Lutnick, Howard W. et al.

Patent Trials and Appeals Board

Apr 2, 2020

11613182 - (D) (P.T.A.B. Apr. 2, 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.
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.
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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
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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
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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.
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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
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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
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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.”).
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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);
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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
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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,
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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.
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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
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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).
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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