Ex Parte Cunningham et alDownload PDFPatent Trials and Appeals BoardApr 22, 201912732915 - (D) (P.T.A.B. Apr. 22, 2019) Copy Citation UNITED STA TES p A TENT AND TRADEMARK OFFICE APPLICATION NO. FILING DATE 12/732,915 03/26/2010 131313 7590 04/24/2019 JPMorgan Chase / Goodwin Procter 901 New York A venue, NW Washington, DC 20001 FIRST NAMED INVENTOR Conor Cunningham 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 ATTORNEY DOCKET NO. CONFIRMATION NO. ]72167.020400 4136 EXAMINER SEE,CAROLA ART UNIT PAPER NUMBER 3696 NOTIFICATION DATE DELIVERY MODE 04/24/2019 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): patentdc@goodwinlaw.com lrogers@goodwinlaw.com aalpha-kpetewama@goodwinlaw.com PTOL-90A (Rev. 04/07) UNITED STATES PATENT AND TRADEMARK OFFICE BEFORE THE PATENT TRIAL AND APPEAL BOARD Ex parte CONOR CUNNINGHAM, MARKUS REITH, and HICHAM MEDKOURI Appeal2018-002080 Application 12/732,915 Technology Center 3600 Before JAMES R. HUGHES, BETH Z. SHAW, and MATTHEW J. McNEILL, Administrative Patent Judges. SHAW, Administrative Patent Judge. DECISION ON APPEAL Appellants 1 appeal under 35 U.S.C. § 134 from a final rejection of claims 1, 2, 4, 5, 7, 8, 10, 11, 13, 14, 16, 17, and 19. We have jurisdiction under 35 U.S.C. § 6(b ). We affirm. The claims are directed to a method and system for managing spread orders. Claim 1, reproduced below, is illustrative of the claimed subject matter: 1 According to Appellants, the real party in interest is JPMorgan Chase Bank, N.A. App. Br. 2. Appeal2018-002080 Application 12/732,915 1. A computer-implemented method of managing a volume of a spread order trade in accordance with a target volume, compnsmg: receiving, by a computer, a spread portfolio selection comprising a plurality of legs: identifying, by the computer, the target volume for the spread portfolio, wherein the target volume is represented by a total order vector comprising an aggregate of order volume desired for each of the plurality of legs in the spread portfolio; identifying, by the computer, an actual trade volume for the spread portfolio, wherein the actual trade volume is represented by a total traded vector comprising an aggregate of individual trades successfully executed for each of the plurality of legs in the spread portfolio; calculating, by the computer, a difference between the total order vector and the total traded vector, wherein a total suggested sub- order vector is identified at least in part based on the difference between the total order vector and the total traded vector, the total suggested sub-order vector representing an aggregate of a percentage of order volume to be traded for each of the plurality of legs in the spread portfolio in a first trading iteration: executing, by a computer, a trade for each of the plurality of legs in the spread portfolio in the first trading iteration in accordance with the total suggested sub-order vector; calculating an error rate vector based on a deviation between the target volume for the spread portfolio and a total traded volume after the first trading iteration; and prioritizing the error rate vector for a second trading iteration by using the error rate vector to adjust the total suggested sub-order vector, thereby controlling the volume in accordance with the target volume. REJECTION The Examiner rejected claims 1, 2, 4, 5, 7, 8, 10, 11, 13, 14, 16, 17, and 19 ("the pending claims") under 35 U.S.C. § 101. 2 Appeal2018-002080 Application 12/732,915 CONTENTIONS AND ANALYSIS 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. Pty. Ltd. v. CLS Bank Int 'l, 573 U.S. 208,216 (2014) (quotation marks and citation omitted). 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. Kappas, 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 (Gottschalkv. 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. 3 Appeal2018-002080 Application 12/732,915 252, 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 187, 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 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., Diehr, 450 U.S. 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 tum to the second step of the Alice and Mayo framework, where "we must examine the elements of the claim to determine whether it contains an 'inventive concept' sufficient to 'transform' the claimed abstract idea into a patent-eligible application." Alice, 573 U.S. at 221 ( citation omitted). "A claim that recites an abstract idea must include 'additional features' to ensure 'that the [claim] is more than a drafting effort designed to monopolize the [ abstract idea]."' Id. ( alterations in original) ( quoting Mayo, 566 U.S. at 77). "[M]erely requir[ing] generic computer implementation[] fail[s] to transform that abstract idea into a patent-eligible invention." Id. 4 Appeal2018-002080 Application 12/732,915 The U.S. Patent and Trademark Office ("USPTO") recently published revised guidance on the application of§ 101. US PTO' s 2019 REVISED PATENT SUBJECT MATTER ELIGIBILITY GUIDANCE, 84 Fed. Reg. 50 (Jan. 7, 2019) ("Revised Guidance"). Under that Revised 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 MANUAL OF PATENT EXAMINING PROCEDURE ("MPEP") §§ 2106.05(a}-(c), (e}-(h) (9th Ed., Rev. 08.2017, Jan. 2018)). 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 Revised Guidance. Abstract Idea For the following reasons, we conclude the claims recite a fundamental economic practice, which is one of certain methods of organizing human activity identified in the Revised Guidance, and thus an 5 Appeal2018-002080 Application 12/732,915 abstract idea. See Revised Guidance, 84 Fed. Reg. at 52, 53 (listing "[ c ]ertain methods of organizing human activity-fundamental economic principles or practices" as one of the "enumerated groupings of abstract ideas"). Appellants address the claims as a group, and we treat claim 1 as representative. The claim is directed to an abstract idea because it is directed to a fundamental economic practice, which is one of certain methods of organizing human activity, as discussed below. The steps of claim 1, including, with italics, receiving, by a computer, a spread porifolio selection comprising a plurality of legs; identifying, by the computer, the target volume for the spread porifolio, wherein the target volume is represented by a total order vector comprising an aggregate of order volume desired for each of the plurality of legs in the spread porifolio; identifying, by the computer, an actual trade volume for the spread porifolio, wherein the actual trade volume is represented by a total traded vector comprising an aggregate of individual trades successfully executed for each of the plurality of legs in the spread porifolio; calculating, by the computer, a difference between the total order vector and the total traded vector, wherein a total suggested sub-order vector is identified at least in part based on the difference between the total order vector and the total traded vector, the total suggested sub-order vector representing an aggregate of a percentage of order volume to be traded for each of the plurality of legs in the spread porifolio in a first trading iteration: executing, by a computer, a trade for each of the plurality of legs in the spread porifolio in the first trading iteration in accordance with the total suggested sub-order vector; calculating an error rate vector based on a deviation between the target volume for the spread porifolio and a total traded volume after the first trading iteration; and 6 Appeal2018-002080 Application 12/732,915 prioritizing the error rate vector for a second trading iteration by using the error rate vector to adjust the total suggested sub-order vector, thereby controlling the volume in accordance with the target volume recite steps of receiving a spread portfolio selection, identifying different volumes, calculating a difference between values, executing a trade, calculating an error rate, and controlling a volume of trades. Under Supreme Court precedent, claims directed purely to an abstract idea are patent ineligible. As set forth in the Revised Guidance, which extracts and synthesizes key concepts identified by the courts, abstract ideas include (1) mathematical concepts, (2) certain methods of organizing human activity, and (3) mental processes. Among those certain methods of organizing human activity listed in the Revised Guidance are fundamental economic practices, such as the concept of intermediated settlement in Alice, and the concept of hedging in Bilski. Like those concepts, claim 1 also recites a fundamental economic practice. Specifically, the italicized steps fall under the umbrella of economic practices, including managing transactions or sales activities, because "executing a trade" would ordinarily take place in a sale or market transaction, which occurs in our system of commerce. The "executing a trade" is an economic act, and the "trade" is an item sold in commerce. See Spec. ,r 2 ("The present invention relates generally to a method and system for managing spread orders, and more particularly to a method and system for providing a profit and loss neutral model configured to dynamically and iteratively rebalance trades related to 7 Appeal2018-002080 Application 12/732,915 spread orders"); Spec. ,r 3 ("Typically, spread orders comprise buy and sell orders for one or more of the instruments within a spread portfolio"). Claim 1 is, thus, similar to claims that courts have concluded recite a fundamental economic practice. See, e.g., Bilski v. Kappas, 561 U.S. 593, 611 (2010) ( determining that hedging risk is a "fundamental economic practice long prevalent in our system of commerce"); Alice, 573 U.S. at 219-20 ( determining that intermediated settlement is a fundamental economic practice); see also 2019 Eligibility Guidance 84 Fed. Reg. at 52 n.13. Thus, we conclude claim 1 recites a fundamental economic practice, which is one of certain methods of organizing human activity identified in the Revised Guidance, and thus an abstract idea. In accordance with the Revised Guidance, and looking to MPEP §§ 2106.05(a}-(c) and (e}-(h), we determine that the additional elements of claim 1, both individually and as an ordered combination, do not integrate a judicial exception, in this case the abstract idea of a fundamental economic practice, into a practical application. Claim 1 is directed to little more than the implementation of the abstract idea on generic computer servers and devices. The claim, as a whole, describes how to generally apply or execute the concept of managing a volume of a spread order trade in a computer environment. The claimed "computer" is recited at a high level of generality and merely invoked as a tool to perform the process of claim 1. Simply implementing the abstract idea on a generic computer is not a practical application of the abstract idea. See, e.g., Spec. ,r 1 7 ("The term 'computer' is intended to include any data processing device, such as a desktop computer, a laptop computer, a mainframe computer, a personal digital 8 Appeal2018-002080 Application 12/732,915 assistant, a server, a handheld device, or any other device configured to process data.") Accordingly, the claim as a whole does not integrate the abstract idea into a practical application because the claim limitations do not impose any meaningful limits on practicing the abstract idea. Stated differently, the claims do not (1) improve the functioning of a computer or other technology, (2) are not applied with any particular machine ( except for generic computer components), (3) do not effect a transformation of a particular article to a different state, and (4) are not applied in any meaningful way beyond generally linking the use of the judicial exception to a particular technological environment, such that the claim, as a whole, is more than a drafting effort designed to monopolize the exception. See MPEP §§ 2106.0S(a}-(c), (e}-(h). Inventive Concept Because we determine that claim 1 is "directed to" an abstract idea, we next consider whether claim 1 recites an "inventive concept." The Examiner determined that claim 1 does not recite an inventive concept because the additional elements in the claim do not amount to "significantly more" than an abstract idea. See Final Act. 4---6. We agree with the Examiner's determination in this regard. The additional elements recited in claim 1 include "a computer." The claim recites the "computer" at a high level of generality, and the written description indicates that the computer is a generic one. See, e.g., Spec. ,r 17 ("The term 'computer' is intended to include any data processing device, such as a desktop computer, a laptop computer, a mainframe computer, a personal digital assistant, a server, a handheld device, or any other device 9 Appeal2018-002080 Application 12/732,915 configured to process data.") Using generic computer components to perform abstract ideas does not provide the necessary inventive concept. See Alice, 573 U.S. at 223 ("[T]he mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention."). Thus, these elements, taken individually or together, do not amount to "significantly more" than the abstract idea itself. Appellants contend the Examiner erred in rejecting the claims under 35 U.S.C. § 101 because the claims would not preempt any field of human endeavor. App. Br. 17. We are not persuaded of Examiner error by this argument. Preemption is a driving concern when determining patent eligibility. See Alice, 573 U.S. at 216-17. Patent law cannot inhibit further discovery by improperly tying up the future use of the building blocks of human ingenuity. See id. (citing Mayo, 566 U.S. at 85-86). Although preemption is characterized as a driving concern for patent eligibility, preemption itself is not the test for patent eligibility. "Where a patent's claims are deemed only to disclose patent ineligible subject matter under the Mayo framework, as they are in this case, preemption concerns are fully addressed and made moot." Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015). "While preemption may signal patent ineligible subject matter, the absence of complete preemption does not demonstrate patent eligibility." Id. With regard to Appellants' argument that the pending claims are patent eligible because there are no obviousness or novelty rejections of the claims (see App. Br. 22; Reply Br. 5), Appellants improperly conflate the requirements for eligible subject matter ( § 101) with the independent 10 Appeal2018-002080 Application 12/732,915 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. Ltd. v. Merial L.L.C., 818 F.3d 1369, 1376 (Fed. Cir. 2016) (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"). Appellants also argue the pending claims are similar to Trading Technologies International Inc., v. CQG, Inc., 675 Fed.Appx. 1001 (Fed. Cir. 2017) (non-precedential). App. Br. 21. Even if Trading Technologies were precedential, it is not particularly useful to Appellants. In Trading Technologies, the Federal Circuit, quoting the district court, expfained that the claims "require a specific structured graphical user interface paired with a prescribed functionality directly related to the graphical user interface's structure that is addressed to and resolves a specifically identified problem in the prior state of the art." Trading Techs. 675 Fed.Appx. at 1004. Here, claim 1 does not recite any graphical user interfaces. Appellants do not persuasively explain how the recited clairn is rooted in the specific structure or functionality of a graphical user interface or any other specific structure or functionality that is removed from the abstract idea, as compared to conventional implementations of known procedures. Accordingly, we sustain the Examiner's rejection of the pending claims under 35 U.S.C. § 101 as directed to patent-ineligible subject matter. 11 Appeal2018-002080 Application 12/732,915 DECISION For the above reasons, the Examiner's rejection of claims 1, 2, 4, 5, 7, 8, 10, 11, 13, 14, 16, 17, and 19 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)(l)(iv) (2009). AFFIRMED 12 Copy with citationCopy as parenthetical citation