Ex Parte O et al

Patent Trial and Appeal Board

Jan 7, 2013

12509044 (P.T.A.B. Jan. 7, 2013)

UNITED STATES PATENT AND TRADEMARK OFFICE
____________________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________________

Ex parte JEFFREY K O’HARA, RICHARD SANDOR, and
MICHAEL WALSH
____________________

Appeal 2012-009265
Application 12/509,044
Technology Center 3600
____________________

Before: MICHAEL W. KIM, BARBARA A. BENOIT, and
LYNNE E. PETTIGREW, Administrative Patent Judges.

KIM, Administrative Patent Judge.

DECISION ON APPEAL

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STATEMENT OF CASE
Appellants appeal under 35 U.S.C. § 134 from a rejection of claims 1-
131,2. We have jurisdiction under 35 U.S.C. § 6(b).
We AFFIRM and enter a NEW GROUND of rejection.
The claims are directed to a system, method and media for allocating
a risk of the occurrence of an event or condition that may affect certain
business or other interests, and more particularly, but not exclusively, to
event-linked derivative financial instruments pertaining to water scarcity
(Spec. 1:9-12). Claim 1, reproduced below, is illustrative of the claimed
subject matter:

1. A computer-implemented method for allocating a
risk of the occurrence of an event or condition
comprising:
providing at least one server device comprising at
least one processor executing instructions for:
generating a computer-readable financial instrument
based on a score, determined from one or more factors
that indicate the extent to which the event or condition
has occurred, used to determine a value for the financial
instrument;
executing a settlement value function that converts
said score into a value of said financial instrument; and
transferring, on a settlement date, a settlement
involving a cash payment or transfer of other resources
in an amount that is equivalent to the value determined
via said settlement value function.

1 Our decision will make reference to the Appellants’ Appeal Brief (“App.
Br.,” filed March 23, 2012) and Reply Brief (“Reply Br.,” filed May 22,
2012), and the Examiner’s Answer (“Ans.,” mailed April 26, 2012).
2 Claims 14-20 are withdrawn (App. Br. 1).
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Claims 1-13 are rejected under 35 U.S.C. § 112, first paragraph, for
failing to comply with the written description requirement3.
Claims 1-12 are rejected under 35 U.S.C. § 112, second paragraph, for
indefiniteness.
Claims 1-12 are rejected under 35 U.S.C. § 101 for being directed to
non-statutory subject matter.
Claims 1, 2, 6, and 9-13 are rejected under 35 U.S.C. § 102(b) as
anticipated by Patel (US 2007/0294158 A1, iss. Dec. 20, 2007).
Claims 3-5 and 8 are rejected under 35 U.S.C. § 103(a) as obvious
over Patel.

ISSUES
Did the Examiner err in asserting that claims 1, 3, 9, and 13 recite
aspects that fail to comply with the written description requirement?
Did the Examiner err in asserting that claims 1, 9, 10, and 12 recite
aspects that are indefinite?
Did the Examiner err in asserting that claim 1 is directed to an abstract
idea, which is non-statutory subject matter?
Did the Examiner err in asserting that Patel discloses “generating a
computer-readable financial instrument based on a score, determined from
one or more factors that indicate the extent to which the event or condition
has occurred, used to determine a value for the financial instrument;

3 The Examiner asserts that claims 1, 3, 9, and 13 recite aspects that fail to
comply with the written description requirement (page 3 of final Office
Action mailed January 31, 2012; Ans. 3-8). The Examiner withdrew the
specific rejections of claims 4 and 5 on these grounds (Ans. 2).
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executing a settlement value function that converts said score into a value of
said financial instrument,” as recited in independent claim 1?

FINDINGS OF FACT
We find that the following enumerated findings of fact (FF) are
supported by at least a preponderance of the evidence. Ethicon, Inc. v.
Quigg, 849 F.2d 1422, 1427 (Fed. Cir. 1988) (explaining the general
evidentiary standard for proceedings before the Office).

Specification
FF1. The Specification discloses a system for allocating a risk of a
water shortage, comprising at least one processor, wherein the at least one
processor is configured to perform the method steps described herein (p. 5,
ll. 9-11; p. 9, ll. 9-11).
FF2. The systems and software described include, either explicitly or
implicitly, software implemented on computers or other appropriate
hardware, including such other intelligent data processing devices having
processors, data storage means, and the ability to support an operating
system, with or without user interfaces, for example, file servers (p. 21, l. 28
through p. 22, l. 2).
FF3. Originally-filed claim 13 recites “[a] system for allocating a
risk of the occurrence of an event or condition, comprising at least one
processor which is configured to perform the steps of claim 1.”
FF4. Based on FF1-FF3, the Specification does not provide any
description of a “processor,” let alone a lexicographic definition of a
“processor.”
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FF5. The Specification discloses the content of the event-linked
derivative financial instruments (p. 3, l. 18 through p. 4, l. 2; p. 7, l. 18
through p. 8, ll. 2, 7-8).
FF6. The Specification does not disclose an algorithm for
establishing or “generating a computer-readable financial instrument.”
FF7. A specification for the financial instrument may be sent
between client devices 730-731 and server device 702 (p. 8, ll. 11-13; p. 15,
ll. 2-3).
FF8. The financial instrument may include a settlement value
function, which may be based on a score determined from selected factors
(p. 3, ll. 19-21; p. 8, ll. 9-11; p. 15, ll. 14-26).
FF9. Figure 3 discloses determining a score based on measurement
of factors (308), determining a financial value based on the score (306), and
market participants using this information to set markets values for the
financial instrument (304).
FF10. The process of Figure 3 may be performed by server device 702
and/or client devices 730-731 (p. 12, ll. 11-12).
FF11. The term “settlement” refers to the process of satisfying all
rights and obligations of parties to a financial instrument contract at the
expiration date, in accordance with the specification for the financial
instrument (p. 6, ll. 23-29).
FF12. The term “event or condition” refers to the specified event or
condition that may affect a business or other interest, for which a financial
instrument may be created as a hedging tool (p. 6, ll. 14-15).

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PRINCIPLES OF LAW
The first paragraph of 35 U.S.C. 112 contains a written description
requirement that is separate and distinct from the enablement requirement.
Ariad Pharms., Inc. v. Eli Lilly & Co., 598 F.3d 1336, 1340 (Fed. Cir. 2010)
(en banc). To satisfy the written description requirement, the specification
must describe the claimed invention in sufficient detail that one skilled in the
art can reasonably conclude that the inventor had possession of the claimed
invention. Vas-Cath, Inc. v. Mahurkar, 935 F.2d 1555, 1562-63 (Fed. Cir.
1991). Specifically, the specification must describe the claimed invention in
a manner understandable to a person of ordinary skill in the art and show
that the inventor actually invented the claimed invention. Id. at 1562-63;
Ariad, 598 F.3d at 1351.
The written description requirement of 35 U.S.C. 112, first paragraph
applies to all claims including original claims that are part of the disclosure
as filed. Ariad, 598 F.3d at 1349. As stated by the Federal Circuit,
“[a]lthough many original claims will satisfy the written description
requirement, certain claims may not.” Ariad, 598 F.3d at 1349; see also
LizardTech, Inc. v. Earth Res. Mapping, Inc., 424 F.3d 1336, 1343-46 (Fed.
Cir. 2005); Regents of the University of California v. Eli Lilly & Co., 119
F.3d 1559, 1568 (Fed. Cir. 1997). For instance, generic claim language in
the original disclosure does not satisfy the written description requirement if
it fails to support the scope of the genus claimed. Ariad, 598 F.3d at 1350;
Enzo Biochem, Inc. v. Gen-Probe, Inc., 323 F.3d 956, 968 (Fed. Cir. 2002)
(holding that generic claim language appearing in ipsis verbis in the original
specification did not satisfy the written description requirement because it
failed to support the scope of the genus claimed); Fiers v. Revel, 984 F.2d
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1164, 1170 (Fed. Cir. 1993) (rejecting the argument that “only similar
language in the specification or original claims is necessary to satisfy the
written description requirement”).
In addition, original claims may fail to satisfy the written description
requirement when the invention is claimed and described in functional
language but the specification does not sufficiently identify how the
invention achieves the claimed function. Ariad, 598 F.3d at 1349 (“[A]n
adequate written description of a claimed genus requires more than a generic
statement of an invention’s boundaries.”) (citing Eli Lilly, 119 F.3d at 1568).

ANALYSIS
Written Description Rejection of Independent Claims 1 and 13
We are not persuaded the Examiner erred in asserting that
independent claims 1 and 13 recite aspects that fail to comply with the
written description requirement (App. Br. 4-5; Reply Br. 2). Specifically,
we conclude that because the functional claim language “generating a
computer-readable financial instrument based on a score, determined from
one or more factors that indicate the extent to which the event or condition
has occurred, used to determine a value for the financial instrument,” recited
in each of independent claims 1 and 13, is a genus, and the Specification
does not disclose sufficient species to support the genus, the recited
functional claim language does not have sufficient written description
support to satisfy 35 U.S.C. § 112, first paragraph.
Appellants assert that the aforementioned functional claim language
has literal support in the Specification at page 3, lines 19-21 (App. Br. 5;
Reply Br. 2). However, the fact that the Specification literally repeats the
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functional claim language in ipsis verbis is not dispositive. Ariad, 598 F.3d
at 1350; Enzo Biochem, 323 F.3d at 968.
Given the identified support in the written description, we next must
determine whether the scope of the functional claim language is a genus that
covers all species for performing the claimed function. Ariad, 598 F.3d at
1349. Factors to consider include (a) whether the claim itself recites
limitations as to how the function is performed; and (b) whether the
Specification identifies a way of performing the claimed function, such as a
specific type of microcomputer or an algorithm, that defines the scope of the
functional claim language, without importing limitations from the
Specification into the claim. LizardTech, 424 F.3d at 1346; In re Hayes
Microcomputer Prods., Inc. Patent Litigation, 982 F.2d 1527, 1534 (Fed.
Cir. 1992). To that end, we note that neither independent claim 1 nor
independent claim 13 recite how the function is performed. While the
claims may disclose the content of the “computer-readable financial
instrument” (FF5), they do not disclose how the “computer-readable
financial instrument” is itself generated. We also note that the Specification
only identifies a generic processor (FF4) and no algorithm (FF6) for
“generating a computer-readable financial instrument.” Accordingly, we
find that the scope of “generating a computer-readable financial instrument”
is a genus that covers all species for performing the claimed function. And
as the Specification does not disclose any species for “generating a
computer-readable financial instrument,” independent claims 1 and 13 fail to
meet the written description requirement of 35 U.S.C. § 112, first paragraph.
LizardTech, 424 F.3d at 1346 (“[T]he description of one method for creating
a seamless DWT does not entitle the inventor . . . to claim any and all means
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for achieving that objective”); Ariad, 598 F.3d at 1349 (“the specification
must demonstrate that the applicant has made a generic invention that
achieves the claimed result and do so by showing that the applicant has
invented species sufficient to support a claim to the functionally-defined
genus”).
Insofar as our rationale differs from that set forth by the Examiner, we
denominate it a NEW GROUND of rejection pursuant to 37 C.F.R.
§ 41.50(b).

Written Description Rejection of Dependent Claim 3
We are not persuaded the Examiner erred in asserting that
“transmitting, to one or more client devices in communication with said
server device, data comprising the selected factors and the score determined
from said selected factors,” as recited in dependent claim 3, fails to comply
with the written description requirement (App. Br. 5; Reply Br. 2).
Appellants assert that the Specification discloses that the financial
instrument may be sent between client devices 730-731 and server device
702 (FF7), and that the financial instrument may include a settlement value
function, which may be based on a score determined from selected factors
(FF8). However, sending the financial instrument does mean that the scores
and selected factors themselves are sent; just that a way of determining a
settlement value function based on scores and selected factors has been sent.
Appellants also assert that because steps 304, 306, 308 of Figure 3 (FF9) can
be performed by server device 702 and/or client devices 730-731, that the
scores and selected factors would be sent from server device 702 to client
devices 730-731 in the transition between steps 306, 308 and step 304.
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However, that transition could merely send the determined financial value in
step 306 to the market participants, which would not include scores and
selected factors used to determine the financial value.

Written Description Rejection of Dependent Claim 9
We are not persuaded the Examiner erred in asserting that “executing
instructions for automatically changing a market value of said financial
instrument according to changes in the score,” as recited in dependent claim
9, fails to comply with the written description requirement (App. Br. 6-7;
Reply Br. 3-4). Appellants assert that page 8, lines 21-22 of the
Specification provide adequate written description support for this aspect.
However, we agree with the Examiner that unlike the settlement value of the
financial instrument, which can be changed by the user, the market value is
out of the user’s control, which is confirmed by the aforementioned portion
of the Specification, which only discloses that “the market value of the
financial instrument may change if there is a change in the value of the
score” (emphasis added). Thus, the Specification does not provide written
description support for “executing instructions for automatically changing a
market value,” as recited in dependent claim 9.

Indefiniteness Rejection of Independent Claim 1
We are persuaded the Examiner erred in asserting that independent
claim 1 is indefinite (App. Br. 6-7; Reply Br. 3-4). While we agree with the
Examiner that “providing at least one server” is “astoundingly vast,” that
goes to breadth, and not indefiniteness. In re Miller, 441 F.2d 689, 693
(CCPA 1971).
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Indefiniteness Rejection of Dependent Claim 9
We are not persuaded the Examiner erred in asserting that “executing
instructions for automatically changing a market value of said financial
instrument according to changes in the score,” as recited in dependent claim
9, is indefinite (App. Br. 7-8; Reply Br. 4-5). Once again, the user has no
control over market value, and thus we are unclear as how a user can
“execut[e] instructions for automatically changing a market value” that they
have no control over.

Indefiniteness Rejection of Dependent Claim 10
We are persuaded the Examiner erred in asserting that dependent
claim 10 is indefinite (App. Br. 8-9; Reply Br. 4). Once again, while we
agree with the Examiner that “enabling market participants to initiate” is
“astoundingly vast,” that goes to breadth, and not indefiniteness. In re
Miller, 441 F.2d at 693.

Indefiniteness Rejection of Dependent Claim 12
We are persuaded the Examiner erred in asserting that dependent
claim 12 is indefinite, because “settlement” is used as a noun, but defined as
a verb in the Specification (App. Br. 9-10; Reply Br. 5). However, the
Specification uses “process” to define “settlement” (FF11), both of which
are nouns.

Non-Statutory Rejection of Independent Claim 1
We are not persuaded the Examiner erred in asserting that
independent claim 1 fails to recite statutory subject matter (App. Br. 10;
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Reply Br. 5-6). We agree with the Examiner that the providing step is an
abstract idea, as merely locating the processor would meet the claim. Even
if the processor is a “particular machine,” it is not used to perform, and thus
not sufficiently tied, to the “providing” step to meet the machine-or-
transformation test.

Anticipation Rejection of Independent Claim 14
We are not persuaded the Examiner erred in asserting Patel anticipates
independent claim 1 (App. Br. 10-14; Reply Br. 6-7). Appellants assert that
paragraph [1087] of Patel does not disclose “generating a computer-readable
financial instrument based on a score, determined from one or more factors
that indicate the extent to which the event or condition has occurred, used to
determine a value for the financial instrument,” as recited in independent
claim 1, because “the occurrence of wind speeds over 100 miles per hour in”
select cities is an all-or-nothing occurrence, and not an “extent to which the
event or condition as occurred.” However, “the extent to which the event or
condition” does not exclude binary occurrences. While Appellants may
have intended for the recited “extent” to be more graduated, such an aspect
is not set forth in the claims. CollegeNet, Inc. v. ApplyYourself, Inc., 418
F.3d 1225, 1231 (Fed. Cir. 2005) (while the specification can be examined
for proper context of a claim term, limitations from the specification will not
be imported into the claims).
Furthermore, even if “extent” did require gradations, the Examiner
asserts that “the occurrence of wind speeds over 100 miles per hour in all the

4 As Appellants argue all claims together in response to the prior art
rejections, we choose independent claim 1 as representative of claims 1, 2, 6,
and 9-13. See 37 C.F.R. § 41.37(c)(1)(vii).
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cities of New Orleans, Miami, and Orlando” corresponds to one event or
condition (Ans. 9), which would meet Appellants definition of “event or
condition” as a specified event or condition that may affect a business or
other interest, for which a financial instrument may be created as a hedging
tool (FF12). While Appellants may have intended for “event or condition”
to be a single, discrete event, such an aspect is not set forth in the claims.
CollegeNet, Inc., 418 F.3d at 1231. Accordingly, when wind speeds over
100 miles per hour only occur in one city, the graduated “extent” is 33%.
Appellants then subsequently assert that since paragraph [1087] of
Patel includes no events gradations, it cannot disclose “executing a
settlement value function that converts said score into a value of said
financial instrument,” as recited in independent claim 1. However, as set
forth above, “the occurrence of wind speeds over 100 miles per hour in all
the cities of New Orleans, Miami, and Orlando” in Patel corresponds to one
event or condition, and if one city is affected, the value of the derivative is
reduced by 33%, thus meeting the claim aspect.

DECISION
The Examiner’s rejection of claims 1-13 is AFFIRMED.
Pursuant to 37 C.F.R. § 41.50(b), we designate the rejections of
claims 1 and 13 under 35 U.S.C. § 112, first paragraph, to be NEW
GROUNDS OF REJECTION. Section 41.50(b) provides “[a] new ground
of rejection pursuant to this paragraph shall not be considered final for
judicial review.”
Section 41.50(b) also provides that Appellant, WITHIN TWO
MONTHS FROM THE DATE OF THE DECISION, must exercise one of
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the following two options with respect to the new grounds of rejection to
avoid termination of the appeal as to the rejected claims:
(1) Reopen prosecution. Submit an
appropriate amendment of the claims so rejected or
new evidence relating to the claims so rejected, or
both, and have the matter reconsidered by the
examiner, in which event the proceeding will be
remanded to the examiner . . .
(2) Request rehearing. Request that the
proceeding be reheard under § 41.52 by the Board
upon the same record . . .
Should Appellants elect to prosecute further before the Examiner
pursuant to 37 C.F.R. § 41.50(b)(1), in order to preserve the right to seek
review under 35 U.S.C. §§ 141 or 145 with respect to the affirmed rejection,
the effective date of the affirmance will be deferred until the prosecution
before the Examiner concludes unless, as a mere incident to the limited
prosecution, the affirmed rejection is overcome.
If Appellants elect prosecution before the Examiner and this does not
result in allowance of the application, abandonment or a second appeal, this
case should be returned to the Board of Patent Appeals and Interferences for
final action on the affirmed rejection, including any timely request for
rehearing thereof.
No time period for taking any subsequent action in connection with
this appeal may be extended under 37 C.F.R. § 1.136(a)(1)(iv).

AFFIRMED; 37 C.F.R. § 41.50(b)
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