Ex Parte Adcock et al

Patent Trials and Appeals Board

Jul 3, 2019

11416913 - (D) (P.T.A.B. Jul. 3, 2019)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
11/416,913 05/03/2006
35811 7590 07/08/2019
IP GROUP OF DLA PIPER LLP (US)
ONE LIBERTY PLACE
1650 MARKET ST, SUITE 5000
PHILADELPHIA, PA 19103
FIRST NAMED INVENTOR
Paul D. Adcock
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
ATTORNEY DOCKET NO. CONFIRMATION NO.
NGI-14-1147R 8356
EXAMINER
LICKTEIG, BLANE A
ART UNIT PAPER NUMBER
3691
NOTIFICATION DATE DELIVERY MODE
07/08/2019 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):
pto. phil@dlapiper.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte PAUL D. ADCOCK, MICHAEL A. CORMACK,
THOMAS F. HALLER, and ROBERT A. HILL
Appeal2018-000825 1
Application 11/416,913
Technology Center 3600
Before MURRIEL E. CRAWFORD, MICHAEL W. KIM, and
PHILIP J. HOFFMANN, Administrative Patent Judges.
KIM, Administrative Patent Judge.
DECISION ON REQUEST FOR REHEARING
In our Decision on Appeal, mailed February 5, 2019 (hereinafter
"Dec."), we affirmed the Examiner's rejection of claims 1--4, 8-14, 16, 17,
and 19-30 under 35 U.S.C. § 101. Dec. 6-9. In response to our Decision,
the Appellants filed a Request for Rehearing, on April 4, 2019 (hereinafter
"Req."). Essentially, the Appellants assert that the Decision is inconsistent
with the Office's new Section 101 Guidance, published January 7, 2019.
Req. 2-7.
1 The Appellants identify NYSE Group, Inc. as the real party in interest.
Appeal Br. 1.
Appeal2018-000825
Application 11/416,913
While the Decision is consistent with the Guidance, to make that
consistency more overt, we clarify certain aspects of the Decision, as set
forth below. The ultimate outcome, however, remains the same.
Principles of Law
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. E.g., Alice Corp. v. CLS Bankint'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
risk."); see also Bilski v. Kappas, 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, 67 (1972)). Concepts
determined to be patent eligible include physical and chemical processes,
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such as "molding rubber products" (Diamond v. Diehr, 450 U.S. 175, 191
( 1981) ); "tanning, dyeing, making water-proof cloth, vulcanizing India
rubber, smelting ores" (id. at 182 n.7 (quoting Corning v. Burden, 56 U.S.
252, 267---68 (1854))); and manufacturing flour (Benson, 409 U.S. at 69
(citing Cochrane v. Deener, 94 U.S. 780, 785 (1876))).
In Diehr, the claim at issue recited a mathematical formula, but the
Supreme Court held that "[a] claim drawn to subject matter otherwise
statutory does not become nonstatutory simply because it uses a
mathematical formula." Diehr, 450 U.S. at 187; see also id. at 191 ("We
view respondents' claims as nothing more than a process for molding rubber
products and not as an attempt to patent a mathematical formula."). Having
said that, the Supreme Court also indicated that a claim "seeking patent
protection for that formula in the abstract ... is not accorded the protection
of our patent laws, ... and this principle cannot be circumvented by
attempting to limit the use of the formula to a particular technological
environment." Id. ( citing Benson and Flook); see, e.g., id. at 187 ("It is now
commonplace that an application of a law of nature or mathematical formula
to a known structure or process may well be deserving of patent
protection.").
If the claim is "directed to" an abstract idea, we tum 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
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Application 11/416,913
monopolize the [ abstract idea]."' Id. ( alteration in original) ( 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 recently published revised guidance on the application of
§ 101. 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed.
Reg. 50 (Jan. 7, 2019) ("Guidance"). Under the Guidance, we first look to
whether the claim recites:
( 1) any judicial exceptions, including certain groupings of
abstract ideas (i.e., mathematical concepts, certain methods of
organizing human activity such as a fundamental economic
practice, or mental processes); and
(2) additional elements that integrate the judicial exception into
a practical application (see Manual of Patent Examining
Procedure ("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 Guidance.
Whether the Claims Recite an Abstract Idea
For whether the claim recites an abstract idea, we stated the following
in our Decision:
The Examiner finds the claims are directed to a
fundamental economic practice in the form of order matching
and securities trading. Final Act. 11. Each independent claim is
drawn to a method or system for "parallel processing order data,"
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and the orders are described as financial instrument trading
orders on an exchange. See Spec. ,r,r 2-5. Because the claims
recite steps for matching buy and sell orders for financial
products, we agree with the Examiner that the claims are directed
to order matching and securities trading, the former of which is
a mental process of evaluating data and forming an judgment or
opinion as to whether a match exists, and the second is a
fundamental economic practice.
More specifically, the claims separate priced (limit)
orders from unpriced (market) orders, and queue them
separately to two matching "engines" to process in parallel,
rather than sequentially in a single queue. See Spec. ,r,r 2, 6,
and 23. Each "engine" is construed to be a software module,
because each engine is "activated," and contains "sub-routines."
Spec. ,r 22. The claimed method and system thus divide up work
and have two separate software modules work on the two queues
consecutively, rather than sequentially with one module.
Dec. 6-7 (emphasis added). The Appellants assert that the Board did not
follow the Guidance, because explicit claim limitations were not identified.
Req. 3--4. This is incorrect. As set forth above in the above-italicized
portions of the Decision, the Board quoted some claim limitations, such as
the preamble, and then indicated the steps considered to recite the abstract
idea. While perhaps the exact claim limitations were not replicated, the
steps correspond, as they must, to specific claim limitations. For the
purposes of completeness, however, we explicitly identify below the
italicized portions of the independent claim 1 that correspond to those steps:
1. A method of parallel processing order data to improve
order throughput comprising:
providing a posting market center of a computer system
having at least one non-transitory memory storing executable
program code and at least one processor executing the program
code stored in the memory, the posting market center further
compnsmg:
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an order matching engine defined by code included
in the program code, the order matching engine further
comprising:
a continuous matching engine having at least
one continuous matching routine configured to
execute a continuous matching process, and
an unpriced auction order engine having at
least one unpriced auction order routine configured
to execute an unpriced auction order process,
the order matching engine further configured to
control simultaneous operation of the continuous
matching engine and the unpriced auction order engine,
such that the at least one continuous matching engine
routine and the at least one unpriced auction order routine
execute concurrently and separately to process the order
data in parallel,
a public order book, and
an unpriced auction order book that is separate from
the public order book; and
processing, by the order matching engine, the order
data in parallel, comprising:
(a) receiving one or more limit orders and market
orders at the posting market center, wherein each of the
one or more limit orders and market orders specifies a
quantity of shares or contracts to be traded and each
market order is an unpriced buy order or an unpriced sell
order;
(b) specifying a scheduled auction time at which an
auction is configured to commence, wherein the scheduled
auction time is after the opening of trading on a primary
listing market center of an issue and before the close of
trading on the primary listing market center of the issue;
( c) executing, by the order matching engine, steps
(c)(i)-(c)(v) sequentially in order before the scheduled
auction time:
( c )(i) determining, for each received order of
the received one or more limit orders and market
orders, whether the received order is a limit order
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or a market order and segregating the one or more
limit orders from the one or more market orders;
( c )(ii) automatically directing only all the
segregated limit orders to the continuous matching
engine on the computing system;
( c )(iii) causing the continuous matching
engine on the computing system to execute a
continuous matching process on only all the
segregated limit orders that are marketable against
the posting market center's public order book;
( c )(iv) automatically directing only all the
segregated market orders to the unpriced order
auction engine on the computing system;
(c)(v) causing the unpriced order auction
engine on the computing system to store the market
orders in the unpriced auction order book;
( d) executing, by the unpriced order auction engine,
steps (d)(i)-(d)(iv) sequentially in order at the scheduled
auction time:
( d)(i) matching for the scheduled auction by
the computing system one or more unpriced buy
orders to unpriced sell orders;
( d)(ii) retrieving by the computing system an
indicator external to the posting market center to
establish the best prices in the entire marketplace;
( d)(iii) determining for the scheduled auction
by the computing system a single auction price
from the retrieved external indicator;
(d)(iv) executing the scheduled auction by
the computing system trades in the issue between
the matched unpriced buy and unpriced sell orders
at the determined single auction price, wherein the
scheduled auction at steps (d)(i)-(d)(iv) executes
concurrently and separately from the continuous
matching process executed by the continuous
matching engine on the computing system without
interruption at the scheduled auction time thereby
improving order throughput;
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( e) automatically directing, by the order matching
engine, the received unpriced orders that were not matched
at step ( d)(i) by the computing system for the scheduled
auction to the continuous matching engine on the
computing system; and
(f) activating, by the order matching engine, the
continuous matching engine to execute the continuous
matching process on the computing system on the received
unpriced orders that were not matched at the scheduled
auction step [ ( d)(i)] by the computing system and that are
marketable against the posting market center's public
order book.
For example, for our previous determination that independent claim 1 recites
steps for "matching buy and sell orders for financial products" (Dec. 6),
independent claim 1 recites that the posting market center "receives limit
orders and market orders" ( step (a)), "specif[ ies] a scheduled auction time"
( step (b) ), and "execut[ es], by the order matching engine" several steps,
sequentially ( step ( c) ).
For our determination that independent claim 1 recites steps for
"separate priced (limit) orders from unpriced (market) orders, and queue
them separately to two matching 'engines' to process in parallel" (Dec. 6),
independent claim 1 begins by reciting "determining, for each received
order ... whether the received order is a limit order or market order, and
segregating" each group from the other (step (c)(i)). For the priced (limit)
orders, the independent claim recites "directing ... the limit orders to the
continuous matching," where a "continuous matching process" is executed
on those orders (steps (c)(ii}-(iii)), and "directing ... unpriced orders to the
unpriced order auction," to "store the market orders in the unpriced auction
order book" (steps ( c )(iv}-(v)). For the unpriced (market) orders,
independent claim 1 recites "matching ... unpriced buy orders to unpriced
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sell orders" (step (d)(i)), "retrieving" an external "indicator ... to establish
the best prices in the entire marketplace" (step (d)(ii)), "determining ... a
single auction price from the retrieved external indicator" (step (d)(iii)), and
"executing ... trades ... at the determined single auction price .... "
Independent claim 1 also recites running both types of orders concurrently
and separately from the continuous matching" portion of the market
"without interruption" (step (d)(iv)).
Finally, the same analysis is applicable to the last statement identified
above in our Decision: "The claimed method and system thus divide up
work and have two separate software modules work on the two queues
consecutively, rather than sequentially with one module." Dec. 7.
As such, every step of the method italicized above defines a
component or set of steps to be taken for matching orders and trading
securities in related portions of a securities market. The claim thus recites
defined rules for operating two related portions of a securities market.
Analogous to "hedging" in Alice and "intermediated settlement" in Bilski,"
defined rules for operating two related portions of a securities market, which
is a fundamental economic practice, and also constitutes commercial
interactions, each of which is one of certain methods of organizing human
activity. Guidance, 84 Fed. Reg. at 52; see also OIP Techs., Inc. v.
Amazon.com, Inc., 788 F.3d 1359, 1362---63 (Fed. Cir. 2015) (concluding
that claimed concept of "offer-based price optimization" is "similar to other
'fundamental economic concepts' found to be abstract ideas by the Supreme
Court and this court"); buySAFE, Inc. v. Google, Inc., 765 F.3d. 1350, 1355
(Fed. Cir. 2014) (holding that concept of "creating a contractual
relationship----a 'transaction performance guaranty"' is patent ineligible).
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Thus, independent claim 1 recites abstract ideas, and the Appellants do not
provide us with any arguments as to why other claims should be treated
differently.
Whether the Abstract Idea is Integrated Into a Practical Application
We are not persuaded by the Appellants' argument that the claimed
methods and system integrate the abstract idea into a practical application,
because, according to the Appellants, "claimed invention provides a
technical improvement to computer systems." Req. 4. The claims are not
directed to changes in a computer system, but instead defined rules for
operating two related portions of a securities market. For example, the
Specification indicates that such rules can be implemented on any computer.
Spec. ,r 21 ("a market center of the type described herein may support any
type of suitable interface on any suitable computer system."). As such,
whatever computer that executes the computer code for implementing the
defined rules remains unchanged in its ability to perform computer
operations generally.
The Appellants also argue the claims "define a unique and
unconventional parallel processing computer architecture." Req. 5.
However, no computer architecture is claimed or described in the
Specification. Instead, only defined rules for operating a market is
described, and while such defined rules are certainly translated into logic on
the computer, it still exists independently of the architecture of the computer
itself upon which such logic may be executed.
We are unpersuaded by the Appellants' argument that the claimed
"operations are unique to computing systems, due to the voluminous amount
of data ( e.g., tens of millions of financial products may be transacted per
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second) and rapidly changing data values ( e.g., prices change within
milliseconds)," and that the claim thus cannot be performed mentally by a
human. Req. 5---6. No requirements as to volume of trades or speed of data
changes or execution are recited in the claims, and thus any assertion that the
speed of a computer is crucial to operating the claimed market center are
outside the scope of the claims.
For the "practical application" inquiry in summary, we find explicitly
that, as set forth above, the claims recite defined rules for operating two
related portions of a securities market which do not improve another
technology. MPEP § 2106.05(a). Because a particular computer is not
required, the claim also does not define or rely on a "particular machine."
MPEP § 2106.05(b ). Further, the method does not transform matter. MPEP
§§ 2106.05(c). There is no other language that recites meaningful
limitations that alter the abstract idea analysis, because no language in the
claim amounts to more than defined rules for operating two related portions
of a securities market. As such, the method has no other meaningful
limitations (MPEP § 2106.05( e )), and thus merely recites instructions to
execute the abstract idea on a computer (MPEP § 2106.05(±)).
Whether the Claims Include an Inventive Concept
The Appellants assert a number of features of the claims are not
present in any single existing market system, and thus the combination of
features claimed is not well-understood, routine, or conventional. Req. 6.
That, however, is not the correct inquiry, as the focus in Step 2B are on only
the elements additional to the abstract idea. Specifically, the Federal Circuit
further has held that, after formulating the concept the claims are "directed
to," the inquiry under Alice step two is to determine whether claim
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limitations other than the steps for executing the formulated concept are
"well-understood, routine, and conventional." BSG Tech LLC v.
BuySeasons, Inc., 899 F.3d 1281, 1290 (Fed. Cir. 2018). Here, the
additional elements concern only computer related components, as the
different markets are subsumed within the abstract idea, i.e., the fundamental
economic practice and commercial interactions which include defined rules
for operating two related portions of a securities market. Under Alice, that is
insufficient. Alice, 573 U.S. at 221 (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.").
Conclusion
We have considered the Appellants' Request and modified our
Decision as set forth herein. In all other respect, including outcome,
however, the Appellants' Request is DENIED.
DENIED
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