Ex Parte Edelson

Board of Patent Appeals and Interferences

Feb 7, 2012

11101436 (B.P.A.I. Feb. 7, 2012)

UNITED STATES PATENT AND TRADEMARKOFFICE
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.
11/101,436 04/08/2005 Harry Edelson 023335.0101PTUS 4185
41434 7590 02/07/2012
PATTON BOGGS LLP
2550 M STREET NW
WASHINGTON, DC 20037-1350
EXAMINER
SUBRAMANIAN, NARAYANSWAMY
ART UNIT PAPER NUMBER
3695
MAIL DATE DELIVERY MODE
02/07/2012 PAPER
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.
PTOL-90A (Rev. 04/07)

UNITED STATES PATENT AND TRADEMARK OFFICE 1
___________ 2
3
BEFORE THE BOARD OF PATENT APPEALS 4
AND INTERFERENCES 5
___________ 6
7
Ex parte HARRY EDELSON 8
___________ 9
10
Appeal 2011-004285 11
Application 11/101,436 12
Technology Center 3600 13
___________ 14
15
16
Before ANTON W. FETTING, JOSEPH A. FISCHETTI, and 17
MICHAEL W. KIM, Administrative Patent Judges. 18
FETTING, Administrative Patent Judge. 19
DECISION ON APPEAL 20
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STATEMENT OF THE CASE1 1

1 Our decision will make reference to the Appellant’s Appeal Brief (“App.
Br.,” filed August 23, 2010) and Reply Brief (“Reply Br.,” filed January 10,
2011), and the Examiner’s Answer (“Ans.,” mailed November 10, 2010).
Harry Edelson (Appellant) seeks review under 35 U.S.C. § 134 (2002) 2
of a final rejection of claims 1-3, 5, 7-13, and 15-20, the only claims pending 3
in the application on appeal. We have jurisdiction over the appeal pursuant 4
to 35 U.S.C. § 6(b) (2002). 5
The Appellant invented a way for financial instrument derivatives 6
of rollups of recurrent yield monetary based assets (Specification 1, ll. 4-6). 7
An understanding of the invention can be derived from a reading of 8
exemplary claim 1, which is reproduced below [bracketed matter and some 9
paragraphing added]. 10
1. A computer-implemented system 11
for creating financial instrument derivatives 12
based on recurrent yield monetary assets 13
selected from the group consisting of 14
royalties, 15
salaries, 16
royalty-type streams of revenues, 17
publishing royalties, 18
copyright royalties, 19
trademark royalties, 20
patent royalties, 21
oil-revenue royalties, 22
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movie and video publishing royalties, 1
said recurrent yield monetary assets 2
having an asset value 3
from a recurrent yield monetary asset resource, 4
comprising: 5
a rollup entity, said rollup entity comprising: 6
means for transferring 7
from said recurrent yield monetary asset resource 8
said at least one of said recurrent yield monetary 9
assets; 10
means for depositing 11
at least one of said recurrent yield monetary assets 12
into a rollup entity earnings account; 13
means for calculating, 14
responsive to depositing of said at least one 15
recurrent yield monetary asset, 16
at least one of the group consisting of 17
a cash value 18
and 19
a number of shares of said financial 20
instrument derivatives 21
based on said asset value; 22
means for issuing 23
said calculated number of shares 24
of said financial derivative instruments 25
to said at least one recurrent yield monetary asset 26
resource; 27
database means located for storing 28
information 29
and 30
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data 1
representative of said at least one recurrent 2
yield monetary asset and said financial 3
derivative instruments; 4
and 5
means for communicating 6
between 7
said recurrent yield monetary asset resources 8
and 9
said rollup entity 10
for transmitting 11
said information 12
and 13
said data 14
related to said at least one recurrent yield 15
monetary asset. 16
The Examiner relies upon the following prior art: 17
Haroon US 2004/0181475 A1 Sep. 16, 2004
Spirgel US 2005/0044022 A1 Feb. 24, 2005
Claims 1-3, 5, 7-13 and 15-20 stand rejected under 35 U.S.C. § 112, 18
second paragraph, as failing to particularly point out and distinctly claim the 19
invention. 20
Claims 11-13 and 15-20 stand rejected under 35 U.S.C. § 101 as directed 21
to non-statutory subject matter.2 22

2 The Examiner withdrew this rejection as to claims 1-3, 5, and 7-10. Ans.
11.
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Claims 1-3, 5, 7-13 and 15-20 stand rejected under 35 U.S.C. § 103(a) as 1
unpatentable over Spirgel and Haroon. 2
ISSUES 3
The issue of indefiniteness turns on whether the inclusion of structure in 4
a means plus function claim is indefinite in itself. The issue of statutory 5
subject matter turns primarily on whether the method claims recite more 6
than the abstract concept of issuing derivatives. The issue of obviousness 7
turns primarily on whether royalties were a predictable income stream into 8
Spirgel. 9
FACTS PERTINENT TO THE ISSUES 10
The following enumerated Findings of Fact (FF) are believed to be 11
supported by a preponderance of the evidence. 12
Facts Related to the Prior Art 13
Spirgel 14
01. Spirgel is directed to securitizing a commodity. It comprises 15
a commodity trust or other special-purpose that is established to 16
hold a particular commodity and to issue commodity shares and/or 17
receipts corresponding to the value of the commodity held by the 18
Trust. The commodity shares may represent a proportional 19
interest in the Trust and/or the commodity held by the trust. The 20
Trust may include one or more Trust accounts to receive and store 21
the commodity deposited with the Trust. Spirgel ¶ 0009. 22
23
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Haroon 1
02. Haroon is directed to the use of securitization for providing 2
federal income tax benefits of preferred stock dividends. Haroon 3
¶ 0004. 4
03. Haroon describes a preferred stock securitization process for 5
conveying at least a portion of any dividends and at least a portion 6
of any redemption proceeds on preferred stock to the holders of 7
newly created securities. Depending on the structure of this 8
process, it may create more than one class of new securities. 9
Haroon ¶ 0018. 10
ANALYSIS 11
Claims 1-3, 5, 7-13 and 15-20 rejected under 35 U.S.C. § 112, second 12
paragraph, as failing to particularly point out and distinctly claim the 13
invention. 14
We are persuaded by the Appellant’s argument that the rejection of 15
claims 1-3, 5, and 7-10 is really a claim objection. Examiner found the 16
claims might contain structural limitations in means plus function limitations 17
and requested clarification. If there are such structural limitations, this 18
would not render the claims indefinite. Instead, it would simply take the 19
claims out of the scope of 35 U.S.C. § 112, sixth paragraph. We remind 20
Appellant that the Examiner still has an objection to these claims under this 21
reasoning. 22
We are also persuaded the Examiner erred in rejecting claims 11-13 and 23
15-20 for indefiniteness. The fact that Appellant does not specify which of 24
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the method steps are computer implemented goes to breadth and not 1
indefiniteness. See In re Miller, 441 F.2d 689 (CCPA 1971) 2
3
Claims 11-13 and 15-20 rejected under 35 U.S.C. § 101 as directed to non-4
statutory subject matter. 5
The Appellant argue these claim as a group. Accordingly, we select 6
claim 11 as representative of the group. 37 C.F.R. § 41.37(c)(1)(vii) (2008). 7
Independent claim 11 reads as follows. 8
11. A computer-implemented method for creating recurrent 9
yield monetary asset based financial instrument derivatives by a 10
rollup entity in communication with at least one recurrent yield 11
monetary asset resource, said recurrent yield monetary asset 12
having an asset value, said method comprising: 13
communicating between said rollup entity and said at least one 14
recurrent yield monetary asset resource regarding acquiring an 15
at least one recurrent yield monetary asset selected from the 16
group consisting of royalties, salaries, royalty-type streams of 17
revenues, publishing royalties, copyright royalties, trademark 18
royalties, patent royalties, oil-revenue royalties, movie and 19
video publishing royalties, said recurrent yield monetary assets; 20
transferring from said at least one recurrent yield monetary 21
asset resource to said rollup entity said recurrent yield monetary 22
asset; 23
depositing said one recurrent yield monetary asset into a rollup 24
entity earnings account; 25
calculating at least one of the group consisting of a cash value 26
and a number of shares of said financial instrument derivatives 27
based on said asset value; 28
and 29
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issuing from said rollup entity to said at least one recurrent 1
yield monetary asset resource said calculated number of shares 2
of said financial derivative instrument. 3
The remaining claims depend from claim 11. We are not persuaded by 4
the Appellant’s argument that in claim 1, the system transforms a royalty 5
stream into a derivative. First, claim 1 is not among those rejected. Thus 6
the arguments in support of claim 1 are not pertinent. Second, these claims 7
are to a method for creating recurrent yield monetary asset based financial 8
instrument derivatives. Claim 11 recites steps including communicating 9
information, depositing an asset into an account, calculating some formula, 10
and issuing a derivative instrument. 11
The Examiner found that claim 11 performs no physical transformation 12
and does not recite how a specific machine is used, and therefore recites no 13
more than an abstract idea. The Appellant contends that the claim 14
transforms a royalty stream into a derivative. 15
Here we disagree with the Appellant. The Supreme Court recently held 16
that claims that explained the basic concept of an activity (hedging) would 17
allow the Appellant to pre-empt the use of this approach in all fields, and 18
would effectively grant a monopoly over an abstract idea. Bilski v. Kappos, 19
130 S.Ct. 3218, 3231 (June 2010). Abstract ideas are not patent eligible. Id. 20
at 3225. 21
Claim 11 does no more than lay out the concept of issuing a derivative 22
instrument. The claims neither refer to a specific machine by reciting 23
structural limitations to any apparatus, nor recite any specific operations 24
that would cause a machine to be the mechanism to communicate or 25
calculate information, or to deposit or issue an intangible asset. Indeed to 26
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communicate, calculate, or issue intangible information requires no 1
machine; only the conscious thought of the one controlling the operation. 2
To deposit such intangible information requires only an agreement that such 3
a deposit is made. 4
Absent any specific structural limitations on how one acts to perform 5
these steps, these claims recite no more than the abstract concept of issuing 6
an abstract intangible asset. As in Bilski, a patent including these claims 7
would allow the Appellant to pre-empt the use of this approach in all fields, 8
and would effectively grant a monopoly over an abstract idea. 9
As to the “computer-implemented method,” 10
even if some physical steps are required to obtain information 11
from the database (e.g., entering a query via a keyboard, 12
clicking a mouse), such data-gathering steps cannot alone 13
confer patentability 14
CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1372 (Fed. 15
Cir. Aug. 16, 2011). Simply using some computer-implemented method in 16
some undefined manner alone cannot confer patentability. More recently, 17
claims were held to be non-statutory where 18
the claims here recite only that the method is “computer aided” 19
without specifying any level of involvement or detail. The fact 20
that certain algorithms are disclosed in the specification does 21
not change the outcome. In considering patent eligibility under 22
§ 101, one must focus on the claims. This is because a claim 23
may “preempt” only that which the claims encompass, not what 24
is disclosed but left unclaimed. 25
Dealertrack v Huber --- F.3d ----, 2012 WL 164439 (Fed Cir 2012). 26
The phrase “computer-implemented” modifier is comparable in scope to 27
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“computer-aided” and so its inclusion in the preamble does not change the 1
outcome. 2
3
4
Claims 1-3, 5, 7-13 and 15-20 rejected under 35 U.S.C. § 103(a) as 5
unpatentable over Spirgel and Haroon. 6
We are not persuaded by the Appellant’s argument that neither prior 7
art reference discloses creating a financial instrument derivatives based on 8
royalty-type streams of revenues such as publishing royalties, copyright 9
royalties, trademark royalties, patent royalties, oil-revenue royalties, movie 10
and video publishing royalties as claimed. Appeal Br. 14; Reply Br. 11. 11
The Examiner found that Spirgel described the structures in claims 1-3, 5, 12
and 7-10, and the steps performed in claims 11-13 and 15-20. Ans. 6-7. The 13
Examiner found that Spigel did not use the claimed input of recurrent yield 14
monetary assets having an asset value from a recurrent yield monetary asset 15
resource and applied Haroon for this feature. Thus, the issue is solely 16
whether this feature can distinguish the claims over the art and if so whether 17
Haroon describes this or shows it was otherwise predictable. 18
As to structural claims 1-3, 5, and 7-10, the input cannot distinguish the 19
claims over the art so long as the art describes a structure capable of using 20
the claimed input. 21
"[E]xpressions relating the apparatus to contents thereof during an 22
intended operation are of no significance in determining patentability of the 23
apparatus claim." Ex parte Thibault, 164 USPQ 666, 667 (Bd. App. 1969). 24
Furthermore, "inclusion of material or article worked upon by a structure 25
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being claimed does not impart patentability to the claims." In re Otto, 312 1
F.2d 937, 940 (CCPA 1963). 2
Because the input is a series of prospective cash flows, and the art 3
describes such a series, the structure in the art clearly is capable of operating 4
with the claimed input. Thus, the argument as to these claims is 5
unpersuasive. 6
As to the method claims, the Examiner found at Answer 12 that 7
Haroon’s preferred stock dividends were a form of recurrent yield monetary 8
resources. We agree, as preferred dividends are clearly monetary resources 9
that recur in the form of a yield on the underlying security. Whether they 10
are among those enumerated in the claim 11 first limitation is not 11
dispositive, despite the “consisting of” transition, because this is a rejection 12
under obviousness. 13
The issue is whether it was predictable to one of ordinary skill in the 14
financial instrument arts to put any of the claim 11 enumerated financial 15
flows into Spirgel’s system. “When a work is available in one field of 16
endeavor, design incentives and other market forces can prompt variations 17
of it, either in the same field or a different one. If a person of ordinary skill 18
can implement a predictable variation, § 103 likely bars its patentability.” 19
KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 417 (2007). Clearly royalty 20
income streams are not new. Any neophyte in the financial instrument arts 21
knows of product and services contractually generating such royalty streams. 22
Such a stream entering Spirgel’s system would generate exactly the expected 23
outcome based on Spirgel. There would be no unexpected results. It is just 24
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a different source of income. Thus, we find a royalty stream is a predictable 1
input to Spirgel. 2
CONCLUSIONS OF LAW 3
The rejection of claims 1-3, 5, and 7-10 under 35 U.S.C. § 112, second 4
paragraph, as failing to particularly point out and distinctly claim the 5
invention is improper. 6
The rejection of claims 11-13 and 15-20 under 35 U.S.C. § 101 as 7
directed to non-statutory subject matter is proper. 8
The rejection of claims 1-3, 5, 7-13 and 15-20 under 35 U.S.C. § 103(a) 9
as unpatentable over Spirgel and Haroon is proper. 10
DECISION 11
The rejection of claims 1-3, 5, 7-13, and 15-20 is affirmed. 12
No time period for taking any subsequent action in connection with 13
this appeal may be extended under 37 C.F.R. § 1.136(a). See 37 C.F.R. 14
§ 1.136(a)(1)(iv) (2007). 15
AFFIRMED 16
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JRG 21