Ex Parte Cunningham et al

Patent Trials and Appeals Board

Apr 22, 2019

12732915 - (D) (P.T.A.B. Apr. 22, 2019)

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.
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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.
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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.
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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
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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
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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
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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
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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
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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
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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.
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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
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