Chicago Mercantile Exchange Inc.

Patent Trials and Appeals Board

Jul 16, 2020

2020000680 (P.T.A.B. Jul. 16, 2020)

UNITED STATES PATENT AND TRADEMARK OFFICE
UNITED STATES DEPARTMENT OF COMMERCE
United States Patent and Trademark Office
Address: COMMISSIONER FOR PATENTS
P.O. Box 1450
Alexandria, Virginia 22313-1450
www.uspto.gov
APPLICATION NO. FILING DATE FIRST NAMED INVENTOR ATTORNEY DOCKET NO. CONFIRMATION NO.
14/074,660 11/07/2013 Ari Studnitzer 4672-13019AUS 8979
12684 7590 07/16/2020
Lempia Summerfield Katz LLC/CME
20 South Clark Street
Suite 600
Chicago, IL 60603
EXAMINER
ALLADIN, AMBREEN A
ART UNIT PAPER NUMBER
3693
NOTIFICATION DATE DELIVERY MODE
07/16/2020 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):
docket-us@lsk-iplaw.com
mail@lsk-iplaw.com
pair_lsk@firsttofile.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

Ex parte ARI STUDNITZER, ZACHARY BONIG,
RYAN EAVY, and FRANK KMIEC

____________

Appeal 2020-000680
Application 14/074,660
Technology Center 3600
____________

Before NORMAN H. BEAMER, ADAM J. PYONIN, and
GARTH D. BAER, Administrative Patent Judges.

BAER, Administrative Patent Judge.

DECISION ON APPEAL

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STATEMENT OF THE CASE
Appellant1 appeals under 35 U.S.C. § 134(a) from the Examiner’s
Final rejection of claims 2–11 and 13–21, which are all pending claims.
Appeal Br. 2–3. We have jurisdiction under 35 U.S.C. § 6(b).
We affirm.
BACKGROUND
A. The Invention
Appellant’s invention is directed to providing “a trading system
architecture, having improved performance which further assures
transactional determinism under increasing processing transaction loads.”
Abstract. Independent claim 2 is representative and reproduced below:
2. A system for improving efficiency of a trading system for
a plurality of financial instruments, each of the plurality of
financial instruments comprising at least one component, the
system comprising:
a memory operative to store data representative of a set of
previously received but unsatisfied orders, each order being for
a transaction for at least one of the plurality of financial
instruments;
a plurality of match engines coupled with the memory,
each of the plurality of match engines operative to implement a
market for a financial instrument of the plurality of financial
instruments by being further operative to perform a search of
only an allocated subset of previously received but unsatisfied
orders in order to locate a match for an incoming order provided
thereto for a transaction for the financial instrument with at least
one other of the set of previously received but unsatisfied orders,
the at least one other previously received but unsatisfied order
being for a transaction counter thereto for a financial instrument

1 We use the word “Appellant” to refer to “applicant” as defined in 37
C.F.R. § 1.42. Appellant identifies Chicago Mercantile Exchange, Inc. as
the real party in interest. Appeal Br. 2.
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of the plurality of financial instruments having at least one
component in common with the financial instrument of the
incoming order, to at least partially satisfy one or both of the
incoming order or the at least one other previously received
order, and update the stored data in the memory representative of
the set of previously received but unsatisfied orders based
thereon via removal any of the at least one other previously
received but unsatisfied orders that are completely satisfied by
the incoming order and/or storage of the incoming order in the
set of previously received but unsatisfied orders if it is not
completely satisfied by the at least one other previously received
but unsatisfied orders; and
an order book allocator coupled with the memory and the
plurality of match engines and operative to, upon receipt of an
incoming order from a market participant for a transaction for a
financial instrument, determine a subset of the set of previously
received but unsatisfied orders each having at least one
component of the associated financial instrument in common
with the financial instrument of the incoming order, and
determine if access to the subset has been previously allocated to
one of the plurality of match engines so as to be able to be
searched thereby and, where access to the subset has been
previously allocated to one of the plurality of match engines,
route the incoming order thereto for the selected match engine to
perform the search, and wherein access to the subset has not been
allocated to one of the match engines, select any one of the
plurality of match engines, allocate access to the subset to the
selected match engine and route the incoming order to the
selected match engine for the selected match engine to perform
the search; and
wherein the order book allocator is further operative to
deallocate access to the subset when the selected match engine
has completed the search and match for all incoming orders
routed thereto prior to another incoming order being routed
thereto.

Appeal Br. 19–20 (Claims Appendix).

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B. The Rejections on Appeal
The Examiner rejects claims 2–11 and 13–21 under 35 U.S.C. § 101
because the claimed invention is directed to an abstract idea without
significantly more. Final Act. 2.
The Examiner rejects claim 11 under 35 U.S.C. § 112(b) as being
indefinite. Final Act. 16.2

ANALYSIS
We have reviewed the Examiner’s rejection in light of Appellant’s
arguments. Arguments Appellant could have made but chose not to make
are waived. See 37 C.F.R. § 41.37(c)(1)(iv). Except where noted, we adopt
the Examiner’s findings and conclusions as our own, and add the following
primarily for emphasis.

A. Ineligible Subject Matter Rejection of Claims 2–11 and 13–21
The Examiner determines the claims are patent ineligible under 35
U.S.C. § 101 because claim 2 recites “routing transaction orders of financial
instruments for matching via a series of steps which is a fundamental
economic practice and/or a commercial or legal interaction and thus grouped
as certain methods of organizing human activity which is an abstract idea.”
Final Act. 3; see also Alice Corp. v. CLS Bank Int’l, 573 U.S. 208, 217
(2014) (describing the two-step framework “for distinguishing patents that
claim laws of nature, natural phenomena, and abstract ideas from those that
claim patent-eligible applications of those concepts”).

2 The rejection of claims 2, 9, 10, and 16 under 35 U.S.C. § 112(b) has been
withdrawn in the Advisory Action. See Final Act. 16; Adv. Act 2; Ans. 17–
18.
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Shortly before the Final Rejection issued, the USPTO published
revised guidance on the application of § 101 (“Guidance”). See USPTO’s
2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. 50
(Jan. 7, 2019) (“Memorandum”); USPTO October 2019 Update: Subject
Matter Eligibility (Oct. 17, 2019) (“Update”), noticed at 84 Fed. Reg. 55942
(Oct. 18, 2019). Pursuant to the Guidance “Step 2A,” the office first looks
to whether the claim recites:
(1) Prong One: any judicial exceptions, including certain groupings of
abstract ideas (i.e., mathematical concepts, certain methods of
organizing human activity such as a fundamental economic practice,
or mental processes); and
(2) Prong Two: 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, does the Office then (pursuant to the
Guidance “Step 2B”) look to whether the claim:
(3) adds a specific limitation beyond the judicial exception that are 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 Memorandum Section III.
We are not persuaded the Examiner’s rejection is in error.

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1. Step 2A
Regarding Step 2A, Prong One, Appellant argues that the claims are
not directed to an abstract idea but rather are
directed to an allocation scheme that allows for a generic (non-
orderbook specific) matching engine (of a plurality of generic
matching engines) to be allocated different order books to
search on depending upon the order being received.

Appeal Br. 6. Appellant contends that “[w]ithout the order book allocator,
the system does not provide transactional deterministic operation” (Appeal
Br. 7), and that “routing transactions is a purely technological process, not a
fundamental economic practice.” Appeal Br. 8.
Appellant further argues that under Prong Two, “[t]he claims recite a
specific improvement to allocating resources, an improvement that is applied
in the specific field of providing transactional deterministic operation”
(Appeal Br. 13), in which “resources are allocated efficiently” and that
“parallelism among transaction processing and/or liquidity/trading
opportunities can be balanced.” Appeal Br. 13, citing Spec. ¶¶ 310, 313.
Appellant further argues that under Step 2B, “[t]he claims provide an
Inventive Concept” (Appeal Br. 15) (emphasis omitted), because “the steps
impose meaningful limits that allow for incoming orders and order books to
be allocated between match engines, providing for a more efficient and more
effective trading system.” Appeal Br. 16.
Prong One
Pursuant to Step 2A, Prong One of the Guidance, we are not
persuaded the Examiner erred in determining claims 2–11 and 13–21 recite
an abstract idea. See Final Act. 2–11; Adv. Act. 2; Ans. 3–12, 18–25;
Memorandum Section III(A)(1) (Prong One: Evaluate Whether the Claim
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Recites a Judicial Exception), 84 Fed. Reg. at 54. We first note claim 2’s
preamble recites “improving efficiency of a trading system for a plurality of
financial instruments.” However, the claimed “memory,” “plurality of
match engines,” and “order book allocator” perform the steps of allocating
“an incoming order from a market participant for a transaction for a financial
instrument” to a “selected match engine.” We find that, when analyzing
claim 2 under the Guidance, claim 2 recites “[c]ertain methods of organizing
human activity,” such as (1) “fundamental economic principles or practices”
(including “mitigating risk”), and (2) “commercial or legal interactions”
(including “agreements in the form of contracts; legal obligations” and
“business relations.”) Memorandum, 84 Fed. Reg. at 52.
In particular, claim 2’s steps describe an order matching process used
to allocate “an incoming order from a market participant for a transaction for
a financial instrument,” which is performed to consummate a financial
transaction. The Specification supports this finding, stating both that
as used herein a business transaction may be defined as one or
more operations or acts which are undertaken according to one
or more associated business rules (including industry, legal or
regulatory requirements or customs) to accomplish a business
or commercial purpose, which may include compliance with
industry, regulatory or legal requirements

(Spec. ¶ 46 (emphasis added)), and

the phrase “financial transaction” will refer to a business
transaction involving the purchase or sale of financial
instruments, such as futures contracts or options thereon,
spread or other combination contracts.

Spec. ¶ 47 (emphasis added).
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Further, the Specification indicates the disclosed embodiments aim to
“provid[e] improved trading opportunities, fault tolerance, low latency
processing, high volume capacity, risk mitigation and market protections
with minimal impact, as well as improved and equitable access to
information and opportunities.” Spec. ¶ 43.
Claim 2’s limitations recite abstract ideas because they accomplish
both performing “fundamental economic principles or practices” and
“commercial or legal interactions.” Memorandum Section I, 84 Fed. Reg. at
52. Thus, this claim recites “[c]ertain methods of organizing human
activity.” Id.
Appellant’s contentions that “[w]ithout the order book allocator, the
system does not provide transactional deterministic operation” (Appeal Br.
7), and that “routing transactions is a purely technological process, not a
fundamental economic practice” (Appeal Br. 8) are unsupported attorney
argument. Further, the claims do not recite “transactional deterministic
operation” and this argument is not commensurate with the scope of the
claim.
Accordingly, claim 2 “recites a judicial exception . . . [and] requires
further analysis in Prong Two” of the Guidance. Memorandum, 84 Fed.
Reg. at 54.
Prong Two
We also are not persuaded the Examiner erred pursuant to Step 2A,
Prong Two of the Guidance. In addition to the claim features that are part of
the judicial exception discussed above under Prong One, the remaining
claim features are part of the abstract idea and do not comprise additional
elements, individually or in combination, that integrate the exception into a
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practical application. See Memorandum, 84 Fed. Reg. at 54–55; SAP Am.,
Inc. v. InvestPic, LLC, 898 F.3d 1161, 1170 (Fed. Cir. 2018) (The abstract
idea itself cannot supply the inventive concept, “no matter how
groundbreaking the advance.”). Although claim 2 further recites “memory,”
“plurality of match engines,” and “order book allocator,” even considered as
additional elements, these limitations “merely recite[] the words ‘apply it’
(or an equivalent) with the judicial exception, or merely include[]
instructions to implement an abstract idea . . . on a computer, or merely uses
a computer as a tool to perform an abstract idea.” Memorandum, 84 Fed.
Reg. at 55; see also Smart Sys. Innovations, LLC v. Chicago Transit Auth.,
873 F.3d 1364, 1372–73 (Fed. Cir. 2017) (Determining the claims “invoke
computers in the collection and arrangement of data. Claims with such
character do not escape the abstract idea exception.”). This is not enough to
integrate the underlying abstract idea into a practical application. See
Memorandum, 84 Fed. Reg. at 55.
The Examiner finds, and we agree, that
the hardware presented is generic and appears to have orders
allocated to it by software that is programmed to route various
orders to selected match engines. This is a computer doing what
it is designed to do — flexibly follow directions it is given to
follow.

Ans. 21.
We do not agree with Appellant that “[t]he claims recite a specific
improvement to allocating resources, an improvement that is applied in the
specific field of providing transactional deterministic operation” (Appeal Br.
13), in which “resources are allocated efficiently” and that “parallelism
among transaction processing and/or liquidity/trading opportunities can be
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balanced.” Appeal Br. 13, citing Spec. ¶¶ 310, 313. Instead, we agree with
the Examiner that
the claim recites the idea of a solution or an outcome (i.e.,
improving efficiency of a trading system) but the claim fails to
recite sufficient details for how the solution to a problem is
accomplished and the additional elements are mere instructions
to apply an exception because they do no more than merely
invoke computers or machinery as a tool in its ordinary
capacity for receiving and processing data.

Final Act. 4. Similar to the discussion above regarding claim 2’s lack of
explicit connection to “transactional deterministic operation,” claim 2
similarly fails to recite a connection between the limitations and Appellant’s
assertion that claim 2 results in “parallelism among transaction processing
and/or liquidity/trading opportunities can be balanced.” We agree with the
Examiner that “[t]he claims do not disclose improved algorithms or
architectures that would demonstrate an improvement.” Ans. 21.
Appellant has not shown the claims include additional elements that
improve the underlying computer, or other technology. See, e.g., Trading
Techs. Int’l, Inc. v. IBG LLC, 921 F.3d 1084, 1090 (Fed. Cir. 2019) (“This
invention makes the trader faster and more efficient, not the computer. This
is not a technical solution to a technical problem.”).
To the extent that using a “plurality of match engines” in conjunction
with an “order book allocator” would “improv[e] efficiency of a trading
system for a plurality of financial instruments” (as appearing in claim 2),
because using a plurality of match engines would permit “incoming orders
and order books to be allocated between match engines” as Appellant argues
(see Appeal Br. 16), “merely adding computer functionality to increase the
speed or efficiency of the process does not confer patent eligibility on an
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otherwise abstract idea.” Intellectual Ventures I LLC v. Capital One Bank
(USA), 792 F.3d 1363, 1370 (Fed. Cir. 2015) (emphasis added).
Accordingly, we determine independent claim 2 does not integrate the
judicial exception into a practical application. See Memorandum, 84 Fed.
Reg. at 54. Because the “claim recites a judicial exception and fails to
integrate the exception into a practical application” (id. at 51), “the claim is
directed to the judicial exception” (id. at 54).

2. Step 2B
Appellant has not shown the recited additional elements (or
combination of elements) amount to significantly more than the judicial
exception itself. See Final Act. 5–11; Ans. 6–12, 22–25; Memorandum,
Section III(B) (Step 2B), 84 Fed. Reg. at 56. The Examiner finds, and we
agree, that
[l]ooking at the limitations as an ordered combination adds
nothing that is not already present when looking at the elements
taken individually. There is no indication that the combination
of elements improves the functioning of a computer or
improves any other technology. The collective functions appear
to be implemented using conventional computer systemization.

Final Act. 11. The Examiner further finds, and we agree, that the disclosure
recites “[g]eneric computer components [that are] performing generic
computer functions that are well-understood, routine[,] and conventional
activities.” Final Act. 11, citing Spec. ¶¶ 108, 112, 113, 118, 119, 121, 122,
126, 128, 311–315; see also Alice, 573 U.S. at 226. Based on the record
before us, we agree with the Examiner that the claimed additional elements
and combination of elements, when considered both individually and as an
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ordered combination, do not amount to significantly more than the abstract
idea, but instead recite only generic components and steps that are well-
understood, routine, and conventional.
Accordingly, we agree with the Examiner that independent claim 2 is
patent ineligible. We conclude the same for all dependent claims.

B. Indefiniteness Rejection of Claim 11
Claim 11 recites (with edits for readability)
[t]he system of claim 10 wherein the match algorithm
comprises
[1] a pro-rata algorithm,
[2] a first in first out (“FIFO”) algorithm,
[3] a Price Explicit Time algorithm,
[4] an Order Level Pro Rata algorithm,
[5] an Order Level Priority Pro Rata algorithm,
[6] a Preference Price Explicit Time algorithm,
[7] a Preference Order Level Pro Rata algorithm,
[8] a Preference Order Level Priority Pro Rata algorithm,
[9] a Threshold Pro-Rata algorithm,
[10] a Priority Threshold Pro-Rata algorithm,
[11] a Preference Threshold Pro-Rata algorithm,
[12] a Priority Preference Threshold Pro-Rata algorithm,
[13] a Split Price-Time Pro-Rata algorithm,
or combinations thereof.

Altogether, claim 11 recites a match algorithm that comprises 2^13
(equaling 8,192) different combinations of the individually-listed algorithms.
Appellant argues that
[w]ith respect to the rejection of claim 11 as containing the
indefinite phrase “or combinations thereof,” again Appellants
disagree that this phrase renders the claim indefinite as it clearly
defines the metes and bounds of the claim

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(Appeal Br. 16), and contends that “all such combinations are adequately
supported by the Specification in a manner which would clearly be
understood by one of ordinary skill in the art.” Appeal Br. 17.
We agree with Appellant. The Examiner finds that “[t]he claim lists
thirteen potential match algorithms that may be in arranged in any
combination leading to a scope of the claim that is so broad as to be
indefinite.” Ans. 25. However, “[b]readth is not indefiniteness.” In re
Gardner, 427 F.2d 786, 788 (CCPA 1970). As written, the claim is broad,
but not indefinite, as one skilled in the art would understand the claim covers
8,192 different combinations of the individually-listed algorithms.3

CONCLUSION
In summary:

3 In the event of further prosecution, the Examiner may wish to consider
whether the broad scope of the claim is properly supported by the written
description. See Examining Computer-Implemented Functional Claim
Limitations for Compliance With 35 U.S.C. 112, 84 Fed. Reg. 57, 62 (Jan. 7,
2019) (“The analysis of whether the specification complies with the written
description requirement calls for the examiner to compare the scope of the
claim with the scope of the description to determine whether applicant has
demonstrated possession of the claimed invention.”)
Claims
Rejected
35 U.S.C. § Reference(s)/Basis Affirmed Reversed
2–11,
13–21
101 Eligibility 2–11, 13–21
11 112(b) Indefiniteness 11
Overall
Outcome
2–11, 13–21
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The Examiner’s decision is affirmed because we have affirmed at
least one ground of rejection with respect to each claim on appeal.
No time period for taking any subsequent action in connection with
this appeal may be extended under 37 C.F.R. § 1.136(a)(1)(iv).

AFFIRMED