Ex Parte Davies

Patent Trials and Appeals BoardJan 30, 2019

12053487 - (D) (P.T.A.B. Jan. 30, 2019)

UNITED STA TES p A TENT AND TRADEMARK OFFICE APPLICATION NO. FILING DATE 12/053,487 03/21/2008 63710 7590 02/01/2019 INNOVATION DIVISION CANTOR FITZGERALD, L.P. 110 EAST 59TH STREET (6TH FLOOR) NEW YORK, NY 10022 FIRST NAMED INVENTOR James Davies 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. 07-2155 4378 EXAMINER WONG,ERICTAKWAI ART UNIT PAPER NUMBER 3692 NOTIFICATION DATE DELIVERY MODE 02/01/2019 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): patentdocketing@cantor.com lkorovich@cantor.com phowe@cantor.com PTOL-90A (Rev. 04/07) UNITED STATES PATENT AND TRADEMARK OFFICE BEFORE THE PATENT TRIAL AND APPEAL BOARD Ex parte JAMES DA VIES Appeal 2017-011782 Application 12/053,487 Technology Center 3600 Before ALLEN R. MacDONALD, RAMA G. ELLURU, and ADAM J. PYONIN, Administrative Patent Judges. MacDONALD, Administrative Patent Judge. DECISION ON APPEAL 1 STATEMENT OF THE CASE Appellant appeals under 35 U.S.C. Â§ 134(a) from a final rejection of claims 1-21, which constitute all the claims pending in this application. We have jurisdiction under 35 U.S.C. Â§ 6(b ). We AFFIRM. 1 Appellant indicates the real party in interest is BGC Partners, Inc. App. Br. 3. Appeal 2017-011782 Application 12/053,487 Illustrative Claims Illustrative claims 1-3 under appeal read as follows ( emphasis, formatting, and bracketed material added): 1. A method, comprising the steps performed on one or more computers, of: [A.] computing in memory of the one or more computers a value representative of a first yield for a first instrument, the first instrument being a derivative of an underlying financial instrument, the first instrument being a non-fixed-income instrument; [B.] controlling by the one or more computers submission of trading orders to an automated trading exchange, the orders to trade at least one of the first instrument and a second instrument based at least in part on: [i.] computing in memory of the one or more computers a second yield of the second instrument, and comparing the first yield value with the computed second yield of the second instrument, and/or [ii.] comparing in memory of the one or more computers a differential of the first yield value over change in market interest rates against a differential of the second yield value over change in market interest rates, and [C.] the submission of orders being controlled to balance sizes of positions in the first instrument and second instrument to achieve a financial risk profile desired by a trader. 2. The method of claim 1, wherein the first instrument is a bond futures contract. 3. The method of claim 2, wherein the second instrument is a bond futures contract. 2 Appeal 2017-011782 Application 12/053,487 Rejection2 The Examiner rejected claims 1-21 under 35 U.S.C. Â§ 101 because "the claimed invention is directed to a judicial exception ... without significantly more," i.e., because the claimed invention is directed to patent- ineligible subject matter. Final Act. 3. Separate patentability is not argued for claims 1-21. Therefore, we select independent claim 1 as representative. Except for our ultimate decision, we do not discuss the Â§ 101 rejection of claims 2-21 further herein. Issues on Appeal Did the Examiner err in rejecting claim 1 as being directed to patent- ineligible subject matter? ANALYSIS 3 We have reviewed the Examiner's rejections in light of Appellant's Appeal Brief and Reply Brief arguments that the Examiner has erred. A. Section 101 An invention is patent-eligible if it claims a "new and useful process, machine, manufacture, or composition of matter." 35 U.S.C. Â§ 101. However, the Supreme Court has long interpreted 35 U.S.C. Â§ 101 to include implicit exceptions: "[l]aws of nature, natural phenomena, and abstract 2 All citations to the "Final Action" are to the Final Action mailed on August 11, 2016. 3 All Manual of Patent Examining Procedure (MPEP) citations herein are to MPEP Rev. 08.2017, January 2018. 3 Appeal 2017-011782 Application 12/053,487 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. 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 ( 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, 192 ( 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 (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 4 Appeal 2017-011782 Application 12/053,487 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 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. ( 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 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 (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. (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. B. USPTO Section 101 Guidance The United States Patent and Trademark Office (USPTO) recently published revised guidance on the application ofÂ§ 101. US PTO' s January 7, 2019 Memorandum, 2019 Revised Patent Subject Matter Eligibility 5 Appeal 2017-011782 Application 12/053,487 Guidance, 84 Fed. Reg. 50 ("Memorandum"). Under that guidance, we first look to whether the claim recites: (1) (see Memorandum Step 2A - Prong One) any judicial exceptions, including certain groupings of abstract ideas (i.e., mathematical concepts, certain methods of organizing human interactions such as a fundamental economic practice, or mental processes); and (2) (see Memorandum Step 2A - Prong Two) additional elements that integrate the judicial exception into a practical application (see MPEP Â§ 2106.05(a}-(c), (e}-(h)). 4 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 Â§ 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 Step 2B. 4 We acknowledge that some of these considerations may be properly evaluated under Step 2 of Alice (Step 2B of Office guidance). Solely for purposes of maintaining consistent treatment within the Office, we evaluate it under Step 1 of Alice (Step 2A of Office guidance). See USPTO's January 7, 2019 Memorandum, "2019 Revised Patent Subject Matter Eligibility Guidance." 6 Appeal 2017-011782 Application 12/053,487 C. Examiner's Â§101 Rejection -Alice/Mayo - Steps 1 and 2 C. I. Memorandum Step 2A - Prong One Applying step 1 of the Alice/Mayo analysis, the Examiner concludes claim 1 is directed to an abstract idea. In this case, the claims are directed to submission of financial orders, which is a fundamental economic practice and therefore an abstract idea. The claims are principally drawn to controlling submission of orders for two instruments in order to achieve a financial risk profile desired by a trade. Note that the courts have recently found claims drawn to concepts involving human activity relating to commercial practices ineligible. Here, the instant claims involve comparing values related to two instruments and submitting orders based on those values, which is similar to the commercial practices that have been found by the courts to be abstract ideas. Final Act. 3 ( emphasis added). The Examiner cites Bilski, Alice, and Perkin- Elmer to establish that the courts have found financial risk management to be an abstract idea. Final Act 3--4. Here, the instant [claims] are similar to those in the cited court decisions because they involve concepts relating to performance of financial transactions, concepts relating to managing transactions between people, as well as concepts relating to processes of comparing data that can be performed mentally. Final Act. 4. C.2. Memorandum Step 2A - Prong Two Applying step 2 of the Alice/Mayo analysis, the Examiner concludes: The claims do not include limitations that are "significantly more" than the abstract idea because the claims do not include an improvement to another technology or technical field, an improvement to the functioning of the computer itself, or meaningful limitations beyond generally linking the use of an abstract idea to a particular technological environment. Final Act. 5. 7 Appeal 2017-011782 Application 12/053,487 C.3. Memorandum Step 2B Further applying step 2 of the Alice/Mayo analysis, the Examiner concludes: [T]he limitations, in the instant claims, are done by the generically recited computer products. The generically recited computer elements such as "one or more computers", "memory", and "one or more tangible computer memories" do not add a meaningful limitation to the abstract idea because they would be routine in any computer implementation. The steps for data gathering and processing do not add a meaningful limitation to the method as they would be routinely used by those of ordinary skill in the art in order to apply the abstract idea. Final Act. 5 ( emphasis added). Moreover, the specification does not contribute any technically-specific computer algorithm or code, but rather merely states that the claimed steps may be performed by the generic modules with the expectation that one of ordinary skill in the art would be capable of implementation without further instruction. Whilst the implementation of such a solution may include the use of generic technical features, these merely serve their well-known functions as would be recognized by one of ordinary skill in the art in the technical field under consideration . . . . The computer components are recited at a high level of generality and are recited as performing generic computer functions routinely used in computer applications. Generic computer components recited as performing generic computer functions that are well-understood, routine and conventional activities amount to no more than implementing the abstract idea with a computerized system. The use of generic computer components in this manner does not impose any meaningful limit on the computer implementation of the abstract idea. Final Act. 7 ( emphasis added). 8 Appeal 2017-011782 Application 12/053,487 D. Appellant'sÂ§ 101 Arguments D.1. Appellant contends "the Office Action fails to make a prima facie showing that the claims are directed to an abstract idea." App. Br. 6. Appellant particularly contends: [T]he Examiner does not cite to appropriate court decisions or explain how the concepts correspond to concepts in cited court decisions. The only cases mentioned by the office action with reference to the claims are Alice, Alice, Ultramercial, Content Extraction, buySafe, Bilski, Accenture, Bancorp, De[al]ertrack, Planet Bingo, Ambry, Myriad, Cybersource, SmartGene, Classen, Gametek, and Grams. None of these are even remotely close to Applicants claims. A listing of unrelated cases cannot amount to a prima facie showing in line with required procedure. Further, the Examiner unlawfully over simplifies the claim and merely looks at the gist of the claims when saying that they are directed to "submission of financial orders". App. Br. 7 (emphasis added). The Examiner ignores meaningful [ computing, controlling, comparing] claim limitations to find an abstract idea that is divorced from the claim and that completely misses the point of the claim. The Examiner stands in direct disregard to the directives of the courts and the PTO. Furthermore, The Examiner as its justification for the allegedly abstract idea being abstract states that the idea is a "fundamental economic practice". The Office Action ignores the Court[']s ruling in Alice that limits abstract ideas to fundamental economic practices that are long prevalent. The Office Action certainly presents no evidence regarding the long prevalence of this alleged abstract idea. Moreover, the Examiner presents no evidence of the fundamentality of this economic practice. App. Br. 8 (emphasis added). 9 Appeal 2017-011782 Application 12/053,487 Contrary to Appellant's argument that none of the claims of the cases cited by the Examiner are even remotely close to Applicants claims, we determine that the financial risk management claims of Alice and Bilski are directly on point to Appellant's claimed financial risk management. The Examiner correctly points out that step 1 of the Alice/Mayo framework does not require evidence and may rely on comparing claimed concepts to prior court decisions. Ans. 5---6. Appellant also overlooks that the argued computing, controlling, comparing specifics of claim 1 are part of the judicial exception. The fact that a claimed concept is "[g]roundbreaking, innovative, or even brilliant" does not "itself satisfy theÂ§ 101 inquiry." Ass 'nfor Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. at 591; see also Aatrix Software, Inc. v. Green Shades Software, Inc., 890 F.3d 1354, 1359 (Fed. Cir. 2018) ("It is clear from Mayo that the 'inventive concept' cannot be the abstract idea itself."). We agree with the Examiner that claim 1 recites a judicial exception in the form of a fundamental economic practice, i.e., certain methods of organizing human activity comprising fundamental economic principles or practices (including hedging, insurance, or mitigating risk). D.2. Appellant also contends "the Claims are not directed to an abstract idea." App. Br. 8. [The] claims clearly add functionality to a computer that was previously not available and therefore are not directed to an abstract idea. The lack of a valid prior art reference is clearly indicative of this. Applicants claims, like the claim in Trading Technology, Inc[.] v[.] CQG, Inc. present a non-conventional improvement 10 Appeal 2017-011782 Application 12/053,487 to trading technology that increase the efficiency and usability of trading systems. These claims are therefore not directed to an abstract idea. Moreover, in the CAFC cases of Enfish and McRO, the CAFC followed the Supreme Court's guidance and clearly identified that the central test of abstractness is whether a claim preempts an entire area. The claims clearly do not preempt an entire area. These claim include specific rules, like the rules in McRO, that clearly put them squarely outside of any risk of preemption. App. Br. 9 ( emphasis added). First, Appellant's "lack of a prior art rejection" argument lacks merit because, even though the Section 101 inquiry and the Section 102/103 inquiry might sometimes overlap, a novel and nonobvious claim directed to a purely abstract idea is, nonetheless, patent-ineligible. See Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. at 89 (rejecting the suggestion that Sections 102, 103, and 112 might perform the appropriate screening function and noting that in Mayo such an approach "would make the 'law of nature' exception ... a dead letter"). Second, contrary to Appellant's technology improvement argument, we do not find before us a non-abstract improvement to technology. The focus of claim 1 is not on an improvement in computer-functionality, as in Enfzsh, but on an abstract idea that uses a computer as a tool for "achieving a financial risk profile desired by a trade." App. Br. 13. In Trading Technologies, the Federal Circuit agreed with the district court explanation 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 11 Appeal 2017-011782 Application 12/053,487 resolves a specifically identified problem in the prior state of the art. Trading Techs. Int'!, Inc. v. CQG, INC, 675 F. App'x 1001, 1004 (Fed. Cir. 2017). In contrast, in Appellant's claim 1, we find only abstract improvements to financial risk management. A claim directed to a unique and advantageous method for financial risk management is nonetheless directed to an abstract idea. 5 "[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); see Diehr, 450 U.S. at 188- 89. Third, Appellant's "preemption" argument is not persuasive because 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). We are instructed that "[ w ]here a patent's claims are deemed only to disclose patent ineligible subject matter under the [Alice/Mayo] framework ... , preemption concerns are fully addressed and made moot." Id. 5 See Ultramercial, Inc. v. Hulu LLC, 772 F.3d. 709 (Fed. Cir. 2014). In that case, the patentee argued that its financial arrangement ( a method of using advertising as an exchange or currency) was distinguishable from the "routine," "long prevalent," or "conventional" abstract idea in Alice because it was "directed to a specific method of advertising and content distribution that was previously unknown." Id. at 714. The court rejected the patentee's position that "abstract ideas remain patent-eligible under Â§ 101 as long as they are new ideas not previously well known, and not routine activity." Id. 12 Appeal 2017-011782 Application 12/053,487 We agree with the Examiner that claim 1 "do[es] not include an improvement to another technology or technical field, an improvement to the functioning of the computer itself [see MPEP 2106.0S(a)], or meaningful limitations beyond generally linking the use of an abstract idea to a particular technological environment [see MPEP 2106.0S(h)]." In view of Appellant's Specification, and consistent with the Examiner's determinations, we conclude that claim 1 does not integrate the judicial exception into a practical application. We determine claim 1 does not recite: (i) an improvement to the functioning of a computer; (ii) an improvement to another technology or technical field; (iii) an application of the abstract idea with, or by use of, a particular machine; (iv) a transformation or reduction of a particular article to a different state or thing; or (v) other meaningful limitations beyond generally linking the use of the abstract idea to a particular technological environment. See MPEP Â§Â§ 2106.0S(a}-(c), (e}-(h). We agree with the Examiner that claim 1 is directed to a judicial exception. D.3. As noted above, the Examiner also determined: The generically recited computer elements such as "one or more computers", "memory", and "one or more tangible computer 13 Appeal 2017-011782 Application 12/053,487 memories" do not add a meaningful limitation to the abstract idea because they would be routine in any computer implementation." Final Act. 5. Appellant contends "the Office Action has failed to make a prima facie showing that the claims do not add significantly more than the allegedly abstract idea." App. Br. 9. Appellant particularly contends: The Office Action identifies numerous limitations that are not considered part of the abstract idea. The Office Action addresses all of them by saying they are simply conventional or well- known. These allegations amount to a factual finding of the state of the art made without evidentiary support. It is not readily apparent that all of these claim limitations were actually conventional or well[ -]known at the time of the filing of this application either separately or together. Evidence is required to make such findings. Without such evidence no prima facie showing has been made. App. Br. 9. Although claim 1 recites "more" under step two of the Alice/Mayo analysis, we conclude the "more" is not patentably significant. Rather, the case law shows this "more" of "computers" and "memories" to be the epitome of a well-understood, routine, conventional element/combination previously known in the industry. See Alice, 573 U.S. at 227 ("[P]etitioner's ... media claims add nothing of substance to the underlying abstract idea."); Fairwarning IP, Inc. v. Iatric Sys., Inc., 839 F.3d 1089, 1096 (Fed. Cir. 2016) ("Claims 15-17 ... add nothing more than similar nominal recitations of basic computer hardware, such as 'a non-transitory computer-readable medium with computer-executable instructions' and a microprocessor."). Because claim 1, in addition to the abstract idea, recites only a well- understood, routine, conventional element/combination previously known in 14 Appeal 2017-011782 Application 12/053,487 the industry, we conclude the case law shows there is no genuine issue of material fact regarding step two of the Examiner's Alice/Mayo analysis. Therefore, we are unpersuaded by Appellant's argument that further evidence is required. In view of Appellant's Specification, and consistent with the Examiner's determinations, we determine the claims do not recite: (vi) a specific limitation other than what is well-understood, routine, conventional activity m the field or unconventional steps that confine the claim to a particular useful application. See MPEP Â§ 2106.05(d). CONCLUSIONS (1) The Examiner has not erred in rejecting claims 1-21 under 35 U.S.C. Â§ 101, as being directed to patent-ineligible subject matter. (2) Claims 1-21 are not patentable. DECISION The Examiner's rejection of claims 1-21 under 35 U.S.C. Â§ 101, as being directed to patent-ineligible subject matter, is affirmed. No time period for taking any subsequent action in connection with this appeal may be extended under 37 C.F.R. Â§ 1.136(a)(l)(iv). AFFIRMED 15