Ex Parte Studnitzer et al

Patent Trial and Appeal Board

Nov 30, 2018

14074668 (P.T.A.B. Nov. 30, 2018)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
14/074,668 11/07/2013
12684 7590 12/04/2018
Lempia Summerfield Katz LLC/CME
20 South Clark Street
Suite 600
Chicago, IL 60603
FIRST NAMED INVENTOR
Ari Studnitzer
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.
4672-13015AUS 5024
EXAMINER
GAW,MARKH
ART UNIT PAPER NUMBER
3692
NOTIFICATION DATE DELIVERY MODE
12/04/2018 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):
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 ARI STUDNITZER, ZACHARY BONIG, RYAN EA VY,
FRANK KMIEC, BARRY GALSTER, and PAUL CALLAWAY
Appeal2017-009688
Application 14/074,668
Technology Center 3600
Before ROBERT E. NAPPI, CARLL. SILVERMAN, and
JASON M. REPKO, Administrative Patent Judges.
REPKO, Administrative Patent Judge.
DECISION ON APPEAL
STATEMENT OF THE CASE
Appellants 1 appeal under 35 U.S.C. § 134(a) from the Examiner's
rejection of claims 1-26. App. Br. 2. 2 We have jurisdiction under 35 U.S.C.
§ 6(b ). We reverse.
1 According to Appellants, the real party in interest is the Chicago
Mercantile Exchange Inc., an organization having a place of business in
Chicago, Illinois. App. Br. 2.
2 Throughout this opinion, we refer to the Final Rejection ("Final Act.")
mailed July 18, 2016; the Advisory Action mailed October 6, 2016 ("Adv.
Act."); the Appeal Brief ("App. Br.") filed December 15, 2016; the
Examiner's Answer ("Ans.") mailed May 10, 2017; and the Reply Brief
("Reply Br.") filed July 7, 2017.
Appeal2017-009688
Application 14/074,668
THE INVENTION
Appellants' invention purportedly improves the efficiency of high-
performance electronic trading systems. See, e.g., Spec. ,r 43. In particular,
the invention relates to "implied matching." See id. ,r,r 81-88. A "real" or
"outright" order is an order for a particular financial instrument that is
actually received from a market participant. Id. ,r 82. Implication occurs
when an order is matched by combining counter orders that share a common,
or otherwise interdependent, component financial instrument. Id. ,r 81. To
create these matches, the system must synthesize "implied" orders in order
books other than the outright order's order book. Id. This implied matching
allows a partial trade of the incoming outright order to be executed. Id.
Identifying an implied match, however, can be complex when there are
many potential order combinations. See id. ,r,r 84--85. Because of this
complexity, conventional trading systems cannot efficiently calculate all
possible implied markets. Id. ,r 86.
To address this problem, the invention uses system-generated
synthetic orders and multiple hardware match engines. Id. ,r 88. In
particular, the invention listens for all match events. Id. ,r 88. The invention
then uses a set of self-maintained "shadow order books" to identify,
calculate, or derive implied matches. Id. If an implied match is identified,
the invention generates one or more "synthetic orders" into the necessary
markets and injects them into the incoming-order stream. Id. The synthetic
orders are not real transactions from real traders. Id. Yet the synthetic
orders are processed like any other orders to create the necessary implied
matches. Id. The system uses multiple hardware match engines for each
order book representing a market. Id. ,r 220. Because the invention can
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Application 14/074,668
access match events from multiple markets, the invention can identify a
wider array of implied intra- and inter-market matches. Id.
Claim 1 is reproduced below with our emphasis added:
1. A system for improving efficiency of an electronic trading
system comprising a plurality of hardware match engines
coupled therewith, each of the plurality of hardware match
engines implementing a market for an associated financial
instrument comprising at least one component, each hardware
match engine being operative to attempt to match an incoming
order for a transaction for the associated financial instrument
with at least one other previously received but unsatisfied order
for a transaction counter thereto for the associated financial
instrument, to at least partially satisfy one or both of the
incoming order or the at least one other previously received
order, the system comprising:
a first logic component, coupled with each of the plurality
of hardware match engines, operative to receive match event data
from each of the plurality of hardware match engines indicative
of whether the hardware match engine was able to match an
incoming order to that hardware match engine for at least one
transaction for the associated financial instrument associated
with that hardware match engine with at least one previously
received but unsatisfied order for a transaction counter thereto
for the associated financial instrument, in at least partial
satisfaction of one or both of the incoming order or the at least
one other previously received order;
the first logic component being further operative to, when
the match event data indicates that the incoming order has not
been fully satisfied, to attempt to identify a set of previously
received but unsatisfied orders received by any of the plurality
of match engines wherein, for any residual of each particular of
the at least one component of the associated financial instrument
of the incoming order, the set includes a previously received but
unsatisfied order for a counter transaction for another financial
instrument comprising at least the particular component to at
least partially satisfy one or both of the residual of the particular
component of the associated financial instrument of the
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Application 14/074,668
incoming order or the component of the determined previously
received order and wherein the first logic component is further
operative to attempt to identify and include in the set, for any
component of the financial instrument of any previously received
but unsatisfied orders included in the set and not at least partially
satisfied by any of the components of the associated financial
instrument of the incoming order, another previously received
but unsatisfied order for a counter transaction for a financial
instrument including at least the component of the financial
instrument of the previously received but unsatisfied order, such
that the incoming order together with the set of previously
received but unsatisfied orders, if the transactions for the
financial instruments thereof were completed there between,
includes no fully unsatisfied orders; and
a second logic component operative to, when the incoming
order together with the identified set of previously received but
unsatisfied orders, if the components of the financial instruments
thereof were completed there between, include no fully
unsatisfied orders, generate, for each financial instrument of the
incoming order and the set of previously received but unsatisfied
orders, a set of unique synthetic counter orders, each for a
transaction of another of the financial instruments of the
incoming order and the set of previously received but unsatisfied
orders comprising at least one component in common, and
submit each synthetic counter order to the particular hardware
match engine of the plurality of hardware match engines
associated with the financial instrument for which the counter
order is for.
THE EVIDENCE
The Examiner relies on the following as evidence:
O'Callahan US 2006/0253354 Al
Bauerschmidt et al. US 2007/0118460 Al
Siddall et al. US 2011/0313905 Al
4
Nov. 9, 2006
May 24, 2007
Dec. 22, 2011
Appeal2017-009688
Application 14/074,668
Investopedia, What is a Stripped Bond?
http://www.investopedia.com/ask/answers/127.asp (Apr. 28, 2007);
http://web.archive.org/web/20070428145455/http://www.investopedia
.com/ask/answers/127.asp (last accessed Jan. 15, 2015)
("Investopedia").
THE REJECTIONS
Claims 1-26 stand rejected under 35 U.S.C. § 101 as directed to
patent-ineligible subject matter. Final Act. 2-5.
Claims 1, 2, 4--14, and 16-26 stand rejected under 35 U.S.C. § 103 as
unpatentable over Siddall, Bauerschmidt, and O'Callahan. Final Act. 5-28.
Claims 3 and 15 stand rejected under 35 U.S.C. § 103 as unpatentable
over Siddall, Bauerschmidt, O'Callahan, and Investopedia. Final Act. 29.
THE REJECTION UNDER 35 U.S.C. § 101
The Supreme Court's two-step framework guides our analysis. See
Alice Corp. Pty. Ltd. v. CLS Bank Int'!, 134 S. Ct. 2347, 2355 (2014). In
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. Id. If the
claims are "directed to an abstract idea," we consider the claim limitations
"both individually and 'as an ordered combination"' to determine whether
the additional elements "'transform the nature of the claim' into a
patent-eligible application" in Alice step two. Id. ( quoting Mayo
Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 79, 78 (2012)).
The Supreme Court has described this analysis "as a search for an 'inventive
concept.'" Id. (internal citation omitted).
The Examiner rejected claims 1-26 under 35 U.S.C. § 101 because (1)
the claims are directed to an abstract idea of trade matching and (2) the
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claims lack an inventive concept. Final Act. 2-5. According to the
Examiner, the claims do not improve a technology or how a computer
functions. Id. at 3. The Examiner finds that the claimed features "undertake
their roles in performance of their activities according to their generic
functionalities which are well-understood, routine and conventional." Id.
The Examiner finds that the claims "apply the abstract idea on a computer,
and [are] ... considered to amount to nothing more than requiring a generic
computer system to merely carry out the abstract idea itself." Id. at 4.
Appellants argue that the claims recite a unique electronic trading-
system architecture, which is more than trade matching in the abstract.
App. Br. 8-9. Appellants argue that the claimed system processes more
transactions than conventional systems and does so without modifications to
the hardware match engines. Id. at 12. According to Appellants, the
claimed invention solves a technical problem and improves the way
computers handle these trades. Reply Br. 2---6.
We agree with Appellants that the claims recite more than the idea of
matching unsatisfied orders. App. Br. 15. But even assuming the claims are
directed to the abstract idea of trade matching, the claimed invention
imposes meaningful limits on this concept. Id. For the reason discussed
below, we find no support for the Examiner's assertion that the claimed
system performs well-understood, routine, and conventional functions. See,
e.g., Final Act. 3; Adv. Act. 2.
Specifically, the claimed invention purports to solve a technical
problem with electronic trading-system architectures. See Spec. ,r 87.
According to the Specification, conventional trading systems lack an
efficient way to determine the possible implied markets. Id. ,r 86. In these
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systems, the implication process occurs within the match engine. Id. The
match engine could be privy to all relevant markets-i.e., all order books
that the implication process requires. Id. ,r 87. But the match engine's
computational capacity limits the number of order books that it can manage,
and in tum, the degree of implication. Id. For instance, as the number of
contracts involved in the implication increases, the number of possible
combinations grows exponentially. Id. ,r 85.
The claimed improvement allows electronic trading systems to match
unsatisfied orders across multiple hardware match engines by creating
synthetic counter orders. Reply Br. 12; Spec. ,r,r 81-88. In particular, the
claimed invention moves part of the implication process outside the match
engine. Spec. ,r 88. In independent claim 2, an "implicator"3 listens to all
match events and attempts to identify, calculate, or derive implied matches.
Claim 2 further recites an "order generator"4 that generates synthetic counter
orders and submits them to the hardware match engines associated with the
corresponding financial instrument.
With these features, the claimed solution does not require a
modification to the match engines to process the implied trades. Id. ,r,r 87-
88, discussed in Reply Br. 12. Also, the invention does not require the
match engine to access all order books needed for the implication process.
App. Br. 12. Instead, the synthetic orders are processed by the hardware
3 This function is recited as a first logic component in independent claim 1.
Independent claims 14 and 26 recite similar limitations as method steps or
means-plus function limitations.
4 This function is recited as a second logic component in independent claim
1. Independent claims 14 and 26 recite similar limitations as method steps
or means-plus-function limitations.
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match engines like any other orders. See id. ,r 88. This technical
improvement allows implied matches across a wider variety of markets
compared to conventional methods and increases the complexity and variety
of combination financial instruments. Id.
Appellants' invention is not a mere automation of a known process on
a generic computer, as the Examiner finds. See, e.g., Final Act. 3;
Adv. Act. 2. Rather, the claimed method and system solve a problem-i.e.,
computational inefficiencies in conventional trading systems-in a particular
technical way. See Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1339
(finding the claims were not directed to an abstract idea where the claims
recited a technical solution involving "a specific type of data structure
designed to improve the way a computer stores and retrieves data in
memory").
On this record, we do not sustain the Examiner's rejection of claims
1-26 under 35 U.S.C. § 101.
THE REJECTION OVER SIDDALL, BAUERSCHMIDT, AND
O'CALLAHAN
Claim 1 recites, in part, a second logic component operable to (1)
generate unique synthetic counter orders for each financial instrument of the
incoming order and the previously received unsatisfied orders, and (2)
"submit each synthetic counter order to the particular hardware match
engine of the plurality of hardware match engines associated with the
financial instrument for which the counter order is for." Independent claim
2 recites an order generator that performs a similar function. Independent
claims 14 and 26 recite similar limitations as method steps or means-plus-
function limitations.
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In the rejection of claims 1, 2, 14, and 26, the Examiner finds that the
combination of Siddall and O'Callahan collectively teach generating and
submitting synthetic orders to multiple match engines. Final Act. 7 ( citing
Siddall ,r,r 20, 25, 29, claim 1, claim 3), 10 (citing O'Callahan Abstract,
,r,r 51, 54); Final Act. 12-16, 19-22, 25-28 (rejecting claims 2, 14, and 26).
The Examiner finds that a synthetic order can be broadly interpreted to be an
implied spread or an implied order, which is taught by Siddall. Ans. 18.
According to the Examiner, Siddall's trade system is able to interact with
other trade engines, and O'Callahan teaches that multiple matching engines
in a trading system is known. Id. at 17-18.
Appellants argue that the proposed combination does not teach or
suggest generating and submitting synthetic orders to multiple match
engines. App. Br. 24--25; Reply Br. 8. Appellants argue that Siddall's
notifications are not the recited synthetic orders. App. Br. 24. According to
Appellants, a synthetic order is generated for a transaction of another
financial instrument of an incoming order and a previously received but
unsatisfied order. Id. at 25. Appellants argue that O'Callahan's engines
operate on the appropriate incoming orders for different products
independently. Id.; Reply Br. 8.
We agree with Appellants that the references, individually or in
combination, do not teach or suggest the generate and submit functions
recited in claims 1, 2, 14, and 26. App. Br. 24--25; Reply Br. 8.
Even if Siddall teaches interacting with other trade engines, the
Examiner has not shown that Siddall's interaction involves submitting
synthetic counter orders in the manner claimed. See Final Act. 7; Ans. 17-
18. Specifically, Siddall's implied-spread-determination module 208
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determines that an implied spread exists and sends a notification.
Siddall ,r,r 20, 4 7. Yet Siddall does not handle the implication process in the
same way as the claimed invention. Instead, Siddall uses the notification to
execute multiple trades to match the legs of the implied spread. Id. ,r 50.
For example, the user's monitor could display a notification that an implied
match exists, and the user can then respond accordingly. Id. ,r 48. Thus, the
Examiner has not shown that Siddall synthesizes an order for multiple match
engmes.
To be sure, O'Callahan teaches multiple matching engines. See
O'Callahan ,r 54. But O'Callahan allocates different exchange-traded-
products to different matching engines. Id. O'Callahan's engines execute
trades by paring corresponding marketable buy-sell orders. Id. Notably,
O'Callahan places the non-marketable orders in an order book until they are
marketable. Id. In this way, O'Callahan's engines independently process
the appropriate orders for different products, as Appellants argue. See
Reply Br. 8.
Neither Siddall nor O'Callahan, individually or in combination,
generates and submits the necessary orders to each match engine to effect
the necessary transaction satisfying the particular leg. Unlike Siddall and
O'Callahan, the claimed invention handles implied matches by generating
synthetic orders for each financial instrument of the incoming order and
previously received unsatisfied orders. And Bauerschmidt does not cure this
deficiency because it was relied upon for the first logic component, not
generating and matching synthetic match orders. See Final Act. 8-9, 13-14,
19-22, 25-28. On this record, we agree that the Examiner has not shown
that the references teach or suggest ( 1) generating the recited synthetic
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counter orders and (2) submitting them to multiple match engines, as recited
in claims 1, 2, 14, and 26. See Reply Br. 7.
Thus, we do not sustain the Examiner's rejection of independent
claims 1, 2, 14, and 26, and dependent claims 4--13, and 16-25.
THE REMAINING OBVIOUSNESS REJECTION
We do not sustain the Examiner's rejections of dependent claims 3
and 15. Investopedia was not relied upon to teach the limitation missing
from Siddall, Bauerschmidt, and O'Callahan, and, thus, does not cure the
deficiency discussed above. See Final Act. 29. Therefore, for the same
reasons discussed above in connection with claims 2 and 14, we do not
sustain the rejection of claims 3 and 15.
DECISION
We reverse the Examiner's decision to reject claims 1-26.
REVERSED
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