Ex Parte Samandar et al

Patent Trial and Appeal Board

Mar 10, 2017

13164555 (P.T.A.B. Mar. 10, 2017)

United States Patent and Trademark Office
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
APPLICATION NO. FILING DATE FIRST NAMED INVENTOR ATTORNEY DOCKET NO. CONFIRMATION NO.
13/164,555 06/20/2011 Suleiman Samandar 30431-18957/US 2011
758 7590 03/14/2017
FF.NWTPK fr WF.ST T T P
EXAMINER
SILICON VALLEY CENTER GREGG, MARY M
801 CALIFORNIA STREET
MOUNTAIN VIEW, CA 94041 ART UNIT PAPER NUMBER
3694
NOTIFICATION DATE DELIVERY MODE
03/14/2017 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):
PTOC @Fenwick.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte SULEIMAN SAMANDAR,
JASON LAMACCHIA, and
ANDREW S. JOSEF
Appeal 2015-001515
Application 13/164,5551
Technology Center 3600
Before HUBERT C. LORIN, TARA L. HUTCHINGS, and
MATTHEW S. MEYERS, Administrative Patent Judges.
LORIN, Administrative Patent Judge.
DECISION ON APPEAL
STATEMENT OF THE CASE
Suleiman Samandar et al. (Appellants) seek our review under 35
U.S.C. § 134 of the final rejection of claims 1—25. We have jurisdiction
under 35 U.S.C. § 6(b) (2002).
SUMMARY OF DECISION
We AFFIRM.
1 The Appellants identify Blackrock Fund Advisors as the real party in
interest. App. Br. 2.
Appeal 2015-001515
Application 13/164,555
THE INVENTION
Claim 1, reproduced below, is illustrative of the subject matter on
appeal.
1. A method for creating shares of an exchange traded fund, the
method comprising:
publishing an electronic portfolio composition file on a
non-transitory computer readable medium by a computing
system of a fund manager that administers the exchange traded
fund (ETF), the portfolio composition file specifying a creation
basket of assets that includes a long position from purchasing a
set of equities, a short position from a short sale of a set of
equities, and an additional long position from purchasing a set
of equities using proceeds from the short sale;
electronically receiving a creation request from an
authorized participant at the computing system of the fund
manager;
receiving from the authorized participant an in-kind
transfer of the assets in the creation basket specified in the
published portfolio composition file, the received assets
including the specified long position, short position, and
additional long position using proceeds from the short sale; and
initiating an ETF creation transaction on a primary
market by the computing system of the fund manager, the ETF
creation transaction providing shares of the ETF from the fund
manager to the authorized participant in exchange for the inkind
transfer of the assets in the creation basket specified in the
published portfolio composition file.
THE REJECTIONS
The Examiner relies upon the following as evidence of
unpatentability:
Gastineau US 2001/0025266 A1 Sept. 27, 2001
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Sauter US 7,720,749 B2 May 18,2010
(hereinafter “Sauter ’749”)
Haines US 2011/0055112 A1 Mar. 3,2011
Jan. 12, 2012
July 24, 2012
Spirgel
Wester
US 2012/0011049 A1
US 8,229,828 B1
ETFs, Futures and Swaps-North America, Delta One
Handbook, Credit Suisse (Sept. 2009) (hereinafter “Credit”)
Repurchase Agreements (Repo and Strips), Credit and Finance Risk
Analysis (Nov. 1, 2012, 12:26 PM) http://web.archive.org/web/
20050217071349/http://credfmrisk.com/repos.html (hereinafter
“Risk”)
Condensed Consolidated Statement of Financial Condition, Goldman
Sachs Execution and Clearing FP and Subsidiaries, May 30, 2008
(hereinafter “Goldman”).
U.S. Securities and Exchange Commission, SEC Final Rules,
(available at http:// https://www.sec.gov/rules/fmal.shtml) (hereinafter
“Commission”). Final Act. 28.
The following rejections are before us for review:
1. Claims 1—25 are rejected under 35 U.S.C. § 101 as being directed to
non-statutory subject matter.
2. Claims 1 and 3 are rejected under 35 U.S.C. § 103(a) as being
unpatentable over Gastineau, Haines, and Credit.
3. Claims 2 and 4 are rejected under 35 U.S.C. § 103(a) as being
unpatentable over Gastineau, Haines, Credit, and Risk.
4. Claims 5 and 18 are rejected under 35 U.S.C. § 103(a) as being
unpatentable over Gastineau, Haines, Credit, and Goldman.
5. Claim 19 is rejected under 35 U.S.C. § 103(a) as being unpatentable
over Gastineau, Haines, Credit, and Wester.
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6. Claim 24 is rejected under 35 U.S.C. § 103(a) as being unpatentable
over Gastineau, Haines, Credit, and Sauter ’749.
7. Claims 6 and 8 are rejected under 35 U.S.C. § 103(a) as being
unpatentable over Haines, Gastineau, and Credit.
8. Claim 7 is rejected under 35 U.S.C. § 103(a) as being unpatentable
over Haines, Gastineau, Credit, and Risk.
9. Claim 20 is rejected under 35 U.S.C. § 103(a) as being unpatentable
over Haines, Gastineau, Credit, and Wester.
10. Claim 21 is rejected under 35 U.S.C. § 103(a) as being unpatentable
over Haines, Gastineau, Credit, and Spirgel.
11. Claims 22 and 23 are rejected under 35 U.S.C. § 103(a) as being
unpatentable over Haines, Gastineau, Credit, and Commission.
12. Claim 25 is rejected under 35 U.S.C. § 103(a) as being unpatentable
over Gastineau, Haines, Credit, and Sauter ’749.
13. Claims 9 and 11 are rejected under 35 U.S.C. § 103(a) as being
unpatentable over Haines and Credit.
14. Claims 10 and 13 are rejected under 35 U.S.C. § 103(a) as being
unpatentable over Haines and Risk.
15. Claims 12 and 14 are rejected under 35 U.S.C. § 103(a) as being
unpatentable over Haines, Credit, and Goldman.
16. Claims 15 and 17 are rejected under 35 U.S.C. § 103(a) as being
unpatentable over Haines, Gastineau, and Credit.
17. Claim 16 is rejected under 35 U.S.C. § 103(a) as being unpatentable
over Haines, Gastineau, Credit, and Risk.
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ISSUES
Did the Examiner err in rejecting claims 1—25 are rejected under 35
U.S.C. § 101 as being directed to non-statutory subject matter?
Did the Examiner err in rejecting, under 35 U.S.C. § 103(a), claims 1
and 3 as being unpatentable over Gastineau, Haines, and Credit; claims 2
and 4 as being unpatentable over Gastineau, Haines, Credit, and Risk; claims
5 and 18 as being unpatentable over Gastineau, Haines, Credit, and
Goldman; claim 19 as being unpatentable over Gastineau, Haines, Credit,
and Wester; claim 24 as being unpatentable over Gastineau, Haines, Credit,
and Sauter ’749; claims 6 and 8 as being unpatentable over Haines,
Gastineau, and Credit; claim 7 as being unpatentable over Haines,
Gastineau, Credit, and Risk; claim 20 as being unpatentable over Haines,
Gastineau, Credit, and Wester; claim 21 as being unpatentable over Haines,
Gastineau, Credit, and Spirgel; claims 22 and 23 as being unpatentable over
Haines, Gastineau, Credit, and Commission; claim 25 as being unpatentable
over Gastineau, Haines, Credit and Sauter ’749; claims 9 and 11 as being
unpatentable over Haines and Credit; claims 10 and 13 as being unpatentable
over Haines and Risk; claims 12 and 14 as being unpatentable over Haines,
Credit, and Goldman; claims 15 and 17 as being unpatentable over Haines,
Gastineau, and Credit; and, claim 16 as being unpatentable over Haines,
Gastineau, Credit, and Risk?
FINDINGS OF FACT
We rely on the Examiner’s factual findings stated in the Answer.
Additional findings of fact may appear in the Analysis below.
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ANALYSIS
The rejection of claims 1—25 under 35 U.S.C. § 101 as being directed to
non-statutory subject matter.
The Appellants argued these claims as a group. See App. Br. 2—5.
We select claim 1 as the representative claim for this group, and the
remaining claims 2-25 stand or fall with claim 1. 37 C.F.R. §
41.37(c)(l)(iv).
Alice Corp. Party Ltd. v. CLS Bank International, 134 S. Ct. 2347
(2014) identifies a two-step framework for determining whether claimed
subject matter is judicially-excepted from patent eligibility under § 101.
According to Alice step one, “[w]e must first determine whether the
claims at issue are directed to a patent-ineligible concept,” such as an
abstract idea. Alice, 134 S. Ct. at 2355. In this regard, the Examiner found
the claims are directed towards creating shares of an exchange fund. The
creation of an exchange fund is a fundamental economic practice and thus,
the claims include an abstract idea.” Ans. 2. The Appellants disagree.
According to the Appellants,
[t]he claimed steps perform more than “creating an exchange-traded
fund" and are not a claim on this abstract idea alone. The claims do not
preclude a "building block of human ingenuity.” Indeed, exchange-
traded funds could be, and are, created by many other methods, for
example by exchanges which are not in-kind, do not use a primary
market, and do not use the assets specified in the claimed portfolio
composition file. Indeed, the examiner’s own references teach several
other examples of “creating an exchange-traded fund” that are not pre­
empted by the present claims.
Reply Br. 4.
Notwithstanding the claimed steps perform more than “creating an
exchange-traded fund” as the Appellants argue, we do not see, and the
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Appellants do not adequately explain, how the additional limitations
transform the claimed subject matter such that claim 1 is not directed to the
abstract idea as the Examiner found.
We must “look at the ‘focus of the claimed advance over the prior art’
to determine if the claim’s ‘character as a whole’ is directed to excluded
subject matter.’” Affinity Labs of Texas v. DirectTV, LLC, 838 F.3d 1253,
1257 (Fed. Cir. 2016) (quoting Elec. Power Grp., LLC v. Alstom S.A., 830
F.3d 1350, 1353 (Fed. Cir. 2016); see also Enfish, LLC v. Microsoft Corp.,
822 F.3d 1327, 1335 (Fed. Cir. 2016).
Here claim 1 sets out steps for creating a portfolio composition file
with certain information; receiving a creation request; receiving an in-kind
transfer of the assets in the creation basket specified in the published
portfolio composition file; and, initiating an exchange traded fund (ETF)
creation transaction providing shares in exchange for the in-kind transfer of
the assets in the creation basket specified in the published portfolio
composition file. The steps are specific but the additional details do little to
change their character. Their focus is on presenting a strategy, albeit a
specific one. Presenting a more specific strategy, however, is insufficient to
ensure that the claimed subject matter as a whole amounts to significantly
more than to be upon the abstract idea itself.
The Specification supports the view that the method as claimed
presents a strategy. The “invention relates generally to financial services
and products, and more particularly to financial systems that enable a
leveraged long/short management strategy for an exchange traded fund
(ETF).” Spec., para. 1. “For a number of reasons, it is difficult to
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implement an effective levered long/short strategy in the management of an
ETF.” Id. at para. 4.
Embodiments of the invention enable executing a long/short strategy
for an ETF that leverages the short positions to generate additional
exposure to equities, referred to as levered longs. In a long/short
strategy, in accordance with one embodiment of the invention, the
fund’s strategy involves (1) buying fully funded equities that are
expected to overperform, (2) selling short equities that are expected to
underperform, and (3) buying additional equities that are expected to
overperform using proceeds generated from the short sales. This is
achieved for an ETF by creating and redeeming ETF shares, wherein
the ETF fund manager specifies (e.g., in a portfolio composition file, or
PCF) which equities to buy and which equities to sell short. To create
shares of the ETF, an authorized participant transfers these specified
positions to the fund manager "in kind" in exchange for ETF shares.
Id. at para. 5.
Claim 1, as reasonably broadly construed in light of the Specification
as it would be interpreted by one of ordinary skill in the art, describes a
specific strategy. While this specific strategy may prevent pre-emption of
all strategies for “creating an exchange-traded fund,” it does not make the
claimed subject matter any less directed to an abstract idea. Cf. OIP Techs.,
Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1362-63 (Fed. Cir.), cert, denied,
136 S. Ct. 701, 193 L. Ed. 2d 522 (2015) (“[T]hat the claims do not preempt
all price optimization or may be limited to price optimization in the e-
commerce setting do not make them any less abstract.”)
For these reasons, the Appellants do not persuade us that the
Examiner erred in finding claim 1 is directed to an abstract idea.
Because the claimed subject matter covers patent-ineligible subject
matter, the preemption concern is necessarily addressed. “Where a patent’s
claims are deemed only to disclose patent ineligible subject matter under the
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Mayo framework,. . . preemption concerns are fully addressed and made
moot.” Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379
(Fed. Cir. 2015).
Step two is “a 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.’” Alice, 134 S. Ct. at 2355 (alteration in original) (quoting
Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1294
(2012)).
In this regard, the Appellants argue that “the claims specify further
limitations that transform the ‘abstract idea’ into ‘something more.’” Reply
Br. 4. According to the Appellants, the “something more” is said to be “a
published portfolio composition file and in-kind exchange of assets as
described by the claims,” which the Appellants characterize as the inventive
concept. Id. at 5. The Appellants also point to other limitations in certain
dependent claims which further limit the strategy. Id. The argument also
relies on finding that “no combination of cited art teaches” said strategy. Id.
The argument is unpersuasive. The Appellants show by their
argument that the focus of the claimed subject matter is on the abstract idea
itself, and not on any technology. It is “relevant to ask whether the claims
are directed to an improvement in computer functionality versus being
directed to an abstract idea.” Enfish, LLC v. Microsoft Corp., 822 F.3d
1327, 1335 (Fed. Cir. 2016). Here, as the Appellants have argued, “the
focus of the claims is [not] on [any] specific asserted improvement in
computer capabilities . . . [but], instead, on a process that qualifies as an
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‘abstract idea’ for which computers are invoked merely as a tool.” Id. at
1335-36.
Regarding novelty, indeed, “[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 § 101 categories of
possibly patentable subject matter.” Diamond v. Diehr, 450 U.S. 175, 188—
89 (1981) (emphasis added).
The remaining arguments are unpersuasive as to error in the rejection.
For the foregoing reasons, the rejection is sustained.
The rejections, under 35 U.S.C. § 103(a), of claims 1 and 3 as being
unpatentable over Gastineau, Haines, and Credit; claims 2 and 4 as being
unpatentable over Gastineau, Haines, Credit, and Risk; claims 5 and 18 as
being unpatentable over Gastineau, Haines, Credit, and Goldman; claim 19
as being unpatentable over Gastineau, Haines, Credit, and Wester; claim 24
as being unpatentable over Gastineau, Haines, Credit, and Sauter ’749;
claims 6 and 8 as being unpatentable over Haines, Gastineau, and Credit;
claim 7 as being unpatentable over Haines, Gastineau, Credit, and Risk;
claim 20 as being unpatentable over Haines, Gastineau, Credit, and Wester;
claim 21 as being unpatentable over Haines, Gastineau, Credit, and Spirgel;
claims 22 and 23 as being unpatentable over Haines, Gastineau, Credit, and
Commission; claim 25 as being unpatentable over Gastineau, Haines,
Credit and Sauter ’749; claims 9 and 11 as being unpatentable over Haines
and Credit; claims 10 and 13 as being unpatentable over Haines and Risk;
claims 12 and 14 as being unpatentable over Haines, Credit, and Goldman;
claims 15 and 17 as being unpatentable over Haines, Gastineau, and Credit;
and, claim 16 as being unpatentable over Haines, Gastineau, Credit, and
Risk.
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The Appellants argue that “the examiner errs in finding support in a
combination of Gastineau and Haines for an in-kind exchange that includes
an additional long position using the proceeds of a short sale for a short
position included in the in-kind exchange as required by claim 1Reply Br.
9. We agree.
Claim 1 requires a “portfolio composition file specifying a creation
basket of assets that includes a long position from purchasing a set of
equities, a short position from a short sale of a set of equities, and an
additional long position from purchasing a set of equities using proceeds
from the short sale.” Appeal Br., Claims App. (Claim 1). Independent claim
6 contains a similar limitation.
The Examiner’s position is that said claim limitation is disclosed in:
(1) “(Gastineau) in at least Abstract; FIG. 2 and associated text, FIG. 4-5 and
associated text; para 0030-0035, para 0041-0043, para 0047-0048, para
0057, para 0059” (Final Act. 7); (2) “(Credit) in at least page 2 wherein the
prior art teaches ‘ETFs can be used to take long-short positions in various
combinations. The positions may relate to size, style, sector, or industry
outlook’; page 6-7)” {id. at 9) (emphasis omitted); and (3) “(Haines) in at
least para 0041-0043; wherein the prior art teaches using proceeds from
short sale in order to support long positions” {id. at 10) (emphasis omitted).
The Examiner takes a similar position with respect to claim 6. See id. at 20—
25.
We have reviewed said disclosures. Gastineau discloses “hedging
techniques for exchange traded funds or similar basket products.” Gastineau,
para. 1. Paragraphs 30-35, for example, describe “an embodiment of the
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intra-day valuation proxy process,” focusing on how “to calculate thenet
asset value proxy.” Id. at para. 32. Credit describes how to “use . . .
multiple hedging sources (ETF shares, futures, and stock baskets)... in
conjunction with the creation / redemption process.” Credit 2. Pages 6 and
7 describe futures contracts and swaps. And Haines describes transactions
involving ETFs. Paragraph 42 of Haines states that “[t]he transactions that
allow the ETF to take a long position in the structured futures and the ETF
sponsor to take a short position in the structured future can be accomplished
electronically using computers communicating through a computer
communications network.” Each of these references provide general
disclosures that could lead one to use EFTs to take long and/or short
positions. But as the sole evidence, they are inadequate to lead one further
to create a “portfolio composition file specifying a creation basket of assets
that includes ... an additional long position from purchasing a set of
equities using proceeds from the short sale.'’’ Appeal Br., Claims App
(Claim 1) (emphasis added).
Accordingly, we find that a prima facie case has not been established
for the subject matter of claims 1 and 6 in the first instance by a
preponderance of the evidence. We reach the same conclusion as to claims
2—5, 18, 19, and 24, and claims 7, 8, 20-23, and 25 that depend from claims
1 and 6, respectively.
The other independent claims, 9 and 15, call for a “portfolio
composition file specifying a creation basket of assets that includes a
leveraged long position in a set of equities.’ '’ As the Appellants point out,
the Specification discloses that “long holdings include the levered long
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positions resulting from purchases made using the proceeds from the short
sales associated with the short positions.” Appeal Br. 15 (citing Spec., para.
17). Accordingly, the broadest reasonable construction for “a leveraged
long position in a set of equities” in light of the Specification, as it would be
interpreted by one of ordinary skill in the art, arguably refers to holdings
resulting from purchases made using proceeds from short sales associated
with short positions. The rejections of claims 9 and 15 do not contain a
claim construction analysis and, thus, the claims were not read in light of the
Specification. Moreover, the same Gastineau, Haines, and Credit passages
used to support finding that the claim 1 limitation “an additional long
position from purchasing a set of equities using proceeds from the short
sale” is disclosed in the prior art also are relied upon as evidence that said
claim limitation is disclosed. See Final Act. 31—34 (claim 9), id. at 37-40
(claim 15). But as explained, these passages provide only general
discussions that could lead one to use EFTs to take long and/or short
positions. Absent other evidence, these passages are inadequate to lead one
of ordinary skill further to create a “portfolio composition file specifying a
creation basket of assets that includes a leveraged long position in a set of
equities” (emphasis added), as that phrase is reasonably broadly construed.
Accordingly, we find that a prima facie case has not been established
for the subject matter of claims 9 and 15 in the first instance by a
preponderance of the evidence. We reach the same conclusion as to claims
10-14, and claims 16 and 17 that depend from claims 9 and 15, respectively.
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CONCLUSIONS
The rejection of claims 1—25 under 35 U.S.C. § 101 as being directed
to non-statutory subject matter is affirmed.
The rejections, under 35 U.S.C. § 103(a), of claims 1 and 3 as being
unpatentable over Gastineau, Haines, and Credit; claims 2 and 4 as being
unpatentable over Gastineau, Haines, Credit, and Risk; claims 5 and 18 as
being unpatentable over Gastineau, Haines, Credit, and Goldman; claim 19
as being unpatentable over Gastineau, Haines, Credit, and Wester; claim 24
as being unpatentable over Gastineau, Haines, Credit, and Sauter ’749;
claims 6 and 8 as being unpatentable over Haines, Gastineau, and Credit;
claim 7 as being unpatentable over Haines, Gastineau, Credit, and Risk;
claim 20 as being unpatentable over Haines, Gastineau, Credit, and Wester;
claim 21 as being unpatentable over Haines, Gastineau, Credit, and Spirgel;
claims 22 and 23 as being unpatentable over Haines, Gastineau, Credit, and
Commission; claim 25 as being unpatentable over Gastineau, Haines, Credit
and Sauter ’749; claims 9 and 11 as being unpatentable over Haines and
Credit; claims 10 and 13 as being unpatentable over Haines and Risk; claims
12 and 14 as being unpatentable over Haines, Credit, and Goldman; claims
15 and 17 as being unpatentable over Haines, Gastineau, and Credit; and,
claim 16 as being unpatentable over Haines, Gastineau, Credit, and Risk are
reversed.
DECISION
The decision of the Examiner to reject claims 1—25 is affirmed.
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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
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