Ex Parte GILBERT et al

Patent Trial and Appeal BoardAug 21, 2018

13430122 (P.T.A.B. Aug. 21, 2018)

UNITED STA TES p A TENT AND TRADEMARK OFFICE APPLICATION NO. FILING DATE 13/430, 122 03/26/2012 63710 7590 08/23/2018 INNOVATION DIVISION CANTOR FITZGERALD, L.P. 110 EAST 59TH STREET (6TH FLOOR) NEW YORK, NY 10022 FIRST NAMED INVENTOR Andrew C GILBERT 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. 01-1040-Cl 5420 EXAMINER TRAN,HAI ART UNIT PAPER NUMBER 3697 NOTIFICATION DATE DELIVERY MODE 08/23/2018 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 MARY ANN GILBERT 1 and ANGELA STERGIOPOULOS2 Appeal2017-004658 Application 13/430, 1223 Technology Center 3600 Before ERIC B. CHEN, MATTHEW R. CLEMENTS, and SCOTT E. BAIN, Administrative Patent Judges. CHEN, Administrative Patent Judge. DECISION ON APPEAL Appellants appeal under 35 U.S.C. Â§ 134(a) from the Examiner's Final Rejection of claims 1-8, 13-20, and 25-28. Claims 9-12 and 21-24 have been cancelled. We have jurisdiction under 35 U.S.C. Â§ 6(b ). We AFFIRM. 1 Legal Representative of inventor Andrew C. Gilbert, deceased. 2 Legal Representative of inventor Andrew Stergiopoulos, deceased. 3 Appellants identify the real party in interest as "BGC Partners, Inc." (App. Br. 3.) Appeal2017-004658 Application 13/430, 122 THE INVENTION The present invention creates a spread market for illiquid stocks, which are stocks priced too high to sell. (Spec. ,r,r 8-11.) Specifically, when there is gap between a stock's highest buy orders (highest price someone is willing to buy at) and lowest sell orders (lowest price someone is willing to sell at), the invention allows a "spread market maker" to offer a pair of buy and sell orders at a lesser gap. (Id. at ,r,r 12-13, 36-39 (describing Figs. 3- 4); accord App. Br. 3.) Another user may (at their option) choose the buy order, choose the sell order, or counteroffer the pair of buy and sell orders with a lesser spread. (Spec. ,r,r 14, 40-41 ( describing Figs. 5---6); accord App. Br. 3--4.) The market maker must (is obligated to) then do the same. (Spec. ,r,r 15, 42--44 (describing Figs. 7-9); accord App. Br. 4.) Claim 1 is reproduced below. 1. A method comprising the steps of: by a computer of a computer trading system, issuing to the market of the trading system a bid/offer spread order placed by an originating party: the bid/offer spread order identifying an instrument to be traded, a first spread, and a second spread, and requesting from counterparties two-sided counterorders for the instrument, a two-sided order for an instrument being a bid to buy the instrument at a bid price and an offer to sell the instrument at an offer price, the two-sided order to be satisfied by a party executing on either the bid or the offer; the bid/offer spread order obligating the originating party to trade on one side of a two-sided counterorder for the instrument received from a counterparty, in the event that a received two-sided counterorder has a bid price and 2 Appeal2017-004658 Application 13/430, 122 an offer price that differ by no more than the first spread identified in the originating party's bid/offer spread order; the bid/offer spread order soliciting from counterparties an acceptance of the second spread, a counterparty's acceptance to obligate the originating party to issue a two-sided order to the accepting counterparty, the bid price and offer price of the originating party's two-sided order to differ by no more than the second spread, and the originating party's two-sided order to obligate the accepting counterparty to trade one side of the originating party's two-sided order; by computer of the computer trading system, enforcing the obligations created by the responding counterparty's counterorder or acceptance and the originating party's two-sided order. (App. Br. 11 (Claims Appendix).) REJECTIONS Claims 1-8, 13-20, and 25-28 stand rejected under 35 U.S.C. Â§ 101 as being directed to non-statutory subject matter. ANALYSIS We are unpersuaded by Appellants' arguments (App. Br. 7-9; see also Reply Br. 2---6) that independent claims 1, 13, and 25 are directed to patent- eligible subject matter under 35 U.S.C. Â§ 101. The Examiner found that "[ m ]anaging bid/ offer spread trading [ as recited in claims 1, 13, and 15] has been in widespread use[] in the industry and is considered to be a fundamental economic practice (trading between parties) and a method of organizing human activities ( creating a contractual relationship between parties)." (Final Act. 5.) The Examiner further found 3 Appeal2017-004658 Application 13/430, 122 that "[t]he claim does no more than call on a 'computing device' with basic functionality for issuing bid/offer spread orders to be traded on a trading system between parties and enforcing obligations created by parties." (Id. at 6.) We agree with the Examiner's findings and ultimate conclusion that the claims are directed to non-statutory subject matter. A patent may be obtained for "any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof." 35 U.S.C. Â§ 101. The Supreme Court has held that this "provision contains an important implicit exception: [l]aws of nature, natural phenomena, and abstract ideas are not patentable." Alice Corp. Pty. Ltd. v. CLS Bankint'l, 134 S. Ct. 2347, 2354 (2014); Gottschalkv. Benson, 409 U.S. 63, 67 (1972) ("Phenomena of nature, though just discovered, mental processes, and abstract intellectual concepts are not patentable, as they are the basic tools of scientific and technological work."). Notwithstanding that a law of nature or an abstract idea, by itself, is not patentable, the application of these concepts may be deserving of patent protection. Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 71-72 (2012). In Mayo, the Court stated that "to transform an unpatentable law of nature into a patent-eligible application of such a law, one must do more than simply state the law of nature while adding the words 'apply it."' Mayo, 566 U.S. at 72 (internal citation omitted). In Alice, the Supreme Court reaffirmed the framework set forth previously in Mayo "for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts." Alice, 134 S. Ct. at 2355. The first step in 4 Appeal2017-004658 Application 13/430, 122 the analysis is to "determine whether the claims at issue are directed to one of those patent-ineligible concepts." Id. If the claims are directed to a patent-ineligible concept, then the second step in the analysis is to consider the elements of the claims "individually and 'as an ordered combination'" to determine whether the additional elements "'transform the nature of the claim' into a patent-eligible application." Id. (quoting Mayo, 566 U.S. at 79, 78). In other words, the second step is to "search for an 'inventive concept'-i.e., an 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."' Id. (brackets in original) (quoting Mayo, 566 U.S. at 72- 73). "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. at 2357 (brackets in original) (quoting Mayo, 566 U.S. at 77-78). The prohibition against patenting an abstract idea "cannot be circumvented by attempting to limit the use of the formula to a particular technological environment or adding insignificant post- solution activity." Bilski v. Kappas, 561 U.S. 593, 610-11 (2010) (internal citation and quotation marks omitted). The Court in Alice noted that "' [ s ]imply appending conventional steps, specified at a high level of generality,' was not 'enough' [in Mayo] to supply an 'inventive concept."' Alice, 134 S. Ct. at 2357 (quoting Mayo, 566 U.S. at 82-83, 77-78, 72-73). 5 Appeal2017-004658 Application 13/430, 122 Alice Step One: Are the claims at issue directed to a patent-ineligible concept? Independent claim 1 is a method claim, which recites, the following: (i) "the bid/offer spread order identifying an instrument to be traded, a first spread, and a second spread, and requesting from counterparties two sided counterorders for the instrument;" (ii) "the bid/offer spread order obligating the originating party to trade on one side of a two sided counterorder for the instrument received from a counterparty;" (iii) "the bid/offer spread order soliciting from counterparties an acceptance of the second spread, a counterparty' s acceptance to obligate the originating party to issue a two- sided order to the accepting counterparty." Such method steps of claim 1 are directed to a patent-ineligible abstract idea of either: (1) "a fundamental economic practice long prevalent in our system of commerce," Alice, 134 S. Ct. at 2356, for example, trading stocks on a stock exchange, which includes concepts such as bid price (i.e., highest price a buyer of a stock is willing to pay), ask price (i.e., the lowest price a seller of a stock is willing to sell), and bid-ask spread (i.e., difference between the bid price and ask price); or (ii) creating of a contractual relationship between two parties, for example, the buyer of a stock and seller of a particular stock, see buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1355 (Fed. Cir. 2014) (creating a suretyship is an abstract idea). Claim 13, a non-transitory computer-readable storage medium claim, and claim 25, a system claim, recite limitations similar to those discussed with respect to claim 1. Thus, claims 13 and 25 are also directed to a patent- ineligible abstract idea. 6 Appeal2017-004658 Application 13/430, 122 First, Appellants argue that "the Examiner fails to make a prima facie showing that the alleged abstract idea of 'issuing bid/offer spread orders to be traded on a trading system between parties and enforcing obligations created by parties' is abstract," but "[i]nstead, the Examiner makes a factual finding without any evidence in clear violation of the administrative procedure acts requirement for substantial evidence to make such factual findings." (App. Br. 7; see also Reply Br. 2-3.) Similarly, Appellants argue that "being a fundamental economic practice is not a test for abstractness" and "[t]he full test identified in Alice is whether an idea is a fundamental economic practice long prevalent in our system of commerce." (App. Br. 7 ( emphasis omitted).) Contrary to Appellants' arguments, the Examiner has identified the appropriate judicial exceptions as "fundamental economic practices" or "certain methods of organizing human activity" and the Examiner has compared the claimed concepts of independent claim 1 to appropriate Supreme Court and Federal Circuit decisions (i.e., Alice and buySAFE). Second, Appellants argue that "[ t ]his rationale [ a method of organizing human activity] does not fall into any of the categories of abstract idea identified by the Court in Alice" and "that 'certain methods of organizing human activities' was never identified as a category of abstract idea but rather used as a manner of distinguishing cases." (App. Br. 8; see also Reply Br. 4--5.) Accordingly, Appellants argue, "[a]n error in the PTO' s interim guideline making procedure included that category [ method of organizing human activity] in the interim guidelines." (App. Br. 8.) Contrary to Appellants' arguments, the Supreme Court in Alice recognized 7 Appeal2017-004658 Application 13/430, 122 "a method of organizing human activity" as a category of abstract idea. Alice, 134 S. Ct. at 2356 ("Although hedging is a longstanding commercial practice, it is a method of organizing human activity, not a "truth" about the natural world "'that has always existed"'). Last, Appellants argue that "[ t ]he claims here as the claims in Enfish are directed to the added functionality that improves computerized matching and marketplaces" and "[t]he claims here clearly offer an improvement to that underlying computerized technology improving their information efficiency and the operation of marketplaces." (Reply Br. 3.) Similarly, Appellants argue that "[i]n Trading Technologies International, Inc. v. CQG Inc., the Federal Circuit recognized that improvements to the accuracy, efficiency and usability of technologies involved in trading are not directed to abstract ideas." (Id.) However, Appellants have not adequately explained why the claim "purport[ s] to improve the functioning of the computer itself' or "any other technology or technical field." Alice, 134 S. Ct. at 2359. In particular, Appellants have not explained why the trading of instruments improves the function of a computer or other technology. Alice Step Two: Is there something else in the claims that ensures that they are directed to significantly more than a patent-ineligible concept? Because claims 1, 13, and 25 are directed to an abstract idea, the question is whether these claims recite an element, or combination of elements, that is enough to ensure that the claim is directed to significantly more than an abstract idea. 8 Appeal2017-004658 Application 13/430, 122 Claim 1 is a method claim, which includes "a computer of a computer trading system." Claim 13, a non-transitory computer-readable storage medium claim, includes "at least one processor" and "computers of a computer trading system." Claim 25, a system claim, includes "at least one processor" and a "memory." With respect to the claimed hardware components, Appellants' Specification discloses the following: FIG. 2 illustrates a hardware implementation of market 102 that facilitates electronic trading. Market 102 may include one or more local workstations 150 and one or more remote workstations 166. Workstations 150 and 166 may be any suitable means for presenting data and, in preferred embodiments, accepting participant input. Each workstation may enable a participant to engage in the trading process. For example, workstations 150 and 166 may be personal computers, laptop computers, mainframe computers, data displays, Internet browsers, etc. (Spec. ,r 32 (emphases added).) The trading process may preferably be controlled by a server 154. Server 154 may be any suitable computer or server, such as a network or Internet server. Server 154 may be connected to workstations 150 by a network 152. Server 154 may also be connected to workstations 166 by a network 156, a communications device 15 8, a communication link 160, a remote server 162, and a network 164. Networks 152 and 156 may be any suitable network, such as the Internet. Similarly, communications device 158, link 160, remote server 162, and network 164, which may be any suitable components of a computer network for enabling workstations 166 to connect to server 154, may be eliminated in part or whole, or may be supplemented by additional components. Although a specific arrangement is shown for connecting workstations 166 to server 154, any suitable configuration may be used in accordance with the present invention. (Spec. ,r 33 (emphases added).) 9 Appeal2017-004658 Application 13/430, 122 The generalized functional terms by which the computer components, for example, workstations 150 and 166, server 154, networks 152 and 156, communications device 158, link 160, remote server 162, and network 164, are described reasonably indicate that Appellants' Specification discloses a conventional "computer," including conventional "processor" and "memory." In view of the Examiner's findings, which are consistent with Appellants' Specification, the claimed hardware components, including "a computer of a computer trading system," "at least one processor" and a "memory" reasonably may be determined to be generic, purely conventional computer elements. Thus, the claims do no more than require generic computer elements to perform generic computer functions, rather than improve computer capabilities. Appending a conventional "a computer of a computer trading system," "at least one processor," and a "memory" to an abstract idea is not enough to transform an abstract idea into a patent-eligible invention. See Alice, 134 S. Ct. at 2358 ("[T]he mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention."). First, Appellants argue that "[ t ]he Examiner has provided no evidence or discussion that these limitations are not substantially more than 'issuing bid/offer spread orders to be traded on a trading system between parties and enforcing obligations created by parties"' and "[ t Jo make []findings of fact, the Examiner must present substantial evidence showing that such limitations are well-understood, routine and conventional activities 10 Appeal2017-004658 Application 13/430, 122 previously known to the industry." (App. Br. 9; see also Reply Br. 6.) Regardless of the sufficiency of the Examiner's analysis, Appellants' Specification, as explained above, provides sufficient basis to support the conclusion that claim 1 does not recite significantly more than the abstract idea. Second, Appellants argue that "the Examiner does not allege that these limitations lack novelty or are obvious in view of the prior art" and "[t]o be novel and non-obvious, these claims must then add something significantly more than just 'issuing bid/offer spread orders to be traded on a trading system between parties and enforcing obligations created by parties."' (App. Br. 9.) However, Appellants improperly conflate the requirements for eligible subject matter with the independent requirements of novelty and non-obviousness. "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 Â§ 101 categories of possibly patentable subject matter." Diamond v. Diehr, 450 U.S. 175, 188- 89 (1981). Third, Appellants argue that "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" and "[t]he claims clearly do not preempt the alleged abstract idea." (Reply Br. 3.) However, 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). Where claims are deemed to recite 11 Appeal2017-004658 Application 13/430, 122 only patent ineligible subject matter under the two-step Alice analysis, as they are here, "preemption concerns are fully addressed and made moot." Id. Last, Appellants argue that [i]n the CAFC cases of DDR Holdings, Bascom and Amdocs, the CAFC followed the Supreme Court's guidance and clearly identified that improvements rooted in computer technology that included an inventive concept add something more to an abstract idea even if some or all of the elements are abstract or were previously known and "in Trading Technologies ... , the Federal Circuit recognized that improvements to the accuracy, efficiency and usability of technologies involved in trading add an inventive concept that is significantly more to an abstract idea." (Reply Br. 5.) Accordingly, Appellants argue "like in DDR holdings, the claims clearly recited improvements to technology and electronic trading that are rooted in networking and computers" because "[ t ]hey override the routine and conventional manner of operation of those technologies as is evidenced by the lack of a complete prior art rejection." (Id.) Again, as discussed previously, "[t]he '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 Â§ 101 categories of possibly patentable subject matter." Diehr, 450 U.S. at 188-89. Moreover, other than providing a conclusory statement that "the claims clearly recited improvements to technology and electronic trading that are rooted in networking and computers," Appellants have not adequately explained why the claims overcome a problem that specifically arises in computer 12 Appeal2017-004658 Application 13/430, 122 technology. In particular, Appellants have not explained how trading instruments is a problem rooted in computer technology. Thus, we agree with the Examiner that claims 1, 13, and 25 are directed towards patent-ineligible subject matter. Accordingly, we sustain the rejection of independent claims 1, 13, and 25 under 35 U.S.C. Â§ 101. Claims 2-8, 14--20, and 26-28 depend from independent claims 1, 13, and 25. We sustain the rejection of claims 2-8, 14--20, and 26-28 under 35 U.S.C. Â§ 101 for the same reasons discussed with respect to independent claims 1, 13, and 2 5. DECISION The Examiner's decision rejecting claims 1-8, 13-20, and 25-28 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 13