Borkovec, Milan et al.

Patent Trials and Appeals Board

Dec 24, 2020

2019003530 (P.T.A.B. Dec. 24, 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.
11/976,433 10/24/2007 Milan Borkovec 107945.000041 9745
145584 7590 12/24/2020
Prince Lobel Tye LLP
One International Place
Suite 3700
Boston, MA 02110
EXAMINER
SHAIKH, MOHAMMAD Z
ART UNIT PAPER NUMBER
3694
NOTIFICATION DATE DELIVERY MODE
12/24/2020 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):
docketing@princelobel.com
PTOL-90A (Rev. 04/07)

UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

Ex parte MILAN BORKOVEC, IAN DOMOWITZ, and
HANS G. HEIDLE
____________

Appeal 2019-003530
Application 11/976,433
Technology Center 3600
____________

Before BIBHU R. MOHANTY, BRUCE T. WIEDER, and
TARA L. HUTCHINGS, Administrative Patent Judges.

MOHANTY, Administrative Patent Judge.

DECISION ON APPEAL
STATEMENT OF THE CASE
Pursuant to 35 U.S.C. § 134(a), Appellant1 appeals from the
Examiner’s decision to reject claims 1, 3–8, 10–16, 18–22, and 26–29. We
have jurisdiction under 35 U.S.C. § 6(b).

SUMMARY OF THE DECISION
We AFFIRM.

1 We use the word “Appellant” to refer to “applicant” as defined in 37
C.F.R. § 1.42(a). Appellant identifies the real party in interest as ITG
SOFTWARE SOLUTIONS, INC. (Appeal Br. 2).
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CLAIMED SUBJECT MATTER
The Appellant’s claimed invention relates to systems and methods
for post trade estimation of transaction costs taking into account realized
market conditions (Spec., para. 2). Claim 1, reproduced below with the
italics added, is representative of the subject matter on appeal.

1. A computer implemented method for estimating transaction
costs, comprising:
receiving, over an electronic data network, a selected electronic
trade strategy;
calculating, for a plurality of proposed electronic trade orders
associated with a trading entity, estimated pre-trade transaction costs
for each of the proposed trade orders based on the selected electronic
trade strategy and on historical market data;
receiving, over the electronic data network, electronic execution
data related to an execution of the plurality proposed trade orders;
calculating estimated post-trade transaction costs for each said
executed trade based upon corresponding cost of said estimated pre-
trade transaction costs, said execution data, market returns, and trade
imbalances relating to said proposed trade orders;
aggregating estimated post-trade transaction costs to generate
an aggregated estimated post-trade transaction cost for said trading
entity, and
displaying, on a graphical user interface, the aggregated
estimated post-trade transaction cost.

THE REJECTION
The following rejection is before us for review:
Claims 1, 3–8, 10–16, 18–22, and 26–292 are rejected under 35 U.S.C.
§ 101 as being directed to non-statutory subject matter.

2 The Final Office Action at page 2 states that the rejection of claims 8 and
10–13 is withdrawn. However, the PTOL-326 and Final Office Action at
pages 8 and 17–26, and Answer at page 8, list those claims as rejected. The
Appeal Brief at page 1 also lists those claims as rejected and provides
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FINDINGS OF FACT
We have determined that the findings of fact in the Analysis section
below are supported at least by a preponderance of the evidence3.

ANALYSIS
Rejection under 35 U.S.C. § 101
The Appellant argues that the rejection of claim 1 is improper because
the claim is not directed to an abstract idea (Appeal Br. 12–23). The
Appellant argues further that the claim is “significantly more” than the
alleged abstract idea (Appeal Br. 23–28; Reply Br. 2, 3). The Appellant also
argues that the Examiner failed to properly consider the 1.132 Declaration
(Appeal Br. 19, 20; Supp. Br. 4–7).4

arguments for them at page 9. Accordingly, the statement of the withdrawal
of the rejection of claims 8 and 10–13 at page 2 of the Final Office Action is
considered a typographical error, as the remainder of the record by both the
Examiner and Appellant shows the rejection of those claims still pending.
3 See Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1427 (Fed. Cir. 1988)
(explaining the general evidentiary standard for proceedings before the
Patent Office).
4 The Appellant filed a first paper titled “Reply Brief” on Nov. 19, 2018
(Reply Br.). The Appellant filed a second paper titled “Reply Brief”
(considered a Supplemental Brief) on Nov. 28, 2018, which included a
request to reopen prosecution due to the Examiner allegedly citing new
evidence for the first time in the Answer mailed Sept. 28, 2018. However,
this request to reopen prosecution was not timely filed. 37 CFR 41.40(a)
indicates a petition must be filed within two months from the examiner’s
answer and before the filing of any Reply Brief. A previous Reply Brief was
filed earlier on Nov. 19, 2018, making the request to reopen prosecution
after the filing of that Reply Brief, and therefore the request to reopen
prosecution is untimely and request cannot be considered as it was not
properly timely filed. The other arguments in the Supplemental Brief filed
Nov. 28, 2018, at pages 4–7 not related to that request have been fully
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In contrast, the Examiner has determined that the rejection of record is
proper (Final Act. 8–17; Ans. 3–35). The Examiner states also that the
Declaration was fully considered (Ans. 11).
We agree with the Examiner. 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 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

considered. Regardless, our review of the rejection here determines that the
rejected claims are properly rejected under 35 U.S.C. § 101 on the merits.
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determined to be patent eligible include physical and chemical processes,
such as “molding rubber products” (Diamond v. Diehr, 450 U.S. 175, 192
(1981)); “tanning, dyeing, making waterproof cloth, vulcanizing India
rubber, smelting ores” (id. at 182 n.7 (quoting Corning v. Burden, 56 U.S.
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
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. (citation omitted) (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.”).
In January 2019, the USPTO published revised guidance on the
application of § 101. 2019 Revised Patent Subject Matter Eligibility
Guidance, 84 Fed. Reg. 50 (Jan. 7, 2019) (“Guidance”). Under the
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
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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, i.e., evaluate whether the claim
“appl[ies], rel[ies] on, or use[s] the judicial exception in a manner
that imposes a meaningful limit on the judicial exception, such
that the claim is more than a drafting effort designed to
monopolize the judicial exception.” (see Guidance, 84 Fed. Reg.
at 54; see also 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 Guidance.
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. “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.
(alterations in original) (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 Specification at paragraph 2 states that the invention relates to
systems and methods for post trade estimation of transaction costs taking
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into account realized market conditions. Here, the Examiner has determined
that the claim sets forth calculating the total cost of a trading order and sets
forth an abstract concept (Final Act. 10). We substantially agree with the
Examiner. We determine that the claim sets forth the subject matter in
italics above which describes the concept of: [1] “receiving . . . a selected
electronic trade strategy”; [2] “calculating . . . estimated pre-trade
transaction costs for each of the proposed trade orders”; [3] “receiving . . .
electronic execution data related to an execution of the plurality proposed
trade orders”; [4] “calculating estimated post-trade transaction costs for each
said executed trade”; [5] “aggregating estimated post-trade transaction costs
to generate an aggregated estimated post-trade transaction cost for said
trading entity”; and [6] “displaying . . . the aggregated estimated post-trade
transaction cost” which is a method of determining trading transaction costs
which is a mathematical concept and certain method of organizing human
activities in being a fundamental economic practice, i.e. a judicial exception.
A method, like the claimed method, is “a process that employs mathematical
algorithms to manipulate existing information to generate additional
information [and] is not patent eligible.” See Digitech Image Techs, LLC v.
Elecs. for Imaging, Inc., 758 F.3d 1344, 1351 (Fed. Cir. 2014). In Chicago
Board of Options Exchange v. International Securities Exchange, 640
Fed.Appx. 986 (Mem) (Fed. Cir. 2016), the Federal Circuit affirmed the
determination in three cases (CBM2013-00049, CBM2013-00050,
CBM2013-00051) involving trading technologies that were held to not meet
the requirements of 35 U.S.C. § 101.
We next determine whether the claim recites additional elements to
integrate the judicial exception into a practical application. See Guidance,
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84 Fed. Reg. at 54–55. The Guidance references the MANUAL OF PATENT
EXAMINING PROCEDURE (“MPEP”) §§ 2106.05(a)–(c) and (e)–(h).
Here, the claims do not improve computer functionality, improve
another field of technology, utilize a particular machine, or effect a
particular physical transformation. Rather, we determine that nothing in the
claims imposes a meaningful limit on the judicial exception, such that the
claims are more than a drafting effort to monopolize the judicial exception.
For example, in the claim, the additional elements beyond the abstract
idea are the recited “electronic data network” and “graphical user interface.”
The claimed limitations of “receiving,” “calculating,” “aggregating,” and
“displaying” in the claim “do not purport to improve the functioning of the
computer itself,” do not improve the technology of the technical field, and
do not require a “particular machine.” Rather, they are performed using
generic computer components. Further, the claim as a whole fails to effect
any particular transformation of an article to a different state. The recited
steps in the claim fail to provide meaningful limitations to limit the judicial
exception. In this case, the claim merely uses the claimed computer
elements as a tool to perform the abstract idea.
Considering the elements of the claim both individually and as “an
ordered combination” the functions performed by the computer system at
each step of the process are purely conventional. Each step of the claimed
method does no more than require a generic computer to perform a generic
computer function. Thus, the claimed elements have not been shown to
integrate the judicial exception into a practical application as set forth in the
Guidance.
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Turning to the second step of the Alice and Mayo framework, we
determine that the claim does not contain an inventive concept sufficient to
“transform” the abstract nature of the claim into a patent-eligible application.
Considering the claim both individually and as an ordered combination fails
to add subject matter beyond the judicial exception that is not well-
understood, routine, and conventional in the field. Rather the claim uses
well-understood, routine, and conventional activities previously known in
the art and they are recited at a high level of generality. The Specification at
paragraph 39 for example describes using conventional computer
components such as electronic data networks including the Internet, trade
routers, and known trading devices in a conventional manner. Here, the
claimed generic computer components which are used to implement the
claimed method are well understood, routine, or conventional in the field.
The claim has not been shown to be “significantly more” than the abstract
idea.
The Appellant states that the Declaration of Milan Borkovec was not
properly considered (Appeal Br. 19, 20; Supp. Br. 4–7). The Examiner
states that the Declaration was considered but not deemed persuasive
(Ans. 11). We have considered the Declaration fully and also determine that
is not persuasive. The Appeal Brief at page 13 argues, for instance, that the
Declaration shows the claimed invention is rooted in computer technology
but we disagree as it is rather rooted in determining trading transaction costs
and only inferentially uses conventional computer components in a generic
manner to implement the method steps. The Declaration is not deemed
persuasive to show the rejection was improper.
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The Appellant, at pages 16 and 22 of the Appeal Brief, has also cited
to McRO, Inc. v. Bandai Namco Games America Inc., 837 F.3d 1299 (Fed.
Cir. 2016) but the claims in that case are distinguished from this case in
being directed to rules for lip sync and facial expression animation. The
Appellant, at pages 20 and 21 of the Appeal Brief, has also cited to Enfish,
LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016) to show that the
claim is not abstract but the claims in that case were not similar in scope to
those here and were in contrast directed to a self-referential data table.
For the reasons given above, the claim is considered to set forth the
abstract concept of determining trading transaction costs and the claimed
method steps are not considered to be “significantly more” than the abstract
concept.
For these above reasons, the rejection of claim 1 is sustained. The
Appellant has provided the same arguments for the remaining claims drawn
to similar subject matter and the rejection of these claims is sustained for the
same reasons given above.

CONCLUSIONS OF LAW
We conclude that Appellant has not shown that the Examiner erred in
rejecting claims 1, 3–8, 10–16, 18–22, and 26–29 under 35 U.S.C. § 101.

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DECISION SUMMARY
In summary:
Claims
Rejected
35
U.S.C. §
Reference(s)/Basis Affirmed Reversed
1, 3–8, 10–
16, 18–22,
26–29
101 Eligibility 1, 3–8, 10–
16, 18–22,
26–29

TIME PERIOD FOR RESPONSE
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