Ex Parte Labuszewski et al

Patent Trials and Appeals Board

Jun 25, 2019

14492941 - (D) (P.T.A.B. Jun. 25, 2019)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
14/492,941 09/22/2014
12684 7590 06/27/2019
Lempia Summerfield Katz LLC/CME
20 South Clark Street
Suite 600
Chicago, IL 60603
FIRST NAMED INVENTOR
John Labuszewski
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.
4672-14013AUS 9395
EXAMINER
BRINDLEY, BENJAMIN S
ART UNIT PAPER NUMBER
3697
NOTIFICATION DATE DELIVERY MODE
06/27/2019 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 JOHN LABUSZEWSKI, RICHARD CO, JOHN KERPEL,
and
ROBERTA PAFFARO
Appeal 2018-005159
Application 14/492,941 1
Technology Center 3600
Before JOSEPH L. DIXON, HUNG H. BUI, and JON M. JURGOV AN,
Administrative Patent Judges.
BUI, Administrative Patent Judge.
DECISION ON APPEAL
Appellants seek our review under 35 U.S.C. § 134(a) from the
Examiner's Final Rejection of claims 1-27, which are all the claims pending
in the application. We have jurisdiction under 35 U.S.C. § 6(b ).
We AFFIRM. 2
1 According to Appellants, Chicago Mercantile Exchange Inc. is the real
party in interest. App. Br. 2.
2 Our Decision refers to Appellants' Appeal Brief filed October 20, 2017
("App. Br."); the Reply Brief filed April 20, 2018 ("Reply Br."); the
Examiner's Answer mailed February 22, 2018 ("Ans."); the Final Office
Action mailed May 30, 2017 ("Final Act."); and the original Specification
filed September 22, 2014 ("Spec.").
Appeal 2018-005159
Application 14/492,941
STATEMENT OF THE CASE
Appellants' invention is directed to a method and system for
"managing electronic messages of an electronic trading system in which
orders are extracted from the electronic messages" for "executing primary
actions associated with respect to the orders" and triggering "conditional
[secondary] actions associated with the orders" upon detection of an event.
Spec. ,r,r 23, 31, Abstract.
Claims 1, 10, and 19 are independent. Independent claim 1,
reproduced below, is exemplary of the subject matter on appeal.
1. A computer implemented method of processing
transactions in a system which implements a batch auction
trading system of an electronic market using electronic
messages, the method comprising:
receiving, by a processor, a plurality of electronic
messages, each of the plurality of messages having an
associated first action to be executed within a designated
period of time having a beginning time and an ending
time, and further comprise a particular time between the
beginning and end of the period of time at which the first
action associated with the at least one electronic message
is to be executed, wherein at least one electronic message
of the plurality of electronic messages further comprises
data representative of an event and a second action to be
executed upon the occurrence of the event prior to the end
of the period of time;
executing the first action of each of the plurality of
electronic messages at the particular time during the
designated period of time;
detecting, subsequent to the execution of the first
action when the electronic message further comprises the
data representative of the event and the second action,
whether the event has occurred after the executing of the
first action of the electronic message and prior to the end
of the of the period of time; and
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executing, by the processor, in response to detection
of the occurrence of the event, prior to the end of the
period of time, the second action associated with at least
one electronic message.
App. Br. 16-20 (Claims App.).
Evidence Considered
Prasad et al. ("Prasad") US 2015/0006350 Al Jan. 1,2015
Eddy et al. ("Eddy") US 2015/0006349 Al Jan. 1,2015
Examiner's Rejections
(1) Claims 1-27 stand rejected under 35 U.S.C. § 101 because the
claimed invention is directed to an abstract idea without significantly more.
Final Act. 3---6.
(2) Claims 1-27 stand rejected under 35 U.S.C. § 103 as being
unpatentable over Prasad and Eddy. Final Act. 7-19.
ANALYSIS
35 USC§ 101 Rejection
To determine whether claims are patent eligible under § 101, we apply
the Supreme Court's two-step framework articulated in Alice Corp. v. CLS
Banklnt'l, 573 U.S. 208 (2014). First, we determine whether the claims are
directed to a patent-ineligible concept: laws of nature, natural phenomena,
and abstract ideas. Alice, 573 U.S. at 216. If so, we then proceed to the
second step to consider the elements of the claims "individually and 'as an
ordered combination'" to determine whether there are additional elements
that "'transform the nature of the claim' into a patent-eligible application."
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Id. at 217. In other words, the second step is to "search for an 'inventive
concept'-i.e., 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 concept] itself."' Id. at 218.
The Federal Circuit has described the Alice step-one inquiry as
looking at the "focus" of the claims, their "character as a whole," and the
Alice step-two inquiry as looking more precisely at what the claim elements
add-whether they identify an "inventive concept" in the application of the
ineligible matter to which the claim is directed. See Elec. Power Grp., LLC
v. Alstom S.A., 830 F.3d 1350, 1353 (Fed. Cir. 2016); see also Enfish, LLC v.
Microsoft Corp., 822 F.3d 1327, 1335-36 (Fed. Cir. 2016); and Internet
Patents Corp. v. Active Network, Inc., 790 F.3d 1343, 1346 (Fed. Cir. 2015).
Because there is no single definition of an "abstract idea" under Alice
Step 1, the Office has recently recognized, 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) 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, 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); and
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(3)Mental processes----concepts performed in the human
mind (including an observation, evaluation, judgment,
opinion).
See 2019 Revised Patent Subject Matter Eligibility Guidance, ("Revised
Guidance, 84 Fed. Reg.") 50, 52 (which is effective on January 7, 2019).
According to the Revised Guidance, "[ c ]laims 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
Uudicial] exception." See Revised Guidance, 84 Fed. Reg. 53.
"[I]ntegration 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. See Revised Guidance, 84 Fed. Reg. 53-55.
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
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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).
In contrast, limitations that are not indicative of "integration into a
practical application" include:
1) 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 using a computer as a tool to perform an
abstract idea-see MPEP 2106.05(±);
2) Adding insignificant extra-solution activity to the judicial exception
-see MPEP 2106.05(g); and
3) Generally linking the use of the judicial exception to a particular
technological environment or field of use-see MPEP 2106.05(h).
See Revised Guidance, 84 Fed. Reg. 54--55 ("Prong Two").
Appellants argue independent claims 1-27 as a group, providing
arguments for representative claim 1. See App. Br. 4, 9, 12. As a result, we
select independent claim 1 as the representative claim for the group and
address Appellants' arguments thereto. See 37 C.F.R. § 4I.37(c)(l)(iv).
Appellants present several arguments against the § 101 rejection. The
Examiner has provided a comprehensive response to Appellants' arguments.
See Ans. 2-9. We do not find Appellants' arguments persuasive, as
discussed in greater detail below. We adopt the Examiner's findings and
conclusions and analyze the claims under the Revised Guidance and adopt
the nomenclature for the steps used in the Guidance.
Examiner's Determination of Patent Ineligibility
In support of the § 101 rejection, the Examiner determines
Appellants' claim 1 is directed to "a process for financial instrument trading,
electronic trading of products, batch auction in an electronic market,
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receiving electronic messages with action to be executed, and execution of
action associated to periods of time" which is an abstract idea of a
fundamental economic practice and certain methods of organizing human
activity. Ans. 5---6; see also Final Act. 4. The Examiner determines
Appellants' claimed method for receiving and executing electronic messages
in a trading system is directed to an abstract concept similar to concepts
identified as abstract by the courts, such as collecting and comparing known
information ( Classen Immunotherapies ), collecting, analyzing, and
displaying information (Electric Power Group and Digitech ), data
recognition and storage ( Content Extraction), and creating a contractual
relationship (buySAFE). Final Act. 3--4 (citing Classen Immunotherapies,
Inc. v. Biogen IDEC, 659 F.3d 1057 (Fed. Cir. 2011); Elec. Power Grp.,
LLC v. Alstom S.A., 830 F.3d 1350 (Fed. Cir. 2016); Digitech Image Techs.,
LLC v. Elecs.for Imaging, Inc., 758 F.3d 1344 (Fed. Cir. 2014); Content
Extraction and Transmission LLC v. Wells Fargo Bank, Nat 'l Ass 'n, 776
F.3d 1343 (Fed. Cir. 2014); and buySAFE, Inc. v. Google, Inc., 765 F.3d
1350 (Fed. Cir. 2014)); see also Ans. 6.
The Examiner then determines the claim elements, when analyzed
individually and as an ordered combination, do not amount to significantly
more than the abstract idea. Final Act. 4--5; see also Ans. 7-8.
Alice/Mayo-Step 1 (Abstract Idea)
Step 2A-Prongs 1 and 2 identified in the Revised Guidance
Step 2A-Prong 1
Appellants argue "the present claims are not directed to an abstract
idea," rather, "the claims are directed to a specific and non-preempting
application of a system for reducing congestion over a communications
network which allows messages to be submitted to the system in advance of
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execution and to pre-specify and control the execution time for that
message." App. Br. 4. Appellants assert the claims are "directed to network
usage/data traffic impact" and provide various improvements that: (i)
"reduce processing loads;" (ii) "prevent the congestion caused over a
network due to competition among incoming transactions" and "reduce[] ...
competition for time-priority" by "effectively allowing submission at any
earlier time and reduction of subsequently submitted transaction
modifications;" and (iii) "provide for a specific transaction message
format/protocol which allows for a specific operation of the system and
results in the improved operation thereof." App. Br. 6-8 ( citing Spec.
,r,r 19--23); see also Reply Br. 3. Appellants also argue the claims are non-
abstract because: (iv) "the claims ... recite a concept similar to non-abstract
ideas found in McRO, i.e. the [S]pecification of a particular execution time
provided within a received message which causes the execution thereof at
the specified time in conjunction which[ sic] event base execution of a
second action;" and (v) the claims are similar to Finjan because the claims
"call for a new type of electronic message structure" which "enables a
processor to do things it could not do before, i.e. receive transactions in
advance for later execution at times defined by the submitter of the
transaction" thereby providing "an improvement to computer functionality
itself." Reply Br. 5-7 (citing McRO, Inc. v. Bandai Namco Games Am. Inc.,
837 F.3d 1299 (Fed. Cir. 2016); and Finjan, Inc. v. Blue Coat Sys., Inc., 879
F.3d 1299 (Fed. Cir. 2018)).
Appellants' arguments are not persuasive. Although the Specification
mentions reducing congestion and excessive loading of a trading system
during peak order entry times, claim 1 is not directed to such a method for
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reducing congestion or to an improved computer functionality for reducing
congestion and excessive loading. See Spec. ,r,r 21-23. Instead, claim 1
merely recites receiving and executing actions in electronic messages at "a
particular time between the beginning and end of the period of time" or at a
time "prior to the end of the period of time" after an "event has occurred."
App. Br. 16 (Claims App.). Claim 1 does not recite or require the claimed
particular time ( at which the first action is executed) or the time at which the
second action is executed to be set so as to ''prevent the congestion caused
over a network due to competition among incoming transactions," or to
"reduce processing loads" and "competition for time-priority," or to submit
the actions for execution at an "earlier time," as Appellants assert. See App.
Br. 6-8 ( emphases added). Likewise, claim 1 does not recite or require the
messages' submission and the first and second actions' execution to be
timed or arranged so as to "reduce[] transaction submission congestion" and
"network usage/data traffic impact," as Appellants submit. See App. Br. 7-
8; see also Reply Br. 8. Although claims are interpreted in light of the
Specification, limitations from the Specification are not read into the claims.
In re Van Geuns, 988 F.2d 1181, 1184 (Fed. Cir. 1993).
We also note Appellants' reliance on McRO is misplaced. For
example, McRO's '576 patent (U.S. Patent No. 6,307,576) describes
computer software for matching audio to a 3D animated mouth movement to
provide lip-synched animation. McRO 's claims contain (i) specific
limitations regarding a set of rules that "define[] a morph weight set stream
as a function of phoneme sequence and times associated with said phoneme
sequence" to enable computers to produce "accurate and realistic lip
synchronization and facial expressions in animated characters" (McRO, 837
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F.3d at 1313) and, when viewed as a whole, are directed to (ii) a
"technological improvement over the existing, manual 3-D animation
techniques" that uses "limited rules in a process specifically designed to
achieve an improved technological result in conventional industry practice."
Id. at 1316.
In contrast to McRO, Appellants' Specification and claims do not
describe technological improvements or specific improvements to the way
computers operate. Rather, Appellants' Specification and claims describe
techniques that manage electronic market messages in a fair and balanced
manner for all participants "to ensure that the expectations of [a] market
participant are met, e.g. that transactional integrity and predictable system
responses are maintained." See Spec. ,r,r 15-16, Title. Appellants argue "the
claims ... recite a concept similar to non-abstract ideas found in McRO, i.e.
the specification of a particular execution time provided within a received
message which causes the execution thereof at the specified time in
conjunction which[ sic] event base execution of a second action;" however,
Appellants do not explain why the broad specification of the claimed
"particular time" ( at which the first action is executed) and time at which the
second action is executed would be similar to McRO's technological
improvement. Ans. 4--5; see also Reply Br. 5. Appellants reference McR03
3 In addition to McRO, Appellants also present patent-eligibility arguments
based on Amdocs (Israel) Ltd. v. Openet Telecom, Inc., 841 F.3d 1288 (Fed.
Cir. 2016). App. Br. 7. However, the Federal Circuit's decision in Amdocs
is applicable to the analysis under Prong Two of the Revised Guidance and
Alice step 2 under the Federal Circuit precedent, rather than Alice step 1,
and, as such, will be addressed separately in that context. See MPEP
§ 2106.05(a).
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arguing that the claims "reduc[ e] network congestion" and are "directed to
network usage/ data traffic impact," but Appellants' claim 1 does not recite
or require features that improve network operation. See App. Br. 7.
More specifically, representative claim 1 recites the following
limitations: (1) "receiving ... a plurality of electronic messages, each of the
plurality of messages having an associated first action to be executed within
a designated period of time having a beginning time and an ending time" and
having "a particular time between the beginning and end of the period of
time at which the first action associated with the at least one electronic
message is to be executed," with "at least one electronic message of the
plurality of electronic messages [] compris[ing] data representative of an
event and a second action to be executed upon the occurrence of the event
prior to the end of the period of time;" (2) "executing the first action of each
of the plurality of electronic messages at the particular time during the
designated period of time;" (3) "detecting, subsequent to the execution of the
first action when the electronic message further comprises the data
representative of the event and the second action" and "whether the event
has occurred after the executing of the first action of the electronic message
and prior to the end of the of the period of time;" and (4) "executing ... in
response to detection of the occurrence of the event, prior to the end of the
period of time, the second action associated with at least one electronic
message." App. Br. 16 (Claims App.). These limitations, under their
broadest reasonable interpretation, recite trading of financial instruments in a
financial market or exchange, because the limitations all recite operations
that would ordinarily take place during financial trading-such as receiving
and executing investors' instructions ( electronic messages) to purchase, sell,
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or otherwise manipulate tradable financial assets, such as securities and
derivatives.
For example, limitation ( 1) in claim 1 describes receiving investors'
trading instructions ( electronic messages) specifying actions to be executed
and desired execution times, which are activities ordinarily performed by
investors (sending trading orders) and brokers (receiving investors' trading
orders). See Spec. ,r 29 (Providing that electronic messages may include
order content "such as an indicated specific financial product, a requested
price to buy or sell the financial product, a volume of financial products to
buy or sell at the requested price, as well as further characteristics of the
order such as information indicating the market participant associated with
the order" and "[a] primary action ... [that] may be any action to be
undertaken by the exchange computer system 100 with respect to the
order"). Limitations (2) and (4) in claim 1 describe executing an investor's
requested trading actions, which are activities ordinarily performed by a
broker that executes buy, sell, and other types of trading orders submitted by
the broker's clients (the investors). Further, limitation (3) in claim 1
describes analyzing an investor's trading instructions to determine
conditions set and requests made by the investor-again, activities ordinarily
performed by brokers analyzing conditional content in particular types of
trading instructions/orders, such as, for example, limit orders (that condition
securities' buy on pre-specified price ranges), stop orders (that condition
securities' buy or sell on a price moving past a particular point), call options
(that request an asset buy at a stated price within a specific timeframe ), and
put options (that request an asset sell at a stated price within a specific
timeframe ).
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Thus, limitations (1 }-( 4) in claim 1 recite executing investors'
instructions to purchase, sell, or otherwise manipulate tradable financial
assets in a financial market, which is a known business activity and a
fundamental economic practice of trading in a market environment-similar
to fundamental economic practices and certain methods of organizing human
activities identified in Alice, Bilski, and buySAFE. See Alice, 573 U.S. at
217-19 (intermediated settlement of traded or exchanged financial
obligations to mitigate the risk that one party will not perform); see also
Bilski v. Kappas, 561 U.S. 593, 599, 611-12 (2010) (risk hedging);
buySAFE, 765 F.3d at 1354 (creating a contractual relationship and
guaranteeing transactions); OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d
1359, 1362 (Fed. Cir. 2015) ("[The] concept of 'offer based pricing' is
similar to other 'fundamental economic concepts' found to be abstract ideas
by the Supreme Court and this court."); Ans. 2, 5-6; and Final Act. 4. Thus,
similar to the concept of intermediated settlement in Alice, the concept of
hedging in Bilski, and guaranteeing transactions in buySAFE, the concept of
executing investors' instructions for manipulating tradable financial assets in
a financial market (as in Appellants' claim) "[is] a fundamental economic
practice long prevalent in our system of commerce." See Alice, 573 U.S. at
219; see also Bilski, 561 U.S. at 611-12 ("Claims 1 and 4 in petitioners'
application explain the basic concept of hedging, or protecting against
risk.").
We therefore conclude limitations ( 1 }-( 4) in representative claim 1,
and similar limitations in grouped claims 10 and 19, recite trading financial
instruments in a financial market or exchange, which is a fundamental
economic practice and one of the certain methods of organizing human
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activity identified in the Revised Guidance, and therefore an abstract idea.
See Revised Guidance (Revised Step 2A, Prong One), 84 Fed. Reg. 52, 54.
We further note limitations ( 1 }-( 4) in claim 1 recite steps readily
performable by human beings (e.g., by an investor and a broker exchanging
trading information verbally or on the phone). Thus, we conclude
limitations ( 1 }-( 4) in claim 1 also recite concepts readily performed
mentally or manually, which is another abstract idea identified in the
Revised Guidance. See Revised Guidance (Revised Step 2A, Prong One-
Mental processes), 84 Fed. Reg. 52, 54; see also CyberSource Corp. v.
Retail Decisions, Inc., 654 F.3d 1366, 1372-73 (Fed. Cir. 2011) ("[A]
method that can be performed by human thought alone is merely an abstract
idea and is not patent-eligible under§ 101."). Claim 1 's "processor"
automates such actions that can be performed manually with pen and paper,
however, mental processes remain unpatentable even when automated to
reduce the burden on the user of what once could have been done with pen
and paper. CyberSource, 654 F.3d at 1375 ("That purely mental processes
can be unpatentable, even when performed by a computer, was precisely the
holding of the Supreme Court in Gottschalk v. Benson.").
Step 2A-Prong 2 (Integration into Practical Application)
Under Revised Step 2A, Prong Two of the Revised Guidance, we
discern no additional element ( or combination of elements) recited in
Appellants' claims 1, 10, and 19 that may have integrated the judicial
exception into a practical application. See Revised Guidance, 84 Fed. Reg.
54--55.
Appellants' claims generally link the use of a judicial exception to a
particular technological environment. That is, although Appellants' claims
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recite hardware components (generic computer processors, batch auction
trading system, memory, readable medium), the components are configured
to perform numerous real-world functions and operations, adding nothing of
substance to the underlying abstract idea. It is clear from the claims and the
Specification (Discussing "general processors, digital signal processors,
application specific integrated circuits, field programmable gate arrays,
servers, networks, digital circuits, analog circuits, combinations thereof, or
other now known or later developed devices for analyzing and processing
data," "general and special purpose microprocessors, and any[]one or more
processors of any kind of digital computer" and "computer-readable medium
[that] can include a solid-state memory such as a memory card or other
package that houses one or more non-volatile read-only memories."), these
limitations require no improved computer or memory resources that
Appellants claim to have invented. See Spec. ,r,r 96-98, 104, and 11 O; see
also Ans. 4--5. Thus, the claims' limitations are not indicative of
"integration into a practical application." Rather, the computer processors
and other claimed hardware components are readily available computing
elements using their already available basic functions as tools in executing
the claimed trading of financial instruments. See SAP Am., Inc. v. InvestPic
LLC, 898 F. 3d 1161 (Fed. Cir. 2018).
We are also not persuaded that Appellants' claim 1 is similar to the
claims in Finjan. See Reply Br. 6-7. Appellants' claim 1 does not describe
improvements in computer functionality similar to Finjan. In Finjan, the
claims were directed to identifying and protecting a computer against
malware, which the court found to constitute sufficient non-abstract
improvement in computer functionality to render the claims patent eligible.
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Finjan, 879 F.3d at 1304---05. As indicated above, claim 1 merely recites
receiving and executing investors' instructions ( electronic messages) to
purchase, sell, or otherwise manipulate tradable financial assets. Issuing
trading orders and executing them does not improve the functionality of a
computing device, or some other technology, as in Finjan. Appellants argue
the claims are similar to Finjan because the claims "call for a new type of
electronic message structure" which "enables a processor to do things it
could not do before, i.e. receive transactions in advance for later execution at
times defined by the submitter of the transaction." Reply Br. 6-7. We
remain unpersuaded because the broad specification of the claimed
"particular time" ( at which the message's first action is executed) and time
at which the message's second action is executed in claim 1, for example,
does not evince an improvement in computer functionality or in "message
format/protocol." See Reply Br. 3, 6. Additionally, we note the claimed
"first action" to be executed could just be an action of "placing the order into
an electronic trading system such that the order may be matched and
ultimately traded." See Spec. ,r 29. Appellants do not explain why such
timed actions ( e.g., timed placing of orders) would "enable[] a processor to
do things it could not do before." See Reply Br. 6-7.
With respect to preemption, Appellants argue "the claims ... do not
entirely preempt that abstract idea and are instead directed to a practical
application of executing transactions at designated specific times within a
time window to as to allow pre-specification of execution time and further
allowing specification of subsequently executed conditional action." App.
Br. 12. As noted by the Examiner, however, "the absence of preemption
alone does not demonstrate patent eligibility, or make the idea less abstract."
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Ans. 3--4 (citing OIP Tech., 788 F.3d at 1359). We agree with the
Examiner. As the McRO court explicitly recognized, "the absence of
complete preemption does not demonstrate patent eligibility." See McRO,
837 F.3d at 1315 (quoting Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788
F.3d 1371, 1379 (Fed. Cir. 2015)). Furthermore, "[w]here a patent's claims
are deemed only to disclose patent ineligible subject matter" under the
Alice/Mayo framework, "preemption concerns are fully addressed and made
moot." Ariosa, 788 F.3d at 1379.
For these reasons, we agree with the Examiner' determination that
claim 1, and grouped claims 10 and 19, are directed to an abstract idea that
does not integrate a practical application.
Alice/Mayo-Step 2 (Inventive Concept)
Step 2B identified in the Revised Guidance
In the second step of the Alice inquiry, Appellants argue claims 1, 10,
and 19 recite significantly more than a judicial exception for the reasons
that: (1) the claims are similar to DDR because the claims are "rooted in
technology, specifically in electronic transaction processing systems having
to handle competition among participants for limited communications
resources," "solv[ e] a transaction/data processing-centric problem," and
provide a "unique claimed message structure which cause the processor to
operate in a non-generic manner" (App. Br. 10-11; see also Reply Br. 4); (2)
the claims are similar to Amdocs in that they are "directed to network
usage/data traffic impact" (App. Br. 7); (3) the "claims allow for the
implementation of a particular, non-routine, novel approach to
communicating financial messages for designated execution in an electronic
marketplace" and "allow for reduced congestion/competition for time-
priority" (App. Br. 8-9; see also Reply Br. 7); and (4) electronic messages
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having a particular time at which an action is to be executed, and executing
that action at the designated time followed by conditional evaluation and
execution of a secondary action "form a specific solution/application which
have NOT been used before and therefore are not well understood, routine or
conventional in the art" (App. Br. 9--1 O; see also Reply Br. 7).
Appellants' arguments are not persuasive. Under current Federal
Circuit precedent, an "inventive concept" under Alice step 2 can be
established by showing, for example, that the patent claims:
(1) provide a technical solution to a technical problem
unique to the Internet, e.g., a "solution ... necessarily
rooted in computer technology in order to overcome a
problem specifically arising in the realm of computer
networks" (see DDR Holdings, LLC v. Hotels.com, L.P.,
773 F.3d 1245, 1257 (Fed. Cir. 2014));
(2) transform the abstract idea into "a particular, practical
application of that abstract idea," e.g., "installation of a
filtering tool at a specific location, remote from the end-
users, with customizable filtering features specific to
each end user" (see BASCOM Glob. Internet Servs., Inc.
v. AT&T Mobility LLC, 827 F.3d 1341, 1352, 1350
(Fed. Cir. 2016)); or
(3) "entail[] an unconventional technological solution ([ e.g.,]
enhancing data in a distributed fashion) to a
technological problem ([e.g.,] massive record flows [that]
previously required massive databases)" and "improve
the performance of the system itself' (see Amdocs (Isr.)
Ltd. v. Openet Telecom, Inc., 841 F.3d 1288, 1300, 1302
(Fed. Cir. 2016)).
Similarly, as recognized by the Revised Guidance, an "inventive
concept" under Alice step 2 can also be evaluated based on whether an
additional element or combination of elements:
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(1) adds a specific limitation or combination of limitations
that are not well-understood, routine, conventional
activity in the field, which is indicative that an inventive
concept may be present; or
(2) simply appends well-understood, routine, conventional
activities previously known to the industry, specified at a
high level of generality, to the judicial exception, which
is indicative that an inventive concept may not be
present.
See Revised Guidance, 84 Fed. Reg. 56.
In this case, however, we find no element or combination of elements
recited in Appellants' claim 1 that contains any "inventive concept" or adds
anything "significantly more" to transform the abstract concept into a patent-
eligible application. Alice, 573 U.S. at 220. In contrast to DDR and
Amdocs, Appellants' Specification and claims describe techniques that
manage electronic market messages "to ensure that the expectations of [a]
market participant are met, e.g. that transactional integrity and predictable
system responses are maintained"- a fundamental economic practice long
prevalent in our system of commerce. See Spec. ,r,r 15-16. Appellants'
trading technique using electronic messages with embedded time constraints
does not provide a technical solution to a technical problem unique to the
Internet, i.e., a "solution ... necessarily rooted in computer technology in
order to overcome a problem specifically arising in the realm of computer
networks." DDR, 773 F.3d at 1257. Nor does Appellants' invention entail,
like Amdocs, any "unconventional technological solution ( enhancing data in
a distributed fashion) to a technological problem (massive record flows
which previously required massive databases)" and "improve the
performance of the system itself." Amdocs, 841 F.3d at 1300, 1302.
Instead, the solution proposed by Appellants is a business solution rather
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than a technological solution that utilizes a general purpose computer. Ans.
2-3.
We are also not persuaded by Appellants' arguments that the claims
are "rooted in technology" because they enable "handl[ing] competition
among participants for limited communications resources," solve "a
transaction/data processing-centric problem," provide a "unique claimed
message structure which cause the processor to operate in a non-generic
manner," or are "directed to network usage/data traffic impact." App. Br. 7,
10-11; see also Reply Br. 4. Claim 1 does not recite or require handling
competition for limited communications resources, and does not indicate
how the claimed steps might impact network usage or data traffic, as argued
by Appellants. Appellants' arguments also do not explain why the "claimed
message structure ... cause[ s] the processor to operate in a non-generic
manner." See Reply Br. 4. Appellants have not demonstrated their claimed
generic processors, memory, and readable medium are able, alone or in
combination, to perform/unctions that are not merely generic, as the claims
in DDR. See DDR Holdings, 773 F.3d at 1258. As discussed supra,
Appellants' claims merely recite financial trading steps performable by
conventional computers, or even manually by brokers for their investor
clients: steps that are well-understood, routine, and conventional. That is,
Appellants' independent claims simply add a high level of generality to the
judicial exception of trading financial instruments in a financial market.
Appellants' claims also do not solve "a challenge particular to the Internet"
as considered by the court in DDR. See DDR Holdings, 773 F.3d at 1256-
57. Rather, Appellants' claims merely implement the abstract idea using
generic computers and memory. See Spec. ,r,r 96-98, 104, and 11 O; see also
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Ans. 7-9. However, "after Alice, there can remain no doubt: recitation of
generic computer limitations does not make an otherwise ineligible claim
patent-eligible." DDR, 773 F.3d at 1256 (citing Alice, 573 U.S. 208 at 223).
We also are not persuaded by Appellants' arguments that (i) the
"claims allow for the implementation of a particular, non-routine, novel
approach to communicating financial messages" and (ii) electronic messages
having a particular time at which an action is to be executed, and executing
that action at the designated time followed by conditional evaluation and
execution of a secondary action "form a specific solution/application which
have NOT been used before and therefore are not well understood, routine
or conventional in the art." App. Br. 8, 10 (emphases added). The
Examiner has identified conventional trading techniques using electronic
messages with time constraints and conditional evaluation and execution of
secondary actions. 4 Further, Appellants' Specification describes generic
computing elements performing generic data collection and processing
functions, as described supra. See Spec. ,r,r 95-98, 104, 107, and 110.
"[T]he use of generic computer elements like a microprocessor or user
interface" to perform conventional computer functions "do not alone
transform an otherwise abstract idea into patent-eligible subject matter."
FairWarning IP, LLC v. Iatric Sys., Inc., 839 F.3d 1089, 1096 (Fed. Cir.
2016) (citing DDR Holdings, 773 F.3d at 1256); see also OIP Tech., 788
4 For example, the Examiner has identified Prasad and Eddy as disclosing
electronic messages including time constraints, and Eddy as disclosing
electronic messages triggering conditional evaluation and execution of
secondary actions. See Prasad ,r,r 12, 23-34, 41, 46, 51-52; see also Eddy
,r,r 13, 36-40, 50, 60, 75, and 80-81.
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F.3d at 1363 ("[R]elying on a computer to perform routine tasks more
quickly or more accurately is insufficient to render a claim patent eligible.").
Appellants also argue the claims recite significantly more than an
abstract idea because the claims implement a "novel" trading approach.
App. Br. 8; see also Reply Br. 7. This improperly conflates the test for
§ 101 with the separate tests for§§ 102 and 103. See, e.g., Genetic Techs.
Ltd. v. Merial L.L.C., 818 F.3d 1369, 1376 (Fed. Cir. 2016) ("[U]nder the
Mayo/Alice framework, a claim directed to a newly discovered law of nature
(or natural phenomenon or abstract idea) cannot rely on the novelty of that
discovery for the inventive concept necessary for patent eligibility."); see
also Diamond v. Diehr, 450 U.S. 175, 188-89 (1981) ("The '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.").
Because Appellants' independent claims 1, 10, and 19 are directed to
a patent-ineligible abstract concept and do not recite an "inventive concept"
by providing a solution to a technical problem under the second step of the
Alice analysis, we sustain the Examiner's § 101 rejection of independent
claims 1, 10, and 19, and their dependent claims 2-9, 11-18, and 20-27 not
separately argued.
35 US.C. § 103 Rejection
With respect to independent claim 1, the Examiner finds Prasad' s
electronic trading exchange teaches a computer implemented method of
processing transactions in a system which implements a batch auction
trading system of an electronic market using electronic messages (Prasad's
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electronic trading instructions including placement orders, such as buy
orders, sell orders, put orders, and call orders, as well as cancel requests).
Final Act. 7 (citing Prasad ,r,r 23, 26-32, 52, Figs. 1 and 7). The Examiner
finds Prasad's electronic messages (electronic trading instructions) include
(i) a first action to be executed within a designated period of time (Prasad's
duration parameter for an upcoming electronic trading auction) having a
beginning time and an ending time, and (ii) a particular time between the
beginning and end of the period of time at which the first action is to be
executed, as recited in claim 1. Final Act. 7-8 (citing Prasad ,r,r 12, 24, 26,
30-33, 41, and 52). The Examiner further finds Prasad's electronic trading
exchange executes the first action of each electronic message at the
particular time designated by the electronic message, as required by claim 1.
Final Act. 7-8 (citing Prasad ,r,r 26-27, 33, 37, 46, and 51-52).
To support the conclusion of obviousness, the Examiner relies on both
Prasad and Eddy (particularly, Prasad's and Eddy's electronic trading
orders) for teaching the claimed electronic message that includes data
representative of an event. Final Act. 8-9 (citing Prasad ,r,r 23, 25-28, 34;
Eddy ,r,r 36-37, 75). The Examiner further relies on Eddy's electronic
trading order having a conditional function by which an order parameter
depends on whether a condition is satisfied, for teaching claim 1 's electronic
message that includes a second action to be executed upon the occurrence of
the event prior to the end of the time period. Final Act. 9 (citing Eddy ,r,r 13,
36-37, 75, and Fig. 3). The Examiner also finds Eddy teaches (iii)
detecting, subsequent to the execution of the first action when the electronic
message further comprises the data representative of the event and the
second action, whether the event has occurred after the executing of the first
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action of the electronic message and prior to the end of the of the period of
time, and (iv) executing, by the processor, in response to detection of the
occurrence of the event, prior to the end of the period of time, the second
action associated with at least one electronic message, as recited in claim 1.
Final Act. 9 (citing Eddy ,r,r 13, 37--40, 50, 60, 80-81, and Fig. 4).
Appellants dispute the Examiner's factual findings regarding Prasad.
In particular, Appellants argue Prasad "do[es] not teach or suggest that the
disclosed 'electronic trading instructions' can include a parameter of 'a
particular time between the beginning and end of the period of time at which
the first action associated with the at least one electronic message is to be
executed"' as recited in claim 1. Reply Br. 11; see also App. Br. 13.
Appellants additionally argue "neither Prasad nor Eddy teach or suggest that
incoming trading instructions, received during the disclosed 'acceptant
phase' or 'first phase,' include a particular time, within that first/acceptance
phase when they are to be executed" and "there is no teaching or suggestion
[in Prasad and Eddy] of Appellants' claimed time, within the
first/acceptance phase, at which the instructions are to be executed." Reply
Br. 9; see also App. Br. 13.
Appellants also argue "both [Prasad and Eddy] references strongly
teach away from [Appellants' claimed messages which specify their
particular execution time within the designated time window]" because
Prasad and Eddy reduce latency competition "via random execution of
trading instructions received within a given acceptance/first phase." App.
Br. 14. Appellants argue Prasad's and Eddy's "randomization of trade
instruction execution" conflicts with "Appellants' claimed messages which
specify their particular execution time within the designated time window"
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and "allow[] traders to pre-specify their desired priority within the
acceptance/first phase." Id. Appellants additionally argue "Prasad's and
Eddy's randomization of trade instruction execution ... would render
Appellants' claimed particular execution time inoperative because, instead
of executing the instructions at the specified time, Prasad and Eddy would
execute them at a random time." Reply Br. 14; see also App. Br. 14. As
such, Appellants argue "one of ordinary skill in the art would not be
motivated to modify the system of Prasad to include Appellants' claimed
particular execution time," as this would be "contrary to the stated purpose
of Prasad to equalize priority among trading instructions received during the
acceptance/first phase." Reply Br. 12; see also App. Br. 13-14 (citing
Prasad ,r 7).
We do not find Appellants' arguments persuasive. Rather, we find the
Examiner has provided a comprehensive response to Appellants' arguments
supported by a preponderance of evidence. Ans. 9-10. Therefore, we adopt
the Examiner's findings and explanations provided therein. Id. At the
outset, we note claim terms are given their broadest reasonable interpretation
consistent with the Specification. In re Am. Acad. of Sci. Tech Ctr., 367
F.3d 1359, 1364 (Fed. Cir. 2004). Under the broadest reasonable
interpretation, claim terms are given their ordinary and customary meaning,
as would be understood by one of ordinary skill in the art in the context of
the entire disclosure. In re Translogic Tech., Inc., 504 F.3d 1249, 1257
(Fed. Cir. 2007).
Appellants' independent claim 1 (and similarly, independent claims
10 and 19) recites, inter alia, that each electronic message has an associated
first action to be executed at a particular time within a designated period of
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time. Appellants' Specification does not provide an explicit and exclusive
definition of the claim term "first action." Rather, Appellants' Specification
provides discussion of non-limiting examples of a "first action" ( or "primary
action") that "may be any action to be undertaken by the exchange computer
system 100 with respect to the order. ... the primary action 15 may involve
placing the order into an electronic trading system such that the order may
be matched and ultimately traded." See Spec. ,r,r 29, 37 ("[T]he first action
may include placing the associated order into an electronic market"), and
,r 52 ("The action may involve any action as associated with transacting the
order ..... The actions may involve placing the orders within a particular
market and/ or order book of a market in the electronic trading system.")
(Emphasis added). Thus, the claimed "particular time between the
beginning and end of the period of time at which the first action associated
with the at least one electronic message is to be executed" includes a time at
which an order is to be placed into an electronic trading system; and the
claimed "executing the first action of each of the plurality of electronic
messages at the particular time during the designated period of time"
includes placing the order into the electronic trading system (i.e., executing
the first action) at the specified particular time.
Such is disclosed by Prasad, which describes "notify[ing] auction
participants that an acceptance phase is open ( or will be beginning) and that
the participants can begin placing electronic trading instructions when the
acceptance phase is open." See Prasad ,r,r 3 0, 44 ("[T]he engine 100 can be
programmed to open an acceptance phase to begin accepting electronic
trading instructions for the auction from the auction participants."); see also
Ans. 9-10; and Final Act. 24. Thus, Prasad's auction participants place
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messages (electronic trading instructions) having a first action (the action of
placing the orders into the electronic trading exchange) to be executed at a
particular time (at the time when Prasad's acceptance phase is open), as
required by claim 1. Prasad's trading exchange places the auction
participants' orders into the exchange ( executes the first action) when
requested by the participants-such as when the participants are notified
that the acceptance phase has opened, which is at a particular time as
claimed. Prasad also discloses the particular time at which orders are placed
in its trading exchange is "within a designated period of time having a
beginning time and an ending time" as recited in claim 1. See Prasad ,r,r 28,
31 (a period of time is a trading day).
Additionally, Eddy discloses an "acceptance engine ... configured to
request final orders to be entered before closing the acceptance phase to
provide participants an opportunity to enter their electronic trading orders
for consideration in the pending auction." See Eddy ,r 34. Thus, Eddy also
suggests that auction participants may request placement of orders into the
trading exchange ( claimed "executing the first action") at a particular time
( when the participants are notified that the acceptance phase is about to
close) as claimed.
We therefore agree with the Examiner that the combination of Prasad
and Eddy teaches electronic messages each having "an associated first action
to be executed within a designated period of time" and "a particular time
between the beginning and end of the period of time at which the first action
... is to be executed," and "executing the first action of each of the plurality
of electronic messages at the particular time during the designated period of
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time," as recited in claim 1, and similarly recited in claims 10 and 19. Final
Act. 8, 24; see also Ans. 9--10.
We also disagree with Appellants' argument that Prasad and Eddy
"strongly teach away from [Appellants' claimed messages which specify
their particular execution time within the designated time window]" because
Prasad and Eddy would reduce latency competition "via random execution
of trading instructions received within a given acceptance/first phase." See
App. Br. 14. Although Prasad may randomize the termination time of the
acceptance phase ("the auction participants do not know when the
acceptance phase is scheduled to terminate," (see Prasad ,r,r 24, 33)) and
Eddy may randomly sort groups of electronic trading orders (see Eddy ,r 13),
Prasad and Eddy do not teach away from Appellants' claimed electronic
messages that specify a particular execution time of a first action. Ans. 9--
10. Rather, the combination of Prasad and Eddy teaches electronic messages
that specify a particular execution time of a first action, as discussed supra.
We are further unpersuaded by Appellants' arguments that "Prasad' s
and Eddy's randomization of trade instruction execution ... would render
Appellants' claimed particular execution time inoperative," and the skilled
artisan "would not be motivated to modify the system of Prasad to include
Appellants' claimed particular execution time" because the modification
would allegedly be "contrary to the stated purpose of Prasad." See Reply Br.
12-14; see also App. Br. 13-14. Appellants' support for these contentions
relies upon Appellants' previous arguments that Prasad and Eddy do not
teach, and teach away from, specifying a particular execution time in an
electronic message ( as in Appellants' claim 1 ). As discussed supra, we are
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not persuaded by Appellants' arguments that Prasad and Eddy do not teach
( or teach away from) the limitations of claim 1.
For these reasons, Appellants have not persuaded us of error in the
Examiner's rejection of claims 1, 10, and 19. As such, we sustain the
Examiner's obviousness rejection of claims 1, 10, and 19, and dependent
claims 2-9, 11-18, and 20-27, argued for their dependency. App. Br. 15.
CONCLUSION
On the record before us, we conclude Appellants have not
demonstrated the Examiner erred in rejecting claims 1-27 under
35 U.S.C. §§ 101 and 103.
DECISION
As such, we AFFIRM the Examiner's rejections of claims 1-27 under
35 U.S.C. §§ 101 and 103.
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).
AFFIRMED
29