchasing swap contract based on
conversion requirements, instructing [a] trustee to convert bond, changing
[an] identifier, and monitoring [an] account” (Non-Final Act. 2; Ans. 5–6).
Appellant further argues that because independent claim 29 is “is
limited to the recitation in the Jepson-form preamble and the specific process
recited in claim 29 improves upon the purported abstract idea without tying
up traditional or conventional methods used to achieve the same result”
(Appeal Br. 30). However, as discussed above, neither a finding of novelty
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nor a non-obviousness determination automatically leads to the conclusion
that the claimed subject matter is patent-eligible.
As such, we are not persuaded by Appellant’s argument for these
reasons, and the reasons discussed with respect to independent claim
1, supra. Therefore, we sustain the rejection of independent claim 29 under
35 U.S.C. § 101.
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).

DECISION
The Examiner’s rejection of claims 1–18 and 23–29 under 35 U.S.C.
§ 101 is affirmed.
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).

CONCLUSION
In summary:

Claims Rejected Basis Affirmed Reversed
1–18 and 23–29 § 101 1–18 and 23–29
Overall Outcome 1–18 and 23–29

AFFIRMED