McConaughy, Jon et al.Download PDFPatent Trials and Appeals BoardDec 11, 201912356671 - (D) (P.T.A.B. Dec. 11, 2019) Copy Citation 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. 12/356,671 01/21/2009 Jon McConaughy 18034-044USC1/1000346764 9297 54205 7590 12/11/2019 NORTON ROSE FULBRIGHT US LLP 98 San Jacinto Blvd, Suite 1100 Austin, TX 78701 EXAMINER OYEBISI, OJO O ART UNIT PAPER NUMBER 3697 NOTIFICATION DATE DELIVERY MODE 12/11/2019 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): aoipdocket@nortonrosefulbright.com PTOL-90A (Rev. 04/07) UNITED STATES PATENT AND TRADEMARK OFFICE ____________________ BEFORE THE PATENT TRIAL AND APPEAL BOARD ____________________ Ex parte JON McCONAUGHY, JOSH STAR, ZACK LING, LIGUO SONG, and TONY HSU1 ____________________ Appeal 2019-000522 Application 12/356,671 Technology Center 3600 ____________________ Before JOSEPH L. DIXON, ROBERT E. NAPPI, and JOHN A. EVANS, Administrative Patent Judges. NAPPI, Administrative Patent Judge. DECISION ON APPEAL Appellant appeals under 35 U.S.C. § 134(a) from the Examiner’s rejection of claim 1. 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(a). According to Appellant, Credit Suisse Securities (USA) LLC. is the real party in interest. Appeal Br. 2. Appeal 2019-000522 Application 12/356,671 2 INVENTION The invention is directed to a method for providing replicable financial instrument orders, and establishing a fill price that is better than the theoretical upper limit of the industries’ best order execution. Spec., Abstract. Claim 1 is reproduced below. 1. A processor-implemented method for filling at least one financial instrument order with a replicable product in the liquidity format of the at least one financial instrument and at a price equivalent to the replicable product, the method comprising: receiving an order for a financial instrument, having a particular market exposure risk profile, at a liquidity transformer system; accessing a product database using the liquidity transformer system; establishing a liquidity universe of financial instrument baskets, using the liquidity transformer system, by determining all possible formats of liquidity based on the ordered financial instrument and information contained in the product database; analyzing the liquidity universe using legal and compliance information accessed from a legal-and-compliance database to determine which financial instrument baskets are available to fill the financial instrument order; determining an equivalent book for each format of liquidity in the universe of financial instrument baskets available to fill the financial instrument order by determining an average depth value including price and size, in terms of the instruments under execution for each one of a plurality of formats of liquidity using real-time market data consisting of market liquidity data, real-time price and size data for related instruments, and dynamic information; reorganizing the equivalent book for each format of liquidity from equivalent price terms to equivalent size terms; determining a tradeable book for each format of liquidity by adjusting the financial instrument baskets using dynamic Appeal 2019-000522 Application 12/356,671 3 microstructure and cross order feedback to determine a mean depth price; selecting an optimum combination of the tradeable books for the formats of liquidity to create an alternative financial instrument to fill the order, the combination having: (1) a market exposure risk profile that is similar to the particular market exposure risk profile of the ordered financial instrument and (2) an advantageous price relative to the price of the ordered financial instrument; and placing orders for the tradeable books to create a replicable product consisting of a plurality of replicable financial instrument orders that achieves optimal execution for each individual format of liquidity such that the financial instrument order is filled in the liquidity format of the ordered financial instrument and at the price or equivalent price of the optimum combination of formats of liquidity; distributing the replicable financial instrument orders across different trading venues, including exchanges and electronic communication networks; posting the filled replicable financial instrument orders to a trading account; and converting the formats of the filled replicable financial instrument orders into the format of the financial instrument ordered, but at the price of the replicable product. EXAMINER’S REJECTION2 The Examiner rejected claim 1 under 35 U.S.C. § 101 for being directed to patent-ineligible subject matter. Non-Final Act. 3. 2 Throughout this Decision we refer to the Appeal Brief filed April 16, 2018 (“Appeal Br.”); Reply Brief filed October 29, 2018 (“Reply Br.”); Non-Final Office Action mailed April 11, 2017 (“Non-Final Act.”); and the Examiner’s Answer mailed August 27, 2018 (“Ans.”) Appeal 2019-000522 Application 12/356,671 4 ANALYSIS We have reviewed Appellant’s arguments in the Briefs, the Examiner’s rejections, and the Examiner’s response to Appellant’s arguments. Appellant’s arguments have not persuaded us of error in the Examiner’s rejection the claim under 35 U.S.C. § 101. Patent eligibility under § 101 is a question of law that may contain underlying issues of fact. Interval Licensing LLC v. AOL, Inc., 896 F.3d 1335, 1342 (Fed. Cir. 2018) (citing Berkheimer v. HP Inc., 881 F.3d 1360, 1365 (Fed. Cir. 2018)). “We review the district court’s ultimate conclusion on patent eligibility de novo.” Id.; SiRF Tech., Inc. v. Int’l Trade Comm’n, 601 F.3d 1319, 1331 (Fed. Cir. 2010) (“Whether a claim is drawn to patent-eligible subject matter is an issue of law that we review de novo.”) 35 U.S.C. § 101 Rejection PRINCIPLES OF LAW Patent-eligible subject matter is defined in 35 U.S.C. § 101 of the Patent Act, which recites: Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title. There are, however, three judicially created exceptions to the broad categories of patent-eligible subject matter in 35 U.S.C. § 101: “[l]aws of nature, natural phenomena, and abstract ideas.” Alice Corp. v. CLS Bank Int’l, 573 U.S. 208, 216 (2014); Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 70 (2012). Appeal 2019-000522 Application 12/356,671 5 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. Alice, 573 U.S. at 217–18 (citing Mayo, 566 U.S. at 75–77). 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. 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)). Concepts determined to be patent eligible include physical and chemical processes, such as “molding rubber products” (Diamond v. Diehr, 450 U.S. 175, 191 (1981)); “tanning, dyeing, making water-proof cloth, vulcanizing India rubber, smelting ores” (id. at 182 n.7 (quoting Corning v. Burden, 56 U.S. (15 How.) 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 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 Appeal 2019-000522 Application 12/356,671 6 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. (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 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 (citation 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 United States Patent and Trademark Office “USPTO” published revised guidance on the application of § 101. USPTO’s 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. 50 (Jan. 7, 2019) (“Memorandum”). Under that guidance, we first determine whether the claim recites: (1) any judicial exceptions, including certain groupings of abstract ideas (i.e., mathematical concepts, certain methods of Appeal 2019-000522 Application 12/356,671 7 organizing human activity such as a fundamental economic practice, or mental processes); and (2) additional elements that integrate the judicial exception into a practical application (see MANUAL OF PATENT EXAMINING PROCEDURE (“MPEP”) § 2106.05(a)–(c), (e)–(h) (9th Ed., Rev. 08.2017, Jan. 2018)). 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 Memorandum. DISCUSSION The Judicial Exception The Examiner determines the claim is not patent eligible because they are directed to a judicial exception without reciting significantly more. Non- Non-Final Act. 3–5. Specifically, the Examiner determines the claim is directed at least one financial instrument order at a price, which is similar to a concept found abstract by the Supreme Court. Non-Final Act. 3–4 (citing Alice). Appellant argues the Examiner has paraphrased the claim and as such oversimplified and mischaracterized the claim as a fundamental economic Appeal 2019-000522 Application 12/356,671 8 practice. Appeal Br. 8. Specifically, Appellant asserts the Examiner has paraphrased the limitations of “receiving an order for a financial instrument”; “determining an equivalent book for each format of liquidity”; “determining a tradeable book for each format of liquidity”; and “distributing the replicable financial instrument orders” and oversimplified them as receiving specific data, determining data elements and distributing data. Appeal Br. 9. We concur with the Examiner that representative claim 1 sets forth an abstract concept, fundamental economic process. We also consider claim 1 to set forth a mental process of collecting information, analyzing it and displaying the results. Claim 1 recites a “method for filling at least one financial instrument order” and that includes steps of receiving an order, accessing a database to establish liquidity and determine a book (depth value including price and size), determining a tradeable book, placing orders for the book, distributing financial instruments and posting orders to a trading account. The invention is described in the Specification as directed to a method “of order execution for providing replicable financial instrument orders, known as a replicable product” to “reduce the market impact of executed orders” and to “provide measurable savings substantially equivalent to the bid-ask spread on small orders.” Specification ¶¶ 5, 8, 9. Thus, the claim recites a business process or receiving an order, valuing the order, placing a trade and posting the orders in a trading account which is a fundamental economic activity. This is similar to other “fundamental economic concepts” found to be abstract ideas by the Supreme Court and this court. See, e.g., Alice, 573 U.S. at 220 (intermediated settlement); Bilski v. Kappos, 561 U.S. 593, 611 (2010) (risk Appeal 2019-000522 Application 12/356,671 9 hedging); Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 715 (Fed. Cir. 2014) (using advertising as an exchange or currency); Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat’l Ass’n, 776 F.3d 1343, 1347 (Fed. Cir. 2014) (data collection); Accenture Glob. Servs., GmbH v. Guidewire Software, Inc., 728 F.3d 1336, 1346 (Fed. Cir. 2013) (generating tasks in an insurance organization). Further, the claim also recites a mental process of collecting information, analyzing it and displaying the results. Claim 1 recites a “receiving an order” (a data gathering or observation element); “accessing a product database” (a data gathering or observation element); “establishing a liquidity universe . . . analyzing the liquidity. . . determining an equivalent book . . . reorganizing the equivalent book . . . selecting an optimum combination . . . distributing the replicable financial instrument . . . converting the formats of the filled replicable financial instrument” (are data analysis/organization or evaluation element); and “placing orders for the tradeable books . . . posting the filled replicable financial instrument orders,” (a means of communicating the result of the analysis). We consider these limitations to recite an abstract mental process. The claims at issue in Electric Power Group recited several steps of receiving data from various sources, detecting and analyzing the data and displaying the data. Elec. Power Grp., 830 F.3d at 1351–52. The court stated “we have treated collecting information, including when limited to particular content (which does not change its character as information), as within the realm of abstract ideas.” Id. at 1353. Thus, we conclude representative claim 1 recites an abstract idea. Appeal 2019-000522 Application 12/356,671 10 Integration of the Judicial Exception into a Practical Application The Examiner finds that the additional claim limitations do not recite an improvement to a technical field or a technology. Non-Final Act. 4. Further, the Examiner finds that the claim recites a processor “at a high level of generality to simply perform the generic computer functions of generating, receiving, processing, calculating, storing, displaying and transmitting data.” Non-Final Act. 4–5. Appellant argues that the claim improves a technological filed as the claim is rooted in computer technology. Appeal Br. 14–17 (citing DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014), Enfish, LLC v Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016) and McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299 (Fed. Cir. 2016), Reply Br. 7–10. Further, Appellant argues that the claim recite meaningful limitations beyond generating linking the abstract idea to a particular technology, Appeal Br. 16 (citing Alice). Appellant cites the claim 1 limitations of determining book value, reorganizing book value, determining a tradeable book and selecting the optimum combination as a “detailed recitation of specific steps taken by the liquidity transformer system provide meaningful limitations that go beyond generally linking the use of an abstract idea.” Appeal Br. 17. Additionally, Appellant argues that the claim does not automate a conventional process. Appeal Br. 17–19 (citing McRO). Appellant also asserts the claimed “combination of specific steps taken by the liquidity transformer system, when considered as a whole, amounts to significantly more than filling at least one financial instrument order at a price.” Appeal Br. 19–20; Reply Br. 2–5. Finally, Appellant argues the Appeal 2019-000522 Application 12/356,671 11 claim does not tie up the judicial exception. Appeal Br. 20–21; Reply Br. 5– 6. We are not persuaded of error by Appellant’s arguments. As discussed above, we concur with the Examiner that the claim recites an abstract idea. Further, we do not consider the claim to be drawn to a practical application of the abstract idea as we do not find that the claim recites an improvement to the functioning of the computer or other technology or otherwise tied to technology. We are not persuaded of error by Appellant’s argument, which relies upon Enfish and asserts the claim is directed to improving computer technology or other technology. As discussed above, Appellant’s Specification identifies that the invention is to “order execution for providing replicable financial instrument orders, known as a replicable product” to “reduce the market impact of executed orders” and to “provide measurable savings substantially equivalent to the bid-ask spread on small orders.” Spec. ¶ 5, 8, 9. The Specification does not identify that the method changes the operation of a computer to improve the function of the computer, but rather to improve the economic process of receiving an order, performing analysis to value the order, placing a trade and posting the orders in a trading account. Thus, the claim, when interpreted in light of the Specification, merely recites use of a computer as a tool to implement a method of organizing human activity involving a fundamental economic principle (an abstract idea). See, e.g., RecogniCorp, 855 F.3d at 1327 (“Unlike Enfish, [the claim] does not claim a software method that improves the functioning of a computer . . . [but] claims a ‘process that qualifies as an Appeal 2019-000522 Application 12/356,671 12 ‘abstract idea’ for which computers are invoked merely as a tool.’”) (Citation omitted). Further, we do not find that the claim is necessarily rooted in computer technology as were the claims in DDR Holdings. In DDR Holdings, the claimed invention created a hybrid web page that combined advantageous elements from two web pages, bypassing the expected manner of sending a visitor to another party’s web page, in order to solve the internet-centric problem of retaining website visitors. DDR Holdings, 773 F.3d at 1257–1259. Unlike DDR Holdings, the claim does not overcome a problem specifically arising in the realm of computer networks. We disagree with Appellant’s argument that the “the present application is directed to an improvement of a problem arising from existing computer technology” as the problems solved from the invention “stem from the fact that computers, computer networks, and the Internet have enabled market conditions to change faster than a human being can respond and the fact that purchases are completed via computer networks (i.e., the Internet).” Appeal Br. 15–16. Claim 1 does not recite limitations directed to the speed of performing the computations nor does the claim discuss the calculations are based upon the trades/purchase being based upon the computer. Rather, claim 1 states the computer implemented method places an order but not that the purchase is completed by a computer. Further, as discussed above, the Specification discloses the invention reduces market impact of executed order and produce measurable savings, because the markets change faster than a human can respond. We, additionally note, that Appellant’s Specification identified the claimed financial instruments are known and that the analysis of liquidity is performed using known techniques. Specification Appeal 2019-000522 Application 12/356,671 13 ¶¶ 15 and 32. Thus, the problem addressed in claim 1 is not related to a computer or to another technology, but instead to “the performance of some business practice known from the pre-Internet world along with the requirement to perform it” via computer and Internet which the DDR court distinguished as not involving solutions necessarily rooted in computer technology. DDR Holdings, 773 F.3d at 1257. Thus, we conclude representative claim 1 does not recite a practical application of the judicial exception. Significantly More than the Abstract Idea Under the Memorandum, 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 adds a specific limitation beyond the judicial exception that is not “well-understood, routine, conventional” in the field (see MPEP § 2106.05(d)); or, simply appends well-understood, routine, conventional activities previously known to the industry, specified at a high level of generality, to the judicial exception. Representative claim 1 recites the additional element that the method is processor implemented. Appellant’s Specification does not identify any processor or computer, let alone any specific processor.3 Thus, we concur 3 We note that the term processor broadly construed could be a job description, person performing, e.g. a loan processor, or trade processor. Although our decision does not rely upon such a broad interpretation as even if it construed as a computer processor, the recitation would be insufficient as “[M]erely requir[ing] generic computer implementation[] fail[s] to transform that abstract idea into a patent-eligible invention.” Alice, 573 U.S. at 221. Appeal 2019-000522 Application 12/356,671 14 with the Examiner that the additional elements recite wellknown elements. Appellant’s arguments, on page 17 of the Appeal Brief, that the limitations of determining book value, reorganizing book value, determining a tradeable book and selecting the optimum combination are, meaningful limitations that go beyond generally linking the use of an abstract idea, are not persuasive as under the above analysis these limitations are part of the abstract idea, and not the additional elements. Further, we are not persuaded by Appellant’s arguments that the claim recites an ordered combination of elements and as such is patent eligible. In McRO, the court reviewed claims which use “a combined order of specific rules that renders information into a specific format that is then used and applied to create desired results: a sequence of synchronized, animated characters” McRO, 837 F.3d at 1315. The court found that the claims did not “simply use a computer as a tool to automate conventional activity,” but instead used the computer to “perform a distinct process” that is carried out in a different way than the prior non-computer method to improve the technology of (3-D animation techniques). See McRO, 837 F.3d at 1314–16. Claim 1 recites a “receiving an order” (a step of data input which is conventional in computer technology MPEP § 2106.05(d) II (i)); “accessing a product database” (a step of accessing data which is also conventional to computer technology MPEP § 2106.05(d) II (iv)); “establishing a liquidity universe . . . analyzing the liquidity . . . determining an equivalent book . . . reorganizing the equivalent book . . . selecting an optimum combination . . . distributing the replicable financial instrument . . . converting the formats of the filled replicable financial instrument” (these are data analysis steps, as discussed above, the Appellant’s Specification identifies that the financial Appeal 2019-000522 Application 12/356,671 15 instruments and the analysis of liquidity is performed using known techniques, see also MPEP 2106.05 § (d) II (ii)-(iii)); and “placing orders for the tradeable books . . . posting the filled replicable financial instrument orders,” (these are data output steps which are conventional to computer technology). Thus, the claim recites using conventional steps to perform the abstract idea and the claim is unlike those at issue in McRO as there is no evidence that the claim perform a distinct process that is carried out in a different way than the prior non-computer method. Further, with regard to Appellant’s preemption argument, our reviewing court has said “[w]here a patent’s claims are deemed only to disclose patent ineligible subject matter under the Mayo framework, . . . , preemption concerns are fully addressed and made moot.” Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015). Thus, Appellant’s arguments are not persuasive of error in the Examiner’s determination that the claims do not recite significantly more than the abstract idea. In summary, Appellant’s arguments have not persuaded us of error in the Examiner’s determination that representative claim 1 is directed to an abstract idea; both a method of fundamental economic process and a method of collecting/gathering information and analyzing it (mental processes). Further, Appellant’s arguments have not persuaded us that the Examiner erred in finding that the claim is not: directed to an improvement in the functioning of the computer or to other technology or other technical field; directed to a particular machine; directed to performing or affecting a transformation of an article to a different state or thing; directed to using a judicial exception in some meaningful way beyond linking the exception to a Appeal 2019-000522 Application 12/356,671 16 particular technological environment such that the claim as a whole is more than a drafting effort to monopolize the judicial exception. For these reasons, we are unpersuaded that the claim recites additional elements that integrate the judicial exception into a practical application. See Memorandum, 84 Fed. Reg. at 54. Accordingly, we sustain the Examiner’s rejection of claim 1. Accordingly, we sustain the Examiner’s rejection of claim 1 under 35 U.S.C. § 101 as being directed to a patent-ineligible abstract idea, that is not integrated into a practical application, and does not include an inventive concept. CONCLUSION We affirm the Examiner’s rejection of claim 1, under 35 U.S.C. § 101. In summary: Claim Rejected 35 U.S.C § Reference(s)/Basis Affirmed Reversed 1 101 Eligibility 1 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 Copy with citationCopy as parenthetical citation