Lutnick, Howard W. et al.Download PDFPatent Trials and Appeals BoardApr 2, 202011613182 - (D) (P.T.A.B. Apr. 2, 2020) Copy Citation 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. 11/613,182 12/19/2006 Howard W. Lutnick 06-2046 7332 63710 7590 04/02/2020 INNOVATION DIVISION CANTOR FITZGERALD, L.P. 110 EAST 59TH STREET (6TH FLOOR) NEW YORK, NY 10022 EXAMINER GOTTSCHALK, MARTIN A ART UNIT PAPER NUMBER 3697 NOTIFICATION DATE DELIVERY MODE 04/02/2020 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 STUART A. HERSCH Appeal 2019-004398 Application 11/613,182 Technology Center 3600 Before ST. JOHN COURTENAY III, LARRY J. HUME, and PHILLIP BENNETT, Administrative Patent Judges. BENNETT, Administrative Patent Judge. DECISION ON APPEAL STATEMENT OF THE CASE Pursuant to 35 U.S.C. § 134(a), Appellant1 appeals from the Examiner’s decision to reject claims 6, 8, 9, 11, 17, 19–22, and 24–31. Appeal Br. 7. Claims 1–5, 7, 10, 12–16, 18, and 23 have been cancelled. We have jurisdiction 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(a). Appellant identifies the real party in interest as CFPH, LLC. Appeal Br. 3. Appeal 2019-004398 Application 11/613,182 2 CLAIMED SUBJECT MATTER The claims are directed to facilitating the buying and selling transactions of life instruments. Claim 6, reproduced below, is illustrative of the claimed subject matter: 6. An apparatus comprising: at least one processor of an electronic computer network comprising a plurality of computing nodes; and a memory that stores instructions which, when executed by the at least one processor, direct the processor to: receive information about a plurality of life insurance policies and respective policyholders of each life insurance policy; calculate a value of each life insurance policy based on the received information; generate a trading instrument for each life insurance policy based on the calculated values; generate records in a database to store data indicative of each trading instrument; generate a database index based on unique aspects of the records; receive, during a pre-determined period of time, a plurality of bids for a given trading instrument associated with a given life insurance policy, in which each of the plurality of bids comprises a bid price; search data associated with the given trading instrument in the database using the database index; determine that a first bid price is higher than any other bid price received during the pre-determined period of time; transmit an indication of an agreement to sell the given trading instrument at the first bid price; and Appeal 2019-004398 Application 11/613,182 3 generate a transfer of the given life insurance policy associated with the given trading instrument upon an exchange of a payment at the first bid price. App. Br. 16 (Claims Appendix). REFERENCE The prior art relied upon by the Examiner as evidence is: Name Reference Date Sakaue et al. (“Sakaue”) US 2006/0206438 A1 Sept. 14, 2006 REJECTIONS A. Claims 6, 8, 9, 11, 17, 19–22, and 24–31 stand rejected under 35 U.S.C. § 101 as being directed to ineligible subject matter. Final Act. 2. B. Claims 6, 8, 9, 11, 17, 19–22, and 24–31 stand rejected under 35 U.S.C. § 102(b) as anticipated by Sakaue. Final Act. 8. REJECTION A UNDER 35 U.S.C. § 101 Standard for Patent Eligibility In issues involving subject matter eligibility, our inquiry focuses on whether the claims satisfy the two-step test set forth by the Supreme Court in Alice Corp. v. CLS Bank International, 573 U.S. 208 (2014). The Court instructs us to “first determine whether the claims at issue are directed to a patent-ineligible concept,” id. at 217–18, and, in this case, the inquiry centers on whether the claims are directed to an abstract idea. If the initial threshold is met, we then move to the second step, in which we “consider the elements of each claim both individually and ‘as an ordered combination’ to determine whether the additional elements ‘transform the nature of the claim’ into a patent-eligible application.” Id. (quoting Mayo Collaborative Appeal 2019-004398 Application 11/613,182 4 Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 79, 78 (2012)). The Court describes the second step as a 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. (quoting Mayo, 566 U.S. at 72–73). The USPTO has published revised guidance on the application of § 101 consistent with Alice and subsequent Federal Circuit decisions. USPTO, 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. 50 (Jan. 7, 2019) (“Guidance”). Under the Guidance, we first look to whether the claim recites: (1) any judicial exceptions, including certain groupings of abstract ideas (i.e., mathematical concepts, certain methods of organizing human activity such as a fundamental economic practice, or mental processes) (referred to Step 2A, prong 1 in the Guidance); and (2) additional elements that integrate the judicial exception into a practical application (see MPEP §§ 2106.05(a)–(c), (e)–(h)) (referred to Step 2A, prong 2 in the Guidance). Only if a claim (1) recites a judicial exception and (2) does not integrate that exception into a practical application, do we then move to Step 2B of the Guidance. There, we look to whether the claim: (3) adds a specific limitation beyond the judicial exception that is not “well-understood, routine, conventional” in the field (see MPEP § 2106.05(d)); or (4) simply appends well-understood, routine, conventional activities previously known to the industry, specified at a high level of generality, to the judicial exception. See Guidance, 84 Fed. Reg. at 52. Appeal 2019-004398 Application 11/613,182 5 Examiner’s Findings and Conclusion The Examiner rejects the pending claims as being directed to a judicial exception without significantly more. Final Act. 2–7. Applying Step 2A, the Examiner determines the claims recite an abstract idea of, inter alia, generating a contract for a policyholder of a life insurance policy and enabling the policyholder to sell the contract to a purchaser. Final Act. 2; Ans. 3. The Examiner identifies the recited abstract idea as being related to the economy and commerce within the category of “certain methods of organizing human activity” under the Guidance. Ans. 4. Under Step 2A, prong two, the Examiner determines the additional recited elements are insufficient to integrate the abstract idea into a practical application because The “receiving” and “transmitting” features essentially recite steps for receiving and transmitting information associated with performing the abstract idea. The “generating” steps are merely electronic record keeping. The “searching” step is merely retrieving stored information. The ‘calculating’ and “determining” steps are merely performing repetitive calculations a human could perform manually. Final Act. 4; Ans. 4–5. The Examiner further expands this explanation and cites case law for each of these steps that do not integrate the abstract idea into a practical application. Ans. 5–6. The Examiner also finds the additional elements associated with computer or network technology do not transform the abstract idea into a patent eligible application of the abstract idea such that the claims amount to significantly more than the abstract idea itself. Ans. 6. Under Step 2B, the Examiner determines that the claims do not “provide meaningful limitations to transform the abstract idea into a patent eligible application of the abstract idea such that the claims amount to Appeal 2019-004398 Application 11/613,182 6 significantly more than the abstract idea itself.” Ans. 6. The Examiner finds the additional limitations generally use generic computers to performing generic functions similar to elements that the court have recognized as well- understood, routine, and conventional activities, and cites various cases identified in MPEP § 2106.05(d) in support. Id. Appellant’s Contentions Appellant argues that there are several deficiencies in the rejection. Appeal Br. 8–11. However, Appellant does not respond to the Examiner’s responses, additional findings, and further clarifications in the Answer. See Reply Br. 2. Arguments not made are waived. Revised Guidance, Step 2A, Prong One 2 The Judicial Exception Applying the guidance set forth in the Guidance, we are not persuaded the Examiner has erred in rejecting the claims as being directed to patent- ineligible subject matter. The Guidance instructs us first to determine whether any judicial exception to patent eligibility is recited in the claim. The Guidance identifies three judicially-excepted groupings: (1) mathematical concepts, (2) certain methods of organizing human activity such as fundamental economic practices, and (3) mental processes. We focus our analysis on the second grouping—certain methods of organizing human activity such as economic and commercial interactions.3 2 Throughout this opinion, we give the claim limitations the broadest reasonable interpretation consistent with the Specification. See In re Morris, 127 F.3d 1048, 1054 (Fed. Cir. 1997). 3 Appellant’s arguments are made to claim 6 generally. We treat claim 6 as representative. 37 C.F.R. § 41.37(c)(iv) (“When multiple claims subject to the same ground of rejection are argued as a group or subgroup by Appellant, the Board may select a single claim from the group or subgroup Appeal 2019-004398 Application 11/613,182 7 Claim 6 recites the following limitations: (1) “receive information about a plurality of life insurance policies and respective policyholders of each life insurance policy,” (2) “calculate a value of each life insurance policy based on the received information,” (3) “generate a trading instrument for each life insurance policy based on the calculated values,” (4) “store data indicative of each trading instrument,” (5) “generate a[n] . . . index based on unique aspects of the [data],” (6) “receive, during a pre-determined period of time, a plurality of bids for a given trading instrument associated with a given life insurance policy, in which each of the plurality of bids comprises a bid price,” (7) “search data associated with the given trading instrument,” (8) “determine that a first bid price is higher than any other bid price received during the pre-determined period of time,”,” and (8) “generate a transfer of the given life insurance policy associated with the given trading instrument upon an exchange of a payment at the first bid price.” Appeal Br. 16 (Claims Appendix). We conclude that these limitations, under their broadest reasonable interpretation, recite the practice of contracting on life insurance policies, which is based on economic principles and is a commercial interaction, and falls under the category of certain methods of organizing human activities. This is so because the limitations recite basic operations that would customarily and routinely be performed in selling trading instruments associated with bidding on life insurance policies. For example, limitations (1) through (3) recite receiving policy information, calculating a value for each life insurance policy and generating a trading instrument for each and may decide the appeal as to the ground of rejection with respect to the group or subgroup on the basis of the selected claim alone.”). Appeal 2019-004398 Application 11/613,182 8 policy based on the calculated values. Policy information is routinely received in connection with any commercial interaction involving life insurance policies. Similarly, the valuation and securitization of insurance policies are also practices typical of insurance trading transactions. Limitations (4) and (5) recite generating records to store data indicative of each trading instrument and indexing the stored data also are performed to carry out a commercial transaction of selling the trading instruments. Limitations (6) through (8) recite receiving bids on trading instruments associated with life insurance policies and determining the highest bid, determining an indication of an agreement to sell the trading instrument at the bid price and transferring the life insurance policy once the bid price has been paid, also are typical commercial interactions that take place within the context of contracting life insurance policies. Accordingly, we conclude claim 6 recites a judicial exception of a commercial interaction, which is a certain method of organizing human activities under the Guidance. Revised Guidance, Step 2A, Prong Two Integration of the Judicial Exception into a Practical Application Having determined that claim 6 recites a judicial exception, our analysis under the Guidance turns now to determining whether there are “additional elements that integrate the judicial exception into a practical application.” See Guidance, 84 Fed. Reg. at 54–55 (citing MPEP § 2106.05(a)–(c), (e)–(h)). Under the Guidance, 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); Appeal 2019-004398 Application 11/613,182 9 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 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 merely including 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(f); 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 Guidance, 84 Fed. Reg. at 54–55 (“Prong Two”). Appellant’s claim 6 recites elements additional to the abstract limitations identified above. Certain of these limitations primarily relate to the computer equipment that is used to carry out the recited process, and they include limitations (a) “at least one processor of an electronic computer network comprising a plurality of computing nodes,”; and (b) “a memory that stores instructions which, when executed by the at least one processor, direct the processor,” (c) “a database,” and (d) “a database index.” These computer-related elements are described in the Appellant’s Specification as generic computer components. Spec. 13–16 (§ V. entitled “Computing”). These limitations are insufficient to integrate the recited judicial exception Appeal 2019-004398 Application 11/613,182 10 into a practical application. In particular, these additional claim limitations amount only to the use of generic hardware to carry out the abstract idea. It is well established that mere automation of manual processes using computers is insufficient to integrate a claim into a practical application. See Credit Acceptance Corp., 859 F.3d at 1055 (“Our prior cases have made clear that mere automation of manual processes using generic computers does not constitute a patentable improvement in computer technology.”); see also MPEP § 2106.05(a) (“Mere automation of manual processes, such as using a generic computer to process an application for financing a purchase” is insufficient) (citing Credit Acceptance Corp, 859 F.3d at 1055). Appellant’s argument that “[t]he claims recite a set of rules that allow the computer to perform a function that it could not previously perform” is not persuasive. Appeal Br. 10. The type of improvement identified by the Guidance is an “[i]mprovement[] to the functioning of a computer, or to any other technology or technical field.” MPEP § 2106.05(a). The improvement alleged by Appellant is an improvement to the commercial practice of selling life insurance policies as trading instruments, and not to any technology or technical field. As such, we do not find the additional limitations of claim 6, either individually or as an ordered combination, are sufficient to integrate the judicial exception into a practical application. The Inventive Concept – Step 2B Having determined the claim is directed to a judicial exception, we proceed to evaluating whether the claim adds any specific limitation beyond the judicial exception that is not “well-understood, routine, conventional” in the field (see MPEP § 2106.05(d)) or simply appends well-understood, Appeal 2019-004398 Application 11/613,182 11 routine, conventional activities previously known to the industry, specified at a high level of generality, to the judicial exception. See Guidance. Our review of the Examiner’s rejection under Step 2B is guided by the revised examination procedure published online by the USPTO on April 19, 2018, entitled “Changes in Examination Procedure Pertaining to Subject Matter Eligibility, Recent Subject Matter Eligibility Decision (Berkheimer v. HP, Inc.)” (“Berkheimer Memorandum”), which emphasized a fact finding requirement for examiners, as applicable to rejections under § 101. In our review of the rejection under Step 2B, we consider the same “additional limitations” as were considered at Step 2A, Prong 2. We agree with the Examiner that the additional limitations are well understood, routine, and conventional under the Guidance. Appellant argues the Examiner has failed to provide sufficient evidence. Appeal Br. 11. However, after the Examiner clarified his findings in the Answer (Ans. 4–6), Appellant did not rebut the Examiner’s additional findings in their Reply Brief. The Berkheimer Memorandum provides that the Examiner may support a finding that an additional element or combination of elements may be supported by “[a] citation to one or more of the court decisions discussed in MPEP § 2106.05(d)(II) as noting the well-understood, routine, conventional nature of the additional element(s).” Berkheimer Memorandum at 4 § III(A)(2). This section of the MPEP notes that “[r]eceiving or transmitting data over a network, e.g., using the Internet to gather data” as well as “storing and retrieving information in memory” have been recognized by courts as being well understood, routine, and conventional. MPEP § 2106.05(d)(II) (citing, inter alia, OIP Techs., Inc., v. Appeal 2019-004398 Application 11/613,182 12 Amazon.com, Inc., 788 F.3d 1359, 1363 (Fed. Cir. 2015)). The Examiner cites various of the court decisions from MPEP § 2106.05(d)(ii), including citing OIP Technologies in support of the rejection. Ans. 4–6. As such, we disagree with Appellant that the Examiner’s analysis in Step 2B was insufficient, and we agree with the Examiner that the additional limitations in the claims do not supply an inventive concept. Because the Examiner correctly concluded claim 6 is directed to a judicial exception, and because Appellant does not identify any error in the Examiner’s determination under Step 2B of the Guidance, we sustain the rejection of representative claim 6 under 35 U.S.C. § 101. REJECTION B UNDER 35 U.S.C. § 103 Issue Has the Examiner erred in finding Sakaue discloses the limitations “generate a trading instrument for each life insurance policy based on the calculated values” and “generate records in a database to store data indicative of each trading instrument,” as recited in representative claim 6? ANALYSIS We have considered all of Appellant’s arguments and any evidence presented. Based upon Appellant’s arguments, and our discretion under 37 C.F.R. § 41.37(c)(1)(iv), we decide the appeal of anticipation rejection B of claims 6, 8, 9, 11, 17, 19–22, and 24–31 on the basis of representative claim 6. To the extent Appellant has not advanced separate, substantive arguments for particular claims, or other issues, such arguments are waived. See 37 C.F.R. § 41.37(c)(1)(iv). Appellant contends Sakaue differs from the invention of claim 6 because “Sakaue explicitly provides that the life settlement policy disclosed therein is not a ‘negotiable instrument.’” Appeal Appeal 2019-004398 Application 11/613,182 13 Br. 13. Because Sakaue fails to disclose any “negotiable instrument, Appellant asserts: Sakaue simply does not disclose: “generate a trading instrument for each life insurance policy based on the calculated values” and “generate records in a database to store data indicative of each trading instrument.” Accordingly, Sakaue fails to disclose all elements of claim 6. Appeal Br. 13 (emphasis omitted). In the Answer, the Examiner explains in additional detail the basis for finding that Sakaue discloses the “trading instrument” recited in claim 6: [T]he claims actually are directed to a “trading” instrument which has a distinct meaning from “negotiable” instrument as would be known to one of ordinary skill in the art. Note that the entire Sakaue reference is entirely directed to trading the contracts generated by the disclosed invention. Furthermore, note that the purpose of the invention is to transform certain insurance policies (e.g. viatical) into a different type of instrument suitable for trading by seeing to it that the transformed contracts may be securitized (e.g. see Sakuae: [242]; [380]-[381]. One of ordinary skill would recognize that a securitized contract is a trading instrument. Ans. 7. We find the Examiner’s explanation reasonable, and we note Sakaue teaches an auction system between a seller and a bidder on life settlement policies where the communication network calculates the price for the life settlement policy. Sakaue, Abst. Because Appellant fails to address the Examiner’s additional explanation and findings in the Reply Brief, on this record, we are not persuaded of error regarding the Examiner’s finding that Sakaue discloses contested limitations. Arguments not made are waived. See 37 C.F.R. § 41.37(c)(1)(iv). Appeal 2019-004398 Application 11/613,182 14 CONCLUSION We affirm the Examiner’s rejections. DECISION SUMMARY Claims Rejected 35 U.S.C. § Reference(s)/Basis Affirmed Reversed 6, 8, 9, 11, 17, 19–22, 24–31 101 Eligibility 6, 8, 9, 11, 17, 19–22, 24–31 6, 8, 9, 11, 17, 19–22, 24–31 102(b) Sakaue 6, 8, 9, 11, 17, 19–22, 24–31 Overall Outcome 6, 8, 9, 11, 17, 19–22, 24–31 TIME PERIOD FOR RESPONSE No time period for taking any subsequent action in connection with this appeal may be extended under 37 C.F.R. § 1.136(a). See 37 C.F.R. § 1.136(a)(1)(iv). AFFIRMED Copy with citationCopy as parenthetical citation