Matthew Arnold. O'Hara et al.

Patent Trials and Appeals Board

Aug 20, 2019

14053036 - (D) (P.T.A.B. Aug. 20, 2019)

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.
14/053,036 10/14/2013 Matthew Arnold O'Hara 22869-24451 4997
758 7590 08/20/2019
FENWICK & WEST LLP
SILICON VALLEY CENTER
801 CALIFORNIA STREET
MOUNTAIN VIEW, CA 94041
EXAMINER
BRIDGES, CHRISTOPHER
ART UNIT PAPER NUMBER
3695
NOTIFICATION DATE DELIVERY MODE
08/20/2019 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):
PTOC@Fenwick.com
PTOL-90A (Rev. 04/07)

UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

Ex parte MATTHEW ARNOLD O’HARA and
CHARLES A. CASTILLE III
____________

Appeal 2017-009303
Application 14/053,0361
Technology Center 3600
____________

Before BRADLEY B. BAYAT, TARA L. HUTCHINGS, and
ROBERT J. SILVERMAN, Administrative Patent Judges.

SILVERMAN, Administrative Patent Judge.

DECISION ON APPEAL

STATEMENT OF THE CASE
The Appellants appeal under 35 U.S.C. § 134(a) from the Examiner’s
decision rejecting claims 1, 2, 4, and 6–20. We have jurisdiction under 35
U.S.C. § 6(b).
We AFFIRM.

1 The Appellants identify BlackRock Index Services, LLC as the real party
in interest. Appeal Br. 2.
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ILLUSTRATIVE CLAIM
1. A method for determining an index level of a future
cost of retirement index, the method comprising:
estimating a cost of an annuity on a future
investment date, the annuity providing a periodic income
comprising a plurality of payments starting from the
future investment date and continuing until an end date,
the end date determined according to a mortality rate;
determining a target return from a present
investment date to the future investment date of at least
one security, the target return sufficient to acquire the
periodic income of the annuity at the future investment
date;
determining a yield curve for modeling growth in a
value of the at least one security from the present
investment date to the future investment date for
achieving the target return;
adjusting a discount function by a risk charge
corresponding to an adjustment in the mortality rate, the
discount function based on the determined yield curve;
applying the discount function to the value of the
at least one security at the future investment date;
determining a net present value of the at least one
security at the future investment date with the discount
function applied thereto; and
setting the index level of the future cost of
retirement index based on the determined net present
value of the periodic income starting from the future
investment date.
REJECTION
Claims 1, 2, 4, and 6–20 are rejected under 35 U.S.C. § 101 as
ineligible subject matter.
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ORAL HEARING WAIVED
The Appellants requested an oral hearing in this matter, in a filing
received by the Office on June 16, 2017. A Notice of Hearing issued on
May 21, 2019, stating, in part:
CONFIRMATION OF ATTENDANCE OR WAIVER
OF THE HEARING IS REQUIRED WITHIN 21 DAYS OF
THE MAILING DATE OF THIS NOTICE. Failure to respond
may subject Appellant(s) to waiver of the oral hearing. If
Appellant is no longer interested in having an oral hearing,
Appellant must still file a waiver of oral hearing with the
Board. This allows the panel to promptly act on the appeal
without waiting for the oral hearing date.
The Appellants failed to respond to the Notice of Hearing, as required, and
no representative for the Appellants appeared before the Board panel, on the
date and time identified in the Notice of Hearing (July 12, 2019). We
remind the Appellants and their representatives to provide all responses
required by the Office and to do so in a timely manner.
FINDINGS OF FACT
The findings of fact relied upon, which are supported by a
preponderance of the evidence, appear in the following Analysis.
ANALYSIS
Under 35 U.S.C. § 101, an invention is patent-eligible if it claims a
“new and useful process, machine, manufacture, or composition of matter.”
35 U.S.C. § 101. Yet, subject matter belonging to any of the statutory
categories may, nevertheless, be ineligible for patenting. The Supreme
Court has interpreted § 101 to exclude laws of nature, natural phenomena,
and abstract ideas, because they are regarded as the basic tools of scientific
and technological work, such that including them within the domain of
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patent protection would risk inhibiting future innovation premised upon
them. Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S.
576, 589 (2013).
Of course, “[a]t some level, ‘all inventions . . . embody, use, reflect,
rest upon, or apply’” these basic tools of scientific and technological work.
Alice Corp. v. CLS Bank Int’l, 573 U.S. 208, 217 (2014). Accordingly,
evaluating ineligible subject matter, under these judicial exclusions, involves
a two-step framework for “distinguish[ing] between patents that claim the
buildin[g] block[s] of human ingenuity and those that integrate the building
blocks into something more, thereby transform[ing] them into a patent-
eligible invention.” Id. (internal quotation marks and citation omitted). The
first step determines whether the claim is directed to judicially excluded
subject matter (such as a so-called “abstract idea”); the second step
determines whether there are any “additional elements” recited in the claim
that (either individually or as an “ordered combination”) amount to
“significantly more” than the identified judicially excepted subject matter
itself. Id. at 217–18.
The USPTO recently published revised guidance on the application of
§ 101, in accordance with judicial precedent. 2019 Revised Patent Subject
Matter Eligibility Guidance, 84 Fed. Reg. 50, 52 (Jan. 7, 2019) (“2019
Revised Guidance”). Under the 2019 Revised Guidance, a claim is “directed
to” an abstract idea, only if the claim recites any of (1) mathematical
concepts, (2) certain methods of organizing human activity, and (3) mental
processes — without integrating such abstract idea into a “practical
application,” i.e., without “apply[ing], rely[ing] on, or us[ing] the judicial
exception in a manner that imposes a meaningful limit on the judicial
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exception, such that the claim is more than a drafting effort designed to
monopolize the judicial exception.” Id. at 52–55. The considerations
articulated in MANUAL OF PATENT EXAMINING PROCEDURE § 2106.05(a)–(c)
and (e)–(h) (“MPEP”) bear upon whether a claim element (or combination
of elements) integrates an abstract idea into a practical application. Id. at 55.
A claim that is “directed to” an abstract idea constitutes ineligible subject
matter, unless the claim recites an additional element (or combination of
elements) amounting to significantly more than the abstract idea. Id. at 56.
Although created “[i]n accordance with judicial precedent” (id. at 52),
the 2019 Revised Guidance enumerates the analytical steps differently than
the Supreme Court’s Alice opinion. Step 1 of the 2019 Revised Guidance
addresses whether the claimed subject matter falls within any of the statutory
categories of § 101. Id. at 53–54. Step 2A, Prong One, concerns whether
the claim at issue recites ineligible subject matter and, if an abstract idea is
recited, Step 2A, Prong Two, addresses whether the recited abstract idea is
integrated into a practical application. Id. at 54–55. Unless such integration
exists, the analysis proceeds to Step 2B, in order to determine whether any
additional element (or combination of elements) amounts to significantly
more than the identified abstract idea. Id. at 56.
In the present Appeal, the Appellants advance some specific
arguments for each of independent claims 1, 11, and 16, but do not
separately address any of the dependent claims. Accordingly, the dependent
claims stand or fall with their respective independent claims. See 37 C.F.R.
§ 41.37(c)(1)(iv).
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Neither the Examiner nor the Appellants questions the satisfaction of
Step 1 of the 2019 Revised Guidance — i.e., that the claims are drawn to
subject matter within the scope of § 101.
In relation to Step 2A, Prong One, of the 2019 Revised Guidance, the
Examiner, without identifying particular corresponding limitations,
characterizes “the claims” as
a process of providing an investment product based on a future
cost of retirement index level which is considered to be an
abstract idea inasmuch as such activity is considered both a
fundamental economic practice of mitigating risk of future
income, organizing information through mathematical
correlations and as an abstract idea of itself such as comparing
new and stored information and using rules to identify options
(SmartGene[, Inc. v. Advanced Biological Labs., 555 F. App’x
950 (Fed. Cir. 2014) (nonprecedential)]), using categories to
organize, store and transmit information (Cyberfone[ Sys., LLC
v. CNN Interactive Grp., Inc., 558 F. App’x 988 (Fed. Cir.
2014) (nonprecedential)]), data recognition and storage
(Content Extraction[ & Transmission LLC v. Wells Fargo
Bank, 776 F.3d 1343 (Fed. Cir. 2014)]).
Non-Final Act. 3. The Examiner also treats independent claim 11 as
exemplary of the independent claims and correlates each claim limitation (or
a grouping of such limitations) to a concept that the Examiner identifies as
an abstract idea, based upon court decisions:
[T]he step of estimating a cost of an annuity on a future
investment date, the annuity providing a periodic income
comprising a plurality of payments starting from the future
investment date and continuing until an end date, the end date
determined according to a mortality rate corresponds to
comparing new and stored information and using rules
(estimation) to identify options (amount needed at future date).
The steps of determining a target return from a present
investment date to the future investment date of at least one
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security, the target return sufficient to acquire the periodic
income of the annuity at a future investment date and
determining a yield curve for modeling growth in a value of the
at least one security from the present investment date to the
future investment date for achieving the target return
correspond to organizing information through fundamental
mathematical correlations within a fundamental economic
practice. The steps of adjusting a discount function by a risk
charge corresponding to an adjustment in the mortality rate,
the discount function based on the determined yield curve and
applying the discount function to the value of the at least one
security at the future investment date, correspond to comparing
new and stored information (mortality rate) and using rules
(adjusting) to identify options (applying the discount function)
as well as organizing information through mathematic
correlations to mitigate financial risk. The step of determining
a net present value of the at least one security at the future
investment date with the discount function applied thereto
further corresponds to using mathematical correlations/formulas
to organize information. The steps of setting an index level of
the future cost of retirement index based on the determined net
present value of the periodic income starting from the future
investment date and creating a future cost of retirement fund
comprising a plurality of shares, each share of the fund having
a share price based on the index value, where the fund holds
one or more securities selected for the fund by a process
comprising: modeling an annuity purchased on the end date
having a periodic income approximately corresponding to the
index level on the end date; estimating a duration, a key rate
duration, and a yield of the modeled annuity and selecting the
securities for the fund based at least in part on the duration, the
key rate duration, and the yield of the modeled annuity
correspond to using categories to organize, store and transmit
information and a fundamental economic practice such as
selecting securities to fund the future cost of retirement.
Non-Final Act. 3–4 (italics added, in order to identify claim language).
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The Appellants argue, focusing on the Examiner’s characterization
that all the limitations of claim 11, taken together, constitute a type of
abstract idea:
The Examiner’s proposed abstract idea of “providing an
investment product based on a future cost of retirement index
level” is not an abstract idea. It is not a “building block of
human ingenuity,” nor is it a “fundamental economic concept.”
Instead, the proposed abstract idea describes a specific metric
used to aid investors with retirement.
Appeal Br. 8. The Appellants contend that the claimed “future cost of
retirement index level” is not a longstanding practice and that a “financial
index is inherently non-abstract”:
The purpose of economic indices is to quantify abstract
concepts within an economy, such as the health of an economy
or the performance of an economic sector, and turn them into
objectively measurable values that can be used to evaluate a
given domain specific solution.
Appeal Br. 10.
Yet, the Examiner points out that an index is a basic tool of
economics. Answer 4. As such, it is similar to basic financial techniques
discussed by the Supreme Court in Bilski v. Kappos, 561 U.S. 593, 611
(2010) (“hedging, or protecting against risk”) and Alice, 573 U.S. at 218
(“intermediated settlement”). The Examiner’s characterization of the
claimed implementation of an “index” may, therefore, be a feature of one of
the “[c]ertain methods of organizing human activity” abstract-idea category
of the 2019 Revised Guidance, 84 Fed. Reg. at 52, which includes
“fundamental economic principles or practices (including hedging,
insurance, mitigating risk),” as well as “commercial or legal interactions
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(including agreements in the form of contracts [and] legal obligations)” —
another description that applies to the claimed subject matter.
The Appellants also argue that the claims are non-abstract, because
they involve novel and non-conventional features. Appeal Br. 11–13. To
the contrary, although non-conventional elements — if not part of a judicial
exception — may render a claim patent-eligible (under the second step of
the Alice analysis, or Step 2B of the 2019 Revised Guidance), a novel or
non-conventional feature is not necessarily outside the realm of judicial
exceptions. See Synopsys, Inc. v. Mentor Graphics Corp., 839 F.3d 1138,
1151 (Fed. Cir. 2016) (“[A] claim for a new abstract idea is still an abstract
idea.”) See also Answer 4–5.
The Appellants also take issue with the Examiner’s characterization of
the claimed subject matter (as “providing an investment product based on a
future cost of retirement index level”) arguing that independent claim 1 does
not recite “providing an investment product” — although independent
claims 11 and 16 admittedly do so. Appeal Br. 13–14. The Appellants point
out that claim 1 describes “a method for determining an index level of a
future cost of retirement index” and even though “the index level determined
in claim 1 may be used to provide an investment product, the claim does not
recite that this step must be performed.” Id. at 14. We agree that the
Examiner’s characterization of the claims (as “providing an investment
product based on a future cost of retirement index level”) is overly narrow,
with regard to claim 1. Yet, the Appellants’ position that claim 1 is even
less specific than the Examiner’s characterization, does not render claim 1
non-abstract. Moreover, the Appellants concede that a primary purpose of
the method of claim 1 is to create an investment product based thereon. Id.
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(“[T]he limitations of claims 1 ensure that the claim recites a specific
process for determining an index level for the future cost of retirement index
and for creating a subsequent investment product based on the index.”)
In view of the foregoing, the Appellants’ arguments do not persuade
us of error in the portion of the Examiner’s analysis corresponding to Step
2A, Prong One, of the 2019 Revised Guidance.
Turning to Step 2A, Prong Two, unless a claim that recites a judicial
exception (such as an abstract idea) “integrates the recited judicial exception
into a practical application of that exception,” the claim is “directed to” the
judicial exception. 2019 Revised Guidance, 84 Fed. Reg. at 53. The
analysis of such an “integration into a practical application” involves
“[i]dentifying . . . any additional elements recited in the claim beyond the
judicial exception(s)” and “evaluating those additional elements individually
and in combination to determine whether they integrate the exception into a
practical application.” Id. at 54–55. Among the considerations “indicative
that an additional element (or combination of elements) may have integrated
the exception into a practical application” is whether “[a]n additional
element reflects an improvement in the functioning of a computer, or an
improvement to other technology or technical field.” Id. at 55 (footnote
omitted). “[W]hether an additional element or combination of elements
integrate the exception into a practical application should be evaluated on
the claim as a whole.” Id. n.24.
In regard to issues that bear upon Step 2A, Prong Two, the Appellants
suggest that independent claims 1, 11, and 16 entail improvements. Appeal
Br. 14–19. Yet, the Appellants do not articulate the nature of any alleged
improvements. Instead, the Appellants appear to argue that improvements
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are achieved through claim specificity. For example, with respect to
claim 1, the Appellants state:
Here, the claimed method for determining the index level
determines a target return for a security that would allow an
investor to purchase an annuity for retirement. While it is true
that any of a number of target returns can be determined for a
future cost of retirement index, such as a lump sum, a
percentage of total lifetime earnings, or a portfolio of low-risk
assets (e.g., low-yield bonds), the claim is not so broad to cover
all such ways. Rather, the claim recites a specific method for
determining the future cost of retirement index using an
estimate for the cost of an annuity that a retiree would purchase
on their retirement date to determine the index level. Reciting
this one particular way of determining a target return does not
preempt the alleged abstract idea of determining a future cost of
retirement index, and thereby recites a concrete and non-
conventional method, just like the claims in McRO[, Inc. v.
Bandai Namco Games America Inc., 837 F.3d 1299 (Fed. Cir.
2016)].
Id. at 16.
Yet, claim narrowness or specificity alone does not overcome
ineligibility. After all, an abstract idea may be described in multiple ways
that vary in breadth. See Apple, Inc. v. Ameranth, Inc., 842 F.3d 1229, 1240
(Fed. Cir. 2016) (“An abstract idea can generally be described at different
levels of abstraction.”) Indeed, claims in the cited McRO case were not
deemed patent-eligible, on account of their specificity or non-
conventionality, as the Appellants contend; rather, the dispositive issue was
that the claimed functionality improved upon prior art techniques for
computer animation. McRO, 837 F.3d at 1313 (“[T]he claimed
improvement here is allowing computers to produce ‘accurate and realistic
lip synchronization and facial expressions in animated characters’ that
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previously could only be produced by human animators. As the district
court correctly recognized, this computer automation is realized by
improving the prior art through ‘the use of rules, rather than artists, to set the
morph weights and transitions between phonemes.’”) (citations omitted).
See also Answer 5–6 (discussing McRO).
Further, the Appellants’ assertion that the independent claims should
be deemed patent-eligible, because the claims allegedly avoid preemption
(see Appeal Br. 16–19), is unpersuasive. The proper test for determining
whether a claim improperly preempts a fundamental tool of scientific and
technological work is to apply the very framework that the Supreme Court
delineated in Alice and Mayo Collaborative Services v. Prometheus
Laboratories, Inc., 566 U.S. 66 (2012). “Where a patent’s claims are
deemed only to disclose patent ineligible subject matter under the Mayo
framework, as they are in this case, preemption concerns are fully addressed
and made moot.” Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d
1371, 1379 (Fed. Cir. 2015). See also Answer 6.
Accordingly, we are not persuaded of error in the portion of the
Examiner’s analysis corresponding to Step 2A, Prong Two, of the 2019
Revised Guidance.
Turning to Step 2B of the 2019 Revised Guidance, 84 Fed. Reg. at 56,
a claim that is directed to a judicial exception (such as an abstract idea)
might, nevertheless, be patent-eligible, if the claim contains “additional
elements amount[ing] to significantly more than the exception itself” — i.e.,
“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.” See Alice, 573 U.S. at 223
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(“[T]he mere recitation of a generic computer cannot transform a patent-
ineligible abstract idea into a patent-eligible invention.”)
The Examiner’s position is that exemplary claim 11 includes no claim
elements that would satisfy the Step 2B inquiry, so as to render the claim
patent-eligible. Non-Final Act. 6–7. See also Answer 7–8.
The Appellants contend that various claim limitations rise to the level
of amounting to significantly more than an abstract idea. Appeal Br. 19–21.
The Appellants state:
[T]here are many limitations in the claim that are not merely the
steps of “providing an investment product based on a future
cost of retirement index level.” For example, the claims
“estimat[e] a cost of an annuity on a future investment date”
and “determin[e] a target return . . . to acquire the periodic
income of the annuity at [a] future investment date.”
Additionally, the claims set the index level of the future cost of
retirement index based on “a net present value of . . . at least
one security” determined by “determining a yield curve for
modeling growth in a value of the at least one security” and
“applying discount function to the value of the at least one
security at the future investment date.” Finally, claims 11 and
16 select securities to be included in a future cost of retirement
fund based on “the duration, the key rate duration, and the yield
of [a] modeled annuity” and “the duration, and the duration
times the spread of [a] modeled annuity,” respectively. All of
these limitations ensure that the claims recite specific methods
for calculating a future cost of retirement index level or creating
an investment product based on the future cost of retirement
index. None of these steps are necessary or inherent to the
alleged abstract idea, nor are they part of the generic
implementation thereof.
Id. at 20 (alterations in original).
Yet, the Appellants provide no explanation for the position that any of
the identified claim elements should amount to “significantly more” than an
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abstract idea, per Step 2B. “A statement” — such as the Appellants’ — that
“merely points out what a claim recites will not be considered an argument
for separate patentability of the claim.” 37 C.F.R. § 41.37(c)(iv). See also
In re Jung, 637 F.3d 1356, 1365 (Fed. Cir. 2011) (“[I]t has long been the
Board’s practice to require an applicant to identify the alleged error in the
examiner’s rejections.”) (citing Ex parte Frye, Appeal No. 2009-006013, at
9–10, 2010 WL 889747 (BPAI Feb. 26, 2010) (precedential)).
Furthermore, the Appellants’ identification of limitations appearing in
claims 1 and 11 (see Appeal Br. 20) encompasses limitations that the
Examiner identifies specifically as part of a judicial exception (see Non-
Final Act. 3–4). As such, these limitations cannot constitute “additional
elements” that may be considered for the purpose of Step 2B.
In view of the foregoing, we are not persuaded of error in the rejection
of independent claims 1, 11, and 16 — or of dependent claims 2, 4, 6–10,
12–15, and 17–20 (none of which is argued separately) — such that we
sustain the rejection of these claims under 35 U.S.C. § 101.
DECISION
We AFFIRM the Examiner’s decision rejecting claims 1, 2, 4, and 6–
20 under 35 U.S.C. § 101.
No time period for taking any subsequent action in connection with
this appeal may be extended under 37 C.F.R. § 1.136(a).
AFFIRMED