Howard W. Lutnick et al.

Patent Trials and Appeals Board

Jan 17, 2020

14622151 - (D) (P.T.A.B. Jan. 17, 2020)

UNITED STATES PATENT AND TRADEMARK OFFICE
UNITED STATES DEPARTMENT OF COMMERCE
United States Patent and Trademark Office
Address: COMMISSIONER FOR PATENTS
P.O. Box 1450
Alexandria, Virginia 22313-1450
www.uspto.gov
APPLICATION NO. FILING DATE FIRST NAMED INVENTOR ATTORNEY DOCKET NO. CONFIRMATION NO.
14/622,151 02/13/2015 Howard W. Lutnick 14-2410US 1449
63710 7590 01/17/2020
INNOVATION DIVISION
CANTOR FITZGERALD, L.P.
110 EAST 59TH STREET (6TH FLOOR)
NEW YORK, NY 10022
EXAMINER
SUBRAMANIAN, NARAYANSWAMY
ART UNIT PAPER NUMBER
3695
NOTIFICATION DATE DELIVERY MODE
01/17/2020 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):
lkorovich@cantor.com
patentdocketing@cantor.com
phowe@cantor.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

Ex parte HOWARD W. LUTNICK and PHILIP M. GINSBERG
____________

Appeal 2018-009002
Application 14/622,151
Technology Center 3600
____________

Before CAROLYN D. THOMAS, KARA L. SZPONDOWSKI, and
MICHAEL M. BARRY, Administrative Patent Judges.

THOMAS, Administrative Patent Judge.

DECISION ON APPEAL

Pursuant to 35 U.S.C. § 134(a), Appellant 0F1 appeals from the
Examiner’s decision to reject claims 7–11 and 14–18. Claims 1–6 and 13
are withdrawn and claim 12 is canceled. Claim Appendix. We have
jurisdiction over the appeal under 35 U.S.C. § 6(b).
We AFFIRM.

1 We use the word “Appellant” to refer to “applicant” as defined in 37
C.F.R. § 1.42. Appellant identifies the real party in interest as CFPH, LLC.
Appeal Br. 3.
Appeal 2018-009002
Application 14/622,151
2
The present invention relates generally to trading of financial
instruments. See Abstr.
Independent claim 7, reproduced below, is representative of the
appealed claims:
7. A method comprising:
storing, by at least one processor, a plurality of
electronic records indicative of bids and offers for a variety of
financial instruments in at least one queue in a memory;
comparing, by the at least one processor, the bids
with the offers stored in the at least one queue;
determining, by the at least one processor, whether
a bid for a financial instrument stored in the at least one queue
matches an offer for the financial instrument stored in the at
least one queue;
transferring, by the at least one processor and in
response to determining the matching bid and offer, data
indicative of money from a second account database to a first
account database;
forming, by the at least one processor and in
response to determining the matching bid and offer, a first
obligation to make a payment of an amount of money to a user
if an outcome of a contest meets a winning parameter;
determining, by the at least one processor, that the
outcome meets the winning parameter; and
transmitting, by the at least one processor and in
response to the determining that the outcome meets the winning
parameter, a payment of the amount of money to the user.

Appellant appeals the following rejection:
Claims 7–11 and 14–18 are rejected under 35 U.S.C. § 101 because
the claimed invention is directed to patent-ineligible subject matter. Final
Act. 2–9.
We review the appealed rejections for error based upon the issues
identified by Appellant, and in light of the arguments and evidence produced
thereon. Ex parte Frye, 94 USPQ2d 1072, 1075 (BPAI 2010) (precedential).
Appeal 2018-009002
Application 14/622,151
3
ANALYSIS
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 Bank Int’l, 573 U.S. 208,
216 (2014).
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 the 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. Kappos, 561 U.S. 593, 611 (2010) (“Claims 1 and 4
in petitioners’ application explain the basic concept of hedging, or protecting
against risk.”). For example, concepts determined to be abstract ideas, and
thus patent ineligible, include certain methods of organizing human activity,
such as fundamental economic practices (Alice, 573 U.S. at 219–20; Bilski,
561 U.S. at 611); mathematical formulas (Parker v. Flook, 437 U.S. 584,
594–95 (1978)); and mental processes (Gottschalk v. Benson, 409 U.S. 63,
69 (1972)).
The USPTO published revised guidance on the application of 35
U.S.C. § 101. USPTO’s 2019 Revised Patent Subject Matter Eligibility
Guidance, 84 Fed. Reg. 50 (Jan. 7, 2019) (“Revised Guidance”). Updated
by USPTO, October 2019 Update: Subject Matter Eligibility (available at
https://www.uspto.gov/sites/default/files/documents/
Appeal 2018-009002
Application 14/622,151
4
peg_oct_2019_update.pdf) (jointly referred to as “Revised Guidance”); see
also October 2019 Patent Eligibility Guidance Update, 84 Fed. Reg. 55942
(Oct. 18, 2019) (notifying the public of the availability of the October
update).
Under the Revised Guidance “Step 2A,” the office first looks 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
(2) additional elements that integrate the judicial exception into a
practical application (see MPEP § 2106.05(a)-(c), (e)-(h)). 84 Fed. Reg. at
51–52, 55.
Only if a claim (1) recites a judicial exception and (2) does not
integrate that exception into a practical application, does the Office then
(pursuant to the Revised Guidance “Step 2B”) 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 §
106.05(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. 84 Fed. Reg. at 56.
Step 2A, Prong 1 (Does the Claim Recite a Judicial Exception?)
With respect to independent method claim 7, and similarly, apparatus
claim 14, the Examiner determines, and we agree, that the claims are
directed to “trading a financial instrument . . . a fundamental economic
practice and a method of organizing human activity . . . such as creating and
Appeal 2018-009002
Application 14/622,151
5
fulfilling a contractual relationship” (Final Act. 3), which is a type of
abstract idea.
For example, claim 7 recites at least the following limitations:
(1) “storing . . . a plurality of electronic records indicative of bids and
offers,” (2) “comparing . . . the bids with the offers,” (3) “determining . . .
whether a bid . . . matches an offer,” (4) “transferring . . . data indicative of
money,” (5) “forming . . . a first obligation to make a payment . . . if an
outcome of a contest meets a winning parameter,” (6) “determining . . . that
the outcome meets the winning parameters,” and (7) “transmitting . . . a
payment.” Claim 14 recites similar limitations. These limitations, under
their broadest reasonable interpretation, recite at least commercial or legal
interactions, including agreements in the form of contracts or legal
obligations and/or sales activities. We agree with the Examiner that “[t]he
overall abstract idea of trading a financial instrument is a combination of
abstract-idea processes.” Ans. 4. Merely combining abstract ideas does not
render the combination any less abstract. Cf. Shortridge v. Found. Constr.
Payroll Serv., LLC, No. 14-CV-04850-JCS, 2015 WL 1739256 (N.D. Cal.
Apr. 14, 2015), aff'd, No. 2015-1898, 2016 WL 3742816 (Fed. Cir. July 13,
2016); see also RecogniCorp LLC v. Nintendo Co. Ltd., 855 F.3d 1322, 1327
(Fed. Cir. 2017) (“[a]dding one abstract idea (math) to another abstract idea
(encoding and decoding) does not render the claim non-abstract”).
Supporting the Examiner’s interpretation, Appellant’s Specification
states:
For example, a first user may submit a bid to purchase a
financial instrument to the marketplace. A second user may
submit an offer to sell the financial instrument to the
marketplace. Any number of bids and offers may be received
for any number of financial instruments from any number of
Appeal 2018-009002
Application 14/622,151
6
users. The marketplace may match the bids and offers together
to form trades between users. Processors and/or queues may be
used in some embodiments to manage and track the variety of
orders for a variety of financial instruments that may trade
through a marketplace.

The electronic marketplace may match bids and offers for a
financial instrument in a variety of manners. For example, in
some embodiments, a pro-rata filling mode may be used in
which one bid or offer may be matched against a plurality of
matching offers or bids in a prorate manner. As another
example, a first come first serve mode may be used in which an
incoming bid or offer is matched against a matching offer or bid
that has been pending for a longest amount of time first. Offers
and bids may be determined to be matching based on being for
a same financial instrument and for a same price or price
mechanism. In response to finding matches, a marketplace may
communicate with a clearinghouse to facilitate an exchange to
fulfil the matching orders. Matching orders may happen in a
high speed environment to minimize latency or delay so that
accurate pricing and desire matching takes place. This can be
accomplished using state of the art computing and/or
networking technologies.
Spec. ¶¶ 18–19.
Similarly, at least the following decisions from our reviewing court
have found many types of fundamental commercial practices patent
ineligible: OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359 (Fed. Cir.
2015), cert. denied, 136 S. Ct. 701 (mem) (2015) (offer-based price
optimization); buySAFE, Inc. v. Google, Inc., 765 F.3d 1350 (Fed. Cir.
2014) (transaction guaranty); Personalized Media Commc’ns, L.L.C. v.
Amazon.com Inc., 671 F. App’x 777 (mem) (Fed. Cir. 2016) (receiving
instructions for ordering).
Firstly, Appellant contends that the “Office Action is not in
accordance with the eligibility guidelines” published in 2016. Appeal Br. 8.
Appeal 2018-009002
Application 14/622,151
7
However, such guidelines have been superseded by the aforementioned
Revised Guidance, which our analysis is following.
Secondly, Appellant contends that the claimed concept “is directed to
memory queue operations for matching bids and offers [and] [t]he Examiner
has not cited a case reasonably tied to this concept.” Appeal Br. 9. We
determine that the Examiner has provided a sufficient response supported by
a preponderance of evidence. See Final Act. 3–9; Ans. 3–11. Additionally,
we supplement the Examiner’s analysis per the Revised Guidance, outlining
relevant cases.
Therefore, for at least the aforementioned reasons, we agree with the
Examiner that claims 7 and 14 recite an abstract idea, which we conclude is
“commercial or legal interactions,” which are certain methods of organizing
human activity under the Revised Guidance.
Step 2A—Prong 2 (integration into Practical Application) 1F2
Under the Revised Guidance, we now must determine if additional
elements in the claims integrate the judicial exception into a practical
application (see MPEP § 2106.05(a)–(c), (e)–(h)).
We discern no additional element (or combination of elements)
recited in Appellant’s claims 7 and 14 that integrate the judicial exception
into a practical application. See Revised Guidance, 84 Fed. Reg. at 54–55
(“Prong 2”). For example, Appellant’s claimed additional elements (e.g.,
“processor,” and “memory,”) do not: (1) improve the functioning of a

2 We acknowledge that some of the considerations at Step 2A, Prong 2,
properly may be evaluated under Step 2 of Alice (Step 2B of the Office
revised guidance). For purposes of maintaining consistent treatment within
the Office, we evaluate them under Step 1 of Alice (Step 2A of the Office
revised guidance). See Revised Guidance, 84 Fed. Reg. at 55 nn.25, 27–32.

Appeal 2018-009002
Application 14/622,151
8
computer or other technology; (2) are not applied with any particular
machine (except for a generic computer); (3) do not effect a transformation
of a particular article to a different state; and (4) are not applied in any
meaningful way beyond generally linking the use of the judicial exception to
a 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(a)–(c), (e)–(h).
Appellant contends “the claimed subject matter recites an
improvement to computer technology . . . [because] the claims recite a set of
rules that allow the computer to perform a function that was not previously
performed by a computer.” Appeal Br. 11.
Relatedly, Appellant’s Specification states:
For example, in the given example of party A and party B
trading a futures contract, the clearinghouse may determine that
team A wins the game. In response, the clearinghouse may
determine that the clearing house owes party A and is owed
from party B. The clearinghouse may transfer money from
party B to the clearinghouse and from the clearinghouse to
party A in response (e.g., by directing a marketplace to make
such transfers.). In some embodiments, two transfers may not
be used because they are offsetting to one another. Rather, a
single transfer from party B to party A may be used.
Spec. ¶ 40. In other words, the alleged rules in the claimed invention allow
a business method related to trading financial instruments to consider the
outcome of competitions.
In McRO, the Federal Circuit concluded that the claim, when
considered as a whole, was directed to a “technological improvement over
the existing, manual 3-D animation techniques” through the “use of limited
rules specifically designed to achieve an improved technological result in
conventional industry practice.” McRO, Inc. v. Bandai Namco Games Am.
Appeal 2018-009002
Application 14/622,151
9
Inc., 837 F.3d 1299, 1316 (Fed. Cir. 2016). Specifically, the Federal Circuit
found that the claimed rules allow computers to produce accurate and
realistic lip synchronization and facial expressions in animated characters
that previously could only be produced by human animators; and the rules
are limiting because they define morph weight sets as a function of phoneme
sub-sequences. Id. at 1313 (citations omitted).
In contrast, here, Appellant has not identified any analogous
technological improvement attributable to the claimed invention. Although
allowing trading that relates to the outcome of competitions may improve a
business process, it does not achieve an improved technological result. We
see no parallel between the limiting rules described in McRO and the results-
based rules recited in Appellant’s claims.
Instead, the claimed rules improve economic tasks, i.e., transmitting
payments in a trading environment. That is, here the arguably innovative
technique of the appealed claims is inextricably a part of the abstract idea of
trading a financial instrument. Moreover, nothing in the claims, understood
in light of the Specification, requires anything other than an off-the-shelf,
conventional computer used for collecting and processing/analyzing various
information/data. Therefore, unlike McRO, the claims are directed not to
improvement in computer capabilities, but to the results of applying an
abstract idea.
Regarding Appellant’s contention that “the instant claims do not
preempt all ways of matching orders” (Appeal Br. 12), we note that although
pre-emption “‘might tend to impede innovation more than it would tend to
promote it,’ thereby thwarting the primary object of the patent laws” (Alice,
573 U.S. at 216 (citing Mayo, 566 U.S. at 71)), “the absence of complete
preemption does not demonstrate patent eligibility” (Ariosa Diagnostics,
Appeal 2018-009002
Application 14/622,151
10
Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015)). Moreover,
we agree with the Examiner that because we find the claimed subject matter
covers patent-ineligible subject matter, the pre-emption concern is
necessarily addressed. See Ans. 8. “Where a patent’s claims are deemed
only to disclose patent ineligible subject matter under the Mayo framework,
. . . preemption concerns are fully addressed and made moot.” Ariosa
Diagnostics, 788 F.3d at 1379.
For at least the reason noted supra, we determine that claims 7 and 14
(1) recite a judicial exception and (2) do not integrate that exception into a
practical application. Thus, claims 7 and 14 are directed to the
aforementioned abstract idea.
Alice/Mayo—Step 2 (Inventive Concept)
Step 2B identified in the Revised Guidance
Turning to the second step of the Alice inquiry, we now look to
whether claims 7 and 14 contain any “inventive concept” or add anything
“significantly more” to transform the abstract concept into a patent-eligible
application. Alice, 573 U.S. at 216. As recognized by the Revised
Guidance, an “inventive concept” under Alice step 2 can be evaluated based
on whether an additional element or combination of elements:
(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. at 56; see also MPEP § 2106.05(d).
Appeal 2018-009002
Application 14/622,151
11
We find no element or combination of elements recited in Appellant’s
claims 7 and 14 that contain any “inventive concept” or add anything
“significantly more” to transform the abstract concept into a patent-eligible
application. Appellant has not adequately explained how claims 7 and 14
are performed such that it is not a routine and conventional function of a
generic computer.
Appellant contends “[t]he lack of prior art rejections” indicates patent
eligibility. Appeal Br. 13. However, a finding of novelty or non-
obviousness does not require the conclusion that the claimed subject matter
is patent-eligible. Although the second step in the Mayo/Alice framework is
termed a search for an “inventive concept,” the analysis is not an evaluation
of novelty or nonobviousness, but, rather, is a search for “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.’” Alice, 573 U.S. at 216. “Groundbreaking, innovative, or
even brilliant discovery does not by itself satisfy the § 101 inquiry.” Ass’n.
for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 591 (2013).
A novel and non-obvious claim directed to a purely abstract idea is,
nonetheless, patent-ineligible. See Mayo, 566 U.S. at 90. 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 Appellant’s independent claims 7 and 14 are directed to a
patent-ineligible abstract concept, do not include additional elements that
integrate the judicial exception into a practical application, and do not add a
specific limitation beyond the judicial exception that is not “well-
Appeal 2018-009002
Application 14/622,151
12
understood, routine, and conventional,” we sustain the Examiner’s rejection
of the claims 7–11 and 14–18 under 35 U.S.C. § 101 as being directed to
non-statutory subject matter in light of Alice, its progeny, and the Revised
Guidance. Appellant has not separately argued the dependent claims. See
Appeal Br. 14.
CONCLUSION
In summary:
Claims
Rejected
35 U.S.C. § Reference(s)/Basis Affirmed Reversed
7–11, 14–18 101 Eligibility 7–11,
14–18

No period for taking any subsequent action in connection with this
appeal may be extended under 37 C.F.R. § 1.136(a).

AFFIRMED