Ex Parte Glinberg et al

Patent Trials and Appeals Board

Jun 27, 2019

13864851 - (D) (P.T.A.B. Jun. 27, 2019)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
13/864,851 04/17/2013
12684 7590 07/01/2019
Lempia Summerfield Katz LLC/CME
20 South Clark Street
Suite 600
Chicago, IL 60603
FIRST NAMED INVENTOR
Dmitriy Glinberg
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.
4672-09720FUS 6618
EXAMINER
HAMILTON, LALITA M
ART UNIT PAPER NUMBER
3691
NOTIFICATION DATE DELIVERY MODE
07/01/2019 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 DMITRIY GLINBERG, TAE S. YOO,
DALE A. MICHAELS, and EDWARD GOGOL1
Appeal2017-010970
Application 13/864,851
Technology Center 3600
Before ST. JOHN COURTENAY III, ELENI MANTIS MERCADER, and
JOYCE CRAIG, Administrative Patent Judges.
Opinion for the Board filed by
Administrative Patent Judge JOYCE CRAIG,
Dissenting Opinion filed by
Administrative Patent Judge ELENI MANTIS MERCADER,
CRAIG, Administrative Patent Judge.
DECISION ON APPEAL
1 According to Appellants, the real party in interest is Chicago Mercantile
Exchange Inc. App. Br. 2.
Appeal2017-010970
Application 13/864,851
This is a decision on appeal under 35 U.S.C. § 134(a) of the final
rejection of claims 1-7 and 9-19, which are all of the claims pending in the
application. Appellants have canceled claims 8 and 20. We have
jurisdiction under 35 U.S.C. § 6(b ).
We affirm.
The Invention
Appellants' disclosed embodiments and claimed invention relate to a
system and method for flexible spread participation. Spec. (Title).
Exemplary Claim
Claim 1, reproduced below with bracketed labels added, is
representative of the subject matter on appeal:
1. A system for minimizing computations required to
compute a margin requirement for a portfolio, the portfolio
comprising one or a plurality of exchange-traded products
and/or one or a plurality of positions on exchange-traded
products, the system comprising:
[a] means for creating one or a plurality of predefined
sets of exchange-traded products and/or positions on exchange-
traded products, wherein each of the predefined sets has an
associated offset value;
[b] means for determining whether any of the products
and/or the positions on products within the portfolio are
common to any of the one or the plurality of predefined sets;
[ c] means for grouping together into a single asset the
products and/or the positions on products within the portfolio
that are common to at least one of the one or the plurality of
predefined sets; and
[ d] means for assigning to the single asset at least a
portion of the offset value associated with the at least one of the
one or the plurality of predefined sets that holds the products
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Application 13/864,851
and/or the positions on products that are common to the single
asset.
App. Br. 12 (Claims App'x).
Rejection on Appeal
Claims 1-7 and 9-19 stand rejected under 35 U.S.C. § 101 as directed
to patent-ineligible subject matter. Final Act. 5-7.
ANALYSIS
Section 101 of the Patent Act provides that "any new and useful
process, machine, manufacture, or composition of matter, or any new and
useful improvement thereof' is patent eligible. 35 U.S.C. § 101. But the
Supreme Court has long recognized an implicit exception to this section:
"Laws of nature, natural phenomena, and abstract ideas are not patentable."
Alice Corp. v. CLS Bankint'l, 573 U.S. 208,216 (2014) (quotingAss'nfor
Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 589 (2013)).
To determine whether a claim falls within one of these excluded categories,
the Court has set out a two-part framework. The framework requires us first
to consider whether the claim is "directed to one of those patent-ineligible
concepts." Alice, 573 U.S. at 217. If so, we then examine "the elements of
[the] claim both individually and 'as an ordered combination' to determine
whether the additional elements 'transform the nature of the claim' into a
patent-eligible application." Alice, 573 U.S. at 217 (quoting Mayo
Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 78, 79 (2012)).
That is, we examine the claim for an "inventive concept," "an element or
combination of elements that is 'sufficient to ensure that the patent in
practice amounts to significantly more than a patent upon the [ineligible
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concept] itself."' Alice, 573 U.S. at217-18 (alteration in original) (quoting
Mayo, 566 U.S. at 72-73).
The Patent Office recently revised its guidance about this framework.
See 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg.
50 (Jan. 7, 2019) ("Revised Guidance"). Under the Revised Guidance, to
decide whether a claim is directed to an abstract idea, we evaluate whether
the claim ( 1) recites subject matter that falls within one of the abstract idea
groupings identified in the Revised Guidance and (2) fails to integrate the
recited abstract idea into a practical application. See Revised Guidance, 84
Fed. Reg. at 51, 54. If the claim is directed to an abstract idea, as noted
above, we then determine whether the claim has an inventive concept. The
Revised Guidance explains that when making this determination, we should
consider whether the additional claim elements add "a specific limitation or
combination of limitations that are not well-understood, routine,
conventional activity in the field" or "simply append[] well-understood,
routine, conventional activities previously known to the industry, specified
at a high level of generality." Revised Guidance, 84 Fed. Reg. at 56.
Based on Appellants' arguments (App. Br. 3-11) and our discretion
under 37 C.F.R. § 41.37(c)(l)(iv), we decide the appeal of the patent-
ineligible subject matter rejection of claims 1-7 and 9-19 on the basis of
representative claim 1.
Step 1
Claim 1, as a system claim, recites one of the enumerated categories
of eligible subject matter in 35 U.S.C. § 101 (machine). Therefore, the issue
before us is whether it is directed to a judicial exception without
significantly more.
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Application 13/864,851
Step 2A(i): Does the Claim Recite a Judicial Exception?
The Examiner determined that claim 1 is directed to "the abstract idea
of risk analysis of a portfolio of derivative products," which the Examiner
concluded was a certain method of organizing human activity. Final Act. 6.
Claim 1, as drafted, is a system that, under its broadest reasonable
interpretation, is a fundamental economic practice similar to risk the
intermediated settlement in Alice (see Alice, 573 U.S. at 218-19), verifying
credit card transactions in Cy her Source Corp. v. Retail Decisions, Inc., 654
F.3d 1366, 1370 (Fed. Cir. 2011), and guaranteeing transactions in
buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1354 (Fed. Cir. 2014). The
Specification describes that "[t]he disclosed embodiments relate to risk
analysis of a portfolio of derivative products which is conducted based on a
set of flexible rules." Spec. ,i 378. As such, claim 1 recites a fundamental
economic practice-i.e., a certain method of organizing human activity-
which is an abstract idea. See Revised Guidance, 84 Fed. Reg. at 54-55.
Claim 1 recites, in pertinent part:
[a] [ means for] creating one or a plurality of predefined
sets of exchange-traded products and/or positions on exchange-
traded products, wherein each of the predefined sets has an
associated offset value;
[b] [ means for] determining whether any of the products
and/or the positions on products within the portfolio are
common to any of the one or the plurality of predefined sets;
[ c] [ means for] grouping together into a single asset the
products and/or the positions on products within the portfolio
that are common to at least one of the one or the plurality of
predefined sets; and
[ d] [ means for] assigning to the single asset at least a
portion of the offset value associated with the at least one of the
one or the plurality of predefined sets that holds the products
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Application 13/864,851
and/or the positions on products that are common to the single
asset.
Claims App 'x.
Under the broadest reasonable interpretation standard, 2 we conclude
limitations [a] through [ d] recite steps that would ordinarily occur when
analyzing the risk of a portfolio of derivative products. See Final Act. For
example, "creating one or a plurality of predefined sets of exchange-traded
products and/or positions on exchange-traded products, wherein each of the
predefined sets has an associated offset value" is an operation that generally
occurs when analyzing the risk of a portfolio of derivative products.
According to the Specification, an "offset" refers to taking a second futures
or options on futures position opposite to the initial or opening position, e.g.,
selling if one has bought, or buying if one has sold. Spec. ,i 3. Similarly
"determining whether any of the products and/or the positions on products
within the portfolio are common to any of the one or the plurality of
predefined sets" and "grouping together into a single asset the products
and/or the positions on products within the portfolio that are common to at
least one of the one or the plurality of predefined sets," are operations that
generally occur when analyzing the risk of a portfolio of derivative products.
2 During prosecution, claims must be given their broadest reasonable
interpretation when reading claim language in light of the specification as it
would be interpreted by one of ordinary skill in the art. In re Am. Acad. of
Sci. Tech. Ctr., 367 F.3d 1359, 1364 (Fed. Cir. 2004). Under this standard,
we interpret claim terms using "the broadest reasonable meaning of the
words in their ordinary usage as they would be understood by one of
ordinary skill in the art, taking into account whatever enlightenment by way
of definitions or otherwise that may be afforded by the written description
contained in the applicant's specification." In re Morris, 127 F.3d 1048,
1054 (Fed. Cir. 1997).
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See, e.g., Spec. ,i 42 ("combines the risk of closely related products into
integrated portfolios"). Also, "assigning to the single asset at least a portion
of the offset value associated with the at least one of the one or the plurality
of predefined sets that holds the products and/or the positions on products
that are common to the single asset" is an operation that would occur when
analyzing the risk of a portfolio of derivative products.
Thus, under Step 2A(i), we agree with the Examiner that claim recites
a judicial exception. Specifically, we conclude claim 1, as a whole, under
our Revised Guidance, recites a fundamental economic practice, i.e., a
certain method of organizing human activity, and thus an abstract idea.
Step 2A(ii): Judicial Exception Integrated into a Practical Application?
If the claims recite a patent-ineligible concept, as we conclude above,
we proceed to the "practical application" Step 2A(ii) in which we determine
whether the recited judicial exception is integrated into a practical
application of that exception by: (a) identifying whether there are any
additional elements recited in the claim beyond the judicial exception(s); and
(b) evaluating those additional elements individually and in combination to
determine whether they integrate the exception into a practical application.
Claim 1 recites an abstract idea as identified in Step 2A(i), supra, and
none of the additional elements integrates the judicial exception of a
fundamental economic practice into a practical application. Here, the
additional elements, which are not part of the abstract idea, are the recited
"means for" performing each of the functions that comprise the abstract
idea. In the Summary of Claimed Subject Matter section of the Appeal
Brief, Appellants identify Figures 2 and 3, and paragraphs 386 and 387, as
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describing the corresponding structure for the recited "means for"
limitations. 3 We note that paragraph 3 85 states:
3 We note claim 1 recites "means for" limitations. For a computer-
implemented means-plus-function claim limitation that invokes 35 USC
§ 112, sixth paragraph, the corresponding structure is required to be more
than simply a general purpose computer. Aristocrat Techs. Aust!. Pty v. Int 'l
Game Tech., 521 F.3d 1328, 1333 (Fed. Cir.2008) ("For a patentee to claim
a means for performing a particular function and then to disclose only a
general purpose computer as the structure designed to perform that function
amounts to pure functional claiming. Because general purpose computers
can be programmed to perform very different tasks in very different ways,
simply disclosing a computer as the structure designated to perform a
particular function does not limit the scope of the claim to 'the
corresponding structure, material, or acts' that perform the function, as
required by section 112 paragraph 6."). The corresponding structure for a
computer-implemented function must include the algorithm as well as the
general purpose computer. WMS Gaming, Inc. v. Int'! Game Tech., 184 F.3d
1339 (Fed. Cir. 1999). For means plus function limitations under§ 112,
sixth paragraph, an indefiniteness rejection under§ 112, second paragraph,
is appropriate if the specification discloses no corresponding algorithm
associated with a computer or processor. Aristocrat, 521 F.3d at 1337-38.
Mere reference to a general purpose computer or processor with appropriate
programming without providing an explanation of the appropriate
programming or to "software" without providing detail about the means to
accomplish the software function is not an adequate disclosure. Id. at 1334;
Finisar Corp. v. DirecTV Group, Inc., 523 F.3d 1323, 1340-41 (Fed. Cir.
2008). In addition, simply reciting the claimed function in the specification,
while saying nothing about how the computer or processor ensures that those
functions are performed, is not a sufficient disclosure for an algorithm
which, by definition, must contain a sequence of steps. See Blackboard, Inc.
v. Desire2Learn Inc., 574 F.3d 1371, 1384 (Fed. Cir. 2009) ("The [purported
disclosed structure] is essentially a black box that performs a recited
function. But how it does so is left undisclosed."). Therefore, in the event of
further prosecution, we leave it to the Examiner to determine whether
Appellants' Figures 2 and 3, and paragraphs 386 and 387, contain a
sufficiently precise description of the corresponding structure to satisfy
section 112, sixth paragraph.
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the disclosed embodiments relate to a computer software
program which is stored in the memory of a computer and
executed by the processor( s) of the computer to perform the
disclosed functions, it will be appreciated that one or more of
the disclosed components may be implemented in hardware or a
combination of hardware and software, and is implementation
dependent.
Thus, claim 1 as a whole merely uses instructions and a generic processor to
implement the abstract idea on a computer or, alternatively, merely uses a
computer as a tool to perform the abstract idea.
Appellants contend the claimed invention is patent eligible because it
solves the technical problem of "product offset computation." App. Br. 3-4.
Appellants argue the claimed invention solves this problem via "a novel
process of pre-defining and pre-assigning offsets such that an offset need not
be calculated for a product but instead assigned to the product based on its
membership in a set having the precalculated offset," thereby reducing the
computational burden on computational resources by reducing transactional,
data processing and storage requirements. Id. Appellants further argue the
claims "are directed to a specific, novel and patentable system for creating
predefined sets of products for the purpose of future risk offsets .... " Id. at
5. Appellants also argue, relying on McRO, Inc. v. Bandai Namco Games
America Inc., 837 F.3d 1299 (Fed. Cir. 2016):
the claimed invention improves upon the technical field of
electronic trading and transaction processing by offering a
novel mechanism for rapidly assigning offset values to products
in a portfolio, thereby improving transactional throughput as
well as minimizing the consumption of communications
bandwidth and resources, e.g. by using predefined offsets to
avoid calculation thereof.
Id. at 5; see also id. at 6-7.
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We are not persuaded by Appellants' arguments. In McRO, the
claims were not held to be abstract because they recited a "specific ...
improvement in computer animation" using "unconventional rules that
relate[ d] sub sequences of phonemes, timings, and morph weight sets."
McRO, 837 F.3d at 1302-03, 1307-08, 1314-15. In McRO, "the
incorporation of the claimed rules, not the use of the computer," improved
an existing technological process. Id. at 1314. The claims in McRO,
however, recited a "specific ... improvement in computer animation" using
"unconventional rules that relate[ d] sub sequences of phonemes, timings,
and morph weight sets." McRO, 837 F.3d at 1302-03, 1307-08, 1314-15.
Appellants do not, however, identify how claim 1 improves an existing
technological process. See Alice, 134 S. Ct. at 2358 (explaining that "the
claims in Diehr were patent eligible because they improved an existing
technological process"). Rather, claim 1 concerns a "system for minimizing
computations required to compute a margin requirement for a portfolio."
App. Br. 23. Nor do Appellants direct us to any evidence that the claimed
"creating," "determining," "grouping," and "assigning" functions correspond
to unconventional rules.
Appellants' arguments based on Enfzsh, LLC v. Microsoft Corp., 822
F.3d 1327, 1330 (Fed. Cir. 2016) are also unpersuasive. App. Br. 8-10. In
Enfzsh, our reviewing court held claims directed to a self-referential logical
model for a computer database patent-eligible under step one of Alice. The
disclosed technique enabled faster searching and more effective storage of
data than previous methods. Id. at 1333. The court found the claims
directed to "a specific improvement to the way computers operate, embodied
in the self-referential table" (id. at 1336), and explained that the claims are
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"not simply directed to any form of storing tabular data, but instead are
specifically directed to a self-referential table for a computer database" that
functions differently than conventional databases. Id. at 1337. Claim 1,
however, is not related to the type of patent-eligible database claim
considered by the court in Enfish. Indeed, all claims on appeal are silent
regarding a database. Therefore, none of Appellants' claims is directed to a
"self-referential table for a computer database" of the type considered in
Enfish. See 822 F.3d at 1336.
We are not persuaded by Appellants' argument that the recited means-
plus-function elements in claim 1 amount to a "specific algorithm that
transforms an otherwise general purpose computer into a special purpose
computer programmed to perform the recited function" and therefore
imparts a meaningful limitation or adds significantly more to the abstract
idea, itself. App. Br. 10-11 ( citing Chicago Mercantile Exchange, Inc. v.
5th Market, Inc., CBM2015-00061 (PTAB July 16, 2015) (Paper 9), pages
37-38 (denying institution of the request for covered business method post
grant review).
We note the cited decision of Chicago Mercantile Exchange was not
designated precedential by the Patent Trial and Appeal Board and is not
binding on this panel. Moreover, the key issue in Chicago Mercantile
Exchange is not present here. The panel in that proceeding merely held that
the petitioner failed adequately to address the proper interpretation of a
means-plus-function element of a claim, and consequently, failed to
establish that it was more likely than not that the claim was directed to
patent-ineligible subject matter under§ 101. See Chicago Mercantile
Exchange at 37-38.
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Furthermore, even if the additional elements prevent claim 1 from
preempting the identified abstract idea, as Appellants argue (see App. Br. 5),
this fact alone does not show that claim 1 is patent eligible. See Ariosa
Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015)
("While preemption may signal patent ineligible subject matter, the absence
of complete preemption does not demonstrate patent eligibility.").
Additionally, it is not enough for subject-matter eligibility that
claimed techniques be novel (see App. Br. 5) and nonobvious in light of
prior art, passing muster under 35 U.S.C. §§ 102 and 103. See Mayo, 566
U.S. at 89-90; Synopsys, Inc. v. Mentor Graphics Corp., 839 F.3d 1138,
1151 (Fed. Cir. 2016) ("[A] claim for a new abstract idea is still an abstract
idea. The search for a § 101 inventive concept is thus distinct from
demonstrating§ 102 novelty."); Intellectual Ventures I LLC v. Symantec
Corp., 838 F.3d 1307, 1315 (Fed. Cir. 2016) (same for obviousness).
We 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. § 41.4l(b)(2). Trading Technologies was: (1)
decided on January 18, 2017, several weeks before the Appeal Brief was
filed on March 9, 2017, and, (2) is non-precedential. In particular,
Appellants have not shown good cause why we should consider Appellants'
untimely arguments pertaining to Trading Technologies in the Reply Brief
(5-6), regarding the rejection of all claims on appeal.
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Thus, on this record, Appellants have not shown under the guidance
of Manual of Patent Examining Procedure section 2106.05(a)
("Improvements to the Functioning of a Computer or to Any Other
Technology or Technical Field") or section 2106.05(e)("Other Meaningful
Limitations"). Nor do Appellants advance any arguments in the Brief(s) that
are directed to the Bilski machine-or-transformation test, which would only
be applicable to method (process) claims on appeal. See MPEP
§§ 2106.05(b) (Particular Machine) and 2106.05(c) (Particular
Transformation).
Therefore, we conclude the abstract idea is not integrated into a
practical application, and thus the claim is directed to the judicial exception.
Step 2B ~ "Inventive Concept" or "Significantly More"
If the claims are directed to a patent-ineligible concept, as we
conclude above, we proceed to the "inventive concept" step. For Step 2B we
must "look with more specificity at what the claim elements add, in order to
determine 'whether they identify an "inventive concept" in the application of
the ineligible subject matter' to which the claim is directed." Affinity Labs
of Texas, LLC v. DIRECTV, LLC, 838 F.3d 1253, 1258 (Fed. Cir. 2016)
(quoting Elec. Power Grp., 830 F.3d at 1353).
In applying step two of the Alice analysis, our reviewing court guides
we must "determine whether the claims do significantly more than simply
describe [the] abstract method" and thus transform the abstract idea into
patentable subject matter. Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709,
715 (Fed. Cir. 2014). We look to see whether there are any "additional
features" in the claims that constitute an "inventive concept," thereby
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rendering the claims eligible for patenting even if they are directed to an
abstract idea. Alice, 573 U.S. at 221. Those "additional features" must be
more than "well-understood, routine, conventional activity." Mayo, 566
U.S. at 79.
Evaluating representative claim 1 under Step 2B, we conclude it lacks
an inventive concept that transforms the abstract idea of analyzing the risk of
a portfolio of derivative products into a patent-eligible application of that
abstract idea.
As evidence of the conventional nature of the "means for" recited in
claim 1, we again refer to paragraph 365 of the Specification, which
describes a computer software program, stored in memory and executed by
the processor(s) of the computer, to perform the disclosed functions. Spec.
,i 365. We agree with the Examiner that the generic computer described in
the Specification is well-understood, routine, and conventional (Ans. 2-3), at
least because the Specification describes the computer in a manner that
indicates that the additional elements are sufficiently well-known that the
Specification does not need to describe the particulars of such additional
elements to satisfy 35 U.S.C. § l 12(a). See Berkheimer Memo4 § III.A. I;
Spec. ,i,i 3 85-87.
4 "Changes in Examination Procedure Pertaining to Subject Matter
Eligibility, Recent Subject Matter Eligibility Decision (Berkheimer v. HP,
Inc.)" at 3 (Apr. 19, 2018), available at
https: //www. uspto. gov/sites/default/ files/ do cum en ts/ memo-berkheimer-
20180419 .PDF ( explaining that a specification that describes additional
elements "in a manner that indicates that the additional elements are
sufficiently well-known that the specification does not need to describe the
particulars of such additional elements to satisfy 35 U.S.C. § l 12(a)" can
show that the elements are well understood, routine, and conventional).
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Thus, because the Specification describes the additional elements in
general terms, without describing the particulars, we conclude the claim
limitations may be broadly but reasonably construed as reciting conventional
computer components and techniques, particularly in light of Appellants'
Specification, as quoted above.
We conclude the claims fail the Step 2B analysis because claim 1, in
essence, merely recites various computer-based elements along with no
more than mere instructions to implement the identified abstract idea using
the computer-based elements.
Therefore, because the claims fail under both the Step 2A and Step 2B
analyses, we sustain the Examiner's§ 101 rejection of independent claims 1
and 13, and grouped claims 2-7, 9-12, and 14-19, which fall therewith.
DECISION
We affirm the Examiner's decision rejecting claims 1-7 and 9-19.
No time period for taking any subsequent action in connection with
this appeal may be extended under 37 C.F.R. § l.136(a)(l)(iv). See
37 C.F.R. § 41.50(±).
AFFIRMED
15
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte DMITRIY GLINBERG, TAE S. YOO, DALE A.
MICHAELS, and EDWARD GOGOL
Appeal2017-010970
Application 13/864,851
Technology Center 3600
MANTIS MERCADER, Administrative Patent Judge, dissenting.
I respectfully dissent from the majority's opinion affirming the
Examiner's rejection of claims 1-7 and 9-19 under 35 U.S.C. § 101.
Claims are patent-eligible under 35 U.S.C. § 101 and in view of
USPTO, 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed.
Reg. 50 (Jan. 7, 2019) ("Memorandum") if the claims integrate a judicial
exception into a practical application (see Memorandum and see also
Manual of Patent Examining Procedure ("MPEP") § 2106.05(a)-(c), (e)-(h)
(91h Ed., Rev. 08-2017 (Jan. 2018)).
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 Banklnt'l, 573 U.S.
208, 216 (2014).
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Application 13/864,851
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.").
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 (internal citation omitted). "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. (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 PTO recently published revised guidance on the application of
§ 101. Memorandum. Under that 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
organizing human activity, such as a fundamental economic
practice, or mental processes); and
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(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) (91h Ed., Rev.
08-2017 (Jan. 2018)).
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 Memorandum.
The majority determines that all of the means-plus-function
limitations of claim 1 are included in the abstract idea recited by claim 1.
Dec. 5-7. Furthermore, the majority determines at Step 2A, Prong 2 that
there are no additional elements that integrate the fundamental economic
practice into a practical application. Dec. 7-13. The majority further
determines that the claims fail to recite significantly more than the
fundamental economic practice in Step 2B. Dec. 13-15.
I agree with the majority that the "means for creating one or a
plurality of predefined sets of exchange-traded products and/or positions on
exchange-traded products, wherein each of the predefined sets has an
associated offset value" (i.e., "means for creating") and the "means for
determining whether any of the products and/or the positions on products
within the portfolio are common to any of the one or the plurality of
predefined sets" (i.e., "means for determining) constitute a fundamental
economic practice under broadest and reasonable interpretation, i.e., a
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certain method of organizing human activity, and thus an abstract idea under
Step 2A, Prong 1. See Dec. 6.
However, I respectfully disagree with the majority's determination
that the "means for grouping together into a single asset the products and/or
the positions on products within the portfolio that are common to at least one
of the one or the plurality of predefined sets" (i.e., "means for grouping")
and the "means for assigning to the single asset at least a portion of the
offset value associated with the at least one of the one or the plurality of
predefined sets that holds the products and/or the positions on products that
are common to the single asset" (i.e., "means for assigning") are part of the
abstract idea claimed. See claim 1 and Dec. 6-7. Rather, the "means for
grouping" and the "means for assigning" limitations recite additional
elements integrating the abstract idea of fundamental economic practice into
a practical application under Step 2A, Prong 2.
I particularly disagree with the majority's assertion that "determining
whether any of the products and/or the positions on products within the
portfolio are common to any of the one or the plurality of predefined sets"
and "grouping together into a single asset the products and/or the positions
on products within the portfolio that are common to at least one of the one or
the plurality of predefined sets," are operations that generally occur when
analyzing the risk of a portfolio of derivative products. See Dec. 6-7 ( citing
Spec. ,i 42 ("combines the risk of closely related products into integrated
portfolios")). This is because the Theoretical Intermarket Margin System
(i.e., TIMS) as described in paragraph 42, cited by the majority, addresses
combining the risk of closely related products into integrated portfolios '2y__
calculating risk exposure at different account levels for different account
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types and does not avoid these calculations by creating predefined sets
wherein each set has an associated offset value and grouping together into a
single asset the products within the portfolio that are common to at least one
of the predefined sets as required by claim 1. Cf Spec. ,i 42 and Spec. ,i,i
386, 387; also see Figs. 2, 3.
The extensive calculations and process of TIMS for assessing risk in
portfolios alluded in paragraph 42 are explained in more detail in paragraphs
43-48 of the Specification. See Spec. ,i 43-48. I would agree with
Appellants that the claimed invention solves the problem of product offset
computation by pre-defining and pre-assigning offsets such that an offset
need not be calculated for a product but instead assigned to the product
based on its membership in a set having the assigned offset, and thereby
reducing the computational burden on the computational resources leading
to a technical field improvement in electronic trading. See App. Br. 4, 5-6
( citing ,i,i 378-379 and 383). In other words, the problem solved by the
claimed invention is not solved through mathematical operations but rather
through this pre-defining and pre-assigning offsets. The Specification
explicitly states that "[t]he disclosed embodiments allow for the flexibility of
assigning a known offset to a set of products quickly and easily without
significant computational efforts." See Spec. ,i 379. As stated in Enfish, the
"conclusion that the claims are directed to an improvement of an existing
technology is bolstered by the specification's teachings that the claimed
invention achieves other benefits ... such as increased flexibility, faster
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search times, and smaller memory requirements." See Enfzsh, LLC v.
Microsoft Corp., 822 F.3d 1327, 1337 (Fed. Cir. 2016).
Furthermore, the majority does not provide any supporting evidence
for its assertion that, the last limitation of claim 1 reciting, "assigning to the
single asset at least a portion of the offset value associated with the at least
one of the one or the plurality of predefined sets that holds the products
and/or the positions on products that are common to the single asset" is an
operation that would occur when analyzing the risk of a portfolio of
derivative products. See Dec. 7.
Accordingly, I am persuaded by Appellants' argument that:
[i]n particular, the claimed invention solves the technical
problem of product offset computation, i.e. by providing a
means by which such computations may be selectively avoided.
The claimed invention solves this problem via a novel
process/combination of pre-defining and pre-assign off sets
such that an offset need not be calculated for a product but
instead assigned to the product based membership in a set
having the pre-calculated offset, and further thereby reducing
the computational burden on the computational resources of the
Exchange by reducing transactional, data processing and
storage requirements. Appellants submit that the claims are
directed to a specific implementation of a solution to a problem
in the software arts. See Appellants' Specification at paras. 378-
388.
App. Br. 10 (citing Spec. ,i,i 378-388). The additional elements recited by
the "means for grouping" and the "means for assigning" limitations integrate
the abstract idea claimed into a practical application by eliminating
calculations required thereby constituting an improvement of the technical
field.
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The majority's comparison of the claimed invention to Enfish as being
drawn to a "self-referential table for a computer database" as a factual
distinction (see Dec. 10-11) does not diminish the Enfish legal proposition
that claims integrate an abstract idea into a practical application if the claims
improve the function of a computer or software device or provide a practical
improvement to a technological field. See Enfish, 822 F.3d at 1339. The
present claims integrate an abstract idea, in this case a fundamental
economic practice, into a practical application because the claims recite an
improvement to the technological field of electronic trading systems.
Accordingly, the limitations of:
[ c] means for grouping together into a single asset the
products and/or the positions on products within the portfolio
that are common to at least one of the one or the plurality of
predefined sets; and
[ d] means for assigning to the single asset at least a
portion of the offset value associated with the at least one of the
one or the plurality of predefined sets that holds the products
and/or the positions on products that are common to the single
asset.
as recited in claim 1 serve to integrate the abstract idea into a practical
application.
Thus, there is no need to consider the remaining step in the Section
101 framework under step 2B. See Memorandum. However, it is
noteworthy that the claims do not merely seek to practice a fundamental
economic principle using a computer. In Fair Warning, the fact that the
required calculations could be performed more efficiently via a computer did
not materially alter the patent eligibility of the claimed subject matter. See
FairWarning IP, LLC v. Iatric Sys., Inc., 839 F.3d 1089, 1095 (Fed. Cir.
2016) (citing Bancorp Servs., LLC v. Sun Life Assurance Co., 687 F.3d
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1266, 1278 (Fed. Cir. 2012)). The instant case differs from Fair Warning
because the claimed invention does not use a computer in the computer's
ordinary capacity to make the computations faster but rather eliminates
computations and the speed increase comes from the recited claimed means
plus function processes and respective execution of software itself-not
from the computer being used as a tool.
The claims as written constitute patent eligible subject matter.
Accordingly, I respectfully dissent from the majority's opinion affirming the
Examiner's rejection of claims 1-7 and 9-19 under 35 U.S.C. § 101.
8