Ex Parte Crawford et al

Board of Patent Appeals and Interferences

May 30, 2007

09999580 (B.P.A.I. May. 30, 2007)

The opinion in support of the decision being entered today was not written 1
for publication and is not binding precedent of the Board 2
3
UNITED STATES PATENT AND TRADEMARK OFFICE 4
____________________ 5
6
BEFORE THE BOARD OF PATENT APPEALS 7
AND INTERFERENCES 8
____________________ 9
10
Ex parte STEPHEN P. CRAWFORD, STEPHANIE EVANICK, 11
BRYAN SEYFRIED, MARK DILWORTH, PETER STOCKMAN, 12
and MICHAEL R. SUTCLIFF 13
____________________ 14
15
Appeal 2006-2429 16
Application 09/999,5801 17
Technology Center 3600 18
____________________ 19
20
Decided: May 30, 2007 21
____________________ 22
23
Before: MURRIEL E. CRAWFORD, STUART S. LEVY, and ANTON W. 24
FETTING, Administrative Patent Judges. 25
26
LEVY, Administrative Patent Judge. 27
28
29
DECISION ON APPEAL 30
31
STATEMENT OF CASE 32
Appellants appeal under 35 U.S.C. § 134 (2002) from a final rejection 33
of claims 1 to 232. We have jurisdiction under 35 U.S.C. § 6(b) (2002). 34

1 Application filed October 21, 2001. The Real Party in Interest is
Accenture L.L.P.
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2
Appellants invented a method for providing a financial evaluation of 1
at least one financial instrument or entity. (Specification 1). 2
Claim 1 is representative of the invention and reads as follows: 3
1. A method for providing a financial evaluation of at least one 4
financial instrument, the method comprising: 5
6
inputting counterparty credit quality data associated with a 7
transaction of the financial instrument between a party and a counterparty to 8
a data processing system; 9
10
inputting debt market data associated with the transaction to the 11
data processing system; and 12
13
determining, by the data processing system, a dynamic credit 14
limit for the counterparty based on at least one of the inputted counterparty 15
credit quality and the inputted debit market data, the dynamic credit limit 16
defined in terms of a credit exposure versus time. 17
18
The Examiner rejected claims 10–23 under 35 U.S.C. § 112 (second 19
paragraph) as being indefinite. 20
The Examiner rejected claims 1-5 and 9 under 35 U.S.C. § 103(a) as 21
being unpatentable over Basch in view of Tull.3 22
The Examiner rejected claims 6-8 under 35 U.S.C. § 103(a) as being 23
unpatentable over Basch in view of Tull and Wallman. 24
The prior art relied upon by the Examiner in rejecting the claims on 25
appeal is: 26

2 Claims 24-30 have been withdrawn from consideration as being based
upon a non-elected invention. (Br. 3).
3 The Examiner notes (Answer 5) that because claims 10-23 are considered
to be indefinite, the Examiner is unable to provide art-based rejections for
these claims.
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Application 09/999,580

3
Tull US 5,946,667 Aug. 31, 1999 1
Basch US 6,119,103 Sep. 12, 2000 2
Wallman US 6,360,210 B1 Mar. 19, 2002 3
4
With regard to the rejection of claims 10-23 under 35 U.S.C. § 112 5
(second paragraph) the Examiner contends that it is unclear what is meant by 6
the term "credit cost C," how the term is measured, and how "maximum risk 7
exposure (M)" is measured. Appellants contend (Br. 10-12 and Reply Br. 8
3-5) that the ordinary meaning of "credit cost C" is emphasized in 9
Appellants' Specification; that the Specification provides examples of how 10
to derive a "credit cost C," and that "maximum risk exposure M" could be 11
calculated based upon a number of criteria described in the Specification. 12
With regard to the rejection of claims 1-5 and 9 under 35 U.S.C. 13
§ 103(a) as being unpatentable over Basch in view of Tull, the Examiner 14
contends that Basch does not explicitly teach the step of inputting debt 15
market data associated with a transaction to a data processing system. To 16
overcome this deficiency of Basch, the Examiner turns to Tull for a teaching 17
of inputting debt market data associated with a transaction to a data 18
processing system. (Answer 4). The Examiner asserts that because Tull and 19
Basch are concerned with the problem of evaluating risk and minimizing 20
risk, that it would have been obvious "to include the disclosure of Tull to the 21
invention of Basch." Appellants contend that Basch fails to disclose 22
"inputting debt market data associated with the transaction to the data 23
processing system," and that Tull does not disclose inputting debt market 24
data associated with a transaction of the financial instrument. (Br. 14). 25
Appellants further contend that "[t]he Examiner appears to have confused 26
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the separate issues of analogous art and whether the references can be 1
combined to reject the claims under 35 U.S.C. § 103." (Reply Br. 5). 2
With regard to the rejection of claims 6-8 under 35 U.S.C. § 103(a) as 3
being unpatentable over Basch in view of Tull and Wallman, the Examiner 4
relies upon Wallman for a suggestion of hedging to reduce risk exposure. 5
(Answer 6). Appellants contend that Wallman does not make up for the 6
deficiencies of Basch and Tull, and that there is no suggestion to use 7
hedging of investments in Basch. (Br. 21). 8
9
We reverse. 10
ISSUE 11
With respect to the rejection of claims 10-23 under 35 U.S.C. § 112 12
(second paragraph) as being indefinite, the issue is whether the metes and 13
bounds of the claims would have been clear to an artisan, in light iof 14
Appellants' disclosure. 15
With respect to the rejection of claims 1-5 and 9 under 35 U.S.C. 16
§ 103(a) as being unpatentable over Basch in view of Tull, the issue is 17
whether the combined teachings and suggestions of Basch and Tull would 18
have suggested the limitations of the claims. In particular, the issue turns on 19
whether Tull would have suggested inputting debt market data associated 20
with the transaction to the data processing system of Basch. 21
With respect to the rejection of claims 6-8 under 35 U.S.C. § 103(a) as 22
being unpatentable over Basch in view of Tull and Wallman, the issue turns 23
on whether Wallman makes up for the deficiencies of Basch and Tull. 24
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FINDINGS OF FACT 1
We find that the following enumerated findings are supported 2
by at least a preponderance of the evidence. Ethicon, Inc. v. Quigg, 849 3
F.2d 1422, 1427, 7 USPQ2d 1152, 1156 (Fed. Cir. 1988) (explaining the 4
general evidentiary standard for proceedings before the Office). 5
1. Appellant invented a method of dynamic credit 6
management, and in particular, a method of financial 7
evaluation of at least one financial instrument or entity. 8
(Specification 1). Credit cost C is the credit cost of the 9
party. (Specification 15). Credit cost C may be based on 10
market data, counterparty credit quality data, or both. 11
(Specification 16). Maximum exposure risk M may be 12
defined in terms of potential financial loss (e.g., a default on 13
one or more debt instruments) of the counterparty that the 14
party is willing to bear. (Specification 16). 15
2. “[T]he present invention relates to improved methods and 16
apparatus for a transaction-based risk prediction system that 17
advantageously assess the financial risk level associated 18
with an account and/or an account holder based on the 19
account holder's transaction pattern and/or transactions 20
pertaining to that account holder across multiple accounts 21
and/or account issuers.” (Basch, col. 1, ll. 14-21). 22
3. “To facilitate the management of accounts, account issuers 23
may employ scores developed by credit bureaus. These 24
scores may, for example, be utilized to assist in some 25
aspects of account management, e.g., in the account issuer's 26
decision to increase or decrease the current limit.” (Basch, 27
col. 1, ll. 63-66). 28
4. “The invention relates, in one embodiment, to a computer-29
implemented method for predicting financial risk, which 30
includes receiving transaction data pertaining to a plurality 31
of transactions for a financial account, the transaction data 32
including one of a transaction type and a transaction amount 33
for each of the plurality of transactions. The method further 34
includes scoring the transaction data, including a transaction 35
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pattern ascertained from the transaction data, based on a 1
preexisting model to form a score for the financial account. 2
The method further includes transmitting, if the score is 3
below a predefined financial risk threshold, the score to an 4
account issuer of the financial account.” (Basch, col. 3, ll. 5
61-62). 6
5. “Examples of scoreable transactions include, for example, 7
authorization requests for purchases of goods or services 8
made on credit, clearing and settlement transactions between 9
merchants and account issuers pertaining to one or more 10
accounts, account issuer-supplied account records, public 11
records, and the like.” (Basch, col. 5, ll. 11-16). 12
6. “[T]he scoreable transactions are scored against predictive 13
model(s) within FRPS 100 to generate financial risk scores 14
and/or financial risk alerts for the account issuers." (Basch, 15
col. 6, ll. 59-61). 16
7. “[F]inancial risk scores and/or financial risk alerts may be 17
provided to one or more account issuers 102 to provide 18
financial risk alerts pertaining to a particular account and/or 19
account holder.” (Basch, col. 9, ll. 53-56). 20
8. “To train the neural network of FIG. 8, for example, patterns 21
from known data sets with known results (i.e., historical 22
scoreable transactions, the associated account, and the 23
known risk level) are iteratively furnished to the neural net 24
of FIG. 8.” (Basch, col. 18, ll. 4-8). 25
9. “The present invention relates to a data processing system 26
and method for managing financial debt instruments 27
designed for investors whose objective is to track the 28
performance of certain security markets within a limited 29
period of time.” (Tull, col. 1, ll. 8-11). 30
10. “It is an object of the present invention to provide a financial 31
management system to develop and administer a financial 32
debt instrument traded as a listed security to investors 33
desiring to track the performance of a domestic or foreign 34
capital market.” (Tull, col. 3, ll. 16-20). 35
11. “It is a further object of the present invention to provide data 36
processing means for determining a price for a basket of 37
shares which is packaged as a debt instrument so as to 38
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reflect the current aggregate value of the shares and accrued 1
income and expenses associated with all shares in the 2
basket.” (Tull, col. 3, ll. 30-34). 3
12. “It is yet another object of the present invention to provide a 4
computer system for maintaining financial debt instruments 5
that represent positions in one or more capital markets and 6
which generates reports on the return of each financial debt 7
instrument to the investors.” (Tull, col. 3, ll. 42-46). 8
13. “The debt instrument is sold as an Optimal Portfolio Listed 9
Security ("OPALS") which may provide in many 10
jurisdictions tax and other advantages to the investors. The 11
data processing system of the management system of the 12
present invention provides continuous monitoring of the 13
price of the OPALS and reports this price to customers over 14
a communication network.” (Tull, col. 3, ll. 55-62). 15
14. “The debt instruments are issued in different series which 16
track the performance of domestic or foreign capital markets 17
over different predetermined periods of time.” (Tull, col. 4, 18
ll. 10-13). 19
15. “During the life of the security, the pricing of each OPALS 20
is monitored and analyzed. Based on the analysis, if 21
necessary, an OPALS is then rebalanced to account for 22
differences between the performance of the constituent 23
shares and that of the associated capital market index.” 24
(Tull, col. 4, ll. 34-39). 25
16. “Modeling system 3 selects an optimized basket of shares 26
which is representative of a particular capital market. . . . 27
predicts the future correlation of the selected stocks in the 28
basket with the index of the market to ensure that they will 29
track the market index closely.” (Tull, col. 6, ll. 4-5 and ll. 30
11-13). 31
17. “Based on the information from the modeling system 3, 32
financial management structure 8 creates one or more 33
financial debt instruments 10 which are designed to be 34
traded as Optimized Portfolio Listed Securities ("OPALS").” 35
(Tull, col. 6, ll. 14-18). 36
18. “A computer-based system is disclosed for reducing risk, 37
including market risk, for a given portfolio, by examining 38
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the expected risk, pricing it, and transferring some or all of 1
it.” (Wallman, Abstract). 2
19. “[A] vast number of products, services and techniques have 3
been developed in attempts to reduce (as opposed to avoid) 4
market risk. An example of such a product, service and 5
technique is hedging--such as buying put options on an 6
index.” (Wallman, col. 3, ll. 31-36). 7
20. “The user enters information about the user's portfolio--such 8
as a list of equities, with dollar amounts, shares owned or the 9
percentage of each issue as part of the entire portfolio--so 10
that the computer-based system is provided the input of what 11
the user wishes to have limited for downside risk ("shielded 12
or protected").” (Wallman, col. 9, ll. 17-23). 13
21. “The portfolio is then analyzed to determine the price to 14
charge the user.” (Wallman, col. 9, ll. 50-51). 15
22. “The computer-based system then provides a series of 16
choices to the user[:] Full protection . . . [p]artial protection . 17
. . [and] [e]xcess protection.” (Wallman, col. 10, ll. 15-30). 18
19
20
PRINCIPLES OF LAW 21
On appeal, Appellants bear the burden of showing that the Examiner 22
has not established a legally sufficient basis for combining the teachings of 23
the applied prior art. Appellants may sustain this burden by showing that, 24
where the Examiner relies on a combination of disclosures, the Examiner 25
failed to provide sufficient evidence to show that one having ordinary skill 26
in the art would have done what Appellants did. United States v. Adams, 27
383 U.S. 39, 52 148 USPQ 479, 483-84 (1966); In re Kahn, 441 F.3d 977, 28
987-88, 78 USPQ2d 1329, 1336 (Fed. Cir. 2006); DyStar Textilfarben 29
GmbH & Co. Deutschland KG v. C.H. Patrick, Co., 464 F.3d 1356, 30
1360-61, 80 USPQ2d 1641, 1645 (Fed. Cir. 2006). The mere fact that all the 31
claimed elements or steps appear in the prior art is not per se sufficient to 32
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establish that it would have been obvious to combine those elements. United 1
States v. Adams, id; Smith Indus. Med. Sys., Inc. v. Vital Signs, Inc., 2
183 F.3d 1347, 1356, 51 USPQ2d 1415, 1420 (Fed. Cir. 1999). The 3
Supreme Court, in KSR Int’l v. Teleflex Inc., 127 S.Ct. 1727, 82 USPQ2d 4
1385 (2007) stated that “[t]hroughout this Court’s engagement with the 5
question of obviousness, our cases have set forth an expansive and flexible 6
approach ….” KSR Int’l at 1739, 82 USPQ at 1395. The Court emphasized 7
that “the principles laid down in Graham reaffirmed the ‘functional 8
approach’ of Hotchkiss, 11 How. 248.” KSR Int’l at 1738, 82 USPQ2d at 9
1395 (citing Graham v. John Deere Co., 383 U.S. 1, 12, 148 USPQ 459, 464 10
(1966) (emphasis added)). 11
12
13
ANALYSIS 14
We begin with the rejection of claims 10-23 under 35 U.S.C. § 112 15
(second paragraph) as being indefinite. From the description in fact 1 of the 16
terms "credit cost C," a description of how "credit cost C" is measured, and 17
the description of "maximum risk exposure M," as well as the description of 18
the claimed equation on page 15 of the Specification, we agree with 19
Appellants that an artisan would have understood the scope and meaning of 20
the terms in these claims. Accordingly, we agree with Appellants that the 21
Examiner erred in rejecting claims 10-23 under 35 U.S.C. § 112 (second 22
paragraph). The rejection of claims 10-23 is not sustained. 23
Turning to the rejection of claims 1-5 and 9 under 35 U.S.C. § 103(a) 24
as being unpatentable over Basch in view of Tull, we find from facts 2 and 5 25
that as noted by both the Examiner (Answer 4) and Appellants (Br. 18) that 26
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10
Basch does not describe debt market data, or inputting to the data processing 1
system debt market data associated with a transaction of a financial 2
instrument. Thus, the issue becomes whether Tull makes up for the 3
deficiencies of Basch. From fact 11 we find that in Tull, the reference 4
describes determining a price for a basket of shares which is packaged as a 5
debt instrument to reflect the current aggregate value of the shares. From 6
fact 10 we find that in Tull, the system develops and administers a financial 7
debt instrument traded as a listed security to investors desiring to track the 8
performance of a domestic or foreign capital market. 9
While both Basch and Tull may have some bearing on risk evaluation and 10
minimization as suggested by the Examiner, neither even hints that how it 11
treats risk evaluation and minimization has any bearing on the other, because 12
the risks taught by each are qualitatively different. Because Tull is creating 13
debt instruments formed from a basket of shares to track the performance of 14
a capital market, and is not inputting the debt instrument as part of a process 15
of determining a dynamic credit score, we find no suggestion to combine the 16
teachings and suggestions of Basch and Tull, as advanced by the Examiner, 17
except from using Appellants' invention as a template through a hindsight 18
reconstruction of Appellants' claims. It follows that we cannot sustain the 19
rejection of claims 1-5 and 9 under 35 U.S.C. 20
§ 103(a). 21
We turn next to the rejection of claims 6-8 under 35 U.S.C. § 103(a) 22
as being unpatentable over Basch in view of Tull and Wallman. Although 23
we agree with the Examiner that Wallman would have suggested hedging 24
excess risk (see facts 19-22), we agree with Appellants (Br. 20-22) that 25
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Wallman does not make up for the deficiencies of Basch and Tull. It follows 1
that we cannot sustain the rejection of claims 6-8 under 35 U.S.C. § 103(a). 2
3
CONCLUSION OF LAW 4
On the record before us, Appellants have shown that the Examiner has 5
erred in rejecting claims 10-23 under 35 U.S.C. § 112 (second paragraph) 6
and erred in rejecting claims 1-9 under 35 U.S.C. § 103(a). 7
DECISION 8
The Examiner's rejection of claims 1-23 is Reversed. 9
REVERSED 10
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hh 20
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ACCENTURE CHICAGO 28164 23
BRINKS HOFER GILSON & LIONE 24
P.O. BOX 10395 25
CHICAGO, IL 60610 26