Ex Parte Brady

Patent Trial and Appeal Board

Jan 28, 2019

13079505 (P.T.A.B. Jan. 28, 2019)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
13/079,505 04/04/2011
12684 7590 01/30/2019
Lempia Summerfield Katz LLC/CME
20 South Clark Street
Suite 600
Chicago, IL 60603
FIRST NAMED INVENTOR
Neal B. Brady
UNITED STATES DEPARTMENT OF COMMERCE
United States Patent and Trademark Office
Address: COMMISSIONER FOR PATENTS
P.O. Box 1450
Alexandria, Virginia 22313-1450
www .uspto.gov
ATTORNEY DOCKET NO. CONFIRMATION NO.
4672-11016AUS 9878
EXAMINER
PRESTON, JOHN 0
ART UNIT PAPER NUMBER
3691
NOTIFICATION DATE DELIVERY MODE
01/30/2019 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):
mail@lsk-iplaw.com
docket-us@lsk-iplaw.com
pair_lsk@firsttofile.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte NEAL B. BRADY
Appeal2017-010554
Application 13/079,505
Technology Center 3600
Before ST. JOHN COURTENAY III, JOHNNY A. KUMAR, and
STEVEN M. AMUNDSON, Administrative Patent Judges.
COURTENAY, Administrative Patent Judge.
DECISION ON APPEAL
Appellant1 appeals under 35 U.S.C. § 134(a) from the Examiner's
Final Rejection of claims 1-23, which constitute all the claims pending in
this application. We have jurisdiction over the pending claims under
35 U.S.C. § 6(b).
We affirm.
1 According to Appellant, the real party in interest is the Chicago Mercantile
Exchange, Inc. App. Br. 2.
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Application 13/079,505
STATEMENT OF THE CASE
Embodiments of Appellant's invention relate "generally to a method
and a system for receiving and processing financial instrument trading
instructions or market actions via a messaging, e.g. Instant Messaging (IM),
interface and for providing feedback using the same." Spec. ,r 1.
Exemplary Claim
1. A method for communicating a market action to at
least one market participant through an electronic facility
platform, the method comprising:
a. receiving a communication via a communications
network;
b. scanning the communication using the computerized
system to identify at least one of a predefined plurality of
keywords, each of said plurality of keywords corresponding to a
respective market action to be addressed by the market
participant;
c. when the communication contains at least one of a
predefined plurality of keywords, parsing the communication to
identify at least one parameter corresponding to the respective
market action, and identify one or more outrights specified in the
communication and further, based on the identified one or more
outrights, identify a set of exchange defined spreads formed by
the one or more outrights, regardless of sequence in which the
one or more outrights are presented in the communication by
analyzing each permutation of the order of the one or more
outrights to determine those permutations which match an
exchange defined spread included in an exchange provided
library of common combinations of one or more outrights;
d. converting the communication into a financial
information exchange compliant communication selected from
one of a FIX protocol, a FIXML protocol, or a FPML protocol
compliant communication reflecting the at least one parameter;
and
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e. transmitting the financial information exchange
compliant communication to the at least one market participant
via a financial information exchange compliant communication
network.
App. Br. 18 (Claims Appendix) (Contested limitations emphasized).
Rejections
A. Claims 1-23 are rejected under 35 U.S.C. § 101, as being directed
to a judicial exception, without significantly more. Final Act. 6.
B. Claims 1-23 are rejected under pre-AIA 35 U.S.C. § I03(a), as
being obvious over the combined teachings and suggestions of
Bryan et al. (US 2010/0082755 Al, Apr. 1, 2010) ("Bryan") and
Ben-Levy et al. (US 7,447,654 B2, Nov. 4, 2008) ("Ben-Levy").
Final Act. 7-10.
Issues on Appeal
A. Did the Examiner err in rejecting claims 1-23 under
35 U.S.C. § 101, as being directed to a judicial exception, without
significantly more?
B. Did the Examiner err in rejecting claims 1-23 under
35 U.S.C. § 103, as being obvious over the cited combination of
Bryan and Ben-Levy?
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ANALYSIS
We have considered all of Appellant's arguments and any evidence
presented. We highlight and address specific findings and arguments for
emphasis in our analysis below.
Rejection A Under 35 US.C. § 101
Principles of Law
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. Kappas, 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 );
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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, 192
( 1981) ); "tanning, dyeing, making waterproof cloth, vulcanizing India
rubber, smelting ores" (id. at 184 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 176; see also id. at 192 ("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. ( 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 tum 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
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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.
USPTOJanuary 7, 2019 Revised Section 101 Memorandum
The USPTO recently published revised guidance on the application of
§ 101. See 2019 Revised Patent Subject Matter Eligibility Guidance, 84
Fed. Reg. 50 (Jan. 7, 2019) ("Memorandum"). This new guidance is applied
in this opinion. Under the 2019 Memorandum guidance, we first look to
whether the claim recites:
( 1) any judicial exceptions, including certain groupings of abstract
ideas (i.e., mathematical concepts, mental processes, or certain methods of
organizing human activity such as a fundamental economic practice or
managing personal behavior or relationships or interactions between
people); 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)). 2 84 Fed. Reg. at 51-52, 55.
A claim that integrates a judicial exception into a practical application
applies, relies on, or uses the judicial exception in a manner that imposes a
meaningful limit on the judicial exception, such that the claim is more than a
2 All references to the MPEP are to the Ninth Edition, Revision 08-2017
(rev. Jan. 2018).
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drafting effort designed to monopolize the judicial exception. 84 Fed. Reg.
at 54. When the judicial exception is so integrated, then the claim is not
directed to a judicial exception and is patent eligible under § 101. 84 Fed.
Reg. at 54.
Only if a claim: (1) recites a judicial exception, and (2) does not
integrate that exception into a practical application, do we then evaluate
whether the claim provides an inventive concept. 84 Fed. Reg. at 56; Alice,
573 U.S. at 217-18. For example, we 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, and conventional
activities previously known to the industry, specified at a high level of
generality, to the judicial exception. 84 Fed. Reg. at 56.
Because there is no single definition of an "abstract idea" under Alice
step 1, the PTO has recently synthesized, for purposes of clarity,
predictability, and consistency, key concepts identified by the courts as
abstract ideas to explain that the "abstract idea" exception includes the
following three groupings:
1. Mathematical concepts-mathematical relationships, mathematical
formulas or equations, mathematical calculations;
2. Mental processes-concepts performed in the human mind
(including an observation, evaluation, judgment, opinion); and
3. Certain methods of organizing human activity-fundamental
economic principles or practices (including hedging, insurance,
mitigating risk); commercial or legal interactions (including
agreements in the form of contracts; legal obligations; advertising,
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marketing or sales activities or behaviors; business relations);
managing personal behavior or relationships or interactions
between people (including social activities, teaching, and
following rules or instructions).
According to the Memorandum, "claims that do not recite [subject]
matter that falls within these enumerated groupings of abstract ideas should
not be treated as reciting abstract ideas," except in rare circumstances. Even
if the claims recite any one of these three groupings of abstract ideas, these
claims are still not "directed to" a judicial exception (abstract idea), and thus
are patent eligible, if "the claim as a whole integrates the recited judicial
exception into a practical application of that judicial exception." See
Memorandum, 84 Fed. Reg. at 53.
"Integration into a practical application" requires an additional
element or a combination of additional elements in the claim to apply, rely
on, or use 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 exception. Id.
For example, limitations that are indicative of "integration into a
practical application" include:
1. Improvements to the functioning of a computer, or to any other
technology or technical field-see MPEP § 2106.05(a);
2. Applying the judicial exception with, or by use of, a particular
machine-see MPEP § 2106.05(b);
3. Effecting a transformation or reduction of a particular article to
a different state or thing - see MPEP § 2106.05( c ); and
4. Applying or using the judicial exception in some other
meaningful way beyond generally linking the use of the judicial
exception to a particular technological environment, such that
the claim as a whole is more than a drafting effort designed to
monopolize the exception-see MPEP § 2106.05(e).
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In contrast, limitations that are not indicative of "integration into a
practical application" include:
5. Adding the words "apply it" ( or an equivalent) with the judicial
exception, or mere instructions to implement an abstract idea on
a computer, or merely uses a computer as a tool to perform an
abstract idea-see MPEP § 2106.05(±);
6. Adding insignificant extra-solution activity to the judicial
exception-see MPEP § 2106.05(g); and
7. Generally linking the use of the judicial exception to a
particular technological environment or field of use - see
MPEP 2106.05(h).
See Memorandum, 84 Fed. Reg. at 54--55 ("Prong Two").
The Examiner's Rejection A Under 35 USC§ 101
The Examiner concludes claims 1-23 are directed to a judicial
exception, because the claims are:
directed to the abstract idea of receiving a communication,
identifying key information in the communication, converting
the communication into a suitable format, and transmitting the
communication. The method and/ or system is similar to
concepts that have been identified as abstract by the courts,
such as using categories to organize, store, and transmit
information in Cybeifone[ 3] or comparing new and stored
information and using rules to identify options in SmartGene[ 4 ].
3 The Examiner is referring to Cyberfone Systems, LLC v. CNN Interactive
Group, Inc., 558 F. App'x 988, 993 (Fed. Cir. 2014) (nonprecedential)
(receiving or transmitting data over a network, e.g., using the Internet to
gather data, is abstract).
4 The Examiner is referring to SmartGene, Inc. v. Advanced Biological
Laboratories, SA, 555 F. App'x 950, 955 (Fed. Cir. 2014) (nonprecedential)
("Whatever the boundaries of the 'abstract ideas' category, the claim at issue
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Final Act. 6. 5
The Examiner finds the claims do not include additional elements that
amount to significantly more than the judicial exception, because:
the additional elements when considered both individually and
as a combination do not amount to significantly more than the
abstract idea. The method and/or system is recited at a high level
of generality and only performs generic functions of
manipulating information and transmitting that information to a
remote subscriber computer. Generic computers peiforming
generic computer functions, without an inventive concept, do not
amount to significantly more than the abstract idea. The
limitations describe a field of use that attempt to limit the abstract
idea to a particular technological environment.
Final Act. 6 ( emphasis added).
For the aforementioned reasons, the Examiner concludes that claims
1-23 are not patent eligible under 35 U.S.C. § 101.
Under the revised USPTO January 7, 2019 Section 101 policy
Memorandum, we consider the following points of law:
Memorandum (1 ): Are the claims directed to any judicial exceptions,
including certain groupings of abstract ideas (i.e., mathematical concepts,
here involves a mental process excluded from section 101: the mental steps
of comparing new and stored information and using rules to identify medical
options."). In SmartGene, step (c) of Advanced Biological Laboratories'
claim 1 recites: "generating in said computing device advisory information
for one or more therapeutic treatment regimens in said ranked listing based
on said patient information and said expert rules." Id. at 952.
5 "Patent eligibility under§ 101 presents an issue of law." Accenture Glob.
Servs., GmbH v. Guidewire Software, Inc., 728 F.3d 1336, 1340-41 (Fed.
Cir. 2013).
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certain methods of organizing human interactions such as a fundamental
economic practice, or mental processes)?
Regarding Memorandum ( 1 ), our view is that the Examiner did not err
in concluding that each of claims 1-23 on appeal is directed at least to the
abstract idea of "receiving a communication, identifying key information in
the communication, converting the communication into a suitable format,
and transmitting the communication." Final Act. 6.
We note the preamble of claim 1 is expressly directed to "[a] method
for communicating a market action to at least one market participant
through an electronic facility platform," which informs our view that the
claim considered as a whole is directed to a certain method of organizing
human behavior, i.e., a fundamental economic practice. ( emphasis added).
The body of claim 1 similarly reinforces our view because it is directed to
the last step ( e) result of "transmitting the financial information exchange
compliant communication to the at least one market participant via a
financial information exchange compliant communication network," which
is also a fundamental economic practice. To the extent Appellant advances
arguments regarding Alice step one, which also fall under Memorandum (2)
(covering MPEP §§ 2106.05(a}-(c) and (e}-(h)), we address these arguments
infra.
Regarding Memorandum (2), and for the reasons which follow, we
conclude that Appellant's claims 1-23 do not integrate the judicial
exception into a practical application. See MPEP §§ 2106.05(a}-(c) and
(e}-(h). Applying the revised 101 Memorandum guidance, we address these
"practical application" MPEP sections seriatim.
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MPEP § 2106.05(a) "Improvements to the Functioning of a Computer
or to Any Other Technology or Technical Field"
This section of the MPEP guides: "In determining patent eligibility,
examiners should consider whether the claim 'purport( s) to improve the
functioning of the computer itself' or 'any other technology or technical
field.' ... While improvements were evaluated in Alice Corp as relevant to
the search for an inventive concept (Step 2B), several decisions of the
Federal Circuit have also evaluated this consideration when determining
whether a claim was directed to an abstract idea (Step 2A)."
The MPEP instructs: "Thus, an examiner may evaluate whether a
claim contains an improvement to the functioning of a computer or to any
other technology or technical field at Step 2A or Step 2B, as well as when
considering whether the claim has such self-evident eligibility that it
qualifies for the streamlined analysis." MPEP § 2106.05(a) (emphasis
added).
Regarding the purported improvements offered by the claimed
invention, Appellant urges:
the claims represent an improvement to the technology
surrounding centralized transaction processing systems, such as
trading systems, which need to make rapid calculations, and are
solved by means of a technical solution, the claimed analyzing
which analyzes and compares permutations of outrights
identified in the communication and determines when a given
permutation matches an exchange defined spread included in a
library thereof, thereby permitting communications to include
spread specifications in any order but still be converted to
exchange defined spreads for further processing.
App. Br. 10-11 (emphasis added).
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In response, the Examiner disagrees, and further explains the basis for
the rejection:
The improvement is automating the steps that were previously
done manually to take advantage of the inherent speed of the
computer . ... Furthermore, Appellant did not explain how the
claimed invention improves the technology surrounding
centralized transaction processing systems. Appellant also did
not identify a technical problem solved by the claimed
invention.
Ans. 30 ( emphasis added).
We agree with the Examiner (id.), because we find any resultant speed
increase in the method and system of Appellant's invention comes from a
"general-purpose computer, rather than from the patented method itself,"
and does "not materially alter the patent eligibility of the claimed
[invention]." FairWarning IP, LLC v. Iatric Sys., Inc., 839 F.3d 1089, 1095
(Fed. Cir. 2016) ( citation omitted).
In reviewing the record, we find the claims on appeal are silent
regarding specific limitations directed to an improved computer system,
processor, memory, network, database, or Internet. Therefore, we find
Appellant's claimed invention does not provide a solution "necessarily
rooted in computer technology in order to overcome a problem specifically
arising in the realm of computer networks," such as considered by the court
in DDR Holdings LLC v. Hotels.com, L.P., 773 F.3d 1245, 1257 (Fed. Cir.
2014) (emphasis added).
MPEP § 2106.05(b) Particular Machine, and
MPEP § 2106.05(c) Particular Transformation
Section 2106.05(c) of the MPEP guides: "Another consideration
when determining whether a claim recites significantly more is whether
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the claim effects a transformation or reduction of a particular article to a
different state or thing." "[T]ransformation and reduction of an article 'to a
different state or thing' is the clue to patentability of a process claim that
does not include particular machines." Bilski v. Kappas, 561 U.S. 593, 658
(2010) (quoting Gottschalk v. Benson, 409 U.S. 63, 70, 175 (1972)). If such
a transformation exists, the claims are likely to be significantly more than
any recited judicial exception. Bilski emphasizes that although the
transformation of an article is an important clue, it is not a stand-alone test
for eligibility. MPEP § 2106.05(c).
Regarding Memorandum (2), we note Appellant advances no
arguments in the Briefs that are directed to the Bilski machine-or-
transformation test, which would only be applicable to the method (process)
claims on appeal.
To the extent Appellant may contend that claim 1 transforms data by
converting an unstructured communication ( e.g., an Instant Message) into a
financial information exchange compliant communication (i.e., the
transformation of data), our reviewing court guides that "[t]he mere
manipulation or reorganization of data, however, does not satisfy the
transformation prong." CyberSource Corp. v. Retail Decisions, Inc., 654
F.3d 1366, 1375 (Fed. Cir. 2011) (emphasis added). Therefore, we conclude
method claim 1 fails to satisfy the transformation prong of the Bilski
machine-or-transformation test. See MPEP § 2106.05(c) "Particular
Transformation."
Nor does Appellant argue that the method claims on appeal are tied to
a particular machine. See MPEP § 2106.05(b) "Particular Machine."
Arguments not made are waived. See 37 C.F.R. § 4I.37(c)(l)(iv).
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MPEP § 2106.05(e) Other Meaningful Limitations
This section of the MPEP guides:
Diamond v. Diehr provides an example of a claim that recited
meaningful limitations beyond generally linking the use of the
judicial exception to a particular technological environment. 450
U.S. 175, 209 USPQ 1 (1981). In Diehr, the claim was directed
to the use of the Arrhenius equation ( an abstract idea or law of
nature) in an automated process for operating a rubber-molding
press. 450 U.S. at 177-78, 209 USPQ at 4. The Court evaluated
additional elements such as the steps of installing rubber in a
press, closing the mold, constantly measuring the temperature in
the mold, and automatically opening the press at the proper time,
and found them to be meaningful because they sufficiently
limited the use of the mathematical equation to the practical
application of molding rubber products. 450 U.S. at 184, 187,
209 USPQ at 7, 8. In contrast, the claims in Alice Corp. v. CLS
Bank International did not meaningfully limit the abstract idea of
mitigating settlement risk. 573 U.S. 134 S. Ct. 2347, 110
USPQ2d 1976 (2014). In particular, the Court concluded that the
additional elements such as the data processing system and
communications controllers recited in the system claims did not
meaningfully limit the abstract idea because they merely linked
the use of the abstract idea to a particular technological
environment (i.e., "implementation via computers") or were
well-understood, routine, conventional activity.
MPEP § 2106.05(e) (emphasis added).
Appellant contends the claims recite meaningful limitations:
The combination of steps recited show that the claim is not to
the idea of receiving a communication, identifying key
information in the communication, converting the
communication into a suitable format, and transmitting the
communication requirement, but rather that the steps impose
meaningful limits that allow for identifying particular
combinations within a specified set of arbitrarily ordered
elements. Thus, the claim amounts to significantly more than
the judicial exception.
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App. Br. 10 ( emphasis added).
In support, Appellant cites to McRO, Inc. v. Bandai Namco Games
America Inc., 837 F.3d 1299 (Fed. Cir. 2016). App. Br.IO.
In response, the Examiner disagrees, and further explains the basis for
the rejection:
The claims recite the additional element of a communication
network. The limitations describe a field of use that attempt to
limit the abstract idea to a particular technological environment.
The type of information being manipulated does not impose
meaningful limitations or render the idea less abstract. Looking
at the elements as a combination does not add anything more
than the elements analyzed individually.
Ans. 2 ( emphasis added).
We do not find persuasive Appellant's attempt to analogize the claims
to the subject claims considered by the court in McRO. App. Br. IO.
We note the subject claim considered by the McRO court concerned
a method for automatically animating lip synchronization and facial
expressions. McRO, 837 F.3d at 1303. The McRO court concluded the
subject claims did not recite an abstract idea because the computer animation
improved the prior art through the use of rules, rather than artists, to set
morph weights and transitions between phonemes. Id. at 1308. Thus, the
claimed invention in McRO allowed for computer performance of animation
steps that previously had to be performed by human animators. Id. at 1309.
The subject claims in McRO used "limited rules in a process specifically
designed to achieve an improved technological result" over "existing,
manual 3-D animation techniques." Id. at 1316 (emphasis added).
Here, Appellant's claimed invention does not apply positively recited
rules, per se. The invention under appeal merely adapts to a technological
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setting ( e.g., comprising generic processor devices, communication
networks, and/ or memory devices) the broad concept of converting an
unstructured communication (e.g. Instant Messaging (IM)) into a structured
financial information exchange compliant communication that is transmitted
to at least one market participant via a financial information exchange
compliant communication network. See Claim 1; Spec. ,r,r 18-24 for
context. See also independent claim 16, and independent claims 17 and 18,
which recite similar language of commensurate scope.
Thus, it is our view that Appellant's claims merely implement generic
computer components to perform the recited functions. We emphasize that
McRO (837 F.3d at 1312) also guides that "[t]he abstract idea exception
prevents patenting a result where 'it matters not by what process or
machinery the result is accomplished."' (Quoting O'Reilly v. Morse, 56
U.S. 62, 113 (1854)). Emphasis added. Regarding Appellant's reliance on
Bascom Global Internet Services, Inc. v. AT&T Mobility LLC, 827 F.3d
1341 (Fed. Cir. 2016), we emphasize the Bascom court guides that
implementing "[a]n abstract idea on 'an Internet computer network' or on a
generic computer is still an abstract idea." Id. at 1348. 6
6 Further regarding the use of the recited generic computer components the
Supreme Court has held "the mere recitation of a generic computer cannot
transform a patent-ineligible abstract idea into a patent-eligible invention."
Alice, 573 U.S. at 223. Our reviewing court provides additional guidance:
See FairWarning IP, LLC v. Iatric Sys., Inc., 839 F.3d 1089, 1096 (Fed. Cir.
2016) ("[T]he use of generic computer elements like a microprocessor or
user interface do not alone transform an otherwise abstract idea into patent-
eligible subject matter."); OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d
1359, 1363 (Fed. Cir. 2015) (claims reciting, inter alia, sending messages
over a network, gathering statistics, using a computerized system to
automatically determine an estimated outcome, and presenting offers to
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Applying this reasoning here, we conclude Appellant's claims do not
add meaningful limitations beyond generally linking the use of the judicial
exception to a particular technological environment.
MP EP §2106. 05 (f) Mere Instructions to Apply an Exception
For the reasons discussed above, we conclude Appellant's claims
invoke generic computer components merely as a tool in which the computer
instructions apply the judicial exception (i.e., a fundamental economic
practice) - "[a] method for communicating a market action to at least one
market participant through an electronic facility platform" and "transmitting
the financial information exchange compliant communication to the at least
one market participant via a financial information exchange compliant
communication network." ( claim 1).
potential customers found to merely recite "'well-understood, routine
conventional activities"' by either requiring conventional computer activities
or routine data-gathering steps (internal citation omitted)); see also Elec.
Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1355 (Fed. Cir. 2016) ("We
have repeatedly held that such invocations of computers and networks that
are not even arguably inventive are 'insufficient to pass the test of an
inventive concept in the application' of an abstract idea." ( quoting buySAFE,
Inc. v. Google, Inc., 765 F.3d 1350, 1353, 1355 (Fed. Cir. 2014)));
Intellectual Ventures I LLC v. Capital One Fin. Corp., 850 F.3d 1332, 1341
(Fed. Cir. 2017) ("Rather, the claims recite both a generic computer
element-a processor-and a series of generic computer 'components' that
merely restate their individual functions . . . . That is to say, they merely
describe the functions of the abstract idea itself, without particularity. This
is simply not enough under step two.").
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MP EP § 2106. 05 (g) Insignificant Extra-Solution Activity
We conclude the step of "scanning the communication using the
computerized system to identify at least one of a predefined plurality of
keywords, each of said plurality of keywords corresponding to a respective
market action to be addressed by the market participant" ( claim 1 ), is a step
of data gathering. Data gathering, as performed by the steps or function in
Appellant's claims, is a classic example of insignificant extra-solution
activity. See, e.g., In re Bilski, 545 F.3d 943, 963 (Fed. Cir. 2008) (en bane),
aff'd sub nom, Bilski v. Kappas, 561 U.S. 593 (2010).
The Supreme Court guides that the "prohibition against patenting
abstract ideas 'cannot be circumvented by attempting to limit the use of the
formula to a particular technological environment' or [by] adding
'insignificant postsolution activity."' Bilski, 561 U.S. at 610-11 (quoting
Diehr, 450 U.S. at 191-92). On this record, we are of the view that
Appellant's claims do not operate the recited generic computer components
in an unconventional manner to achieve an improvement in computer
functionality, as discussed above.
MPEP § 2106.05(h) Field of Use and Technological Environment
"[T]he Supreme Court has stated that, even if a claim does not wholly
preempt an abstract idea, it still will not be limited meaningfully if it
contains only insignificant or token pre- or post-solution activity-such as
identifying a relevant audience, a category of use,field of use, or
technological environment." Ultramercial Inc. v. Hulu LLC, 722 F.3d 1335,
1346 (Fed. Cir. 2013) ( citations omitted) ( emphasis added).
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Appellant argues "the present claims are not directed to an abstract
idea and the claimed invention is not a mere statement of a general concept.
In particular, Appellant's claims do not relate to, nor do they preempt, an
abstract idea." App. Br. 5---6 (emphasis added). In support, Appellant
further contends:
As opposed to preempting the entire idea of receiving of
a communication, identifying key information in the
communication, converting the communication into a
suitable format, and transmitting the communication, the claims
are instead directed to a novel and patentable specific
application which identifies outrights specified in a
communication based on scanning for predefined keywords
and, regardless of the order in which those outrights appear in
that communication, determines whether those outrights
form exchange defined spread combinations and are, therefore,
more likely to be tradeable against orders received from other
participants, as opposed to custom user-defined combinations
which are less likely to be tradeable.
App. Br. 6-7.
In the Answer, the Examiner disagrees with Appellant. The
Examiner finds and concludes:
The claims recite the additional element of a communication
network. The limitations describe a field of use that attempt to
limit the abstract idea to a particular technological environment.
The type of information being manipulated does not impose
meaningful limitations or render the idea less abstract. Looking
at the elements as a combination does not add anything more
than the elements analyzed individually.
Ans. 2 ( emphasis added).
Our reviewing court provides applicable guidance: "While
preemption may signal patent ineligible subject matter, the absence of
complete preemption does not demonstrate patent eligibility." Ariosa
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Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015);
Ultramercial, 722 F.3d at 1346.
Therefore, we are not persuaded by Appellant's argument regarding
the absence of complete preemption. See App. Br. 6-7.
For at least the aforementioned reasons, we are not persuaded the
Examiner erred in concluding that each of claims 1-23 on appeal is directed
to an abstract idea. As discussed above, we conclude the claim language
"[a] method for communicating a market action to at least one market
participant through an electronic facility platform" and "transmitting the
financial information exchange compliant communication to the at least
one market participant via a financial information exchange compliant
communication network" ( claim 1) inform our view that the claims
considered as a whole are directed to a certain method of organizing human
behavior, i.e., a fundamental economic practice. ( emphasis added).
Accordingly, for the reasons discussed above, we conclude
Appellant's claims do not include additional elements that integrate the
judicial exception into a practical application (see MPEP §§ 2106.05(a}-
( c ), ( e }-(h), as discussed above).
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:
Memorandum (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
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Memorandum (4), simply appends well-understood, routine,
conventional activities previously known to the industry, specified at a high
level of generality, to the judicial exception.
Appellant contends:
the parsing, scanning and identification using a library of
combinations as claimed by Appellant, have NOT been used
before and therefore are not well understood, routine or
conventional in the art. Furthermore, the Examiner is again
reminded that "[i]t is important to remember that a new
combination of steps in a process may be patent eligible even
though all the steps of the combination were individually well
known and in common use before the combination was made
(Diehr). Thus, it is particularly critical to address the
combination of additional elements, because while
individually-viewed elements may not appear to add
significantly more, those additional elements when viewed in
combination may amount to significantly more than the
exception by meaningfully limiting the judicial exception."
App. Br. 9 ( emphasis added).
In response, the Examiner disagrees, and further explains the basis for
the rejection:
Examiner respectfully disagrees and explains that "[t]he limitations of
the parsing, scanning, and identification of data are part of the identified
abstract [idea] and are not 'additional elements. ' Elements of the abstract
idea cannot also provide significantly more than the abstract idea itself ...
[s]ince the parsing, scanning, and identification are not 'additional
elements."' Ans. 7 ( emphasis added).
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The Examiner additionally provides two cases in support of the
judicial exception (i.e., abstract idea) identified by the Examiner: "The
method and/or system is similar to concepts that have been identified as
abstract by the courts, such as using categories to organize, store, and
transmit information in Cybeifone or comparing new and stored information
and using rules to identify options in SmartGene." Final Act. 6.
In the Reply Brief, Appellant again asserts: "Here, the specifically
disclosed and claimed parsing, scanning and identification are additional
elements that provide 'something more' than mere receiving of a
communication, identifying key information in the communication,
converting the communication into a suitable format, and transmitting the
communication." Reply Br. 5 ( emphasis added).
Because Appellant's contention is not responsive to the Examiner's
legal conclusion that the claimed "parsing, scanning, and identification of
data are part of the identified abstract [idea] and are not 'additional
elements" (Ans. 7), we find Appellant's contentions unavailing.
We additionally find Appellant's new arguments in the Reply Brief
regarding Trading Technologies International, Inc. v. CQG, INC., 675
F. App'x 1001 (Fed. Cir. 2017), are not in response to any shift in the
Examiner's position in the Answer and are therefore untimely. We note
arguments raised in a Reply Brief that were not raised in the Appeal Brief or
are not responsive to arguments raised in the Examiner's Answer will not be
considered except for good cause. See 37 C.F.R. § 4I.41(b)(2); compare
App. Br. 1-17; Ans. 7-11 with Reply Br. 7-8.
We observe Trading Technologies was: (1) decided on January 18,
2017, several weeks before the Appeal Brief was filed on February 9, 2017,
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and, (2) is non-precedential. In particular, Appellant has not shown good
cause why we should consider Appellant's untimely arguments pertaining to
Trading Technologies in the Reply Brief (7-8), regarding Rejection A of all
claims on appeal.
However, in reviewing the record, we recognize that Appellant has
not had the opportunity to argue Berkheimer, which was decided by the
Federal Circuit on February 8, 2018. We note the Reply Brief was filed on
August 9, 2017, over five months before the Berkheimer decision. Because
Berkheimer (881 F.3d at 1369) and the subsequent USPTO Berkheimer
Memorandum are intervening authorities, Appellant will be permitted to
argue any new issues related to Berkheimer in a Request for Rehearing,
under our procedural rule. See 37 C.F.R. § 41.52(a)(2) ("Appellant may
present a new argument based upon a recent relevant decision of either the
Board or a Federal Court.").
However, on the record before us, Appellant has not shown that the
claims on appeal add a specific limitation beyond the judicial exception that
is not "well-understood, routine, and conventional" in the field (see MPEP
§ 2106.05(d)).
In light of the foregoing, we conclude, under the USPTO Revised 101
Guidance (Memorandum), that each of Appellant's claims 1-23, considered
as a whole, is directed to a patent-ineligible abstract idea that is not
integrated into a practical application.
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Accordingly, for the reasons discussed above, we sustain the
Examiner's rejection A under 35 U.S.C. § 101 of claims 1-23.7
Rejection B of Independent Claim 1 Under 35 USC§ 103(a)
Issue: Under 35 U.S.C. § 103(a), did the Examiner err by finding the
cited combination of Bryan and Ben-Levy would have taught or suggested
the contested conditional limitation:
c. when the communication contains at least one of a
predefined plurality of keywords . . . identify one or more
outrights specified in the communication and further, based on
the identified one or more outrights, identify a set of exchange
defined spreads formed by the one or more outrights, regardless
of sequence in which the one or more outrights are presented in
the communication by analyzing each permutation of the order
of the one or more outrights to determine those permutations
which match an exchange defined spread included in an
exchange provided library of common combinations of one or
more outrights[,]
within the meaning of independent claim 1 ?8 ( emphasis added).
The Examiner finds that Bryan does not explicitly disclose:
identify[ing] one or more outrights specified in the
communication and further, based on the identified one or more
outrights, identify a set of exchange defined spreads, formed by
7 To the extent Appellant have not advanced separate, substantive arguments
for particular claims, or other issues, such arguments are waived. See
37 C.F.R. § 4I.37(c)(l)(iv).
8 We give the contested claim limitations the broadest reasonable
interpretation ("BRI") consistent with the Specification. See In re Morris,
127 F.3d 1048, 1054 (Fed. Cir. 1997).
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the one or more outrights, regardless of sequence in which the
one or more outrights are presented in the communication by
analyzing each permutation of the order of the one or
more outrights to determine those permutations which match an
exchange defined spread included in an exchange provided
library of common combinations of one or more outrights.
Final Act. 8 ( emphasis added).
The Examiner further finds "Ben-Levy discloses the auction system
that identifies an outright and allows a delay to search results in search of a
spread (See Ben-Levy Col 24 Ln 8; col 19, lines 30-65)." Final Act. 8
( emphasis added). However, after reviewing the cited portions of the
evidence relied upon by the Examiner, we concur with Appellant that the
Examiner's findings are based upon a misinterpretation of the terms
"spread" and "outright" as used and described in Ben-Levy.
We have reviewed Appellant's arguments in the Briefs, the
Examiner's obviousness rejection, and the Examiner's response to
Appellant's arguments. For at least the following reasons, Appellant has
persuaded us the Examiner erred regarding the obviousness rejection of
claims 1-23.
Ben-Levy simply has nothing to do with identifying
possible spread combinations based on identified outrights.
Instead, Ben-Levy is directed to a bond auctioning system
which enables bidders to submit bids to transact in particular
bonds. Ben-Levy does disclose that a user may "associate one
or more keywords with the proposal, to facilitate rapid and
efficient organization, monitoring, and searching of multiple
offerings. Standard keywords may also be designated by a
user's firm, for example, so that a manager, administrator, or
book keeper may easily locate particular offers or sets of
offers." See Ben-Levy, Col. 19, line 66 - Col. 20, line 4. But
there is no disclosure of identifying outrights from a
communication nor, based thereon, identifying spread
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combinations formed thereby, let alone doing so by analyzing
each permutation of the order of the one or more outrights to
determine those permutations which match an exchange defined
spread included in an exchange provided library of common
combinations of one or more outrights as claimed.
App. Br. 14 ( emphasis added).
In particular, it appears the Examiner has used a claim term as a
search keyword to find the literal term "spread" as used in Ben-Levy (e.g.,
col. 19, 1. 40), as compared to the literal term "spread" as recited in
Appellant's claims (see claim 1: "exchange defined spread"). However, the
computed "reserve spreads" in Ben-Levy refer to basis points (1/100 of a
percent) relative to a benchmark interest rate, and do not have the same
meaning as the term "spread" as used in Appellant's Specification (and
claims) to refer to combinations of multiple option contracts to realize a
trading strategy. See Table of "Spread Types" as included in paragraph 65
of Appellant's Specification. Cf "call butterfly" and "put butterfly" spread
option strategies, with straddles, strangles, and condor spread option
strategies. 9
Similarly, the use of the term "outright" in Ben-Levy ( e.g., "the
offeror is given another opportunity to elect, or to confirm, whether to offer
9 For example, see Wikipedia: "The iron condor is an option trading strategy
utilizing two vertical spreads - a put spread and a call spread with the same
expiration and four different strikes. A long iron condor is essentially
selling both sides of the underlying instrument by simultaneously shorting
the same number of calls and puts, then covering each position with the
purchase of further out of the money call(s) and put(s) respectively. The
converse produces a short iron condor. The position is so named because of
the shape of the profit/loss graph, which loosely resembles a large-bodied
bird, such as a condor."
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the bond lot ... for outright sale as well as auction" - col. 19, 11. 46-48
( emphasis added)), does not have the same meaning as the claim term
"outright" as used in Appellant's Specification and claims. See Claim 1;
Spec. ,r 23: "The system allows users to build spreads ( combinations of
multiple options contracts which are commonly referred to as the 'legs' or
'outrights' of the spread), parses the outrights, and analyzes the
permutations .... " ( emphasis added).
Therefore, on this record, we find a preponderance of the evidence
supports Appellant's contentions, as discussed above regarding rejection B
under 35 U.S.C. § 103(a). Accordingly, we are constrained on this record to
reverse the Examiner's Rejection B of independent claim 1, and also
Rejection B of remaining independent claims 16, 17, and 18, which each
recite the contested limitation in similar form having commensurate scope.
Because we have reversed the Examiner's Rejection B of each independent
claim on appeal, we also reverse the Examiner's Rejection B of each
associated dependent claim.
Reply Brief
Regarding Rejection A under 35 U.S.C. § 101, to the extent Appellant
may advance new arguments in the Reply Brief not in response to a shift in
the Examiner's position in the Answer, we note arguments raised in a Reply
Brief that were not raised in the Appeal Brief or are not responsive to
arguments raised in the Examiner's Answer will not be considered except
for good cause. See 37 C.F.R. § 4I.41(b)(2).
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CONCLUSIONS
The Examiner did not err in rejecting claims 1-23 under 35 U.S.C.
§ 101, as being directed to a judicial exception, without significantly more.
The Examiner erred in rejecting claims 1-23 under 35 U.S.C.
§ 103(a), as being obvious over the cited combination of Bryan and Ben-
Levy. 10
DECISION
We affirm the Examiner's decision rejecting claims 1-23 under
35 U.S.C. § 101.
We reverse the Examiner's decision rejecting claims 1-23 under
pre-AIA 35 U.S.C. § 103(a).
Because we have affirmed at least one ground of rejection with
respect to each claim on appeal, the Examiner's decision is affirmed. See 37
C.F.R. § 4I.50(a)(l).
10 The Supreme Court guides: "[t]he 'novelty' of any element or steps in a
process, or even of the process itself, is of no relevance in determining
whether the subject matter of a claim falls within the § 101 categories of
possibly patentable subject matter." Diehr, 450 U.S. at 188-89 ( emphasis
added). Our reviewing court further emphasizes that "[ e ]ligibility and
novelty are separate inquiries." Two-Way Media Ltd. v. Comcast Cable
Commc 'ns, LLC, 874 F.3d 1329, 1340 (Fed. Cir. 2017); see also Affinity
Labs of Tex., LLC v. DIRECTV, LLC, 838 F.3d 1253, 1263 (Fed. Cir. 2016)
(holding that "even assuming" that a particular claimed feature was novel
does not "avoid the problem of abstractness").
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No time period for taking any subsequent action in connection with
this appeal may be extended under 37 C.F.R. § 1.136(a)(l )(iv). See
37 C.F.R. § 4I.50(f).
AFFIRMED
30