Howard W. Lutnick et al.

Patent Trials and Appeals Board

Jan 28, 2020

13793299 - (D) (P.T.A.B. Jan. 28, 2020)

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.
13/793,299 03/11/2013 Howard W. Lutnick 05-1117-C2 1069
63710 7590 01/28/2020
INNOVATION DIVISION
CANTOR FITZGERALD, L.P.
110 EAST 59TH STREET (6TH FLOOR)
NEW YORK, NY 10022
EXAMINER
POE, KEVIN T
ART UNIT PAPER NUMBER
3692
NOTIFICATION DATE DELIVERY MODE
01/28/2020 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):
lkorovich@cantor.com
patentdocketing@cantor.com
phowe@cantor.com
PTOL-90A (Rev. 04/07)

UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

Ex parte HOWARD W. LUTNICK and STUART A. HERSCH

Appeal 2018-008902
Application 13/793,299
Technology Center 3600
____________

Before CAROLYN D. THOMAS, TREVOR M. JEFFERSON, and KARA
L. SZPONDOWSKI, Administrative Patent Judges.

SZPONDOWSKI, Administrative Patent Judge.

DECISION ON APPEAL

Pursuant to 35 U.S.C. § 134(a), Appellant1 appeals from the
Examiner’s decision to reject claims 22–40. Claims 1–21 have been
cancelled. We have jurisdiction under 35 U.S.C. § 6(b).
We AFFIRM.

1 We use the word “Appellant” to refer to “applicant” as defined in 37
C.F.R. § 1.42. Appellant identifies the real party in interest as CFPH, LLC.
Appeal Br. 3.
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STATEMENT OF THE CASE

Appellant’s invention generally relates to electronically trading and
clearing life settlement contracts. See, e.g., Spec. ¶¶ 115–119. Claim 22,
reproduced below, is representative of the claimed subject matter:
22. An article of manufacture comprising:

a non-transitory, computer-readable medium, in which the
computer-readable medium stores instructions which, when executed
by a processor, direct the processor to:

receive a query for a settlement contract that is available for
sale, in which the query is based on at least one field and the
settlement contract comprises a sale of a policyholder's death benefit
in a life insurance policy in exchange for money;

retrieve a first settlement contract that comprises information
matching the at least one queried field;

compute a rating for the first settlement contract;

receive, during a pre-determined period of time, a plurality of
bids for the first settlement contract, in which each of the plurality of
bids comprises a bid price;

determine, that a first bidder has submitted a best bid price for
the settlement contract;

notify the first bidder and the policyholder of an agreement to
sell the first settlement contract at the best bid price;

determine to generate and communicate electronic commands,
directed to a trade processor, to cause the trade processor to execute
instructions, stored on the computer-readable medium, to cause the
trade processor to execute a procedure to execute and process a trade
associate with the settlement contract; and

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determine to generate and communicate electronic commands,
directed to a clearing processor of a back office clearing center
computer, to execute instructions stored on a computer-readable
medium of the back office clearing center computer, to cause the
clearing processor to execute a procedure to perform a clearing on the
executed trade.

REJECTIONS2

Claims 22–40 stand rejected as directed to patent-ineligible subject
matter under 35 U.S.C. § 101.

ANALYSIS

An invention is patent eligible if it claims a “new and useful process,
machine, manufacture, or composition of matter.” 35 U.S.C. § 101.
However, the Supreme Court has long interpreted 35 U.S.C. § 101 to include
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

2 The Examiner withdrew rejections of claims 22–40 under 35 U.S.C.
§ 103(a) in the Answer. Ans. 4.
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risk.”); see also Bilski v. Kappos, 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)).
If the claim is “directed to” an abstract idea, we turn 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. (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.
The PTO had published revised guidance on the application of § 101.
USPTO, 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed.
Reg. 50 (January 7, 2019) (“2019 Guidance”); October 2019 Update:
Subject Matter Eligibility, 84 Fed. Reg. 55,942 (available at the USPTO’s
website) (“October 2019 PEG Update”). Under the 2019 Guidance, we first
look to whether the claim recites:
(1) any judicial exceptions, including certain groupings of abstract
ideas (i.e., mathematical concepts, certain methods of organizing
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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, 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
§ 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 2019 Guidance, 84 Fed. Reg. at 52–57.
2019 Guidance, Step 2A, Prong 1
The Examiner determines the claims “are directed to managing life
instruments, which is similar to the [fundamental economic] commercial
practices that have been found by the courts to be abstract ideas.” Final Act.
4–5 (citing Alice Corp. v. CLS Bank Int’l, 573 U.S. 208, 216 (2014); Bilski
v. Kappos, 561 U.S. 593, 611 (2010); BuySAFE, Inc. v. Google, Inc., 765
F.3d 1350, 1355 (Fed.Cir.2014); LendingTree, LLC v. Zillow, Inc., 656
F.App’x. 991, 996 (Fed. Cir. 2016)).
Appellant does not challenge the Examiner’s determination that the
claims recite an abstract idea; rather, Appellant’s arguments address whether
the additional elements integrate the judicial exception into a practical
application (see Appeal Br. 9–15). These arguments will be addressed under
Step 2A, Prong 2, below.
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Independent claim 22 recites (1) “receive a query for a settlement
contract that is available for sale, in which the query is based on at least one
field and the settlement contract comprises a sale of a policyholder’s death
benefit in a life insurance policy in exchange for money”; (2) “retrieve a first
settlement contract that comprises information matching the at least one
queried field”; (3) “compute a rating for the first settlement contract”; (4)
“receive, during a pre-determined period of time, a plurality of bids for the
first settlement contract, in which each of the plurality of bids comprises a
bid price”; (5) “determine, that a first bidder has submitted a best bid price
for the settlement contract”; and (6) “notify the first bidder and the
policyholder of an agreement to sell the first settlement contract at the best
bid price.”
We agree with the Examiner (see Final Act. 4–5) that these
limitations, under their broadest reasonable interpretation and in light of the
2019 Guidance, recite at least one of the ineligible “[c]ertain methods of
organizing human activity” that includes “commercial or legal interactions,”
such as “agreements in the form of contracts,” “legal obligations,”
“advertising, marketing or sales activities or behaviors” and “business
relations,” as well as “fundamental economic principles or practices
(including . . . insurance).” See 2019 Guidance, 84 Fed. Reg. at 52.
Accordingly, Appellant has not sufficiently argued why the claims do
not recite an abstract idea and we agree with the Examiner’s findings and
conclusions. See Final Act. 4–5. Therefore, we conclude the claims recite
an abstract idea pursuant to Step 2A, Prong One of the guidance. See 2019
Guidance, Section III(A)(1) (Prong One: Evaluate Whether the Claim
Recites a Judicial Exception).
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2019 Guidance, Step 2A, Prong 2
In determining whether the claims are “directed to” the identified
abstract idea, we next consider whether the claims recite additional elements
that integrate the judicial exception into a practical application.3 We discern
no additional element (or combination of elements) recited in the claims that
integrates the judicial exception into a practical application. See 2019
Guidance, 84 Fed. Reg. at 54–55.
The Examiner determines the 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. 6. Rather, the Examiner determines the limitations recite generic
computer elements, such as “non-transitory, computer-readable medium,
processor, trade processor, clearing processor, back office clearing
computer” that operate in a routine manner. Final Act. 6–7; Ans. 4–6.
Appellant argues “the claims amount to an improvement in computer
performance,” specifically, “improvements in trade processing through
causing a processor to communicate with a trade processor and a clearing
processor.” Appeal Br. 9; see also Reply Br. 2–4. In support, Appellant

3 We acknowledge that some of the considerations at Step 2A, Prong Two,
properly may be evaluated under Step 2 of Alice (Step 2B of the Office
guidance). For purposes of maintaining consistent treatment within the
Office, we evaluate them under Step 1 of Alice (Step 2A of the Office
guidance). See 2019 Guidance, 84 Fed. Reg. at 55 n.25, 27–32.
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cites to paragraphs 146–149 of the published Specification.4 Appeal Br. 10–
12; see also Reply Br. 2–4. Appellant asserts that the “specification includes
a teaching about how the claimed invention improves computer
performance, which may help control activity over the network and control
computer workload including computer resources such as memory,
processor and network resources such as bandwidth.” Appeal Br. 12
(emphasis omitted); see also Reply Br. 4.
Appellant further asserts that the claims are similar to those in
CoreWireless Licensing S.A.R.L. v. LG Electronics MobileComm U.S.A.,
Inc., 880 F.3d 1356 (Fed. Cir. 2018). Appeal Br. 13–14. Appellant argues
the
claimed subject matter is also drawn to an improved interface,
which provides advantages over the prior art systems and
improves the efficiency of the electronic devices, thereby
overcoming disadvantages of prior systems. In the present case
. . . the highlighted paragraphs of Appellants’ published
disclosure emphasized problems and disadvantages of prior
systems and some of the advantages provided by Appellants’
disclosed techniques.

Appeal Br. 14 (emphasis omitted). Appellant also argues the claims reduce
the number of transactions over the network. Appeal Br. 14–15.
We are not persuaded by Appellant’s arguments. The pertinent
portions of Appellant’s Specification state:

[00124] Back office clearing center 112 may be any
suitable equipment, such as a computer, a laptop computer, a

4 These paragraphs correspond to paragraphs 124–127 of the Specification
as filed on March 11, 2013. In this Decision, we cite to the Specification as
filed on March 11, 2013, not to the published application.
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mainframe computer, etc., or any combination of the same, for
causing trades to be cleared and/or verifying that trades are
cleared. Communications link 110 may be any
communications links suitable for communicating data between
server 104 and back office clearing center 112, such as network
links, dial-up links, wireless links, hard-wired links, fiber-
optical links, etc.

[00125] The server, the back office clearing center, and
one of the workstations, which are depicted in FIG. 1, are
illustrated in more detail in FIG. 2. Referring to FIG. 2,
workstation 101 may include processor 201, display 202, input
device 203, and memory 204, which may be interconnected. In
a preferred embodiment, memory 204 contains a storage device
for storing a workstation program for controlling processor 201.
Processor 201 may use the workstation program to present on
display 202 trade information relating to bids, offers, executed
trades, and insurance policy and/or profile information such as
status and query results to a user of workstation 101. Processor
201 may run any of the processes shown in flow diagrams of
FIGS. 3, 4, 10, 11, and 12. Display 202 may be used to view
any portion of FIGS. 5, 6, 7, 8, or 9. Furthermore, input device
203 may be used by the user to submit insurance policies and/or
settlement contracts, search existing ones, view the status of
submitted policies and/or contracts, enter such bids and offers
on them, modify the bids and offers, and enter into trades
involving the policies themselves and/or settlement contracts
for the insurance policies.

[00126] Server 104 may include processor 211, display
212, input device 213, and memory 214, which may be
interconnected. In a preferred embodiment, memory 214
contains a storage device for storing settlement contracts (e.g.,
in a database) as well as trade information relating to the trades.
The storage device further contains a server program for
controlling processor 211. Processor 211 uses the server
program to receive, sort, and search settlement contracts, and
transact the purchase and sale of the settlement contracts.
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Processor 211 may include settlement calculation processor 215
that may be implemented to determine the benchmark values
based on market conditions or other criteria that may relate to
the insurance policy contracts. Processor 211 may run any of
the processes shown in the flow diagrams of FIGS. 3, 4, 10, 11,
and 12. Processor 211 may include trade processor 216 that
executes and processes trades.

[00127] Back office clearing center 112 may include
processor 221, display 222, input device 223, and memory 224,
which may be interconnected. In a preferred embodiment,
memory 224 contains a storage device for storing a clearing
program for controlling processor 221. Processor 221 uses the
clearing program to clear executed trades. Clearing executed
trades may preferably include exchanging currency for a future
commitment.

Spec. ¶¶ 124–127.
Although these portions of the Specification describe the use of a
trade processor that executes and processes trades (paragraph 126) and a
processor that uses a clearing program (paragraph 127), we do not see where
the cited paragraphs describe, teach, or emphasize any improvement to
computer functionality, improvement to computer performance, or
advantages provided by Appellant’s techniques. Contra Visual Memory
LLC v. NVIDIA Corp., 867 F.3d 1253, 1260 (Fed. Cir. 2017) (“And like the
patents at issue in Enfish and Thales, the specification discusses the
advantages offered by the technological improvement”). Appellant’s
arguments pertaining to the improved computer functionality, computer
performance, and advantages constitute attorney argument with no support
in the record.
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The claimed processors are defined generically in the Specification.
See Spec. ¶ 62 (defining a “processor” as “one or more microprocessors,
central processing units (CPUs), computing devices, microcontrollers,
digital signal processors, or like devices or any combination thereof”). The
claimed memory, computer-readable medium, and back office clearing
center computer are likewise defined and described generically. See Spec.
¶¶ 61, 65, 70, 124, 125. Appellant has not identified anything in the
Specification to indicate that any improvements come from the claimed
invention itself, rather than from the capabilities of the recited processors or
other generic computer elements responsible for performing the claimed
limitations. To the contrary, the Specification describes advantages “include
allowing purchasers to trade one or more life settlement contracts and/or
policies electronically.” Spec. ¶ 176; see Bancorp Servs., L.L.C., v. Sun Life
Assurance Co. of Can. (U.S.), 687 F.3d 1266, 1278 (Fed. Cir. 2012) (“[T]he
fact that the required calculations could be performed more efficiently via a
computer does not materially alter the patent eligibility of the claimed
subject matter.”); OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359,
1363 (Fed. Cir. 2015) (relying on a computer to perform routine tasks more
quickly or more accurately is insufficient to render a claim patent-eligible).
We also agree with the Examiner that the claims here are not
analogous to those in Core Wireless. See Ans. 6–7. The claims in Core
Wireless recited a specific manner of displaying a limited set of information
to a user, resulting in an improved user interface for computing devices. 880
F.3d at 1362. The specification in that case described the deficits in the
prior art and explained how the claimed invention improved the efficiency of
using the electronic device. Id. at 1363. As discussed above, here,
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Appellant has not directed us to portions of the Specification that describe
any improvement to the functioning of the computer resulting from the
claimed invention, as opposed to the generic computer elements. Instead,
Appellant has merely offered attorney argument. Moreover, as the
Examiner points out, the claims here are not directed to a user interface like
that described in Core Wireless. Ans. 7.
Accordingly, we determine the claims do not integrate the judicial
exception into a practical application. See 2019 Guidance, Section III(A)(2)
(Prong Two: If the Claim Recites a Judicial Exception, Evaluate Whether
the Judicial Exception Is Integrated Into a Practical Application). We,
therefore, agree with the Examiner that the claims are directed to a judicial
exception. See Final Act. 4–8; Ans. 5–8.
2019 Guidance, Step 2B
Turning to step 2 of the Alice/Mayo framework, we look to whether
the claims: (a) add a specific limitation or combination of limitations that
are not well-understood, routine, conventional activity in the field, or (b)
simply append well-understood, routine, conventional activities previously
known to the industry, specified at a high level of generality, to the judicial
exception. 2019 Guidance, 84 Fed. Reg. at 56.
The Examiner determines the additional limitations (e.g., non-
transitory computer readable medium, processor, trade processor, clearing
processor, back office clearing center) do not add meaningful limitations to
the abstract idea because they operate in a routine manner to apply the
abstract idea. Final Act. 6. Specifically, the Examiner determines these
elements perform routine and conventional functions of storing, receiving,
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sending, or transmitting data, which courts have recognized as “merely
generic.” Ans. 5–6 (citing MPEP § 2106.05(d)).
Appellant presents the same arguments as discussed above, and argues
“the claimed features above are not well-understood, routine or
conventional.” Reply Br. 4 (emphasis omitted).
Appellant’s arguments are not persuasive. When viewed as a whole,
nothing in the claim adds significantly more (i.e., an inventive concept) to
the abstract idea. The additional elements in the claim, identified above,
amount to no more than mere instructions to apply the exception using
generic computer components, which is insufficient to provide an inventive
concept. See, e.g., Spec. ¶¶ 61, 62, 65, 70, 124, 125. Appellant does not
direct our attention to anything in the Specification that indicates the claimed
computer components perform anything other than well-understood, routine,
and conventional processing functions, such as receiving, storing, analyzing,
and transmitting data. See Intellectual Ventures 1 LLC v. Erie Indemnity
Co., 850 F.3d 1315, 1329 (Fed. Cir. 2017) (“the remaining limitations recite
routine computer functions, such as the sending and receiving information to
execute the database search”); Electric Power Grp. LLC v. Alstom S.A., 830
F.3d 1350, 1355 (Fed. Cir. 2016) (“Nothing in the claims, understood in
light of the specification, requires anything other than off-the-shelf,
conventional computer, network, and display technology for gathering,
sending, and presenting the desired information”); buySAFE, 765 F.3d at
1355 (“That a computer receives and sends the information over a
network—with no further specification—is not even arguably inventive”);
Alice, 573 U.S. at 224–26 (basic calculating, receiving, storing, sending
information over networks insufficient to add an inventive concept). In
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short, each step does no more than require a generic computer to perform
generic computer functions.
Furthermore, we are unable discern anything in the claims, even when
the recitations are considered in combination, that represents something
more than the performance of routine, conventional functions of a generic
computer. That is, the claims at issue do not require any nonconventional
computer components, or even a “non-conventional and non-generic
arrangement of known, conventional pieces,” but merely call for
performance of the claimed information receiving, storing, analyzing, and
transmitting data “on a set of generic computer components.” Bascom Glob.
Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1350 (Fed. Cir.
2016).
Appellant’s preemption argument is likewise unpersuasive of
Examiner error. See Appeal Br. 15. Although preemption “might tend to
impede innovation more than it would tend to promote it, ‘thereby thwarting
the primary object of the patent laws,”’ Alice, 573 U.S. at 216 (citing Mayo,
566 U.S. at 70–71), “the absence of complete preemption does not
demonstrate patent eligibility.” Ariosa Diagnostics, Inc. v. Sequenom, Inc.,
788 F.3d 1371, 1379 (Fed. Cir. 2015); see also OIP Techs., Inc. v.
Amazon.com, Inc., 788 F.3d 1359, 1362–63 (Fed. Cir. 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.”); Ans. 7–8.
Appellant does not separately argue the dependent claims. See
generally Appeal Br. 9–15. Accordingly, for the foregoing reasons we
sustain the Examiner’s 35 U.S.C. § 101 rejection of claims 22–40.
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CONCLUSION
In summary:
Claims
Rejected
35 U.S.C.
§
Reference(s)/Basis Affirmed Reversed
22–40 101 Eligibility 22–40

No time period for taking any subsequent action in connection with
this appeal may be extended under 37 C.F.R. § 1.136(a). See 37 C.F.R.
§ 1.136(a)(1)(iv).

AFFIRMED