Optcapital, LLC

Patent Trials and Appeals Board

Apr 1, 2020

14627033 - (D) (P.T.A.B. Apr. 1, 2020)

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.
14/627,033 02/20/2015 Richard D. Ehrhart 140262 8985
26285 7590 04/01/2020
K&L GATES LLP-Pittsburgh
210 SIXTH AVENUE
PITTSBURGH, PA 15222-2613
EXAMINER
CHAKRAVARTI, ARUNAVA
ART UNIT PAPER NUMBER
3693
NOTIFICATION DATE DELIVERY MODE
04/01/2020 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):
USpatentmail@klgates.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte RICHARD D. EHRHART and MEHMET CAN CIVI
Appeal 2019-001937
Application 14/627,033
Technology Center 3600
Before JEREMY J. CURCURI, DAVID J. CUTITTA II, and
PHILLIP A. BENNETT, Administrative Patent Judges.
CURCURI, Administrative Patent Judge.
DECISION ON APPEAL
STATEMENT OF THE CASE
Pursuant to 35 U.S.C. § 134(a), Appellant1 appeals from the
Examiner’s decision to reject claims 12, 13, 15–18, and 23–27. We have
jurisdiction under 35 U.S.C. § 6(b).
We AFFIRM.

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 Optcapital, LLC.
Appeal Br. 1.
Appeal 2019-001937
Application 14/627,033
2
CLAIMED SUBJECT MATTER
The claims are directed to “computing incentive compensation for
managers of investment funds.” Spec. ¶ 2. Claim 12, reproduced below, is
illustrative of the claimed subject matter:
12. A computer system, comprising:
a manager computer system associated with a manager of
an investment fund;
an investment fund computer system associated with the
investment fund, wherein in response to each contribution from
each investor in the investment fund:
the investment fund has issued shares of service
recipient stock to the respective investor for the respective
contribution, wherein the shares of service recipient stock
comprise common class shares and restricted class shares
related to the respective contribution; and
the investment fund has issued fund alignment
rights to the manager of the investment fund as incentive
compensation for managing the investment fund, wherein the
quantity of the fund alignment rights issued equal the number
of restricted class shares issued for the respective contribution,
wherein underlying shares of the fund alignment rights issued
comprise common class shares related to the respective
contribution, and wherein the fund alignment rights issued for
the respective contribution are associated with respective terms;
an administration computer system in communication
with the manager computer system and the investment fund
computer system via an electronic data communications
network, wherein the administration computer system
comprises:
an application server programmed to:
receive from the investment fund computer
system, via the electronic data communications network,
updated investment fund data, wherein the updated investment
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fund data comprises fund growth data indicative of fund growth
over a time period associated with the investment fund;
compute a current Net Asset Value (NAV)
for each share of respective common class shares issued by the
investment fund responsive to each respective contribution
from each respective investor, wherein the current NAV for
each share of the respective common class shares is computed
based on the received fund growth data;
compute a current NAV for each share of
respective restricted class shares issued by the investment fund
responsive to each respective contribution from each respective
investor, wherein the current NAV for each share of the
respective restricted class shares is computed as the lesser of:
(a) a current NAV computed for each share of respective
common class shares that issued with the respective restricted
class shares responsive to a same respective contribution, and
(b) a maximum restricted class NAV;
compute a current NAV for each underlying
share of respective fund alignment rights issued by the
investment fund responsive to each respective contribution
from each respective investor, wherein the current NAV for
each underlying share is equal to a current NAV computed for
each share of respective common class shares that issued with
the respective fund alignment rights responsive to a same
respective contribution;
compute a current strike price for each fund
alignment right issued to the manager of the investment fund,
wherein the current strike price is not less than a NAV of the
underlying share corresponding to each fund alignment right on
the date each fund alignment right was issued; and
compute a spread for each fund alignment
right issued to the manager of the investment fund, wherein
computing the spread comprises calculating a difference
between the current NAV of the underlying share
corresponding each fund alignment right and the current strike
price of each fund alignment right; and
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compute, via a valuation model, a fair value
for each fund alignment right issued to the manager of the
investment fund; and
a web server programmed to host a webpage,
wherein the webpage is accessible via the electronic data
communications network:
by the manager, via the manager computer
system, to:
access at least one of spreads
computed for fund alignment rights issued to the manager or
fair values computed for fund alignment rights issued to the
manager to evaluate the manager’s aggregate position regarding
incentive compensation; and
exercise an issued fund alignment
right; and
by the investment fund, via the investment
fund computer system, to:
value aggregate fund alignment rights issued
the manager as well as related common class shares and
restricted class shares issued to each investor; and
wherein the application server is further
programmed to:
in response to the manager’s election via the
webpage, exercise the issued fund alignment right without
requiring a redemption of the common class share and the
restricted class share issued with the fund alignment right.
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REFERENCES
The prior art relied upon by the Examiner is:
Name Reference Date
Menon US 2007/0288400 A1 Dec. 13, 2007
Sauter US 2013/0275333 A1 Oct. 17, 2013
REJECTIONS
1. Claims 12, 13, 15–18, and 23–27 are rejected under 35 U.S.C. § 101
as directed to a judicial exception without significantly more. Final Act. 2–
7.
2. Claims 12, 13, 15–18, and 23–27 are rejected under 35 U.S.C. § 103
as obvious over Sauter and Menon. Final Act. 7–15.
OPINION
The Judicial Exception Rejection of Claims 12, 13, 15–18, and 23–27
The Examiner determines the following:
Examiner notes that the concepts described in the claims,
such as - issuing shares to investors, fund alignment rights,
incentive compensation - are not meaningfully different than
those activities as well as practices found by the courts to be
abstract ideas. For example, creating a contractual relationship
(BuySAFE), administration of financial accounts (Intellectual
Ventures), budgeting (Int. Ventures), mitigating settlement risk
(Alice), hedging (Bilski), managing a stable value protected
investment plan (Bancorp), implementing rules based tasks for
processing insurance claims (Accenture), collecting information,
analyzing it, and displaying certain results of the collection and
analysis (Electric Power Group), obtaining and comparing
intangible data (Cybersource), and organizing information
through mathematical correlations (Digitech). Similarly, the
limitations of - computing NAV of shares, strike price, spreads
and fair market values - constitute fundamental economic
practices and methods of organizing human activities. Hence,
the independent claim is directed abstract ideas. The dependent
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claims limit the abstract idea to types of funds, redemption of
shares, evaluating investor’s aggregate position, tracking terms
associated with redemption rights, and relationship between
shares - all of which also constitute abstract ideas similar to
previous court cases. Hence, under the first part of the Alice
analysis, the claims are directed to an abstract idea.
Final Act. 5; see also Final Act. 5–7 (determining the claims do not contain
significantly more than an abstract idea), Ans. 3–13.
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-part 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
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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 waterproof 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
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. (citation omitted)
(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 (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
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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.
In January 2019, the U.S. Patent and Trademark Office (USPTO)
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”).2 “All USPTO personnel are, as a matter of
internal agency management, expected to follow the guidance.” Id. at 51;
see also October 2019 Update at 1.
Under the 2019 Revised Guidance and the October 2019 Update, 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) (“Step 2A, Prong One”); and
(2) additional elements that integrate the judicial exception into a
practical application (see MPEP § 2106.05(a)–(c), (e)–(h) (9th ed.
Rev. 08.2017, Jan. 2018)) (“Step 2A, Prong Two”).3

2 In response to received public comments, the Office issued further
guidance on October 17, 2019, clarifying the 2019 Revised Guidance.
USPTO, October 2019 Update: Subject Matter Eligibility (the “October
2019 Update”) (available at
https://www.uspto.gov/sites/default/files/documents/peg_oct_2019_update.p
df).
3 This evaluation is performed by (a) identifying whether there are any
additional elements recited in the claim beyond the judicial exception, and
(b) evaluating those additional elements individually and in combination to
determine whether the claim as a whole integrates the exception into a
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2019 Revised Guidance, 84 Fed. Reg. at 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, under
Step 2B, 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 Revised Guidance, 84 Fed. Reg. at 52–56.

Are the claims patent-eligible?
Step 1
Claim 12 recites a computer system, which falls under the “machine”
category of 35 U.S.C. § 101. Thus, we must determine whether the claims
recite a judicial exception and fail to integrate the exception into a practical
application. See 84 Fed. Reg. at 54–55. If both elements are satisfied, the
claim is directed to a judicial exception under the first step of the Alice/Mayo
test. See id.
Step 2A, Prong One
Independent claim 1 recites the following steps:
[i] the investment fund has issued shares of service
recipient stock to the respective investor for the respective
contribution, wherein the shares of service recipient stock

practical application. See 2019 Revised Guidance - Section III(A)(2), 84
Fed. Reg. 54–55.
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comprise common class shares and restricted class shares
related to the respective contribution; and
[ii] the investment fund has issued fund alignment
rights to the manager of the investment fund as incentive
compensation for managing the investment fund, wherein the
quantity of the fund alignment rights issued equal the number
of restricted class shares issued for the respective contribution,
wherein underlying shares of the fund alignment rights issued
comprise common class shares related to the respective
contribution, and wherein the fund alignment rights issued for
the respective contribution are associated with respective terms;
...
[iii] receive from the investment fund
computer system, via the electronic data communications
network, updated investment fund data, wherein the updated
investment fund data comprises fund growth data indicative of
fund growth over a time period associated with the investment
fund;
[iv] compute a current Net Asset Value
(NAV) for each share of respective common class shares issued
by the investment fund responsive to each respective
contribution from each respective investor, wherein the current
NAV for each share of the respective common class shares is
computed based on the received fund growth data;
[v] compute a current NAV for each share of
respective restricted class shares issued by the investment fund
responsive to each respective contribution from each respective
investor, wherein the current NAV for each share of the
respective restricted class shares is computed as the lesser of:
(a) a current NAV computed for each share of respective
common class shares that issued with the respective restricted
class shares responsive to a same respective contribution, and
(b) a maximum restricted class NAV;
[vi] compute a current NAV for each
underlying share of respective fund alignment rights issued by
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the investment fund responsive to each respective contribution
from each respective investor, wherein the current NAV for
each underlying share is equal to a current NAV computed for
each share of respective common class shares that issued with
the respective fund alignment rights responsive to a same
respective contribution;
[vii] compute a current strike price for each
fund alignment right issued to the manager of the investment
fund, wherein the current strike price is not less than a NAV of
the underlying share corresponding to each fund alignment
right on the date each fund alignment right was issued; and
[viii] compute a spread for each fund
alignment right issued to the manager of the investment fund,
wherein computing the spread comprises calculating a
difference between the current NAV of the underlying share
corresponding each fund alignment right and the current strike
price of each fund alignment right; and
[ix] compute, via a valuation model, a fair
value for each fund alignment right issued to the manager of the
investment fund; and
...
[x] access at least one of spreads
computed for fund alignment rights issued to the manager or
fair values computed for fund alignment rights issued to the
manager to evaluate the manager’s aggregate position regarding
incentive compensation; and
[xi] exercise an issued fund alignment
right; and
...
[xii] value aggregate fund alignment rights
issued the manager as well as related common class shares and
restricted class shares issued to each investor; and
...
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[xiii] in response to the manager’s election
via the webpage, exercise the issued fund alignment right
without requiring a redemption of the common class share and
the restricted class share issued with the fund alignment right.
These steps [i]–[xiii] describe incentive compensation. In particular,
common shares and restricted shares are issued to an investor, fund
alignment rights are issued to a manager, values are computed, fund
alignment rights are exercised. Thus, steps [i]–[xiii] describe “agreements in
the form of contracts; legal obligations,” and are thus “commercial or legal
interactions.” Memorandum, 84 Fed. Reg. at 52. In addition, steps [i]–[xiii]
describe compensation, and are thus a “fundamental economic [] practice[].”
Id. Thus, these steps recite the abstract concept of “[c]ertain methods of
organizing human activity.” Id.
In addition, steps [i]–[xiii] describe calculating compensation. These
steps can be done by human thought and a pen and paper, and are one or
more of “observation, evaluation, judgment, opinion.” Id. The Federal
Circuit has held that if a method can be performed by human thought alone,
or by a human using pen and paper, it is merely an abstract idea and is not
patent-eligible under § 101. CyberSource Corp. v. Retail Decisions, Inc.,
654 F.3d 1366, 1373 (Fed. Cir. 2011) (“[A] method that can be performed
by human thought alone is merely an abstract idea and is not patent-eligible
under § 101.”). The abstract idea, even when automated to reduce the
burden on the user of what once could have been done with pen and paper,
remains an abstract idea. CyberSource, 654 F.3d at 1375 (“That purely
mental processes can be unpatentable, even when performed by a computer,
was precisely the holding of the Supreme Court in Gottschalk v. Benson.”).
Thus, steps [i]–[xiii] recite the abstract concept of “[m]ental processes.” Id.

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We, therefore, determine claim 12 recites at least one judicial
exception.
Regarding claim 23, claim 23’s further recited steps of “access[ing],”
“redeem[ing],” and “redeem[ing]” describe additional parts of the abstract
idea and similarly recite the abstract concepts of “[c]ertain methods of
organizing human activity” and “[m]ental processes.” Memorandum, 84
Fed. Reg. at 52.
Regarding claim 24, claim 24’s further recited step of “track[ing]”
also describes additional parts of the abstract idea and similarly recites the
abstract concepts of “[c]ertain methods of organizing human activity” and
“[m]ental processes.” Id.
Step 2A, Prong Two
Because claim 12 recites at least one judicial exception, we next
determine if the claim recites additional elements that integrate the judicial
exception into a practical application.
In addition to the limitations of claim 12 discussed above that recite
abstract concepts, claim 12 further recites the following: a “manager
computer system”; an “investment fund computer system”; an
“administration computer system”; an “application server”; a “web server”;
and an “electronic data communications network.”
The Specification does not provide additional details that would
distinguish the additional limitations from a generic implementation. See
Spec. ¶¶ 204–210 (describing a computer system illustrated in Figure 10).
There is no indication that the computers used in the invention are anything
other than general purpose computers. See Spec. ¶ 204–210.
We do not find the recited computer-related limitations are sufficient
to integrate the judicial exception into a practical application. Specifically,
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there is no improvement to the functioning of the computer, but, instead, the
computer merely implements the abstract idea. In this case, we do not see
any particular machine or manufacture that is integral to the claim; nor do
we see any transformation. That is, we do not see any of the additionally
recited elements applying or using the judicial exception in any meaningful
way beyond generally linking the judicial exception to the recited elements.
Accordingly, we determine that claim 12 is directed to a judicial
exception because it does not recite additional elements that integrate the
recited judicial exception into a practical application.
Regarding claims 23 and 24, these claims further recite an “investor
computer system.” For the same reasons discussed above, we also determine
that these claims are directed to a judicial exception because they do not
recite additional elements that integrate the recited judicial exception into a
practical application. See Spec. ¶¶ 204–210.
Is there something else in the claims that ensures that they are
directed to significantly more than a patent ineligible concept?
Step 2B
Because claim 12 is directed to a judicial exception, we next
determine, according to Alice, whether the claim recites an element, or
combination of elements that is enough to ensure that the claim is directed to
significantly more than a judicial exception.
In addition to the limitations of claim 12, discussed above, that recite
abstract concepts, claim 12 further recites the following: a “manager
computer system”; an “investment fund computer system”; an
“administration computer system”; an “application server”; a “web server”;
and an “electronic data communications network.”
2019 Revised Guidance, Section III (B) (footnote 36) states:
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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.
The Berkheimer Memorandum, Section III (A)(1) states:
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.
Regarding the “manager computer system”; the “investment fund
computer system”; the “administration computer system”; the “application
server”; the “web server”; and the “electronic data communications
network,” the Specification describes client computer 744 for the manager
301, client computer 734 for the fund 303, system 701 including web server
703 and database (application) server 705, and Internet 740. See Spec.
¶¶ 204–210. Thus, the Specification describes the “manager computer
system”; the “investment fund computer system”; the “administration
computer system”; the “application server”; the “web server”; and the
“electronic data communications network” in a manner that indicates that
these 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). See Spec. ¶¶ 204–210; see also Final Act. 5–7 (“The focus
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of claims is not on any technological advancement but rather on the
performance of abstract[] idea[s] for which computers and web servers are
invoked merely as tools.”).
Further, the Specification does not provide additional details about the
computers that would distinguish the recited components from generic
implementation individually and generic implementation in the combination.
See Spec. ¶¶ 204–210.
In view of Appellant’s Specification, the claimed computer
components are reasonably determined to be generic, purely conventional
computer elements. Thus, the claims do no more than require generic
computer elements to perform generic computer functions; thereby simply
appending well-understood, routine, conventional activities, specified at a
high level of generality, to the judicial exception.
Accordingly, we determine that claim 12 is not directed to
significantly more than a patent ineligible concept.
Regarding claims 23 and 24, these claims further recite an “investor
computer system.” For the same reasons discussed above, we also
determine that these claims are not directed to significantly more than a
patent ineligible concept. See Spec. ¶¶ 204–210.
Appellant’s principal arguments
Appellant presents the following principal arguments:
i. The Examiner does not establish a prima facie case that the
claims are directed to an abstract idea. See Appeal Br. 10–11; see also
Reply Br. 2–7.
ii. The claims are not directed to an abstract idea. See Appeal Br.
11–15.
For example, Appellant argues
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the focus of the pending claims is on a system comprising an
administration computer system, distinct from an investment
fund computer system and a manager computer system of the
system, in which an application server of the administration
computer system is explicitly programmed with particularly
recited capabilities/functionalities beyond those offered by
conventional systems.
Appeal Br. 13 (citing Enfish).
For example, Appellant argues “the pending claims recite a computer
system comprising an administration computer system that realizes specific,
improved capabilities over any computer system conventionally available to
any investment fund.” Appeal Br. 15 (citing Rapid Litigation Management).
iii. The claims recite significantly more than any abstract idea. See
Appeal Br. 15–25.
For example, Appellant argues the Examiner does not establish a
prima facie case that the claims do not recite significantly more than any
abstract idea. See Appeal Br. 15–17 (citing Berkheimer); see also Reply Br.
2–7.
For example, Appellant argues the Examiner failed to consider each
pending claim as a whole. See Appeal Br. 17–18 (citing BASCOM).
For example, Appellant argues the claims recite significantly more
than any abstract idea for the following principal reasons:
a. The Examiner “failed to meet the requirements of the
Berkheimer Memorandum.” Appeal Br. 20; see also Reply Br. 8–9.
“[C]laims 12, 23, and 24 are not directed to any and every system for
realizing incentive compensation or administering incentive compensation
for an investment fund manager.” Appeal Br. 21 (citing BASCOM).
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b. The claims recite a technological improvement and a
specific improvement in computer capabilities. See Appeal Br. 22–24
(“[R]eserving the specifically programmed capabilities/functionalities to the
recited administration computer system enables any investment fund to
administer/manage the novel incentive compensation scheme (i.e., via the
administration computer system) such that any investment fund can offer the
novel incentive compensation scheme to its investment fund managers
without significant administrative and/or management burdens.”); see also
Reply Br. 3.
c. “[The] recited limitations confine the currently pending
claims to a particular machine, thereby making the claims patent eligible.”
See Appeal Br. 24–25; see also Reply Br. 3.
Regarding Appellant’s arguments (i) and (ii), these arguments do not
show any error because, as we explain above, the elements of claim 12 are
the abstract concepts of “[c]ertain methods of organizing human activity”
and “[m]ental processes.” 84 Fed. Reg. at 52. We also explain that the
claims do not recite additional elements that integrate the recited judicial
exception into a practical application, and are not directed to significantly
more than a patent ineligible concept. In short, the claims recite a computer
system for performing the abstract idea. Thus, on the record before us, the
claim limitations do not improve the functionality of the various hardware
components, nor do they achieve an improved technological result in
conventional industry practice. McRO, Inc. v. Bandai Namco Games Am.,
Inc., 837 F.3d 1299, 1316 (Fed. Cir. 2016). More particularly, we do not
agree that the claimed invention improves the technology as a whole.
Regarding Appellant’s arguments (iii), these arguments do not show
any error because, as we explain above, the claims do not recite additional
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elements that integrate the recited judicial exception into a practical
application, and thus are not directed to significantly more than a patent
ineligible concept. Our analysis above considers the claims in light of
current USPTO guidance, including the Berkheimer Memorandum.
Further, regarding well-understood, routine, and conventional and
arguments (iii)(a), as we explain above, the Specification does not provide
additional details about the computer that would distinguish the recited
components from conventional components, and from generic
implementation individually and generic implementation in the combination.
See Spec. ¶¶ 204–210. As our reviewing court has explained, “questions on
preemption are inherent in and resolved by the [section] 101 analysis,” and,
although “preemption may signal patent ineligible subject matter, the
absence of complete preemption does not demonstrate patent eligibility.”
Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir.
2015); cf. OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1362–63
(Fed. Cir. 2015) (“[T]hat the claims do not preempt all price optimization or
may be limited to price optimization in the e-commerce setting do not make
them any less abstract”).
Further, contrary to Appellant’s arguments (iii)(b) and (iii)(c), the
claims do not recite a technological improvement or a specific improvement
in computer capabilities. Nor do the claims recite a particular machine.
Rather, as we explain above, Appellant’s identified improvements are
improvements to the abstract idea because, for example, reserving the
specifically programmed capabilities/functionalities to the recited
administration computer system describes the computer performing the
process of incentive compensation, which recites the abstract concepts of
“[c]ertain methods of organizing human activity” and “[m]ental processes.”
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Memorandum, 84 Fed. Reg. at 52. Further, as we explain above, such
processing can be done by human thought and a pen and paper, and is not an
improvement to a technology or computer functionality.
We, therefore, sustain the Examiner’s rejection of claims 12, 23, and
24. We also sustain the Examiner’s rejection of claims 13, 15–18, and 25–
27, which are not separately argued with particularity.

The Obviousness Rejection of Claims 12, 13, 15–18, and 23–27 over Sauter
and Menon
The Examiner finds Sauter and Menon teach all limitations of claim
12. Final Act. 7–11. The Examiner reasons
it would have been obvious to a person having ordinary skill[] in
the art at the time of the invention to modify the above noted
disclosure of Sau[t]er as it relates to shares issued by fund
manager to include the above noted disclosure of Menon as it
relates to guaranteed minimum rate of return. The motivation for
combining the references would have been to attract investors
with guaranteed minimum rate of return.
Final Act. 11.
Appellant presents the following principal arguments:
i. Sauter does not teach a manager computer system separate from
an investment fund computer system and a separate administration computer
system because Sauter, in Figure 1, discloses “a computer 28 for maintaining
shareholder account data.” Appeal Br. 28.
ii. The Examiner offers no explanation of how Sauter discloses
fund alignment rights, and contradicts himself by finding Sauter does not
disclose fund alignment rights. Appeal Br. 29.
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iii. The Examiner’s reasoning to reach the conclusion of
obviousness is faulty because claim 12 does not recite “the manager of the
investment fund issues shares.” Appeal Br. 29.
In response, the Examiner explains as follows:
Examiner notes that the Investment Company computer
(12) in Sauter (Fig. 1) corresponds to the investment fund
computer system in the claims[,] which would also include the
investment manager function. The Brokerage computer (20) in
Sauter (Fig. 1) corresponds to administration computer system[,]
a separate computer system in communication with the manager
computer system and the investment fund computer system.
Final Act. 14–15. “Menon discloses [a] web server. Hence, all the
structural limitations in the claims are taught by the cited references.” Final
Act. 15.
In response, the Examiner further explains “[i]t would have been
obvious to combine the two references to attract investors with guaranteed
minimum rate of return.” Final Act. 15.
In reply, Appellant argues,
neither the Final Office Action nor the Examiner’s Answer
provides a clear articulation of why the fund alignment rights
recited in the claims would be obvious in view of the various
types [of] agreements in Sauter and Menon, none of which are
like the fund alignment rights recited in the claims.
Reply Br. 9. Appellant further argues “just because it would have been
obvious to combine the references . . . does not mean that the combination
would yield the system of claim 12.” Reply Br. 10. Appellant further argues
“[a]ll the claim limitations must be considered in analyzing claims under §
103, not just the structural limitations.” Reply Br. 10.
Appellant’s arguments persuade us that the Examiner erred.
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Claim 12 recites various limitations relating to “fund alignment
rights.” On the record before us, we do not see factual findings supported by
evidence drawn from the record that explain why Sauter and Menon teach
the recited limitations relating to “fund alignment rights.” See Appeal
Br. 29; see also Reply Br. 9.
For example, in the Final Action, the Examiner refers to Sauter for
some limitations reciting “fund alignment rights” and Menon for other
limitations reciting “fund alignment rights.” See Final Act. 8–11. In the
Final Action on page 11, the Examiner does refer to “fund alig[n]ment
rights” being taught by Menon but offers no specific explanation as to why
Menon teaches them. See Final Act. 11. The Answer does not clarify why
Sauter and/or Menon teach the recited limitations relating to “fund
alignment rights.” See Ans. 13–15. In short, we determine that the record
before us is insufficient to support the rejection of claim 12.
We, therefore, do not sustain the Examiner’s rejection of claim 12.
We also do not sustain the Examiner’s rejection of claims 13, 15–18,
and 23–27, which depend from claim 12.
CONCLUSION
The Examiner’s overall decision to reject claims 12, 13, 15–18, and
23–27 is affirmed.
We designate the affirmance as involving a new ground of rejection
under 37 C.F.R. § 41.50(b) because we have modified the Examiner’s
reasoning to include further discussion of Berkheimer, for all claims, to give
Appellant a fair opportunity to respond to the modified thrust of the rejection
as explained in this decision.
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DECISION SUMMARY
In summary:
Claims
Rejected
35
U.S.C.
§
Reference(s)/Basis Affirmed Reversed New
Ground
12, 13,
15–18,
23–27
101 Judicial Exception 12, 13,
15–18,
23–27
12, 13,
15–18,
23–27
12, 13,
15–18,
23–27
103 Sauter, Menon 12, 13,
15–18,
23–27

Overall
Outcome
12, 13,
15–18,
23–27
12, 13,
15–18,
23–27

TIME PERIOD FOR RESPONSE
This decision contains a new ground of rejection pursuant to
37 C.F.R. § 41.50(b). 37 C.F.R. § 41.50(b) provides “[a] new ground of
rejection pursuant to this paragraph shall not be considered final for judicial
review.”
37 C.F.R. § 41.50(b) also provides that the Appellant, WITHIN TWO
MONTHS FROM THE DATE OF THE DECISION, must exercise one of
the following two options with respect to the new ground of rejection to
avoid termination of the appeal as to the rejected claims:
(1) Reopen prosecution. Submit an appropriate
amendment of the claims so rejected or new Evidence relating
to the claims so rejected, or both, and have the matter
reconsidered by the examiner, in which event the prosecution
will be remanded to the examiner. . . .
(2) Request rehearing. Request that the proceeding be
reheard under § 41.52 by the Board upon the same Record. . . .

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Further guidance on responding to a new ground of rejection can be
found in the Manual of Patent Examining Procedure § 1214.01.
AFFIRMED; 37 C.F.R. 41.50(b)