Ex Parte Janas et al

Patent Trials and Appeals BoardJan 31, 2019

14031789 - (D) (P.T.A.B. Jan. 31, 2019)

UNITED STA TES p A TENT AND TRADEMARK OFFICE APPLICATION NO. FILING DATE 14/031,789 09/19/2013 12684 7590 02/04/2019 Lempia Summerfield Katz LLC/CME 20 South Clark Street Suite 600 Chicago, IL 60603 FIRST NAMED INVENTOR Terrence Janas 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. 4672-13007 AUS 5899 EXAMINER LEMIEUX, JESSICA ART UNIT PAPER NUMBER 3693 NOTIFICATION DATE DELIVERY MODE 02/04/2019 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): mail@lsk-iplaw.com docket-us@lsk-iplaw.com pair_lsk@firsttofile.com PTOL-90A (Rev. 04/07) UNITED STATES PATENT AND TRADEMARK OFFICE BEFORE THE PATENT TRIAL AND APPEAL BOARD Ex parte TERRENCE JANAS, JACQUES DOORNEBOS, and BRUCE DICKMAN Appeal2017-010851 Application 14/031, 789 Technology Center 3600 Before ALLEN R. MacDONALD, IRVINE. BRANCH, and DAVID J. CUTITTA II, Administrative Patent Judges. MacDONALD, Administrative Patent Judge. DECISION ON APPEAL 1 STATEMENT OF THE CASE Appellants appeal under 35 U.S.C. Â§ 134(a) from a final rejection of claims 1-20 and 23-33. Appellants have withdrawn claims 21 and 22. App. Br. 25-26. We have jurisdiction under 35 U.S.C. Â§ 6(b). We AFFIRM. 1 Appellants indicate the real party in interest is Chicago Mercantile Exchange Inc. App. Br. 2. Appeal2017-010851 Application 14/031,789 Illustrative Claim Illustrative claims 1 and 32 under appeal read as follows ( emphasis, formatting, and bracketed material added): 1. A computer-implemented method for identifying potential abusive behavior in an electronic market, the method compnsmg: [A.] determining, by a processor, whether an individual order book associated with a trader comprises an imbalance between at least a subset of a quantity of previously received but unsatisfied orders to buy and at least a subset of a quantity of previously received but unsatisfied orders to sell in relation to a financial instrument for which the trader submitted an order; [B.] determining, by the processor, whether an imbalance identified in the individual order book changed after fulfillment of the order; [C.] identifying, by the processor, the order as potential abusive behavior if the individual order book comprises an imbalance that changed after fulfillment of the order; and [D.] preventing, by the processor based on the identifying, submission of a subsequent order by the trader to the electronic market. 32. A system for identifying potential abusive behavior in an electronic market, the system comprising: [A.] means/or determining whether an individual order book associated with a trader comprises an imbalance between at least a subset of a quantity of previously received but unsatisfied orders to buy and at least a subset of a quantity of previously received but unsatisfied orders to sell in relation to a financial instrument for which the trader submitted an order; [B.] means for determining whether an imbalance identified in the individual order book changed after fulfillment of the order; 2 Appeal2017-010851 Application 14/031,789 [C.] means for identifying the order as potential abusive behavior if the individual order book comprises an imbalance that changed after fulfillment of the order; and [D.] means/or preventing, based on the identifying, submission of a subsequent order by the trader to the electronic market. App. Br. 23, 28 (Claims Appendix). West et al. Friedman et al. References2 US 2010/0161476 Al US 8,751,372 Bl Re} ections3 A. June 24, 2010 June 10, 2014 The Examiner rejected claims 1-20 and 23-33 under 35 U.S.C. Â§ 101 "because the claimed invention is directed to a judicial exception (i.e., a law of nature, a natural phenomenon, or an abstract idea) without significantly more," i.e., because the claimed invention is directed to patent-ineligible subject matter. Final Act. 13-15. We select claims 1 and 32 as representative. Appellants do not separately argue claims 2-20, 23-31, and 33. Except for our ultimate decision, we do not discuss the Â§ 101 rejection of claims 2-20, 23-31, and 3 3 further herein. 2 All citations herein to these references are by reference to the first named inventor only. 3 All citations to the "Final Action" are to the Final Action mailed on October 13, 2016. 3 Appeal2017-010851 Application 14/031,789 B. The Examiner rejected claims 1-20 and 23-33 under 35 U.S.C. Â§ 103 as being unpatentable over the combination of Friedman and West. Final Act. 15-18. We select claim 1 as representative. Appellants do not separately argue claims 2-20 and 23-33. Except for our ultimate decision, we do not discuss the Â§ 103 rejection of claims 2-20 and 23-33 further herein. Issues on Appeal Did the Examiner err in rejecting claims 1 and 32 as being directed to patent-ineligible subject matter? Did the Examiner err in rejecting claim 1 as being obvious? ANALYSIS We have reviewed the Examiner's rejections in light of Appellants' arguments (Appeal Brief and Reply Brief) that the Examiner has erred. We disagree with Appellants. Except as noted below, we adopt as our own (1) the findings and reasons set forth by the Examiner in the action from which this appeal is taken and (2) the reasons set forth by the Examiner in the Examiner's Answer in response to Appellants' Appeal Brief arguments. We concur with the conclusions reached by the Examiner. We highlight the following points. 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 4 Appeal2017-010851 Application 14/031,789 implicit exceptions: "[l]aws of nature, natural phenomena, and abstract 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 5 Appeal2017-010851 Application 14/031,789 statutory does not become nonstatutory simply because it uses a 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 6 Appeal2017-010851 Application 14/031,789 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§ 2106.0S(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§ 2106.0S(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." 7 Appeal2017-010851 Application 14/031,789 C. Examiner's Â§101 Rejection -Alice/Mayo - Steps 1 and 2 C.1. USPTO 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 the instant case, the claim(s) is/are directed towards identifying and preventing potential abusive behaviors, specifically in an electronic market, which is a fundamental economic practice and is not meaningfully different than those commerce and economic concepts that have been identified as abstract by the courts as explained in detail below. Final Act. 13 ( emphasis added). Claim[] 1 ... recite[ s ], in part: determining the presence of imbalances, determining changes in imbalances, and identifying and preventing abusive behavior. These steps describe the concept of identifying and preventing potential abusive behaviors, specifically in an electronic market. ... [T]he claims as a whole are directed to identifying and preventing potential abusive behaviors, specifically in an electronic market, which is a "fundamental economic practice" (Alice Corp. Pty. Ltd. v. CLS Bank lnt'l, Bilski v. Kappas, buySAFE Inc. v. Google Inc., Ultramercial Inc. v. Hulu, LLC). Final Act. 14--15. C.2. USPTO Memorandum Step 2A - Prong Two Applying step 2 of the Alice/Mayo analysis, the Examiner concludes: [T]he 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. 13-14. 8 Appeal2017-010851 Application 14/031,789 C.3. USPTO Memorandum Step 2B Further applying step 2 of the Alice/Mayo analysis, the Examiner concludes: The claim(s) does/do not include additional elements that are sufficient to amount to significantly more than the judicial exception because the additional element(s) or combination of elements in the claim( s) other than the abstract idea per se amount( s) to no more than: (i) mere instructions to implement the idea on a computer, and /or (ii) recitation of generic computer structure that serves to perform generic computer functions that are well-understood, routine, and conventional activities previously known to the pertinent industry. Final Act. 13. The claim recites the additional elements of a processor to perform the claimed steps. The processor is recited at a high level of generality and only performs generic functions that are well-understood, routine and conventional activities previously known to the industry. Generic computers performing generic computer functions, without an inventive concept, do not amount to significantly more than the abstract idea. Final Act. 14 ( emphasis added). D. Appellants'Â§ 101 Arguments D.1. As to claim 1, Appellants contend "the present claims are not directed to an abstract idea and the claimed invention is not a mere statement of a general concept." App. Br. 5. Appellants particularly contend: [E]ven if found to be directed to an abstract idea, e.g. identifying potential, abusive behaviors specifically in an electronic market, the claimed invention does not pre-empt all use of the abstract idea, i.e. the claims do not preempt all identification of abusive behaviors in an electronic market, but instead recite a practical, specific and discrete implementation. 9 Appeal2017-010851 Application 14/031,789 App. Br. 5 (emphasis added). Appellants' "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. We agree with the Examiner. We determine that the "identifying and preventing potential abusive behaviors, specifically in an electronic market" of "financial instrument[ s ]" of claim 1 recites a judicial exception in the form of a method of organizing human activity comprising fundamental economic principles or practices (including hedging, insurance, mitigating risk). That is, we conclude that Appellants' identifying and preventing is mitigating the risk of abusive behavior in an electronic market of financial instruments. D.2. Also as to claim 1, Appellants contend "[t]he claimed invention is a technical invention." App. Br. 12. Appellants particularly contend: [T]he claims ... are directed to a specific, novel and patentable system for determining whether an order book associated with a trader comprises an imbalance between unsatisfied previously received orders to buy and unsatisfied previously received orders to sell, whether the imbalance changed after fulfillment of a submitted related order, and preventing submission of a subsequent order if the determined imbalance did change, as claimed. App. Br. 6 (emphasis added). 10 Appeal2017-010851 Application 14/031,789 Appellants submit that the elements of the claims, in combination, are more than the non-conventional and non- generic arrangement of known, conventional elements, i.e. the utilization of changes in buy/sell order imbalances as a determining factor in identifying order submission should be prevented . . . . Appellants submit that the claimed combination is a specific implementation which has NOT been used before and therefore is not well understood, routine or conventional in the art. Appellants submit that that while the Examiner may not view the additional elements as adding significantly more, "those additional elements when viewed in combination" most certainly "amount to significantly more than the exception by meaningfully limiting the judicial exception." App. Br. 8-9 ( emphasis added). [ A ]t least some of the problems solved by Appellants' invention are specifically rooted in technology, specifically in electronic transaction processing systems which are enabled to evaluate the overall result of a series of transactions to identify scenarios where one is building up to a single illegitimate action though the component actions thereof are not illegitimate, and thereby detect illegitimate behavior even when the actions leading thereto appear legitimate. App. Br. 11 ( emphasis added). Contrary to Appellants' "meaningfully limiting" and "rooted in technology" arguments, 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 "identifying and preventing potential abusive behaviors, specifically in an electronic market" of "financial instrument[ s ]" 11 Appeal2017-010851 Application 14/031,789 of claim 1. 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 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 Appellants' claim 1, we find only abstract improvements to identifying and preventing potential abusive behaviors in an electronic market. A claim directed to a unique and advantageous system for managing potential abusive behaviors in an electronic market is nonetheless directed to an abstract idea. 5 "[U]nder the Mayol 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. We agree with the Examiner that as to claim 1, "the claims do not include an improvement to another technology or technical field, an 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 Appeal2017-010851 Application 14/031,789 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. 13-14. In view of Appellants' Specification (i1i1 [55-56], 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§ 2106.05(a}-(c), (e}-(h). We agree with the Examiner that claim 1 is directed to a judicial exception. D.3. Further as to claim 1, although claim 1 recites "more" under step two of the Alice/Mayo analysis, we conclude the "more" in the form of "a processor" is not significant. Rather, the case law shows this "more" 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 13 Appeal2017-010851 Application 14/031,789 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 judicial exception, recites only a well-understood, routine, conventional element/combination previously known in 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, in view of Appellants' 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§ 2106.0S(d). D.4. As to claim 32, Appellants contend: In a recent case, the Patent Trial and Appeal Board (PT AB) found that a "means for matching" limitation amounted to a "specific algorithm that transforms an otherwise general purpose computer into a special purpose computer programmed to perform the recited function of 'matching."' Thus, according to the Board, "when, as here, a special purpose computer constitutes the structure that performs the recited function of 'matching,' in practical terms it imparts a meaningful limitation or adds significantly more to the abstract idea, itself." See Chicago Mercantile Exchange, Inc. v. 5th Market, Inc., CBM2015-00061 (PTAB July 16, 2015) (Paper 9), pages 37-38. While this PT AB decision may not be precedential, it may serve as an example in that as with the claims at issue in the above referenced decision, claim 32 of the present application 14 Appeal2017-010851 Application 14/031,789 recites means-plus-function elements which amount to "specific algorithm that transforms an otherwise general purpose computer into a special purpose computer programmed to perform the recited function" and therefore imparts a meaningful limitation or adds significantly more to the abstract idea, itself. App. Br. 14. Appellants argument does not present any indication of what "corresponding structure, material, or acts described in the specification" (35 U.S.C. Â§ 112(Â±)) Appellants consider to support the four "means for" limitations of claim 32. Our review of the Specification finds no particular corresponding structure for the four recited "means for." Rather, the first three "means for" of claim 32 are simply disclosed as "means for" performing their recited functions (Spec. ,r 52), and the final "means for preventing" is disclosed solely by its function ("the offending market participant may be blocked from submitting orders" (Spec. ,r 13)). Appellants' argument is not persuasive. Essentially, Appellants are arguing that inclusion of the phrase "means for" in a claim always imparts a meaningful limitation or adds significantly more to the abstract idea, itself. We disagree. We conclude, a particular "corresponding structure, material, or acts described in the specification" may impart a meaningful limitation in a 35 U.S.C. Â§ 112(Â±) context. However, the mere inclusion of the phrase "means for" in a claim does not have that effect. Steps that do nothing more than spell out what it means to "apply it on a computer" cannot confer patent-eligibility. Alice, [573 U.S. at 224,] 134 S.Ct. at 2359 (warning against a Â§ 101 analysis that turns on the draftsman's art (citing Flook, 437 U.S. at 593, 98 S.Ct. 2522)). Requiring the use of a "software" "brain" "tasked with tailoring information and providing it to the user" provides no additional limitation beyond applying an abstract idea, restricted to the Internet, on a generic computer. 15 Appeal2017-010851 Application 14/031,789 Intellectual Ventures I LLC v. Capital One Bank (USA), 792 F.3d 1363, 1370-71 (Fed. Cir. 2015) E. Appellants 'Â§ 103 Arguments E.1. Appellants contend that the Examiner erred in rejecting claim 1 under 35 U.S.C. Â§ 103(a) because: The Examiner admits that Friedman fails to disclose prevention of submission of a subsequent order by the trader to the electronic market, as claimed. The Examiner looks to West for this element but fails to off er any compelling suggestion, motivation or reasoning for one of ordinary skill in the art to combine these references. App. Br. 15 ( emphasis added). As to Appellants' assertion, we disagree. Appellants' Appeal Brief quotes paragraph 26 ( emphasis added) of West explicitly states the "present invention provides a system that preferably operates as a money management tool" which "preferably operates as a trader's conscience ... by modifying the orders before they are sent to the exchange." Contrary to Appellants' argument, we find this a compelling motivation to modify Freidman's determination of regulatory violation to include modifying orders to prevent the violation. E.2. Appellants present additional contentions that the Examiner has erred in rejecting claim 1 under 35 U.S.C. Â§ 103. App. Br. 17-21. We do not reproduce Appellants' additional arguments herein. The Examiner responds to each contention at pages 17-18 of the Answer. Again, we adopt as our own ( 1) the findings and reasons set forth by the Examiner in the action from which this appeal is taken and (2) the 16 Appeal2017-010851 Application 14/031,789 reasons set forth by the Examiner in the Examiner's Answer in response to Appellants' Appeal Brief arguments. We concur with the conclusions reached by the Examiner. CONCLUSIONS (1) The Examiner has not erred in rejecting claims 1-20 and 23-33 under 35 U.S.C. Â§ 101, as being directed to patent-ineligible subject matter. (2) The Examiner has not erred in rejecting claims 1-20 and 23-33 as being unpatentable under 35 U.S.C. Â§ 103(a). (3) Claims 1-20 and 23-33 are not patentable. DECISION The Examiner's rejection of claims 1-20 and 23-33 under 35 U.S.C. Â§ 101, as being directed to patent-ineligible subject matter, is affirmed. The Examiner's rejection of claims 1-20 and 23-33 as being unpatentable under 35 U.S.C. Â§ 103(a) 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 17