Paul A. Bauerschmidt et al.

Patent Trials and Appeals Board

Dec 19, 2019

14195581 - (D) (P.T.A.B. Dec. 19, 2019)

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.
14/195,581 03/03/2014 Paul A. Bauerschmidt 4672-05914EUS 9637
12684 7590 12/19/2019
Lempia Summerfield Katz LLC/CME
20 South Clark Street
Suite 600
Chicago, IL 60603
EXAMINER
BARTLEY, KENNETH
ART UNIT PAPER NUMBER
3693
NOTIFICATION DATE DELIVERY MODE
12/19/2019 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):
docket-us@lsk-iplaw.com
mail@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 PAUL A. BAUERSCHMIDT, ARI L. STUDNITZER,
WILLIAM J. ALBERT, PAUL J. CALLAWAY, JAMES W. FARRELL,
and AGNES SHANTHI THIRUTHUVADOSS
____________

Appeal 2018-000533
Application 14/195,581
Technology Center 3600
____________

Before MURRIEL E. CRAWFORD, PHILIP J. HOFFMANN, and
ROBERT J. SILVERMAN, Administrative Patent Judges.

CRAWFORD, Administrative Patent Judge.

DECISION ON APPEAL
STATEMENT OF THE CASE
Appellant seeks our review under 35 U.S.C. § 134 of the Examiner’s
final rejection of claims 20–37 and 39. We have jurisdiction under 35
U.S.C. § 6(b).
SUMMARY OF DECISION
We AFFIRM.

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THE INVENTION
Appellant claims computer implemented methods to allow over the
counter futures products to be traded in a centralized matching and clearing
environment which permits implying/interpolating price in one of multiple
inter-related markets based on (sufficient) pricing data known in the
remaining markets. (Spec. ¶¶ 11, 188). Specifically, the invention relates to
a method for generating a new order book for a product when an order book
for the product is not available. (Spec. ¶¶ 195–197).
Claim 20 is representative of the subject matter on appeal.
20. A computer implemented method for creating an order
book, for independently transacting a product, based on other
products each having a separate order book associated
therewith, the method comprising:
receiving, by a computer processor coupled with an
exchange computer system, a transaction request for a new
product comprising first and second components;
determining, by the computer processor based on the
receipt of the transaction request, that an order book for the new
product is not available by which the transaction request may
be processed as a single transaction without separately
processing a transaction for the first component and a
transaction for the second component, and based on the
determination that the order book for the new product is not
available:
identifying, by the computer processor, a first
available order book for a first available product listed on
the exchange and a second available order book for a
second available product listed on the exchange, the first
available product comprising a first component and the
second available product comprising a second
component, the first and the second components forming
the new product;
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generating, by the computer processor, a new order
book for the new product based on the first and second
available products; and
causing, by the computer processor, the new
product to be listed on the exchange such that,
independent of the first and second available order books,
subsequently received orders to buy or sell the new
product are matched based on the new order book or
entered into the new order book.

THE REJECTION
Claims 20–37 and 39 are rejected under 35 U.S.C. § 101 as directed to
a judicial exception without significantly more.
Claims 20–37 and 39 are rejected under 35 U.S.C. § 112(a), first
paragraph, as failing to comply with the written description requirement.
Claims 20–37 and 39 are rejected under 35 U.S.C. § 103(a) as being
unpatentable over Johnston (US 2006/0173771 A1, published Aug. 3, 2006)
in view of Boies (US 2002/0103741 A1, published Aug. 1, 2002) and in
further view of Neyman (US 2002/0107781 A1, published Aug. 8, 2002)
ANALYSIS
35 U.S.C. § 101 REJECTION
We will sustain the rejection of claims 20–37 and 39 under 35 U.S.C.
§ 101.
The Supreme Court
set forth a framework for distinguishing patents that claim laws
of nature, natural phenomena, and abstract ideas from those that
claim patent-eligible applications of those concepts. First, . . .
determine whether the claims at issue are directed to one of
those patent-ineligible concepts. . . . If so, . . . then ask, “[w]hat
else is there in the claims before us?” . . . To answer that
question, . . . consider the elements of each claim both
individually and “as an ordered combination” to determine
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whether the additional elements “transform the nature of the
claim” into a patent-eligible application. . . . [The Court]
described step two of this analysis as 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 Corp. v. CLS Bank Int’l, 573 U.S. 208, 217–18 (citing Mayo
Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 72–73 (2012))
(citations omitted).
To perform this test, we must first determine whether the claims at
issue are directed to a patent-ineligible concept. The Federal Circuit has
explained that “the ‘directed to’ inquiry applies a stage-one filter to claims,
considered in light of the [S]pecification, based on whether ‘their character
as a whole is directed to excluded subject matter.’” See Enfish, LLC v.
Microsoft Corp., 822 F.3d 1327, 1335 (Fed. Cir. 2016) (quoting Internet
Patents Corp. v. Active Network, Inc., 790 F.3d 1343, 1346 (Fed. Cir.
2015)). It asks whether the focus of the claims is on a specific improvement
in relevant technology or on a process that itself qualifies as an “abstract
idea” for which computers are invoked merely as a tool. See id. at 1335–36.
In so doing we apply a “directed to” two prong test: 1) evaluate
whether the claim recites a judicial exception, and 2) if the claim recites a
judicial exception, evaluate whether the judicial exception is integrated into
a practical application. 2019 Revised Patent Subject Matter Eligibility
Guidance, 84 Fed. Reg. 50, 50–57 (Jan. 7, 2019) (“Guidance”).
The Examiner determines that the claims are directed to generating a
new order book for a new product, (Final Act. 25). The Examiner
determines that the concepts of the invention relate to the economy and
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commerce and therefore the claims are directed to an abstract idea. (Final
Act. 26).
The Specification discloses that the disclosed systems and methods
relate to allowing trading of over the counter foreign exchange contracts on
a centralized matching and clearing mechanism such as that of the Chicago
Mercantile Exchange’s futures exchange system. (Spec. ¶ 29). The
invention is operative to determine at least one buy price for a new product
based on the at least one buy price of the first product and the at least one
buy price for a second product. (Spec. ¶ 196). This disclosure supports the
Examiner’s determination that the claims recite concepts that relate to the
economy and commerce.
Consistent with this disclosure, claim 20 recites “receiving . . . a
transaction request,” “determining . . . an order book for a new product is not
available,” “identifying . . . a first available order book for a first available
product listed . . . and a second available order book for a second available
product listed on the exchange,” and “generating . . . a new order book for
the new product based on the first and second available products.”
As such, we agree with the Examiner that claim 20 recites a method
that relates to the economy and commerce which is a certain method of
organizing human activities, i.e., a fundamental economic practice.
Guidance 84 Fed. Reg. 52.
Also, we determine that the steps of receiving data in the form of a
transaction request for a product, analyzing that data to determine whether
an order book is available for the product such that the transaction can be
processed without processing a first component and second component
separately and if not generating data in the form of a new order book based
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on the first and second product constitute “analyzing information by steps
people go through in their minds, or by mathematical algorithms, without
more, as essentially mental processes within the abstract-idea category.”
Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1354 (Fed.
Cir. 2016); see also buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1355
(Fed. Cir. 2014) (claims directed to certain arrangements involving
contractual relations are directed to abstract ideas). Thus, we find that the
claims recite the judicial exception of a mental process.
Turning to the second prong of the “directed to test,” claim 20
requires a “processor.” The recitation of the word “processor” does not
impose “a meaningful limit on the judicial exception, such that the claim is
more than a drafting effort designed to monopolize the judicial exception.”
Guidance 84 Fed. Reg. at 53. We find no indication in the Specification, nor
does Appellant direct us to any indication, that the operations recited in
independent claim 20 invoke any inventive programming, require any
specialized computer hardware or other inventive computer components,
i.e., a particular machine, or that the claimed invention is implemented using
other than generic computer components to perform generic computer
functions. See DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245,
1256 (Fed. Cir. 2014) (“[A]fter Alice, there can remain no doubt: recitation
of generic computer limitations does not make an otherwise ineligible claim
patent-eligible.”).
We also find no indication in the Specification that the claimed
invention effects a transformation or reduction of a particular article to a
different state or thing. Nor do we find anything of record, short of attorney
argument, that attributes any improvement in computer technology and/or
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functionality to the claimed invention or that otherwise indicates that the
claimed invention integrates the abstract idea into a “practical application,”
as that phrase is used in the revised Guidance. See Guidance, 84 Fed. Reg.
at 55.
In this regard, the recitation does not affect an improvement in the
functioning of the claimed processor or any other technology, does not recite
a particular machine or manufacture that is integral to the claims, and does
not transform or reduce a particular article to a different state or thing. Id.
Thus, claim 20 is directed to a judicial exception that is not integrated into a
practical application and thus is directed to an “abstract idea.”
Turning to the second step of the Alice analysis, because we find that
claim 20 is directed to an abstract idea, the claim must include an “inventive
concept” in order to be patent-eligible, i.e., there must be an element or
combination of elements that is sufficient to ensure that the claim in practice
amounts to significantly more than the abstract idea itself. See Alice, 573
U.S. at 217–18 (quoting Mayo Collaborative Servs. v. Prometheus Labs.,
Inc., 566 U.S. 66, 72–73 (2012)).
The introduction of a processor into the claims does not alter the
analysis at Alice step two.
[T]he mere recitation of a generic computer cannot transform a
patent-ineligible abstract idea into a patent-eligible invention.
Stating an abstract idea “while adding the words ‘apply it’” is
not enough for patent eligibility. Nor is limiting the use of an
abstract idea “‘to a particular technological environment.’”
Stating an abstract idea while adding the words “apply it with a
computer” simply combines those two steps, with the same
deficient result. Thus, if a patent’s recitation of a computer
amounts to a mere instruction to “implemen[t]” an abstract idea
“on . . . a computer,” that addition cannot impart patent
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eligibility. This conclusion accords with the preemption
concern that undergirds our § 101 jurisprudence. Given the
ubiquity of computers, wholly generic computer
implementation is not generally the sort of “additional
featur[e]” that provides any “practical assurance that the
process is more than a drafting effort designed to monopolize
the [abstract idea] itself.”
Alice, 573 U.S. at 223 (alterations in original) (citations omitted).
Instead, “the relevant question is whether the claims here do more
than simply instruct the practitioner to implement the abstract idea . . . on a
generic computer.” Id. at 225. They do not.
Taking the claim elements separately, the function performed by the
processor at each step of the process is purely conventional. Using a
processor to retrieve, select, and apply decision criteria to data and modify
the data as a result amounts to electronic data query and retrieval—one of
the most basic functions of a computer. All of these computer functions are
well-understood, routine, conventional activities previously known to the
trading industry. See Elec. Power Grp., 830 F.3d at 1354; see also In re
Katz Interactive Call Processing Patent Litig., 639 F.3d 1303, 1316 (Fed.
Cir. 2011) (“Absent a possible narrower construction of the terms
‘processing,’ ‘receiving,’ and ‘storing,’ . . . those functions can be achieved
by any general purpose computer without special programming”). In short,
each step does no more than require a generic computer to perform generic
computer functions. As to the data operated upon, “even if a process of
collecting and analyzing information is ‘limited to particular content’ or a
particular ‘source,’ that limitation does not make the collection and analysis
other than abstract.” SAP Am. Inc. v. InvestPic, LLC, 890 F.3d 1016, 1022
(Fed. Cir. 2018).
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In regard to consideration of claim 20 as an ordered combination, we
note that claim 20 only recites a computer processor and thus no
combination of components is recited.
The sequence of data reception-analysis-access/display is equally
generic and conventional or otherwise held to be abstract. See Ultramercial,
Inc. v. Hulu, LLC, 772 F.3d 709, 715 (Fed. Cir. 2014) (sequence of
receiving, selecting, offering for exchange, display, allowing access, and
receiving payment recited an abstraction), Inventor Holdings, LLC v. Bed
Bath & Beyond, Inc., 876 F.3d 1372, 1378 (Fed. Cir. 2017) (holding that
sequence of data retrieval, analysis, modification, generation, display, and
transmission was abstract), Two-Way Media Ltd. v. Comcast Cable
Commc’ns, LLC, 874 F.3d 1329, 1339 (Fed. Cir. 2017) (holding sequence of
processing, routing, controlling, and monitoring was abstract). The ordering
of the steps is, therefore, ordinary and conventional.
Claim 20 does not, for example, purport to improve the functioning of
the computer processor itself. As we stated above, claim 20 does not affect
an improvement in any other technology or technical field. The
Specification spells out different generic equipment and parameters that
might be applied using this concept and the particular steps such
conventional processing would entail based on the concept of information
access under different scenarios. (See, e.g., Spec. ¶ 124). Thus, claim 20 at
issue amounts to nothing significantly more than instructions to apply the
abstract idea of information access using some unspecified, generic
computer. Under our precedents, that is not enough to transform an abstract
idea into a patent-eligible invention. See Alice, 573 U.S. at 226.
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We have reviewed all the arguments (Appeal Br. 5–15; Reply Br. 1–
6) Appellant has submitted concerning the patent eligibility of the claims
before us that stand rejected under 35 U.S.C. § 101. We find that our
analysis above substantially covers the substance of all the arguments, which
have been made. But, for purposes of completeness, we will address various
arguments in order to make individual rebuttals of same.
We are not persuaded of error on the part of the Examiner by
Appellant’s argument that the claims recite patent eligible subject matter
because the claims does not preempt the entire idea of financial trading of
products. (Appeal Br. 6). “While preemption may signal patent ineligible
subject matter, the absence of complete preemption does not demonstrate
patent eligibility.” Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d
1371, 1379 (Fed. Cir. 2015); see also OIP Techs., Inc. v. Amazon.com, Inc.,
788 F.3d 1359, 1362–63 (Fed. Cir. 2015), cert. denied, 136 S. Ct. 701, 193
(2015) (citation omitted) (“[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.”). And, “[w]here a patent’s
claims are deemed only to disclose patent ineligible subject matter under the
Mayo framework, as they are in this case, preemption concerns are fully
addressed and made moot.” Ariosa, 788 F.3d at 1379.
We are also unpersuaded of error on the part of the Examiner by
Appellant’s argument that the claims are rooted in computer technology and
solve a unique problem in electronic trading systems. (Appeal Br. 5, 7). In
making this argument, Appellant relies on Trading Technologies Int’l, Inc. v.
CQG., Inc., 675 F. App’x 1001 (Fed. Cir. 2017). The claims in Trading
Techs. recited “dynamically displaying a second indicator in one of a
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plurality of locations in an ask display region, each location in the ask
display region corresponding to a price level along the common static price
axis.” No such dynamic positioning of data is recited in the claims at hand.
In a related precedential Trading Techs. case, the Court held “[t]he claims
are focused on providing information to traders in a way that helps them
process information more quickly, not on improving computers or
technology.” Trading Techs. Int’l, Inc. v. IBG LLC, 921 F.3d 1378, 1384
(Fed. Cir. 2019) (“Trading Techs II”). Similarly, the claims here are focused
on providing information to users in a way that helps them process
information more quickly, not on improving computers or technology. In
this regard, we agree with the Examiner’s finding on page 9 of the Answer
that Trading Techs. claimed an improvement to the technology of graphical
user interface for trading purposes which had specific structure and
concordant functionality. There is no specific structure and functionality
claimed here.
We are not persuaded that the Examiner erred by Appellant’s
argument that the claimed combination is a specific implementation which
has not been used before and is novel and therefore is not well-understood,
routine or conventional in the art. (Appeal Br. 9, 13). The analysis of
whether the claims recite well understood, routine and conventional
elements, as we explained above, is done in the second step of the Alice
analysis, i.e., whether the claims include significantly more than the abstract
idea. The only recitation in claim 20 that is not a part of the abstract idea of
generating a new order book for a new product, is the recitation of a
“computer processor.” Appellant does not argue that the processor utilized
in the instant application receives, processes and transmits data in other than
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a well-understood, routine and conventional manner.
To the extent Appellant maintains that the limitations of claim 20
necessarily amount to “significantly more” than an abstract idea because the
claimed implementation is allegedly novel, Appellant misapprehends the
controlling precedent. Although the second step in the Alice/Mayo
framework is termed a search for an “inventive concept,” the analysis is not
an evaluation of novelty or non-obviousness, but rather, a search for “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, 573 U.S. at 217–18 (quoting Mayo, 566
U.S. at 73). A novel and nonobvious claim directed to a purely abstract idea
is, nonetheless, patent-ineligible. See Mayo, 566 U.S. at 90.
We are not persuaded of error on the part of the Examiner by
Appellant’s argument that the claimed invention reduces the computational
load on the electronic trading system (Appeal Br. 10). The difficulty with
this argument is that we can find no basis for it in the claim or the
Specification. Appellant has not directed us to a place in the record where
there is any suggestion that a problem of computational overload has been
solved by following the recited steps of the trading scheme as claimed on a
generic computer. As the argument is not commensurate in scope with what
is claimed, because the record does not reflect it, it amounts to mere attorney
argument. Attorney argument, however, cannot take the place of record
evidence. See In re Geisler, 116 F.3d 1465, 1470 (Fed. Cir. 1997); Johnston
v. IVAC Corp., 885 F.2d 1574, 1581 (Fed. Cir. 1989).
In view of the foregoing, we will sustain the Examiner’s rejection of
claim 20. We will also sustain the rejection as it is directed to claims 21–33
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because Appellant has not argued the separate eligibility of these claims.
We do not agree with the Appellant that claim 34 recites a special
purpose computer (Appeal Br. 14–15). According to the Appellant the
claims recite means-plus-function elements that amount to a specific
algorithm that transforms an otherwise general purpose computer into a
special purpose computer programmed to perform the recited functions.
Appellant’s argument is not persuasive because Appellant does not
explain what this specific algorithm is or how it transforms the general
purpose computer into a special purpose computer. Essentially, Appellant is
arguing that inclusion of the phrase “means for” in a claim imparts a
meaningful limitation or adds significantly more to the abstract idea. We
disagree. While it is true that a particular “corresponding structure, material,
or acts described in the specification” may impart a meaningful limitation in
a 35 U.S.C. § 112(f) context, the mere inclusion of the phrase “means for” in
a claim does not have that effect. Steps that do nothing more than spell out
what it means to “apply it on a computer” cannot confer patent-eligibility.
Alice, 573 U.S. at 224, (warning against a § 101 analysis that turns on the
draftsman’s art (citing Parker v. Flook, 437 U.S. 584, 593 (1978))).
In view of the foregoing, we will sustain this rejection as it is directed
to claim 34. We will also sustain the rejection as it is directed to claims 35–
37 and 39 because Appellant has not argued the separate eligibility of these
claims.
35 U.S.C. § 112, FIRST PARAGRAPH REJECTION
We will not sustain this rejection. The Examiner finds that there is no
support for the recitation in claim 20 of “determining . . . that an order book
for the new product is not available . . . .”
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The Specification discloses:
upon receipt of a request to transact in a particular product, such
as via a request receiver (not shown) or other interface, the
Exchange 108 determines whether a market for the particular
product exists. If a market exists, the transaction proceeds as
described herein. However, if the Exchange is unable to
identify an existing market, a request is transmitted to the
implied spread processor 1302 identifying the requested
product. Alternatively, all transaction requests may be filtered
through the implied spread processor 1302, such as via request
receiver (not shown) or other interface, which determines
whether a market for the requested product exists. If a market
exists, the request is passed to the Exchange 108 as usual. If a
market for the requested product does not exist, the implied
spread processor 1302 operates as described.
Spec. ¶ 192.
We note that the Specification at paragraph 189 discloses that
an “order book” and a “market” are the same thing. Therefore,
Appellant is correct that the Specification provides support for this
recitation.

35 U.S.C. § 103 REJECTION
We will not sustain this rejection because we agree with Appellant
that the prior art does not disclose “the first and second components forming
the new product,” “generating . . . a new order book for the new product
based on the first and second available products,” and “causing . . . the new
product to be listed on the exchange.” From these recitations, it is clear that
the new product is a product that includes the first and second products and
that this product is listed as a new order book on the exchange.
In rejecting claims under 35 U.S.C. § 103, it is incumbent upon the
Examiner to establish a factual basis to support the legal conclusion of
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obviousness. See In re Fine, 837 F.2d 1071, 1073 (Fed. Cir. 1988).
The Examiner relies on Figure 5 of Johnston and accompanying
disclosure for teaching this subject matter. We find that Figure 5 of
Johnston discloses that two products, the purchase of US dollars with
Japanese yen and the purchase of Swiss francs with US dollars are combined
in an implied order. It is unclear, however, how the purchases are done. In
other words, it is unclear from this figure whether these two purchases are
actually combined so that francs are purchased with yen or whether the
purchase of dollars is done first followed by the purchase of francs. Further,
it is not clear that a new product, i.e., the purchase of francs with yen is
listed as a new order book on an exchange.
Therefore, we will not sustain this rejection of claim 20 and
claims 21–26. We will not sustain this rejection as it is directed to the
remaining claims for the same reason.

CONCLUSIONS OF LAW
We conclude the Examiner did not err in rejecting claims 20–37
and 39 under 35 U.S.C. § 101 but did err in rejecting these claims under 35
U.S.C. §§ 112, first paragraph and 103(a).

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DECISION
In summary:
Claims
Rejected
35 U.S.C.
§
Reference(s)/Basis Affirmed Reversed
20–37, 39 101 Eligibility 20–37, 39
20–37, 39 112, first
paragraph
Written
Description
20–37, 39
20–37, 39 103(a) Johnston, Boies,
Neyman
20–37, 39
Overall
Outcome
20–37, 39
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