Chicago Mercantile Exchange Inc.

Patent Trials and Appeals Board

Mar 30, 2022

2021001070 (P.T.A.B. Mar. 30, 2022)

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. 15/002,627 01/21/2016 Jingbin Yin 004672-14519Z-US 5806 12684 7590 03/30/2022 Lempia Summerfield Katz LLC/CME 20 South Clark Street Suite 600 Chicago, IL 60603 EXAMINER KAZIMI, HANI M ART UNIT PAPER NUMBER 3691 NOTIFICATION DATE DELIVERY MODE 03/30/2022 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 JINGBIN YIN and JALPAN SHAH ____________ Appeal 2021-001070 Application 15/002,627 Technology Center 3600 ____________ Before MURRIEL E. CRAWFORD, TARA L. HUTCHINGS, and AMEE A. SHAH, Administrative Patent Judges. CRAWFORD, Administrative Patent Judge. DECISION ON APPEAL STATEMENT OF THE CASE Appellant1 seeks our review under 35 U.S.C. § 134 of the Examiner’s final rejection of claims 1-4, 6-8, 10-15, and 17-19. We have jurisdiction under 35 U.S.C. § 6(b). SUMMARY OF DECISION 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 Chicago Mercantile Exchange Inc. (Appeal Br. 2.) Appeal 2021-001070 Application 15/002,627 2 THE INVENTION Appellant claims a system and method for processing data and, more particularly, a system and method for determining margin requirements. (Spec. ¶ 2, Title.) Claim 1 is representative of the subject matter on appeal. 1. A computer system for determining and communicating volatility and margin requirements to market participants within a defined time frame, the computer system comprising: a processor; a tangible computer-readable medium containing computer executable instructions that when executed by the processor cause the computer system to perform the steps comprising: (a) receiving end of day volatility data from swaption dealers; (b) identifying and filling in any data missing from the end of day volatility data using interpolation; (c) filtering the end of day volatility data to remove least significant volatility data, whereby the computer system performs the following steps more quickly than on the unfiltered end of day volatility data: (i) determining average and dispersion values from the filtered end of day volatility data; (ii) determining volatility levels by applying a modified SABR model that models density instead of implied volatility to the end of day volatility data; (iii) calculating margin requirements for the market participants as a function of the determined volatility levels; and (iv) communicating the margin requirements to the market participants. (Appeal Br. 14 (Claims App.).) THE REJECTION Claims 1-4, 6-8, 10-15, and 17-19 are rejected under 35 U.S.C. § 101 as directed to a judicial exception without significantly more. Appeal 2021-001070 Application 15/002,627 3 ANALYSIS 35 U.S.C. § 101 REJECTION We will sustain the rejection of claims 1-4, 6-8, 10-15, and 17-19 under 35 U.S.C. § 101. The Supreme Court set forth a framework for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts. First, . . . determine whether the claims at issue are directed to one of those patent-ineligible concepts. . . . If so, . . . then ask, “[w]hat else is there in the claims before us?” . . . To answer that question, . . . 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. . . . [The Court] described step two of this analysis 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.” Alice Corp. v. CLS Bank Int’l, 573 U.S. 208, 217-218 (citing Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 72-73 (2012)) (citations omitted). To perform this test, we must first determine whether the claims at issue are directed to a patent-ineligible concept. The Federal Circuit has explained that “the ‘directed to’ inquiry applies a stage-one filter to claims, considered in light of the [S]pecification, based on whether ‘their character as a whole is directed to excluded subject matter.’” See Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1335 (Fed. Cir. 2016) (quoting Internet Appeal 2021-001070 Application 15/002,627 4 Patents Corp. v. Active Network, Inc., 790 F.3d 1343, 1346 (Fed. Cir. 2015)). It asks whether the focus of the claims is on a specific improvement in relevant technology or on a process that itself qualifies as an “abstract idea” for which computers are invoked merely as a tool. See id. at 1335-36. In so doing, we apply a “directed to” two prong test: 1) evaluate whether the claim recites a judicial exception, and 2) if the claim recites a judicial exception, evaluate whether the judicial exception is integrated into a practical application. 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. 50, 51-57 (Jan. 7, 2019) (“Guidance”). The Examiner determines that the claims are directed to determining volatility levels of swap options. (Final Act. 3.) The Examiner also determines that the claimed system recites a mathematical formula or calculation that is used to determine volatility levels for swap options. (Non-Final Act. 4 (mailed May 15, 2019).) The Examiner finds that the claim includes the additional elements of a processor and a computer readable medium to perform the steps of the claim and that the steps are recited at a high level of generality and amount to no more than generic computer components and generic computer functions. As such, the Examiner finds that the additional elements do not integrate the claim into a practical application or amount to significantly more than the abstract idea recited. (Non-Final Act. 5.) The Specification discloses that embodiments of the present invention provide efficient computer systems and computer-implemented methods for determining and communicating pricing, volatility, and margin requirements to market participants. (Spec. ¶ 2.) The computer devices receive end of Appeal 2021-001070 Application 15/002,627 5 day volatility data from swaption2 dealers. The data may be filtered and/or interpolated to obtain data and then a modified SABR model may be used to fit a smile curve to mid-market values. (Spec. ¶¶ 7-8, 44.) The SABR model for determining volatility is a mathematical formula which is provided on page 10 of the Specification. Consistent with this disclosure, claim 1 recites “determining volatility levels by applying a modified SABR model that models density instead of implied volatility to the end of day volatility data” and “calculating margin requirements for the market participants as a function of the determined volatility levels.” We thus agree with the Examiner’s determination that claim 1 recites a mathematical concept which is a judicial exception. Turning to the second prong of the “directed to test,” claim 1 requires a “processor” and a “computer-readable medium.” These recitations do not impose “a meaningful limit on the judicial exception, such that the claim is more than a drafting effort designed to monopolize the judicial exception.” Guidance, 84 Fed. Reg. at 53. We find no indication in the Specification, nor does Appellant directs us to any indication, that the operations recited in claim 1 invoke any inventive programming, require any specialized computer hardware or other inventive computer components, i.e., a particular machine, or that the claimed invention is implemented using other than generic computer components to perform generic computer functions. See DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245, 1256 (Fed. Cir. 2014) (“[A]fter Alice, there can remain no doubt: recitation of generic 2 A swaption is an option to enter into an interest rate swap. (Spec. ¶ 3.) Appeal 2021-001070 Application 15/002,627 6 computer limitations does not make an otherwise ineligible claim patent- eligible.”). We also find no indication in the Specification that the claimed invention effects a transformation or reduction of a particular article to a different state or thing. Nor do we find anything of record, short of attorney argument, that attributes any improvement in computer technology and/or functionality to the claimed invention or that otherwise indicates that the claimed invention integrates the abstract idea into a “practical application,” as that phrase is used in the revised Guidance. See Guidance, 84 Fed. Reg. at 55. In this regard, the recitations do not effect an improvement in the functioning of the processor or computer-readable medium or other technology, do not recite a particular machine or manufacture that is integral to the claim, and do not transform or reduce a particular article to a different state or thing. Id. Thus, claim 1 recites a judicial exception that is not integrated into a practical application and thus claim 1 is directed to an “abstract idea.” Turning to the second step of the Alice analysis, because we find that claim 1 is directed to an abstract idea, the claim must include an “inventive concept” in order to be patent-eligible, i.e., there must be “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.’” See Alice, 573 U.S. at 217-18 (alteration in original) (quoting Mayo, 566 U.S. at 72-73). Appeal 2021-001070 Application 15/002,627 7 The introduction of the processor and the computer-readable medium into the claim does not alter the analysis at Alice step two. [T]he mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention. Stating an abstract idea “while adding the words ‘apply it’” is not enough for patent eligibility. Nor is limiting the use of an abstract idea “‘to a particular technological environment.’” Stating an abstract idea while adding the words “apply it with a computer” simply combines those two steps, with the same deficient result. Thus, if a patent’s recitation of a computer amounts to a mere instruction to “implemen[t]” an abstract idea “on . . . a computer,” that addition cannot impart patent eligibility. This conclusion accords with the preemption concern that undergirds our § 101 jurisprudence. Given the ubiquity of computers, wholly generic computer implementation is not generally the sort of “additional featur[e]” that provides any “practical assurance that the process is more than a drafting effort designed to monopolize the [abstract idea] itself.” Alice, 573 U.S. at 223 (alterations in original) (citations omitted). Instead, “the relevant question is whether claim 1 here does more than simply instruct the practitioner to implement the abstract idea . . . on a generic computer.” Id. at 225. It does not. Taking the claim elements separately, the function performed by the computer system of claim 1 is purely conventional. Using a computer to retrieve, select, and apply decision criteria to data and modify the data as a result amounts to electronic data query and retrieval - one of the most basic functions of a computer. All of these computer functions are well- understood, routine, conventional activities previously known to the trading Appeal 2021-001070 Application 15/002,627 8 industry. See Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1354 (Fed. Cir. 2016); see also In re Katz Interactive Call Processing Patent Litig., 639 F.3d 1303, 1316 (Fed. Cir. 2011) (“Absent a possible narrower construction of the terms ‘processing,’ ‘receiving,’ and ‘storing,’ . . . those functions can be achieved by any general purpose computer without special programming”). In short, each step does no more than require a generic computer to perform generic computer functions. As to the data operated upon, “even if a process of collecting and analyzing information is ‘limited to particular content’ or a particular ‘source,’ that limitation does not make the collection and analysis other than abstract.” SAP Am. Inc. v. InvestPic, LLC, 890 F.3d 1016, 1022 (Fed. Cir. 2018). Considered as an ordered combination, the computer system of Appellant’s claim 1 adds nothing that is not already present when the steps are considered separately. The sequence of data reception-analysis- access/display is equally generic and conventional or otherwise held to be abstract. See Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 715 (Fed. Cir. 2014) (sequence of receiving, selecting, offering for exchange, display, allowing access, and receiving payment recited an abstraction), Inventor Holdings, LLC v. Bed Bath & Beyond, Inc., 876 F.3d 1372, 1378 (Fed. Cir. 2017) (holding that sequence of data retrieval, analysis, modification, generation, display, and transmission was abstract), Two-Way Media Ltd. v. Comcast Cable Commc’ns, LLC, 874 F.3d 1329, 1339 (Fed. Cir. 2017) (holding sequence of processing, routing, controlling, and monitoring was abstract). The ordering of the steps is, therefore, ordinary and conventional. Claim 1 does not, for example, purport to improve the functioning of the processor or computer-readable medium. As we stated above, claim 1 Appeal 2021-001070 Application 15/002,627 9 does not effect an improvement in any other technology or technical field. The Specification states that each computer device includes a central processor that controls the overall operation of the computer and includes a variety of interface units and drives for reading a writing data or files and thus spells out different generic equipment that might be applied using this concept and the particular steps such conventional processing would entail based on the concept of information access under different scenarios. (See, e.g., Spec. ¶ 31.) Thus, claim 1 at issue amounts to nothing significantly more than instructions to apply the abstract idea of the recited mathematical concept using some unspecified, generic computer. Under our precedents, that is not enough to transform an abstract idea into a patent-eligible invention. See Alice, 573 U.S. at 226. We have reviewed all the arguments (Appeal Br. 4-13; Reply Br. 1-4) Appellant has submitted concerning the patent eligibility of the claims before us that stand rejected under 35 U.S.C. § 101. We find that our analysis above substantially covers the substance of all the arguments, which have been made. But, for purposes of emphasis, we will address various arguments in order to make individual rebuttals of same. We are not persuaded of error on the part of the Examiner in rejecting the claims under 35 U.S.C. § 101 by Appellant’s argument that the claims do not recite the judicial exceptions of a mental process and a method of organizing human activity because the Examiner did not determine that the claims recite a mental process or a method of organizing human activity. (Appeal Br. 6). Appellant argues that the claims are akin to the claims in Example 37 of the Guidance. Appellant provides no further discussion of Example 37. Appeal 2021-001070 Application 15/002,627 10 The Office determined that hypothetical claim 1 of Example 37 integrates the recited abstract idea, i.e., a mental process, into a practical application because the additional elements (i.e., receiving, via a GUI, a user selection to organize each icon based on the amount of use of each icon, a processor for performing the determining step, and automatically moving the most used icons to a position on the GUI closest to the start icon of the computer system based on the determined amount of use) “recite a specific manner of automatically displaying icons to the user based on usage[,] which provides a specific improvement over prior systems, resulting in an improved user interface for electronic devices.” Appellant does not direct our attention to any improved user interface recited in the claims and thus this argument is not persuasive of error on the part of the Examiner. We are not persuaded of error on the part of the Examiner by Appellant’s argument that the claims provide a new and useful end, that of quickly and efficiently determining and communicating volatility and margin requirements to market participants within a defined time frame. (Appeal Br. 8.) The difficulty with this argument is that it points to the recited steps of claim 1 themselves which are conducted (automatically) via a generic computer, the very subject matter that we, and the Examiner, have characterized as being directed to an abstract idea. Rather than showing that these steps describe a technical improvement, the Appellant points to result- based functional language (associated with the generic “processor”) that is without any particular means for achieving a purported technological improvement. The claimed invention the Appellant points to - that is, processing volatility data via a generic computer - is described via a scheme (“receiving,” “identifying,” “determining,” “filtering,” “calculating,” Appeal 2021-001070 Application 15/002,627 11 and “communicating”) that is unmoored in technical details but for using a generic processor. By so broadly defining the inventive method, that is, by setting out what it is aspiring to accomplish without any particular means for achieving it, let alone any purported technological improvement, the claim is in effect presenting the invention in purely result-based functional language, strengthening our determination under Alice step one that the claim is directed to an abstract idea. Cf. Two-Way Media Ltd. v. Comcast Cable Commc’ns, LLC, 874 F.3d 1329, 1337 (Fed. Cir. 2017) (“Claim 1 recites a method for routing information using result-based functional language. The claim requires the functional results of ‘converting,’ ‘routing,’ ‘controlling,’ ‘monitoring,’ and ‘accumulating records,’ but does not sufficiently describe how to achieve these results in a non-abstract way.”). We are not persuaded of error on the part of the Examiner by Appellant’s argument that the instant claims are similar to the claims in Example 41 because other than stating that the claims are similar to the Example 41 claims, Appellant does not discuss why the instant claims are similar to the claims in Example 41. In this regard, Appellant does not explain how the recitations in claim 1, for example, are similar to the recitations in Example 41 or how the patent eligibility analysis in Example 41 may be applied to the instant claims to establish the eligibility of the instant claims. We do not agree with Appellant that the claims recite technological elements and attempt to overcome a technological problem. The problem according to Appellant is with calculating margin amounts which is a computational challenge due to complexities and the time involved. (Appeal Br. 9.) Appellant also argues that the combination of steps recited shows Appeal 2021-001070 Application 15/002,627 12 that the claim limitations impose meaningful limits that allow a computer system to limit the number of mass quote messages and the underlying volume of quotes contained therein, submitted from any one source to an electronic trading system. (Appeal Br. 11.) In the Reply Brief, Appellant argues that the claims provide technical improvement in that it provides for correcting for any data loss and anomalous data values by filling in missing values using interpolation and filtering the data to remove least significant values. (Reply Br. 3.) But all of these aspects are improvement to the abstract idea of determining volatility levels of swap options. It could not be clearer from Alice, that under step two of the Mayo/Alice framework, the elements of each claim are considered both individually and “as an ordered combination” to determine whether the additional elements, i.e., the elements other than the abstract idea itself, “transform the nature of the claim” into a patent-eligible application. Alice, 573 U.S. at 217 (internal quotations and citation omitted); see Mayo, 566 U.S. at 72-73 (requiring that “a process that focuses upon the use of a natural law also contain other elements or a combination of elements, sometimes referred to as an ‘inventive concept,’ sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the natural law itself” (emphasis added) (internal citation omitted)). In other words, the inventive concept under step two of the Mayo/Alice test cannot be the abstract idea itself: It is clear from Mayo that the “inventive concept” cannot be the abstract idea itself, and Berkheimer . . . leave[s] untouched the numerous cases from this court which have held claims ineligible because the only alleged “inventive concept” is the abstract idea. Berkheimer v. HP, Inc., 890 F.3d 1369, 1374 (Fed. Cir. 2018) (Moore, J., concurring); see also BSG Tech LLC v. BuySeasons, Inc., 899 F.3d 1281, Appeal 2021-001070 Application 15/002,627 13 1290 (Fed. Cir. 2018) (“It has been clear since Alice that a claimed invention’s use of the ineligible concept to which it is directed cannot supply the inventive concept that renders the invention ‘significantly more’ than that ineligible concept.”) (internal citation omitted). We do not agree with Appellant that the claims are akin to the claims in DDR Holdings, where the Federal Circuit determined that, although the patent claims at issue involved conventional computers and the Internet, the claims addressed the problem of retaining website visitors who, if adhering to the routine, conventional functioning of Internet hyperlink protocol, would be transported instantly away from a host’s website after “clicking” on an advertisement and activating a hyperlink. DDR Holdings, 773 F.3d at 1257. The court held that those claims were directed to statutory subject matter because they recited a solution “necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.” Id. Unlike DDR Holdings, Appellant does not identify any problem particular to computer networks and/or the Internet that claim 1 allegedly overcomes. In fact, the court in DDR Holdings cautioned “that not all claims purporting to address Internet-centric challenges are eligible for patent.” DDR Holdings, 773 F.3d at 1258. For example, the court distinguished the patent-eligible claims at issue from claims found patent-ineligible in Ultramercial. See id. at 1258-59 (citing Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 715-16 (Fed. Cir. 2014)). As noted there, the Ultramercial claims were “‘directed to a specific method of advertising and content distribution that was previously unknown and never employed on the Internet before.’” DDR Holdings, 773 F.3d at 1258 (quoting Ultramercial, 772 F.3d at 714). Nevertheless, those claims were patent Appeal 2021-001070 Application 15/002,627 14 ineligible because they “merely recite[d] the abstract idea of ‘offering media content in exchange for viewing an advertisement,’ along with ‘routine additional steps such as updating an activity log, requiring a request from the consumer to view the ad, restrictions on public access, and use of the Internet.’” DDR Holdings, 773 at 1258 (citation omitted). In view of the foregoing, we will sustain the Examiner’s rejection of claim 1. We will also sustain the Examiner’s rejection of the remaining claims because Appellant does not argue the separate eligibility of these claims. CONCLUSIONS OF LAW We conclude the Examiner did not err in rejecting claims 1-4, 6-8, 10-15, and 17-19 under 35 U.S.C. § 101. DECISION SUMMARY Claim(s) Rejected 35 U.S.C. § Reference(s)/Basis Affirmed Reversed 1-4, 6-8, 10-15, 17- 19 101 Eligibility 1-4, 6-8, 10-15, 17- 19 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) (2019). AFFIRMED