Ex Parte Haller

Patent Trials and Appeals Board

May 28, 2019

14657002 - (D) (P.T.A.B. May. 28, 2019)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
14/657,002 03/13/2015
35811 7590 05/30/2019
IP GROUP OF DLA PIPER LLP (US)
ONE LIBERTY PLACE
1650 MARKET ST, SUITE 4900
PHILADELPHIA, PA 19103
FIRST NAMED INVENTOR
Thomas F. Haller
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.
NGI-14-1073CON-DIV 9784
EXAMINER
BOVEJA, NAMRATA
ART UNIT PAPER NUMBER
3696
NOTIFICATION DATE DELIVERY MODE
05/30/2019 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):
pto. phil@dlapiper.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte THOMAS F. HALLER
Appeal2018-001779
Application 14/657 ,002 1
Technology Center 3600
Before ELENI MANTIS MERCADER, NORMAN H. BEAMER, and
ADAM J. PYONIN, Administrative Patent Judges.
BEAMER, Administrative Patent Judge.
DECISION ON APPEAL
Appellant appeals under 35 U.S.C. § 134(a) from the Examiner's
Final Rejection of claims 1-3, 5, and 7. We have jurisdiction over the
pending rejected claims under 35 U.S.C. § 6(b ).
We AFFIRM and ENTER NEW GROUNDS OF REJECTION
pursuant to 37 C.F.R. § 41.50(b).
1 Appellant identifies NYSE Group, Inc. as the real party in interest. (App.
Br. 1.)
Appeal2018-001779
Application 14/657,002
THE INVENTION
Appellant's disclosed and claimed invention is directed to a trading
platform adapted for pairs trading of unrelated securities from one or more
asset classes using a single order approach. (Abstract.)
Independent claim 1, reproduced below, is illustrative of the subject
matter on appeal:
1. A computer-implemented method of pairing, storing and
processing unrelated securities, said method comprising:
in a computer system comprising a pairing module, a
trading engine module, an order books module and at least one
database structure, said database structure defining an order
book associated with a unique identifier and storing data
defining pairs of unrelated securities corresponding to the
unique identifier as single orders in said order book:
receiving, by the pairing module a request to pair at least
a first leg and a second leg, the first leg and the second leg
comprising two legs of the unrelated securities, each security
associated with a different asset class;
comparing, by the pairing module, predetermined criteria
of each of the first leg and the second leg to determine whether
said first leg and said second leg are tradable as a pair;
converting, by the pairing module, the first leg and the
second leg into a created pair of said unrelated securities and
assigning the unique identifier to said created pair when it is
determined that the first leg and the second leg are tradable as a
pair;
causing, by the pairing module, at least one remote trader
computing device to automatically present the created pair of
said unrelated securities to at least one trader entity for
selection;
receiving, by the pairing module, a selection of the
created pair of said unrelated securities that is presented from
among the at least one remote trader computing device;
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creating, by the trading engine module, a pairs trade
order corresponding to the created pair of said unrelated
securities including the unique identifier, based on the received
selection;
entering, by the order books module, said pairs trade
order as a single order into the order book based on the unique
identifier included in the pairs trade order, the pairs trade order
having order parameters, a portion of the order parameters
associated with the first leg, another portion of the order
parameters associated with the second leg;
automatically matching, by the trading engine module,
information in other trade orders to the order parameters of the
pairs trade order entered in the order book;
determining, by the trading engine module, whether the
order parameters associated with each leg of the entered pairs
trade order are met; and
causing, by the trading engine module, at least one
computer to automatically execute the pairs trade order as one
single order when the order parameters are met.
REJECTI0NS 2
The Examiner rejected claims 1-3, 5, and 7 under 35 U.S.C. § 101
because the claimed invention is directed to non-statutory subject matter.
(Final Act. 6.)
ISSUE ON APPEAL
Appellant's arguments in the Appeal and Reply Briefs present the
following issue: 3
2 The rejections of claims 1-3, 5, and 7 under 35 U.S.C. § 112, first and
second paragraphs (see Final Act. 13, 14) were withdrawn in the Answer.
(Ans. 2.)
3 Rather than reiterate the arguments of Appellant and the positions of the
Examiner, we refer to the Appeal Brief (filed June 8, 2017); the Reply Brief
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Application 14/657,002
Whether the Examiner erred in finding claims 1-3, 5, and 7 as
directed to non-statutory subject matter. (App. Br. 5-19, Reply Br. 1-7.)
ANALYSIS
We have reviewed the Examiner's rejections in light of Appellant's
arguments. Arguments Appellant could have made but chose not to make
are deemed to be waived. See 37 C.F.R. § 4I.37(c)(l)(iv).
The Examiner determines the claims are patent ineligible under
35 U.S.C. § 101, because after reviewing each limitation of exemplary
claim 1, the Examiner finds the claim "is [] directed to an abstract idea of
pairing, storing and processing unrelated securities." (Final Act. 1 O; see
Final Act. 8-10 for analysis.) The Examiner further finds that, with respect
to claim 1, "the ten limitations which describe [the] process being performed
by respective 'modules' labelled as [a] 'pairing module', [a] 'trading engine
module' and [an] 'order book module' [are] implemented on a computer
system" (Final Act. 11) and "do not amount to significantly more when
treated individually and in combination because these elements of the instant
process, when taken alone, each execute in a manner routinely and
conventionally expected of these elements." (Final Act. 11-12; see also
Alice Corp. Pty. Ltd. v. CLS Banklnt'l, 573 U.S. 208,217 (2014)
(Describing the two-step framework "for distinguishing patents that claim
laws of nature, natural phenomena, and abstract ideas from those that claim
patent-eligible applications of those concepts.").)
(filed Nov. 30, 2017); the Final Office Action (mailed Jan. 13, 2017); and
the Examiner's Answer (mailed Oct. 17, 2017) for the respective details.
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After the mailing of the Answer and the filing of the Briefs in this
case, the USPTO published revised guidance on the application of§ 101.
(2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. 50
(Jan. 7, 2019) (hereinafter "Memorandum").) Under the Memorandum, the
Office first looks 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, does the Office then look to whether
the claim:
(3) adds a specific limitation beyond the judicial exception that are 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.
We are not persuaded the Examiner's rejection is in error. We adopt
the Examiner's findings and conclusions as our own, and we add the
following primarily for emphasis and clarification with respect to the
Memorandum.
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Step 2A - Prong One
Appellant's main argument is that similar to Enfzsh, LLC v. Microsoft
Corp., 822 F.3d 1327 (Fed. Cir. 2016),
the claims include a reconfigured database structure that is
specifically reconfigured to define an order book that is
associated with a unique identifier and to accept and store pairs
trade orders of unrelated securities ( corresponding to the
unique identifier) as single orders.
(App. Br. 7, emphasis in original.) Thus, as a result of the "claimed database
structure," a pairs trade order may be stored "into a single location," and is a
"significant and substantial technological advancement" that "provides
more efficient storage." (App. Br. 7.)
For similar reasons, Appellant contends because "the claimed
invention results in improved memory and processing efficiency in
conventional systems in this art and it results in tangible benefits to the end
user," the claims "are also patentable in view of BASCOM." (App. Br. 10,
citing Bascom Global Internet Services, Inc. v. AT&T Mobility LLC, 827
F.3d 1341 (Fed. Cir. 2016).) Appellant further contends that the claims are
patent-eligible under McRO, Inc. v. Bandai Namco Games America Inc., 837
F.3d 1299, 1314 (Fed. Cir. 2016), because "the claimed invention
implements a novel set of rules that 'focus on a specific means or method
that improves the relevant technology."' (App. Br. 10.)
We agree with the Examiner that the claimed invention is directed to
an abstract idea. See Ans. 4--9. 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
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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 v.
Kappas, 561 U.S. 593 (2010). Applying this authority, we conclude claim 1
recites a fundamental economic practice and mathematical concepts.
Specifically, claim 1 recites operations that would ordinarily take
place in performing a pairs trade, in which
[ t ]he concept of pairs trading is disarmingly simple. Find two
stocks whose prices have moved together historically. When
the spread between them widens, short the winner and buy the
loser. If history repeats itself, prices will converge and the
arbitrageur will profit. 4
The trading of single or multiple securities involves the economic acts of
purchasing and/or selling securities, typically in one or more financial
markets. Such trading forms the basis of a fundamental economic practice. 5
4 Gatev et al., "Pairs Trading: Performance of a Relative-Value Arbitrage
Rule," The Review of Financial Studies, Vol. 19, No. 3 (2006), pp. 797-827,
available at: http://www-
stat.wharton.upenn.edu/-steele/Courses/434/434Context/PairsTrading/Pairs
TradingGGR.pdf.
5 See also Bilski v. Kappas, 561 U.S. 593, 611 (2010) ("The concept of
hedging, described in claim 1 and reduced to a mathematical formula in
claim 4, is an unpatentable abstract idea .... "); Alice, 573 U.S. at 218
("These claims are drawn to the abstract idea of intermediated settlement.");
buySafe, Inc. v. Google, Inc., 765 F.3d 1350, 1355 (Fed. Cir. 2014) (claims
that "are squarely about creating a contractual relationship----a 'transaction
performance guaranty"' held as "directed to an abstract idea"); Accenture
Glob. Servs., GmbH v. Guidewire Software, Inc., 728 F.3d 1336, 1345 (Fed.
Cir. 2013) (claims reciting "generalized software components arranged to
implement an abstract concept [ of generating insurance-policy-related tasks
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Further, limitations used to describe the accomplishment of the pairs
trade describe mathematical concepts. The Examiner finds that the claimed
a. "converting, by the pairing module" (identified by the Examiner as
limitation 3) "corresponds to a mathematical concept/formula" and
describes "intangible information processing" (see Final Act. 8); and
b. "creating, by the trading engine module" (identified by the Examiner
as limitation 6) "corresponds to a mathematical concept/formula" (see
Final Act. 9);
We agree with the Examiner, as these recited limitations replicate the
mathematical operations used in determining and performing a pairs
trade, which involves identifying price divergences between two
securities whose prices are historically correlated. 6 See Memorandum,
Section I (Groupings of Abstract Ideas); see particularly fn. 12-13.
based on rules to be completed upon the occurrence of an event] on a
computer" not patent eligible); Bancorp Servs., L.L. C. v. Sun Life Assur. Co.
of Can. (US.), 687 F.3d 1266, 1277 (Fed. Cir. 2012) (determining a
"'method for managing a life insurance policy comprising' seven steps" is
abstract).
6 See,for example, Gatev et al, at 804 ("We select trading rules based on the
proposition that we open a long-short position when the pair prices have
diverged by a certain amount and close the position when the prices have
reverted. Following practice, we base our rules for opening and closing
positions on a standard deviation metric. We open a position in a pair when
prices diverge by more than two historical standard deviations, as estimated
during the pairs formation period. We unwind the position at the next
crossing of the prices.")
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Step 2A - Prong Two
We are unpersuaded by Appellant's arguments that "the Examiner's
over-simplification [ of claim 1] essentially amounts to a generalization
'untethered from the language of the claims,' which is explicitly
impermissible under Enfish." (App. Br. 14, citing Enfzsh, 822 F.3d at 1337.)
The Examiner additionally finds, and we agree, that with respect to modules
recited in claim 1,
the pairing module can routinely perform the functions of
receiving, comparing, converting, and causing a remote trade
computing device to automatically present data. The trading
engine module can routinely create a pair trade order. The
order books module can routinely enter information regarding
the pair trade order into the order book. The trading engine
module can routinely perform the functions of automatically
matching, determining and causing at least one computer to
automatically execute the pairs trade order.
(Final Act. 12; see also Final Act. 11.) These limitations fail to integrate the
exception into a practical application, as the limitations do not reflect an
improvement in the function of a computer or an improvement to a
technology or technical field. Instead, these limitations concern mere data
gathering and insignificant extra-solution activity.
We are additionally unpersuaded by Appellant's principal argument
that "the claims include a reconfigured database structure" and represents a
"significant and substantial technological advancement." (App. Br. 7.)
Appellant offers no technical reasoning or factual support for the assertion
that Appellant's claimed invention includes a reconfigured database
structure and data handling mechanism that provide an advancement in
technology. The claim limitations are recited at a high level of generality
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and the Specification provides no indication that the recited modules and
structures improve the underlying computer system.
Additionally, although the claim recites a "database structure" that
defines "a plurality of order books and storing data defining predefined pairs
of unrelated securities as single orders in said plurality of order books," the
disclosure fails to describe this structure in terms that one of ordinary skill in
the art would use in a description. See particularly Spec. ,r,r 1, 7, 16, 21, 22,
27, and 32-36, Figs. 1 and 4, the portions of the disclosure that Appellant
identifies in the Summary of Claimed Subject Matter. (App. Br. 2.)
Accordingly, we determine the claim does not integrate the judicial
exception into a practical application. See Memorandum, 84 Fed. Reg. at
54. We determine the "claim recites a judicial exception and fails to
integrate the exception into a practical application," therefore we proceed
with "further analysis pursuant to the second step of the Alice/Mayo test
(USPTO Step 2B)." Memorandum, 84 Fed. Reg. at 51.
Step 2B
We agree with the Examiner that the claimed elements and
combination of elements do not amount to significantly more than the
judicial exception itself. See Final Act. 11-12; Memorandum, Section III
(B) (Step 2B), 84 Fed. Reg. at 56. The Examiner finds, and we agree, that
no particular machine is claimed, in that the disclosure refers only to use of a
"computer network 100" that includes "pairs trading platform 130," which
itself is referred to as comprising "pairing module 132," "trading engine
module 134," and "order books module 136." (Spec. ,r,r 20-21, Fig. 1.)
Such modules would appear to be part of "computer system 400" described
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using generic components. (Spec. ,r,r 31-36, Fig. 4; see also Alice, 573 U.S.
at 226 ("merely requiring generic computer implementation fails to
transform [the] abstract idea into a patent-eligible invention").)
Accordingly, we agree with the Examiner that claim 1 is patent in-
eligible, as well as independent claim 5 not separately argued, and all claims
dependent therefrom. See App. Br. 19.
NEW GROUNDS OF REJECTION
Pursuant to our authority under 3 7 C.F .R. § 41. 50(b ), we enter new
grounds of rejection and separately reject independent claim 1 under pre-
AIA 35 U.S.C. § 112, first paragraph.
We reject independent claim 1 under 35 U.S.C. § 112, first paragraph,
as failing to comply with the written description requirement, because the
disclosure does not convey with reasonable clarity to those skilled in the art
that, as of the filing date, Appellant was in possession of the claimed
invention. See, e.g., Purdue Pharma L.P. v. Paulding Inc., 230 F.3d 1320,
1323 (Fed. Cir. 2000) (citations omitted). As described supra, claim 1
recites the limitation:
in a computer system comprising a pairing module, a
trading engine module, an order books module and at least one
database structure, said database structure defining an order
book associated with a unique identifier and storing data
defining pairs of unrelated securities corresponding to the
unique identifier as single orders in said order book ....
However, the disclosure is devoid of any description of the database having
the claimed "structure." We note Appellant quotes various statements from
the Specification to show support for the "database structure," but does not
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explain how these sections relate to the limitations at issue. See App. Br.
19-20. The only use of the term "database" in the disclosure appears to
merely acknowledge that databases exist. See Spec. ,r 36 (stating "the term
'machine-readable storage medium' should be taken to include a single
medium or multiple media ( e.g., a centralized or distributed database, and/or
associated caches and servers) that store the one or more sets of
instructions.")
Similarly, the disclosure does not provide sufficient description, such
as an algorithm, of how to perform the steps in conjunction with the claimed
"database structure." Thus, we do not find any indication that Appellant
possessed the "database structure," or, otherwise, how to achieve the
claimed steps using the "database structure." See Vasudevan Software, Inc.
v. MicroStrategy, Inc., 782 F.3d 671, 683 (Fed. Cir. 2015) ("The more
telling question [ for written description analysis] is whether the specification
shows possession by the inventor of how accessing disparate databases is
achieved."); see also In re Wilder, 736 F.2d 1516, 1521 (Fed. Cir. 1984)
(Affirming a rejection for lack of written description because the
specification does "little more than outlining goals appellants hope the
claimed invention achieves and the problems the invention will hopefully
ameliorate."); Ex parte Smith, Appeal 2012-007631, slip op. at 21 (PTAB
Mar. 14, 2013) (informative) ("Beyond general statements of the function to
be performed, which, at most, may render the claimed function obvious, the
inventor has not shown how the recited opinion timeline is generated,"
which "is not sufficient because a description that merely renders the
invention obvious does not satisfy the written description requirement."); see
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also Examining Computer-Implemented Functional Claim Limitations for
Compliance with 35 U.S.C. 112, 84 Fed. Reg. 57 (Jan. 7, 2019).
We note the Patent Trial and Appeal Board is a review body, rather
than a place of initial examination. We have rejected independent claim 1
based on our authority under 37 C.F.R. § 4I.50(b). We have not, however,
reviewed the remaining claims to the extent necessary to determine whether
those claims fail to meet the requirements of 35 U.S.C. § 112, first
paragraph. We leave it to the Examiner to ascertain whether claims 2, 3, 5,
and 7 should be rejected on similar grounds to those set forth herein.
CONCLUSION
For the reasons stated above, we affirm the Examiner's non-statutory
subject matter rejection of claims 1-3, 5, and 7.
DECISION
The Examiner's decision rejecting claims 1-3, 5, and 7 under 35
U.S.C. § 101 is affirmed.
37 C.F.R. § 4I.50(b) provides a "new ground of rejection pursuant to
this paragraph shall not be considered final for judicial review."
37 C.F.R. § 4I.50(b) also provides that Appellant, WITHIN TWO
MONTHS FROM THE DATE OF THE DECISION, must exercise one of
the following two options with respect to the new ground of rejection to
avoid termination of the appeal as to the rejected claims:
(I) Reopen prosecution. Submit an appropriate amendment of the claims
so rejected or new Evidence relating to the claims so rejected, or both,
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Application 14/657,002
and have the matter reconsidered by the examiner, in which event the
prosecution will be remanded to the examiner ....
(2) Request rehearing. Request that the proceeding be reheard under
§41.52 by the Board upon the same Record ....
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).
AFFIRMED; 37 C.F.R. § 4I.50(b)
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