Ari Studnitzer et al.

Patent Trials and Appeals Board

Sep 23, 2019

14074663 - (D) (P.T.A.B. Sep. 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.
14/074,663 11/07/2013 Ari Studnitzer 4672-13016AUS 6515
12684 7590 09/23/2019
Lempia Summerfield Katz LLC/CME
20 South Clark Street
Suite 600
Chicago, IL 60603
EXAMINER
GAW, MARK H
ART UNIT PAPER NUMBER
3692
NOTIFICATION DATE DELIVERY MODE
09/23/2019 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):
docket-us@lsk-iplaw.com
mail@lsk-iplaw.com
pair_lsk@firsttofile.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
________________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
________________

Ex parte ARI STUDNITZER, ZACHARY BONIG,
RYAN EAVY, and FRANK KMIEC
________________

Appeal 2018-000528
Application 14/074,6631
Technology Center 3600
________________

Before ST. JOHN COURTENAY III, JASON J. CHUNG, and
STEVEN M. AMUNDSON, Administrative Patent Judges.

CHUNG, Administrative Patent Judge.

DECISION ON APPEAL
This is a decision on appeal under 35 U.S.C. § 134(a) of the Final
Rejection of claims 1–26. We have jurisdiction under 35 U.S.C. § 6(b).
We affirm.
INVENTION
The invention relates to a trading-system architecture. Abstract.
Claim 1 is illustrative of the invention and is reproduced below with
emphases discussed below in § C.1.:
1. A system for improving efficiency of a trading
system comprising a plurality of hardware match engines
coupled therewith, each of the plurality of hardware match

1 According to Appellants, Chicago Mercantile Exchange Inc. is the real
party in interest. App. Br. 2.
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engines exclusively implementing at least one market for an
associated financial instrument comprising at least one
component, each hardware match engine being exclusively
operative to attempt to match an incoming order for a transaction
for the associated financial instrument with at least one other
previously received but unsatisfied order for a transaction
counter thereto for the associated financial instrument, to at least
partially satisfy one or both of the incoming order or the at least
one other previously received order, the system comprising:
a first logic component coupled with each of the plurality
of hardware match engines and operative to receive match event
data from each of the plurality of hardware match engines
indicative of whether that hardware match engine was able to
match an incoming order to that hardware match engine for at
least one transaction for the associated financial instrument
associated with that hardware match engine with at least one
previously received but unsatisfied order for a transaction
counter thereto for the associated financial instrument, in at least
partial satisfaction of one or both of the incoming order or the at
least one other previously received order;
the first logic component being further operative to, when
the match event data indicates that the incoming order has not
been fully satisfied and prior to the match event data being
communicated externally to the trading system, attempt to
identify a set of previously received but unsatisfied orders
received by any of the plurality of match engines wherein, for
any residual of each particular of the at least one component of
the associated financial instrument of the incoming order, the set
includes a previously received but unsatisfied order for a counter
transaction for another financial instrument comprising at least
the particular component to at least partially satisfy one or both
of the residual of the particular component of the associated
financial instrument of the incoming order or the component of
the determined previously received order and further attempt to
identify and include in the set, for any component of the financial
instrument of any previously received but unsatisfied orders
included in the set and not at least partially satisfied by any of
the components of the associated financial instrument of the
incoming order, another previously received but unsatisfied
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order for a counter transaction for a financial instrument
including at least the component of the financial instrument of
the previously received but unsatisfied order, such that the
incoming order together with the set of previously received but
unsatisfied orders, if the transactions for the financial
instruments thereof were completed there between, includes no
fully unsatisfied orders; and
a second logic component operative to, when the incoming
order together with the identified set of previously received but
unsatisfied orders, if the components thereof were completed
there between, include at least one fully unsatisfied order having
at least one fully unsatisfied component thereof, for each of the
at least one fully unsatisfied order for a financial instrument
having more than one component, generate, for each at least one
fully unsatisfied component, a synthetic solicitation for a counter
transaction for a financial instrument comprising a component
identical to the at least one fully unsatisfied component and
communicate the synthetic solicitation to a plurality of market
participants and for any two or more of the at least one fully
unsatisfied orders for financial instruments each having only one
component, attempt to identify a financial instrument comprising
a combination of those components, and for each identified
financial instrument, generate a synthetic solicitation for a
counter transaction therefore and submit each synthetic
solicitation to the particular hardware match engine of the
plurality of hardware match engines associated with the financial
instrument for which the solicitation is for to cause the associated
hardware match engine to communicate the synthetic solicitation
to the plurality of market participants.

App. Br. 24–25 (Claims Appendix) (emphases added).

REJECTION AT ISSUE
Claims 1–26 stand rejected under 35 U.S.C. § 101 as being directed to
patent-ineligible subject matter. Final Act. 2–5.

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ANALYSIS OF CLAIMS 1–26 REJECTED UNDER 35 U.S.C. § 101
A. Legal Principles
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 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 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 petitioners’ application explain the basic concept of hedging, or protecting
against risk.”).
Concepts determined to be abstract ideas, and thus patent ineligible,
include certain methods of organizing human activity, such as fundamental
economic practices (Alice, 573 U.S. at 219–20; Bilski, 561 U.S. at 611);
mathematical formulas (Parker v. Flook, 437 U.S. 584, 594–95 (1978)); and
mental processes (Gottschalk v. Benson, 409 U.S. 63, 69 (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
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rubber, smelting ores” (id. at 182 n.7 (quoting Corning v. Burden, 56 U.S.
(15 How.) 252, 267–68 (1854))); and manufacturing flour (Benson, 409 U.S.
at 69 (citing Cochrane v. Deener, 94 U.S. 780, 785 (1876))).
In Diehr, the claim at issue recited a mathematical formula, but the
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 187; see also id. at 192 (“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. (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
monopolize the [abstract idea].’” Id. (quoting Mayo, 566 U.S. at 77).
“[M]erely requir[ing] generic computer implementation[] fail[s] to transform
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that abstract idea into a patent-eligible invention.” Id.
The PTO recently published revised guidance on the application of
§ 101. USPTO’s January 7, 2019 Memorandum, 2019 Revised Patent
Subject Matter Eligibility Guidance (“Memorandum”). 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 (see 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:
(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 Memorandum.
B. The Examiner’s Conclusions and Appellants’ Arguments
The Examiner concludes the present claims recite certain methods of
organizing human activity. Final Act. 6. The Examiner also determines the
present claims do not amount to significantly more than an abstract idea
itself because the Examiner determines the abstract idea is implemented on
generic components that are well-understood, routine, and conventional
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previously known to the industry. Ans. 4, 11, 13–14; Final Act. 4–5, 7.
Appellants argue, similar to DDR Holdings, LLC v. Hotels.com, L.P.,
773 F.3d 1245 (Fed. Cir. 2014), the present claims are necessarily rooted in
computer technology that solve problems specifically arising in the realm of
electronic trading systems by using multiple match engines rather than a
single match engine. App. Br. 11–15, 18, 20 (citing Spec. ¶¶ 230–234);
Reply Br. 2–3. Appellants argue the present claims do not preempt any
abstract idea. App. Br. 9–11.
Appellants argue, similar to BASCOM Global Internet Services, Inc.
v. AT&T Mobility LLC, 827 F.3d 1341 (Fed. Cir. 2016), the present claims
recite a non-conventional and non-generic arrangement of known,
conventional elements, which results in an improvement of identifying
implied transactional opportunities across match engines and interfacing
with each match engine so as to cause those match engines to solicit
appropriate transactions from participants, thereby increasing transactional
opportunities using a novel system architecture. App. Br. 17, 21–22; Reply
Br. 4–5.
Appellants argue the present claims do not implement an abstract idea
using generic components that are well-understood, routine, or conventional
because the present claims are have not been used before. App. Br. 15–172;

2 Appellants’ arguments pertaining to Trading Technologies International,
Inc. v. CQG, Inc., 675 F. App’x 1001 (Fed. Cir. 2017) (non-precedential)
and Chicago Mercantile Exchange, Inc. v. 5th Market, Inc., CBM2015-
00061 (PTAB July 16, 2015) (Paper 9) (App. Br. 15–16, 22; Reply Br. 5)
are moot because these cases are non-precedential and we need not decide
these issues to reach our Decision. See also Trading Techs. Int’l, Inc. v. IBG
LLC, 921 F.3d 1084 (Fed. Cir. 2019) (deciding that the claims at issue failed
to satisfy § 101 and explaining that “[w]e are not bound by non-precedential
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Reply Br. 3. We disagree with Appellants.
C. Discussion
1. Step 2A, Prong 1
The emphasized portions of claim 13, reproduced above (see supra at
1–3), recite commercial interactions (including sales activities). According
to the Memorandum, commercial interactions (including sales activities) fall
into the category of certain methods of organizing human activity. See
Memorandum. Moreover, those certain methods of organizing human
activity are a type of an abstract idea. See id.
Because the present claims recite commercial interactions (including
sales activities), which fall into the category of certain methods of
organizing human activity (i.e., an abstract idea), we proceed to prong 2.
2. Step 2A, Prong 2
The present claims do not integrate the abstract idea into a practical
application because they do not impose any meaningful limits on practicing
the abstract idea.
We disagree with Appellants’ argument that, similar to DDR, the
present claims are necessarily rooted in computer technology that solve
problems specifically arising in the realm of electronic trading systems by

decisions at all”); Trading Techs. Int’l, Inc. v. IBG LLC, 921 F.3d 1378
(Fed. Cir. 2019) (deciding that the claims at issue failed to satisfy § 101).
Appellants’ argument pertaining to TLI Communications LLC Patent
Litigation v. AV Automotive, L.L.C., 823 F.3d 607 (Fed. Cir. 2016) (App. Br.
19) is moot because we do not rely on this case to reach our Decision.
3 Claim 1, reproduced above with emphases, recites similar features as
independent claims 2, 14, and 26. Appellants do not argue claims 2–26
separately with particularity. App. Br. 9–23. We, therefore, group claims
1–26 together and refer to claims 1–26 as the “present claims.”
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using multiple match engines rather than a single match engine. App. Br.
11–15, 18, 20 (citing Spec. ¶¶ 230–234); Reply Br. 2–3. Instead, the present
claims are directed to an abstract idea using additional generic elements as
tools to implement the abstract idea as discussed supra in § I.C.1. or at best,
the present claims are rooted in commercial interactions (including sales
activities) and overcoming a problem arising in that area.
The present claims are directed to an abstract idea as discussed supra,
in § C.1. or at best, improving an abstract idea—not a technological
improvement. The Specification indicates the additional elements (i.e., “first
logic,”4 “a plurality of hardware match engines,” “second logic,”5
“implicator,”6 “trading system,” “order generator,”7 and “processor”8)
recited in the present claims are merely tools used to implement the abstract
idea. Spec. ¶¶ 44, 99, 126, 139, 210, 216.
Additionally, “a claim for a new abstract idea is still an abstract idea.”
Synopsys, Inc. v. Mentor Graphics Corp., 839 F.3d 1138, 1151 (Fed. Cir.
2016). “[U]nder the Mayo/Alice framework, a claim directed to a newly
discovered law of nature (or natural phenomenon or abstract idea) cannot
rely on the novelty of that discovery for the inventive concept necessary for
patent eligibility . . . .” Genetic Techs. Ltd. v. Merial L.L.C., 818 F.3d 1369,
1376 (Fed. Cir. 2016) (citations omitted).
Additionally, we disagree with Appellants’ argument that the present
claims are patent eligible because they do not preempt any abstract idea.

4 Claim 1 is the only independent claim that recites this feature.
5 Claim 1 is the only independent claim that recites this feature.
6 Claim 2 is the only independent claim that recites this feature.
7 Claim 2 is the only independent claim that recites this feature.
8 Claim 14 is the only independent claim that recites this feature.
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App. Br. 9–11. Although preemption may denote patent ineligibility, its
absence does not demonstrate patent eligibility. See FairWarning, IP, LLC
v. Iatric Sys., Inc., 839 F.3d at 1098. For claims covering a patent-ineligible
concept, preemption concerns “are fully addressed and made moot” by an
analysis under the Mayo/Alice framework. Ariosa Diagnostics, Inc. v.
Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015).
To the extent that Appellants are arguing that the present claims
integrate the abstract idea into a practical application pursuant to BASCOM,
we address Appellants’ arguments pursuant to BASCOM infra in § C.3.
Appellants do not make any other arguments pertaining to step 2A,
prong 2. Because the present claims recite an abstract idea that is not
integrated into a practical application, we proceed to Step 2B.
3. Step 2B
We agree with the Examiner’s determination that the abstract idea is
implemented on generic components that are well-understood, routine, and
conventional. Final Act. 7 (citing Spec. 4:2–4, 5); Ans. 6. The Specification
supports the Examiner’s determination in this regard because it explains that
“first logic,” “a plurality of hardware match engines,” “second logic,”
“implicator,” “trading system,” “order generator,” and “processor” are
generic components. Spec. ¶¶ 44, 99, 126, 139, 210, 216. Appellants’
Specification indicates these elements were well-understood, routine, and
conventional components because it describes them at a high level of
generality and in a manner that indicates that they are sufficiently well-
known. Id.
We disagree with Appellants’ argument that the present claims do not
implement an abstract idea using generic components that are well-
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understood, routine, or conventional because the present claims have not
been used before. App. Br. 15–17; Reply Br. 3. Appellants improperly
conflate the requirements for eligible subject matter (§ 101) with the
independent requirements of novelty (§ 102) and non-obviousness
(§ 103). “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.” Diehr, 450 U.S. at 188–89; see also Genetic Techs., 818 F.3d at
1376 (stating that, “under the Mayo/Alice framework, a claim directed to a
newly discovered law of nature (or natural phenomenon or abstract idea)
cannot rely on the novelty of that discovery for the inventive concept
necessary for patent eligibility”). In short, the absence of anticipation and
obviousness “does not resolve the question of whether the claims embody an
inventive concept” under step 2B. Intellectual Ventures I LLC v. Symantec
Corp., 838 F.3d 1307, 1315 (Fed. Cir. 2016).
We disagree with Appellants’ argument that, similar to BASCOM, the
present claims recite a non-conventional and non-generic arrangement of
known, conventional elements, which results in an inventive concept of
identifying implied transactional opportunities across match engines and
interfacing with each match engine so as to cause those match engines to
solicit appropriate transactions from participants, thereby increasing
transactional opportunities using a novel system architecture. App. Br. 17,
21–22; Reply Br. 4–5. Instead, the present claims are directed to an abstract
idea using generic components as discussed supra, in §§ I.C.1. and I.C.2. or
at best, improving an abstract idea—not an inventive concept.
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Appellants do not make any other arguments pertaining to step 2B.
Appellants do not argue claims 2–26 separately with particularity, but assert
the § 101 rejection of those claims should be withdrawn for at least the same
reasons as argued for independent claim 1. App. Br. 9–23. Based on our
review of the dependent claims, these claims do not recite any additional
features that would transform the abstract idea embodied in claims 1, 2, 14,
and 26 into an inventive concept. Dependent claims that merely narrow an
abstract idea “add nothing outside the abstract realm.” SAP Am., Inc. v.
InvestPic, LLC, 898 F.3d 1161, 1169 (Fed. Cir. 2018). Accordingly, we
sustain the Examiner’s rejection of: (1) independent claims 1, 2, 14, and 26;
and (2) dependent claims 3–13 and 15–25 under 35 U.S.C. § 101.
We have only considered those arguments that Appellants actually
raised in the Briefs. Arguments Appellants could have made, but chose not
to make, in the Briefs have not been considered and are deemed to be
waived. See 37 C.F.R. § 41.37(c)(1)(iv).

DECISION
We affirm the Examiner’s decision rejecting claims 1–26 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).
AFFIRMED