THE BANK OF NEW YORK MELLON

Patent Trials and Appeals Board

Jul 2, 2021

2021000463 (P.T.A.B. Jul. 2, 2021)

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.
14/059,126 10/21/2013 Jonathan S. SPIRGEL 201818-0427776 3061
909 7590 07/02/2021
Pillsbury Winthrop Shaw Pittman, LLP
PO Box 10500
McLean, VA 22102
EXAMINER
AKINTOLA, OLABODE
ART UNIT PAPER NUMBER
3691
NOTIFICATION DATE DELIVERY MODE
07/02/2021 ELECTRONIC
Please find below and/or attached an Office communication concerning this application or proceeding.
The time period for reply, if any, is set in the attached communication.
Notice of the Office communication was sent electronically on above-indicated "Notification Date" to the
following e-mail address(es):
docket_ip@pillsburylaw.com
PTOL-90A (Rev. 04/07)

UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

Ex parte JONATHAN S. SPIRGEL and LAURA S. MELMAN
____________

Appeal 2021-000463
Application 14/059,126
Technology Center 3600
____________

Before MURRIEL E. CRAWFORD, BRUCE T. WIEDER, and
TARA L. HUTCHINGS, Administrative Patent Judges.

CRAWFORD, Administrative Patent Judge.

DECISION ON APPEAL
STATEMENT OF THE CASE
Appellant seeks our review under 35 U.S.C. § 134 of the Examiner’s
final rejection of claims 1, 4, 5, 7, 8, 10, 11, and 13–19. We have
jurisdiction under 35 U.S.C. § 6(b).
SUMMARY OF DECISION
We AFFIRM.
THE INVENTION
Appellant claims a system and method for securitizing a physical
commodity. (Spec. ¶ 2, Title).
Claim 1 is representative of the subject matter on appeal.
1. A method for creating trust shares in a physical
commodity, the trust shares being tradable over an
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electronic communications network, the method
comprising:
providing the electronic communications network
configured to trade trust shares;
confirming delivery into a trust account of an amount of
physical commodity associated with a quantity of trust shares,
wherein a value of the amount of the physical commodity
delivered into the trust account is greater than a
predetermined minimum value of the amount of the physical
commodity; and
releasing the trust shares, via the electronic
communications network, based upon the amount of physical
commodity delivered into the account, wherein a value of the
shares released is based on a net asset value of the physical
commodity and is approximately equal to a value of the
commodity delivered into the account.

THE REJECTION
Claims 1, 4, 5, 7, 8, 10, 11, and 13–19 are rejected under 35 U.S.C.
§ 101 as directed to a judicial exception without significantly more.
ANALYSIS
35 U.S.C. § 101 REJECTION
We will sustain the rejection of claims 1, 4, 5, 7, 8, 10, 11, and 13–19
under 35 U.S.C. § 101.
The Supreme Court
set forth a framework for distinguishing patents that claim laws
of nature, natural phenomena, and abstract ideas from those that
claim patent-eligible applications of those concepts. First, . . .
determine whether the claims at issue are directed to one of those
patent-ineligible concepts. . . . If so, . . . then ask, “[w]hat else is
there in the claims before us?” . . . To answer that question, . . .
consider the elements of each claim both individually and “as an
ordered combination” to determine whether the additional
elements “transform the nature of the claim” into a patent-
eligible application. . . . [The Court] described step two of this
analysis as a search for an “‘inventive concept’”—i.e., an
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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 Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208, 217–218 (2014)
(citing Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66,
72–73 (2012)) (citations omitted).
To perform this test, we must first determine whether the claims at
issue are directed to a patent-ineligible concept. The Federal Circuit has
explained that “the ‘directed to’ inquiry applies a stage-one filter to claims,
considered in light of the [S]pecification, based on whether ‘their character
as a whole is directed to excluded subject matter.’” See Enfish, LLC v.
Microsoft Corp., 822 F.3d 1327, 1335 (Fed. Cir. 2016) (quoting Internet
Patents Corp. v. Active Network, Inc., 790 F.3d 1343, 1346 (Fed. Cir.
2015)). It asks whether the focus of the claims is on a specific improvement
in relevant technology or on a process that itself qualifies as an “abstract
idea” for which computers are invoked merely as a tool. See id. at 1335–36.
In so doing we apply a “directed to” two prong test: 1) evaluate
whether the claim recites a judicial exception, and 2) if the claim recites a
judicial exception, evaluate whether the judicial exception is integrated into
a practical application. 2019 Revised Patent Subject Matter Eligibility
Guidance, 84 FR 50, 50–57 (Jan. 7, 2019) (“Guidance”).
The Examiner determines that the claims recite “confirming delivery
in a trust account and releasing the trust shares based upon the amount of the
physical commodity delivered into the account.” (Final Act. 2). The
Examiner determines that under its broadest reasonable interpretation, the
claims cover performance of a certain method of organizing human activity
but for the recitation of generic computer components. The Examiner also
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determines that other than reciting an electronic communications network,
nothing in the claim elements preclude the steps from practically being
performed in the human mind. (Final Act. 2). The Examiner finds that
claim 1 requires a processor to perform the confirming and releasing steps.
The Examiner further finds that the processor is recited at a high level of
generality and, as such, the processor recitations amount to no more than
mere instructions to apply the judicial exception using a generic computer
component. (Final Act. 3–5). Therefore, the Examiner determines that the
recitation of the processor does not integrate the judicial exception into a
practical application or amount to significantly more than the judicial
exceptions recited.
The Specification discloses that the invention relates to exchange-
traded equity securities and, particularly, to a method and system for
securitizing a physical commodity. (Spec. ¶ 2). The invention seeks to
address the many barriers to owning commodities that have prevented
investors from investing in physical commodities. (Spec. ¶ 3). To address
these barriers, the Specification describes systems and methods for
securitizing a commodity in which a commodity trust or other special-
purpose vehicle (“Trust”) is established to hold a particular commodity and
to issue commodity shares and/or receipts corresponding to the value of the
commodity held by the Trust. (Spec. ¶ 7). The commodity shares can be
traded on a major securities exchange, thereby creating a robust secondary
market for the commodity shares. (Spec. ¶ 10).
Consistent with this disclosure, claim 1 recites “confirming delivery
into a trust account of an amount of physical commodity associated with a
quantity of trust shares,” and “releasing the trust shares. . . wherein the value
of the shares released is based on a net asset value of the physical
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commodity.” Claim 1, considered in light of the disclosure, makes it clear
that the claimed invention relates to confirming delivery in a trust account
and releasing the trust shares based upon the amount of the physical
commodity delivered into the account. This relates to commercial
interactions related to trading commodities, and therefore, is a certain
method of organizing human activities. Guidance, 84 Fed. Reg. at 52.
We, thus, agree with the Examiner’s determination that claim 1 recites
a method of controlling the behavior of persons concerning confirming
delivery in a trust account and releasing trust shares based upon the amount
of the physical commodity delivered into the account. We also agree that
claim 1 recites the judicial exception of a certain method of organizing
human activity.
Additionally, we agree that the steps constitute “analyzing
information by steps people go through in their minds, or by mathematical
algorithms, without more, as essentially mental processes within the
abstract-idea category.” Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d
1350, 1354 (Fed. Cir. 2016); see also buySAFE, Inc. v. Google, Inc., 765
F.3d 1350, 1355 (Fed. Cir. 2014) (claims directed to certain arrangements
involving contractual relations are directed to abstract ideas). Thus, we find
that claim 1 recites the abstract idea of a certain method of organizing
human activity and in the alternative, a mental process.
Turning to the second prong of the “directed to test”, claim 1
additionally requires an “electronic communications network.” The
recitation of the words “electronic communications network” does not
impose “a meaningful limit on the judicial exception, such that the claim is
more than a drafting effort designed to monopolize the judicial exception.”
Guidance 84 Fed. Reg. at 53. We find no indication in the Specification, nor
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does Appellant direct us to any indication, that the operations recited in
independent claim 1 invoke any inventive programming, require any
specialized computer hardware or other inventive computer components,
i.e., a particular machine, or that the claimed invention is implemented using
other than generic computer components to perform generic computer
functions. See DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245,
1256 (Fed. Cir. 2014) (“[A]fter Alice, there can remain no doubt: recitation
of generic computer limitations does not make an otherwise ineligible claim
patent-eligible.”).
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. Nor do we find anything of record, short of attorney
argument, that attributes any improvement in computer technology and/or
functionality to the claimed invention or that otherwise indicates that the
claimed invention integrates the abstract idea into a “practical application,”
as that phrase is used in the revised Guidance. See Guidance, 84 Fed. Reg.
at 55.
In this regard, the additional element, considered alone and as an
ordered combination, does not affect an improvement in the functioning of
the electronic communications network or other technology, does not recite
a particular machine or manufacture that is integral to claim 1, and does not
transform or reduce a particular article to a different state or thing. Id.
Thus, claim 1 recites judicial exceptions that are not integrated into a
practical application, signifying that claim 1 is directed to an “abstract idea.”
Turning to the second step of the Alice analysis, because we find that
claim 1 is directed to an abstract idea, the claim must include an “inventive
concept” in order to be patent-eligible, i.e., there must be an element or
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combination of elements that is sufficient to ensure that the claim in practice
amounts to significantly more than the abstract idea itself. See Alice, 573
U.S. at 217–18 (alteration in original) (quoting Mayo Collaborative Servs. v.
Prometheus Labs., Inc., 566 U.S. 66, 72–73 (2012)).
We agree with the Examiner that the recitation of an “electronic
communications network” is simply a field of use limitation, limiting the
abstract idea to a particular technological environment. (Ans. 3).
In Alice, the Supreme Court explained that, under the second step of the
patent-eligibility analysis, “the relevant question is whether the claims here
do more than simply instruct the practitioner to implement the abstract idea
of intermediated settlement on a generic computer.” 573 U.S. at 225. The
Supreme Court also provided examples of claims that represent more than
instructions to implement an abstract idea on a generic computer, such as
claims that purport to improve the functioning of the computer itself and
claims that effect an improvement in any other technology or technical field.
Id. at 225–26. Here, we agree with the Examiner that claim 1 does not do
more than simply instruct the practitioner to implement the abstract idea on a
generic computer.
Taking the claim elements separately, the function performed by the
electronic communications network at each step of the process is purely
conventional. Using a computer to retrieve, select, and apply decision
criteria to data and modify the data as a result of the application of decision
criteria amounts to electronic data query, retrieval, and processing —some
of the most basic functions of a computer. All of these computer functions
are well-understood, routine, conventional activities previously known to the
trading industry. See Elec. Power Grp., 830 F.3d at 1354; see also In re
Katz Interactive Call Processing Patent Litig., 639 F.3d 1303, 1316 (Fed.
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Cir. 2011) (“Absent a possible narrower construction of the terms
‘processing,’ ‘receiving,’ and ‘storing,’ . . . those functions can be achieved
by any general purpose computer without special programming”). In short,
each step does no more than require a generic computer to perform generic
computer functions. As to the data operated upon, “even if a process of
collecting and analyzing information is ‘limited to particular content’ or a
particular ‘source,’ that limitation does not make the collection and analysis
other than abstract.” SAP Am. Inc. v. InvestPic, LLC, 890 F.3d 1016, 1022
(Fed. Cir. 2018).
Considered as an ordered combination, the electronic communication
network of Appellant’s claim 1 adds nothing that is not already present when
the steps are considered separately. The sequence of data reception-
analysis-access/display is equally generic and conventional or otherwise
held to be abstract. See Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 715
(Fed. Cir. 2014) (sequence of receiving, selecting, offering for exchange,
display, allowing access, and receiving payment recited an abstraction),
Inventor Holdings, LLC v. Bed Bath & Beyond, Inc., 876 F.3d 1372, 1378
(Fed. Cir. 2017) (holding that sequence of data retrieval, analysis,
modification, generation, display, and transmission was abstract), Two-Way
Media Ltd. v. Comcast Cable Commc’ns, LLC, 874 F.3d 1329, 1339 (Fed.
Cir. 2017) (holding sequence of processing, routing, controlling, and
monitoring was abstract). The ordering of the steps is, therefore, ordinary
and conventional.
Claim 1 does not, for example, purport to improve the functioning of
the electronic communication network itself. As we stated above, claim 1
does not effect an improvement in any other technology or technical field.
The Specification spells out different generic securities exchanges that might
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be used to accomplish the invention. Specifically, the Specification
discloses that the New York Stock Exchange, the American Stock
Exchange, the National Association of Securities Dealers Automatic
Quotation System or any other exchange or Electronic Communication
Network may be used as the recited electronic communication network.
(Spec. ¶ 10). Thus, claim 1 at issue amounts to nothing significantly more
than instructions to apply the abstract idea of information access using some
unspecified, generic electronic communications network. Under our
precedents, that is not enough to transform an abstract idea into a patent-
eligible invention. See Alice, 573 U.S. at 226.
We have reviewed all the arguments (Appeal Br. 7–11) Appellant has
submitted concerning the patent eligibility of the claims before us that stand
rejected under 35 U.S.C. § 101. We find that our analysis above
substantially covers the substance of all Appellant’s arguments. But, for
purposes of emphasis, we will address various arguments in order to make
individual rebuttals of same.
We are not persuaded of error on the part of the Examiner by
Appellant’s argument that the instant claims are patent-eligible in view of
the Federal Circuit's decision in BASCOM Global Internet Servs. v. AT&T
Mobility LLC, 827 F.3d 1341 (Fed. Cir. 2016). (Appeal Br. 10–11).
Appellant argues that, even if each limitation is allegedly abstract and the
steps are performed by or are generic computers so too are the BASCOM
claim limitations and like the BASCOM claims provide an improvement to
another technology or technical field. Appellant asserts that even though the
steps in BASCOM used generic computers, the claims in BASCOM, were
found eligible because the ordered combination as a whole provided an
improvement to another technology or technical field. (Appeal Br. 11).
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In BASCOM, the Federal Circuit followed the Supreme Court's
guidance for determining whether the claims recite an inventive concept set
forth in Alice Corp. Pty. Ltd. v. CLS Bank International, 134 S. Ct. 2347,
2357–60(2014). Specifically, the Federal Circuit held “[t]he inventive
concept described and claimed in the ’606 patent is the installation of a
filtering tool at a specific location, remote from end-users, with
customizable filtering features specific to each end user.” BASCOM, 827
F.3d at 1350. In determining this feature to be an inventive concept, the
Federal Circuit explained that the remote location of a filtering tool having
customizable user-specific filtering features provides the filtering tool both
the benefits of a filter on a local computer and the benefits of a filter on the
ISP server and is a technical improvement over prior art ways of filtering
content. Id. at 1350–51. Notably, the Federal Circuit specifically
determined that “the claims may be read to ‘improve[] an existing
technological process.”’ Id. at 1351 (citing Alice, 573 U.S. at 223). Here, in
contrast, Appellant does not establish that the claim 1 provides any
analogous improvement to technology.
We are not persuaded of error on the part of the Examiner by
Appellant’s argument that there is no factual evidence that that the claims as
a whole are well-understood and routine. As we discussed above, in an
analysis of whether a claim is directed to an abstract idea, we first determine
whether a claim recites an abstract idea and, if so, we then determine
whether there are additional elements recited in the claim that are
significantly more than the abstract idea recited. Therefore, the analysis as
to whether a claim recites well-understood, routine and conventional
elements or steps is done in regard to the additional elements, not the claim
as a whole. As we discussed above, claim 1’s only additional element is the
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“electronic communication network.” The Examiner finds that using an
electronic communication network to perform the steps of the claim amounts
to no more than mere instructions to apply the abstract idea using a generic
computer component. In addition, the Specification is evidence that the
electronic communication network is well-understood, routine and
conventional by disclosing in paragraph 10 that the communications
exchange may be any well-known, conventional and routine exchange.
In view of the foregoing, we will sustain the Examiner’s rejection of
claim 1. Independent claims 7 and 13 are substantially similar to
independent claim 1, and Appellant does not argue the separate eligibility of
these claims. Therefore, we will also sustain the rejection as it is directed to
claims 7 and 13.
Turning to the dependent claims, we are not persuaded of error on the
part of the Examiner by Appellant’s argument that the Examiner failed to
identify many of the additional claim features in the dependent claims.
(Appeal Br. 11). Consideration of each claim individually does not require a
separate written analysis for each individual claim. We decline to find error
here in the Examiner’s decision to not address the patent-eligibility of each
of the dependent claims separately, inasmuch as the dependent claims are all
directed to the same abstract idea. See Content Extraction & Transmission
LLC v. Wells Fargo Bank, Nat. Ass'n, 776 F.3d 1343, 1348 (Fed. Cir. 2014)
(explaining that when all claims are directed to the same abstract idea,
“addressing each claim of the asserted patents [is] unnecessary.”). Here, the
dependent claims merely further detail which commodity is traded, the type
of trust shares, and which communication exchange is used. None of the
additional elements recited in the dependent claims suffices to transform the
abstract idea from the realm of the abstract. In view of the foregoing, we
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will also sustain this rejection as it is directed to the dependent claims.

CONCLUSIONS OF LAW
We conclude the Examiner did not err in rejecting claims 1, 4, 5, 7, 8,
10, 11, 13–19 under 35 U.S.C. § 101.

CONCLUSION
In summary:

Claims
Rejected
35 U.S.C. § References(s)/Basis Affirmed Reversed
1, 4, 5, 7, 8,
10, 11, 13–
19
101 Eligibility 1, 4, 5, 7, 8,
10, 11, 13–
19

No time period for taking any subsequent action in connection with
this appeal may be extended under 37 C.F.R. § 1.136(a). See 37 C.F.R.
§ 1.136(a)(1)(iv).
AFFIRMED