Anthony A. Renshaw

Patent Trials and Appeals Board

Jan 28, 2020

13892644 - (D) (P.T.A.B. Jan. 28, 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.
13/892,644 05/13/2013 Anthony A. Renshaw 166.0007 1043
27997 7590 01/28/2020
Hultquist IP
P.O. Box 14329
Research Triangle Park, NC 27709
EXAMINER
BAIRD, EDWARD J
ART UNIT PAPER NUMBER
3692
NOTIFICATION DATE DELIVERY MODE
01/28/2020 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):
hip@hultquistip.com
PTOL-90A (Rev. 04/07)

UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

Ex parte ANTHONY A. RENSHAW

Appeal 2018-008907
Application 13/892,644
Technology Center 3600
____________

Before JON M. JURGOVAN, ADAM J. PYONIN, and KARA L.
SZPONDOWSKI, Administrative Patent Judges.

SZPONDOWSKI, Administrative Patent Judge.

DECISION ON APPEAL

Pursuant to 35 U.S.C. § 134(a), Appellant1 appeals from the
Examiner’s decision to reject claims 1–3 and 7–18, constituting all claims
pending in the application. 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. Appellant identifies the real party in interest as Axioma, Inc.
Appeal Br. 1.
Appeal 2018-008907
Application 13/892,644

2
STATEMENT OF THE CASE

Appellant’s invention generally relates to estimating risk in an
investment portfolio, and more specifically to “improved computer based
systems, methods and software for more accurate estimation of the risk or
active risk of an investment portfolio by providing more than one estimate of
specific risk or specific variance for all assets covered by a factor risk
model.” Spec. 1. Claim 1, reproduced below, is representative of the
claimed subject matter:
1. A computer-based method providing a user tool for
comparison of different specific risk or variance estimates of a
factor risk model in order to distinguish stocks with significant
news from those without, the method comprising:

electronically receiving by a programmed computer a
portfolio of assets defined by an N-dimensional column vector
for a set of N possible investment opportunities with elements
corresponding to investment holdings in said portfolio of assets;

electronically receiving by the programmed computer a
factor risk model that predicts an asset risk for each of the N
possible investment opportunities in the portfolio of assets, said
factor risk model comprising a matrix of factor exposures, a
matrix of factor covariances, and two or more different specific
matrices modelling either specific covariance or specific risk;

providing a user with a selectable choice amongst the two
or more different specific matrices by the user tool;

electronically receiving by the programmed computer a
user selection of at least two of the two or more different
specific matrices to use;

Appeal 2018-008907
Application 13/892,644

3
computing a separate risk prediction for the portfolio of
assets using the factor risk model for each of the at least two
selected specific matrices; and

providing an output comparison for said separate risk
predictions to allow investors to readily choose the risk
prediction and assets which best suit goals including properly
addressing outliers.

REJECTIONS2

Claims 1–3 and 7–18 stand rejected as directed to patent-ineligible
subject matter under 35 U.S.C. § 101.

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. 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 that 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

2 The Examiner withdrew rejections of claims 1–3 and 7–18 under 35 U.S.C.
§ 103(a) in the Answer. Ans. 18.
Appeal 2018-008907
Application 13/892,644

4
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.”).
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)).
If the claim is “directed to” an abstract idea, we turn to the second
step of the Alice and Mayo framework, where “we must examine the
elements of the claim to determine whether it contains an ‘inventive
concept’ sufficient to ‘transform’ the claimed abstract idea into a patent-
eligible application.” Alice, 573 U.S. at 221 (quotation marks omitted). “A
claim that recites an abstract idea must include ‘additional features’ to
ensure ‘that the [claim] is more than a drafting effort designed to
monopolize the [abstract idea].’” Id. (quoting Mayo, 566 U.S. at 77).
“[M]erely requir[ing] generic computer implementation[] fail[s] to transform
that abstract idea into a patent-eligible invention.” Id.
The PTO published revised guidance on the application of § 101.
USPTO, 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed.
Reg. 50 (January 7, 2019) (“2019 Guidance”); October 2019 Update:
Subject Matter Eligibility, 84 Fed. Reg. 55,942 (available at the USPTO’s
website) (“October 2019 PEG Update”). Under the 2019 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
Appeal 2018-008907
Application 13/892,644

5
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)).
Only if a claim (1) recites a judicial exception and (2) does not integrate that
exception into a practical application, do we then 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 2019 Guidance, 84 Fed. Reg. at 52–57.
2019 Guidance, Step 2A, Prong 1
The Examiner determines the claims are directed to “a method for
estimating risk of a portfolio,” which are abstract ideas, specifically, a
method of organizing human activity and a mathematical relationship. Final
Act. 5–9 (citing Electric Power Grp. LLC v. Alstom S.A., 830 F.3d 1350,
1355 (Fed. Cir. 2016) and Bancorp Servs., L.L.C v. Sun Life Assurance Co.
of Can. (U.S.), 687 F.3d 1266, 1278 (Fed. Cir. 2012)).
Appellant argues “the present invention relates to a user tool to
distinguish stocks with significant news from those without in a very
specific way.” Appeal Br. 14. According to Appellant, “the present
invention provides new tools that enable users to more effectively analyze
news, related events and to more easily experiment with different responses
Appeal 2018-008907
Application 13/892,644

6
thereto to see which are most advantageous during a particular time or under
particular market conditions.” Appeal Br. 14.
Claim 1 recites (1) “receiving . . . a portfolio of assets defined by an
N-dimensional column vector for a set of N possible investment
opportunities with elements corresponding to investment holdings in said
portfolio of assets”; (2) “receiving . . . a factor risk model that predicts an
asset risk for each of the N possible investment opportunities in the portfolio
of assets, said factor risk model comprising a matrix of factor exposures, a
matrix of factor covariances, and two or more different specific matrices
modelling either specific covariance or specific risk”; (3) “providing a user
with a selectable choice amongst the two or more different specific matrices
by the user tool”; (4) “receiving . . . a user selection of at least two of the two
or more different specific matrices to use”; (5) “computing a separate risk
prediction for the portfolio of assets using the factor risk model for each of
the at least two selected specific matrices”; and (6) “providing an output
comparison for said separate risk predictions to allow investors to readily
choose the risk prediction and assets which best suit goals including properly
addressing outliers.”
We agree with the Examiner (See Final Act. 5–9; Ans. 20) that these
limitations, under their broadest reasonable interpretation and in light of the
2019 Guidance, recite an ineligible concept, as the limitations recite at least
one of “mathematical relationships” and/or “mental processes.” Final Act.
6–8; see Electric Power Grp., 830 F.3d at 1355; Bancorp Servs., 687 F.3d at
1278. We also note that the limitations recite “[c]ertain methods of
organizing human activity” that includes “fundamental economic principles
or practices (including . . . mitigating risk).” See Alice, 573 U.S. at 212
Appeal 2018-008907
Application 13/892,644

7
(computerized scheme for mitigating “settlement risk” is abstract); Bilski,
561 U.S. 593, 611 (2010) (hedging against the financial risk of price
fluctuations is an abstract idea).
Accordingly, Appellant has not persuaded us the Examiner erred in
reciting an abstract idea. See Final Act. 5–9; Ans. 20. Therefore, we
conclude the claims recite an abstract idea pursuant to Step 2A, Prong One
of the guidance. See 2019 Guidance, Section III(A)(1) (Prong One: Evaluate
Whether the Claim Recites a Judicial Exception).
2019 Guidance, Step 2A, Prong 2
In determining whether the claims are “directed to” the identified
abstract idea, we next consider whether the claims recite additional elements
that integrate the judicial exception into a practical application.3 We discern
no additional element (or combination of elements) recited in the claims that
integrates the judicial exception into a practical application. See 2019
Guidance, 84 Fed. Reg. at 54–55.
The Examiner determines the additional limitations in the claims, “a
user tool for comparison of different specific risk or variance estimates of a
factor risk model,” “electronically receiving [data] by a programmed
computer,” and “computing a risk prediction” are recited at a high level of
generality and are recited as performing generic computer functions
routinely used in computer applications. Final Act. 9; Ans. 20–21. The

3 We acknowledge that some of the considerations at Step 2A, Prong Two,
properly may be evaluated under Step 2 of Alice (Step 2B of the Office
guidance). For purposes of maintaining consistent treatment within the
Office, we evaluate them under Step 1 of Alice (Step 2A of the Office
guidance). See 2019 Guidance, 84 Fed. Reg. at 55 nn.25, 27–32.
Appeal 2018-008907
Application 13/892,644

8
Examiner determines these additional limitations do not improve another
technology, technical field, or the functioning of the computer itself. Final
Act. 11; Ans. 21.
Appellant recites each of the limitations in claim 1, and argues that the
claim provides “an advantageous solution to a problem in the existing art
and a technological advance thereon resulting in an improved computing
device.” Appeal Br. 15. In support, Appellant cites to pages 7 and 10 of the
Specification. Appeal Br. 14. Appellant also cites to Visual Memory LLC v.
NVIDIA Corp., 867 F.3d 1253 (Fed. Cir. 2017) and argues that “the
specification addresses the advantages offered by the technological
improvement.” Appeal Br. 16.
Appellant’s arguments are not persuasive. Appellant’s Specification
states
Among its several aspects, the present invention recognizes a
problem with existing commercial factor risk models that
provide only one estimate of specific variance or specific risk
for each investible asset is that that estimate cannot adequately
distinguish a specific risk value driven by a long history of
stationary and similar specific returns versus a specific risk
that is dominated either by a large, single specific return by a
prolonged time period in which the trading of that asset was
driven largely by news about that company's potential
acquisition, or the like.

Spec. 7. Appellant’s Specification further states
The present invention recognizes that factor risk models with
only one specific risk or specific variance estimate for each
asset, do not easily distinguish companies with significant news
from those without.

Appeal 2018-008907
Application 13/892,644

9
One goal of the present invention, then, is to provide more than
one estimate of specific risk or specific variance as part of a
factor risk model. Comparison of the different specific risk or
variance estimates for a given asset will help investors easily
distinguish companies with significant news from those
without.

Another goal to be solved by the present invention is to provide
an easy way for investors to control how quickly the investment
risk predictions and their investment allocations change when
news is announced for a particular company. That is, by
selecting and utilizing different specific risk estimates with
different levels of reactiveness to the returns of a single day,
investors can obtain investment results that match their
investment needs.

Spec. 10.
We do not see, and Appellant has not sufficiently explained, where
the cited portions of the Specification describe or teach any improvement to
computer functionality or technology as a result of Appellant’s techniques.
Rather, the cited portions of the Specification describe a business problem—
problems with existing commercial risk models—and Appellant’s methods
for solving such business problems. See id. Appellant has not identified
anything in the Specification to indicate that any improvements to computer
functionality or technology come from the claimed invention itself, rather
than from the capabilities of the recited additional limitations or other
generic computer elements responsible for performing the claimed
limitations. See Bancorp, 687 F.3d at 1278 (“[T]he fact that the required
calculations could be performed more efficiently via a computer does not
materially alter the patent eligibility of the claimed subject matter.”); OIP
Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1363 (Fed. Cir. 2015)
Appeal 2018-008907
Application 13/892,644

10
(“[R]elying on a computer to perform routine tasks more quickly or more
accurately is insufficient to render a claim patent-eligible.”). Appellant’s
Specification supports that the claimed “user tool” and “programmed
computer” are generic computer components. See Spec. 12 (“implemented
as a computer 12 including one or more programmed processors, such as a
personal computer, workstation, or server,” “display the output on a display,
such as display 22, or the output is printed out, using a printer, such as
printer 24,” “[t]he computer 12 may suitably include a number of standard
input and output devices,”); Spec. 15 (describing various tools on the
MathWorks website to provide estimates).
Moreover, the additional limitations, e.g., “electronically receiving
[data] by the programmed computer,” whether considered alone or in
combination, simply recite the steps of receiving various types of data.
These steps do not integrate the abstract idea into a practical application
because these steps are insignificant pre-solution data gathering activity,
which is necessary in order to perform the computation of the separate risk
prediction for the portfolio of assets. See CyberSource Corp. v. Retail
Decisions, Inc., 654 F.3d 1366, 1370 (“We have held that mere ‘[data-
gathering] step[s] cannot make an otherwise nonstatutory claim statutory.’”
(citations omitted)); see also 84 Fed. Reg. 55 (court-identified “examples in
which a judicial exception has not been integrated into a practical
application” include when “an additional element adds insignificant extra-
solution activity to the judicial exception”); MPEP § 2106.05(g) (describing
“a step of obtaining information about credit card transactions, which is
recited as part of a claimed process of analyzing and manipulating the
gathered information by a series of steps in order to detect whether the
Appeal 2018-008907
Application 13/892,644

11
transactions were fraudulent” as an exemplary pre-solution activity of data
gathering).
Accordingly, we determine the claims do not integrate the judicial
exception into a practical application. See 2019 Guidance, Section III(A)(2)
(Prong Two: If the Claim Recites a Judicial Exception, Evaluate Whether
the Judicial Exception Is Integrated Into a Practical Application). We,
therefore, agree with the Examiner that the claims are directed to a judicial
exception. See Final Act. 5–11; Ans. 20–24.
2019 Guidance, Step 2B
Turning to step 2 of the Alice/Mayo framework, we look to whether
the claims: (a) add a specific limitation or combination of limitations that
are not well-understood, routine, conventional activity in the field, or (b)
simply append well-understood, routine, conventional activities previously
known to the industry, specified at a high level of generality, to the judicial
exception. 2019 Guidance, 84 Fed. Reg. at 56.
The Examiner determines the additional limitations (e.g., “a user tool
for comparison of different specific risk or variance estimates of a factor risk
model,” “electronically receiving [data] by a programmed computer,” and
“computing a risk prediction”) do not add meaningful limitations to the
abstract idea because they operate in a routine manner to apply the abstract
idea. Final Act. 9. Specifically, the Examiner determines these elements
perform routine and conventional functions of receiving, processing, and
Appeal 2018-008907
Application 13/892,644

12
sending data, which courts have recognized as “merely generic.” Final Act.
9–10.
Appellant argues the claims provide no risk of preemption of factor
risk models. Appeal Br. 15.
Appellant’s argument is unpersuasive of Examiner error. Although
preemption “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 70–71)), “the absence of
complete preemption does not demonstrate patent eligibility.” Ariosa
Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015);
see also OIP Techs., 788 F.3d at 1362–63 (“[T]hat the claims do not
preempt all price optimization or may be limited to price optimization in the
e-commerce setting do not make them any less abstract.”); Ans. 7–8.
When viewed as a whole, nothing in the claim adds significantly more
(i.e., an inventive concept) to the abstract idea. The additional elements in
the claim, identified above, amount to no more than mere instructions to
apply the exception using generic computer components, which is
insufficient to provide an inventive concept. See, e.g., Spec. 12–
15. Appellant does not direct our attention to anything in the Specification
that indicates the claimed computer components perform anything other than
well-understood, routine, and conventional processing functions, such as
receiving, processing, and sending data. See Intellectual Ventures 1 LLC v.
Erie Indemnity Co., 850 F.3d 1315, 1329 (Fed. Cir. 2017) (“the remaining
limitations recite routine computer functions, such as the sending and
receiving information to execute the database search”); Electric Power, 830
F.3d at 1355 (“Nothing in the claims, understood in light of the
Appeal 2018-008907
Application 13/892,644

13
specification, requires anything other than off-the-shelf, conventional
computer, network, and display technology for gathering, sending, and
presenting the desired information”); buySAFE, Inc. v. Google, Inc., 765
F.3d 1350, 1355 (Fed. Cir. 2014) (“That a computer receives and sends the
information over a network—with no further specification—is not even
arguably inventive”); Alice, 573 U.S. at 224–26 (basic calculating, receiving,
storing, sending information over networks insufficient to add an inventive
concept). In short, each step does no more than require a generic computer
to perform generic computer functions.
Furthermore, we are unable discern anything in the claims, even when
the recitations are considered in combination, that represents something
more than the performance of routine, conventional functions of a generic
computer. That is, the claims at issue do not require any nonconventional
computer components, or even a “non-conventional and non-generic
arrangement of known, conventional pieces,” but merely call for
performance of the claimed information receiving, processing, and sending
data “on a set of generic computer components.” Bascom Glob. Internet
Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1350 (Fed. Cir. 2016).
Appellant does not separately argue the dependent claims. See
generally Appeal Br. 13–16. Accordingly, for the foregoing reasons we
sustain the Examiner’s 35 U.S.C. § 101 rejection of claims 1–3 and 7–18.

Appeal 2018-008907
Application 13/892,644

14
CONCLUSION
In summary:

Claims
Rejected
35 U.S.C.
§
Reference(s)/Basis Affirmed Reversed
1–3, 7–18 101 Eligibility 1–3, 7–
18

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