Ex Parte Anguish et al

Patent Trials and Appeals Board

Mar 21, 2019

13213703 - (D) (P.T.A.B. Mar. 21, 2019)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
13/213,703 08/19/2011
12684 7590 03/25/2019
Lempia Summerfield Katz LLC/CME
20 South Clark Street
Suite 600
Chicago, IL 60603
FIRST NAMED INVENTOR
Keith Alan Anguish
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.
004672-07251Z-US 8750
EXAMINER
GREGG, MARY M
ART UNIT PAPER NUMBER
3697
NOTIFICATION DATE DELIVERY MODE
03/25/2019 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):
mail@lsk-iplaw.com
docket-us@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 KEITH ALAN ANGUISH, SUNIL KIRAN
CUTINHO, DMITRIY GLINBERG,
SUNEEL IYER, DALE MICHAELS,
and KETAN B. PATEL
Appeal2017-010344
Application 13/213,703 1
Technology Center 3600
Before JAMES R. HUGHES, JOHN A. EV ANS, and
CATHERINE SHIANG, Administrative Patent Judges.
SHIANG, Administrative Patent Judge.
DECISION ON APPEAL
Appellants appeal under 35 U.S.C. § 134(a) from the Examiner's
rejection of claims 10 and 12-15, which are all the claims pending and
rejected in the application. We have jurisdiction under 35 U.S.C. § 6(b ).
We affirm.
1 Appellants identify Chicago Mercantile Exchange Inc. as the real party in
interest. Br. 1.
Appeal2017-010344
Application 13/213,703
STATEMENT OF THE CASE
Introduction
According to the Specification, the present invention relates to
"trading and clearing of financial instruments. In particular, aspects of the
invention relate to processing and clearing interest rate swaps." Spec. ,r 2.
Claim 10 is exemplary:
10. A system comprising:
a first computer system that includes:
a memory unit;
a processing unit coupled to the memory unit and
configured to cause the first computer system at least to
perform:
determining a first discount factor for a financial
instrument based on a swap yield curve, wherein the financial
instrument is associated with a start date;
generating a second discount factor based on an interest
rate for discounting the first discount factor from the start date
back to a spot date;
generating a swap value factor based on the first discount
factor and the second discount factor;
determining a mark-to-market value for the financial
instrument based on the swap value factor;
outputting the mark-to-market value; and
a second computer system connected to the first
computer system and that includes:
a memory unit; and
a processing unit coupled to the memory unit and
configured to cause the second computer system at least to
perform:
altering a required margin account deposit requirement
on a daily basis based on the mark-to-market value.
2
Appeal2017-010344
Application 13/213,703
References and Rejections2
Claims 10 and 12-15 are rejected under 35 U.S.C. § 101 because they
are directed to patent-ineligible subject matter. Final Act. 5-7.
Claims 10 and 12-15 are rejected under 35 U.S.C. § I03(a) as being
unpatentable over Rotman (US 2005/0203818 A9; Sept. 15, 2005), Mosler
(US 2002/0010670 Al; January 24, 2002 ), Kajiwara (US 8,386,355 Bl;
February 26, 2013), and Scheinberg (US 7,376,614 Bl; May 20, 2008).
Final Act. 8-17.
ANALYSIS
We disagree with Appellants' arguments. To the extent consistent
with our analysis below, we adopt the Examiner's findings and conclusions
in (i) the action from which this appeal is taken and (ii) the Answer. 3
35 us.c. § 101
The Examiner rejects the claims under 35 U.S.C. § 101 because they
are directed to patent-ineligible subject matter. See Final Act. 5-7; Ans. 2-
26. In particular, the Examiner concludes the claimed processes or functions
can be performed by a human using a pen and paper. See Final Act. 6-7;
Ans. 17-18. The Examiner determines the claims do not identify an
inventive concept to transform the nature of the claims into a patent-eligible
2 Throughout this opinion, we refer to the (1) Final Rejection dated June 13,
2016 ("Final Act."); (2) Appeal Brief dated February 13, 2017 ("Br."); and
(3) Examiner's Answer dated May 10, 2017 ("Ans.").
3 We note the Examiner provides detailed responses to Appellants'
arguments (Ans. 2-27). Appellants do not critique the Examiner's
responses. As a result, Appellants have not shown error in such responses.
3
Appeal2017-010344
Application 13/213,703
application. See Final Act. 6-7; Ans. 4--26. Appellants argue the Examiner
erred. See Br. 3-20.
Appellants have not persuaded us of error. Section 101 of the Patent
Act provides, "[ w ]hoever invents or discovers any new and useful process,
machine, manufacture, or composition of matter, or any new and useful
improvement thereof, may obtain a patent therefor, subject to the conditions
and requirements of this title." 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. Pty. Ltd. 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 (Gottschalkv. Benson, 409 U.S. 63, 69 (1972)). Concepts
4
Appeal2017-010344
Application 13/213,703
determined to be patent eligible include physical and chemical processes,
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 183 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 176; see also id. at 192 ("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
5
Appeal2017-010344
Application 13/213,703
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 recently published revised guidance on the application of
§ 101. USPTO's January 7, 2019 Memorandum, 2019 Revised Patent
Subject Matter Eligibility Guidance ("Memorandum"). Under that
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) (Step 2A, Prong 1 ); and
(2) additional elements that integrate the judicial exception into a
practical application (see MPEP § 2106.0S(a}-(c), (e}-(h)) (Step 2A,
Prong 2).
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
§ 2106.0S(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. (Step 2B).
See Memorandum.
Turning to Step 2A, Prong 1 of the Memorandum, we agree with the
Examiner that the rejected claims are patent ineligible because they are
6
Appeal2017-010344
Application 13/213,703
directed to functions that can be performed by a human using a pen and
paper. See Final Act. 6; Ans. 9, 26.
For example, claim 10 (with emphases) recites:
10. A system comprising:
a first computer system that includes:
a memory unit;
a processing unit coupled to the memory unit and configured to
cause the first computer system at least to perform:
determining a first discount factor for a financial
instrument based on a swap yield curve, wherein the financial
instrument is associated with a start date;
generating a second discount factor based on an interest
rate for discounting the first discount factor from the start date
back to a spot date;
generating a swap value factor based on the first
discount factor and the second discount factor;
determining a mark-to-market value for the financial
instrument based on the swap value factor;
outputting the mark-to-market value; and
a second computer system connected to the first computer system and
that includes:
a memory unit; and
a processing unit coupled to the memory unit and configured to cause
the second computer system at least to perform:
altering a required margin account deposit requirement
on a daily basis based on the mark-to-market value.
Claim 10 recites (i) "a first computer system that includes: a memory
unit; a processing unit coupled to the memory unit and configured to cause
the first computer system at least"; and (ii) "a second computer system
connected to the first computer system and that includes: a memory unit; and
a processing unit coupled to the memory unit and configured to cause the
second computer system at least" for performing the above italicized
functions. However, because all of the italicized functions can be otherwise
7
Appeal2017-010344
Application 13/213,703
performed by a human using a pen and paper, they are like the mental
processes in CyberSource and Synopsys. See CyberSource Corp. v. Retail
Decisions, Inc., 654 F .3 d 13 66, 13 72-73 (Fed. Cir. 2011) ("All of claim 3 's
method steps can be performed in the human mind, or by a human using a
pen and paper. . . . Such a method that can be performed by human thought
alone is merely an abstract idea and is not patent-eligible under§ 101.");
Synopsys, Inc. v. Mentor Graphics Corp., 839 F.3d 1138, 1146 (Fed. Cir.
2016) ("[W]e continue to 'treat[ ] analyzing information by steps people go
through in their minds, or by mathematical algorithms, without more, as
essentially mental processes within the abstract-idea category."') ( citation
omitted). As a result, we disagree with Appellants' argument that the
Examiner ignores claim limitations (Br. 6-7), and conclude claim 10 is
directed to mental processes, and thus an abstract idea. See Memorandum,
Step 2A, Prong 1 (Groupings of Abstract Ideas).
The dependent claims are directed to similar functions that can be
otherwise performed by a human using a pen and paper, and Appellants have
not shown such claims are directed to other non-abstract functions or
processes. See claims 12-15. As a result, the dependent claims are similarly
directed to mental processes, and thus an abstract idea.
Appellants' assertion regarding pre-emption (Br. 9-11, 18) is
unpersuasive, because "[ w ]hile preemption may signal patent ineligible
subject matter, the absence of complete preemption does not demonstrate
patent eligibility .... \\There a patent's claims are deemed only to disclose
patent ineligible subject matter under the 1\1ayo framework, as they are in
this case, preemption concerns are fully addressed and rnade moot" Ariosa
Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015);
8
Appeal2017-010344
Application 13/213,703
see also OIP, 788 F.3d at 1362---63 ("that 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").
Further, Appellants' argument (Br. 11, 13-15) about McRO, Inc. v.
Bandai Namco Games America Inc., 837 F.3d 1299 (Fed. Cir. 2016) is
unpersuasive. In McRO, the Court determines:
Claim 1 of the '576 patent is focused on a specific asserted
improvement in computer animation, i.e., the automatic use of
rules of a particular type. . . . It is the incorporation of the
claimed rules, not the use of the computer, that "improved [the]
existing technological process" by allowing the automation of
further tasks ....
Further, the automation goes beyond merely "organizing
[ existing] information into a new form" or carrying out a
fundamental economic practice. The claimed process uses a
combined order of specific rules that renders information into a
specific format that is then used and applied to create desired
results: a sequence of synchronized, animated characters.
McRO, 837 F.3d at 1314--15 (emphasis added) (citations omitted).
This case is different from McRO because unlike the claims of McRO,
the rejected claims are not directed to "a specific asserted improvement in
computer animation," let alone "us[ing] a combined order of specific rules
that renders information into a specific format that is then used and applied
to create desired results: a sequence of synchronized, animated characters."
McRO, 837 F.3d at 1314--15. Contrary to the claims of McRO and as
discussed above, the rejected claims are directed to patent-ineligible mental
processes.
Turning to Step 2A, Prong 2 of the Memorandum, contrary to
Appellants' assertion (Br. 3-20), the rejected claims do not recite additional
elements that integrate the judicial exception into a practical application.
9
Appeal2017-010344
Application 13/213,703
Appellants' argument that the claims "recite specific details about novel and
inventive inputs that are collectively used to generate a swap value factor"
(Br. 5) is unpersuasive because "a claim for a new abstract idea is still an
abstract idea." Synopsys, 839 F.3d at 1151. "[U]nder the Mayo/Alice
framework, a claim directed to a newly discovered law of nature ( or natural
phenomenon or abstract idea) cannot rely on the novelty of that discovery
for the inventive concept necessary for patent eligibility .... " Genetic
Techs. Ltd. v. Merial L.L.C., 818 F.3d 1369, 1376 (Fed. Cir. 2016) (citations
omitted).
Appellants also cite paragraphs from the Specification and argue "the
system of claim 10 is drawn to a technological improvement over existing
system" because "[ t ]he combination of computer systems claimed in claim
10 results in an efficient system overall system that allows for reduced
processing resources needed to track and manage a book of interest rate
swaps." Br. 8-9. However, our reviewing court has declared:
While the claimed system and method certainly purport to
accelerate the process of analyzing audit log data, the speed
increase comes from the capabilities of a general-purpose
computer, rather than the patented method itself See Bancorp
Servs., L.L. C. v. Sun Life Assurance Co. of Can. (US.), 687
F.3d 1266, 1278 (Fed. Cir. 2012) ("[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.").
FairWarning IP, LLC v. Iatric Sys., Inc., 839 F.3d 1089, 1095 (Fed. Cir.
2016) ( emphases added).
Applying this reasoning to the rejected claims, we similarly find any
purported "efficient system" comes from the capabilities of general-purpose
computers ( the recited "a first computer system" and "a second computer
10
Appeal2017-010344
Application 13/213,703
system"), rather than the claimed functions. Similar to the claims of
FairWarning, claim 10 is "not directed to an improvement in the way
computers operate" and "the focus of the claims is not on ... an
improvement in computers as tools, but on certain independently abstract
ideas that use computers as tools." FairWarning, 839 F.3d at 1095.
Further, Appellants' argmnent about the absence of any anticipation
rejection (Br. 12----13, 15) is unpersuasive, because an anticipation rejection is
detennined under 35 U.S.C. § 102, which is a different statutory
requirement As the Supreme Court emphasizes: "[t]he 'novelty' of any
element or steps in a process, or even of the process itself, is of no relevance
in determining whether the subject matter of a claim falls within the § 101
categories of possibly patentable subject matter." Diamond v. Diehr, 450
U.S. 175, 188-89 (1981) (emphasis added). Our reviewing court further
guides that "[e]ligibility and novelty are separate inquiries." Two-Way
Media Ltd. v. Comcast Cable Commc 'ns, LLC, 874 F.3d 1329, 1340 (Fed.
Cir. 2017). Further, Appellants' argument contradicts their own statement
that "Congress intended for the patent eligibility of inventions to be
evaluated independent of ... 35 USC 102 and 35 USC 103" (Br. 18).4
Contrary to Appellants' arguments (Br. 3-21 ), the claims are similar
to the claims of Synopsys and do not contain the requisite inventive concept.
See Synopsys, 839 F.3d at 1152. To the extent the claims add anything to
4 Appellants' assertions that "the Office Action Fails to Consider Congress's
Intent in 35 USC 101 When Passing The Patent Act of 1952" and "The
Office Action Violates the Administrative Procedures Act (APA) Because
Its Rejection of the Claims Under the Purported Alice Test Is Arbitrary and
Capricious" (Br. 18-20 ( emphases omitted)) are speculative and
unsubstantiated. Therefore, they are unpersuasive.
11
Appeal2017-010344
Application 13/213,703
the abstract idea ( such as "a first computer system" and "a second computer
system connected to the first computer system"), such additions "merely aid
in mental [processes] as opposed to computer efficacy, are not an inventive
concept that takes the ... [ c ]laims beyond their abstract idea." Similar to the
claims of Synopsys, the rejected claims "do not introduce a technical
advance or improvement. They contain nothing that 'amounts to
significantly more than a patent upon the [ abstract idea] itself."' Synopsys,
839 F .3d at 1152 ( citation omitted).
As a result, we conclude the rejected claims do not recite additional
elements that integrate the judicial exception into a practical application.
See Memorandum, Step 2A, Prong 2.
Finally, turning to Step 2B of the Memorandum, Appellants cite
BASCOM Global Internet Services, Inc. v. AT&T Mobility LLC, 827 F.3d
1341 (Fed. Cir. 2016) and argue "[t]he claims recite a non-conventional and
non-generic arrangement of elements" because "[t]he Office Action provides
no better explanation or analysis than that which the district court in Bascom
provided" (Br. 16-18). Appellants' attorney arguments are unpersuasive,
because Appellants do not provide sufficient objective evidence to support
their arguments. See In re Geisler, 116 F.3d 1465,1470 (Fed.Cir.1997)
("attorney argument [is] not the kind of factual evidence that is required to
rebut a prima facie case of obviousness"); Meitzner v. Mindi ck, 549 F .2d
775, 782 (CCPA 1977) ("Argument of counsel cannot take the place of
evidence lacking in the record.").
As a result, Appellants have not persuaded us the Examiner erred with
respect to the Memorandum's Step 2B analysis. See Memorandum, Step
2B.
12
Appeal2017-010344
Application 13/213,703
Because Appellants have not persuaded us the Examiner erred, we
sustain the Examiner's rejection of claims 10 and 12-15 under 35 U.S.C.
§ 101.
35 USC§ 103
On this record, the Examiner did not err in rejecting claim 10.
Appellants argue:
Claim 10 requires a first computer system that configured to
perform "outputting the mark-to-market value" and a second
computer system configured to perform "altering a required
margin account deposit requirement on a daily basis based on
the mark-tomarket value." The Applicant respecifully submits
that that Office Action does not even allege why it would have
been obvious to peiform these functions with two computer
systems in a modified system of Rotman.
Moreover, besides passing mentions (see Office Action, pp. 12-
14) to Kajiwara and Scheinberg being in the same general area
of teachings, the Office Action provides no reasonable basis
why a person having ordinary skill in the art would have
undertaken the effort to modify the system of Rotman to
incorporate the omitted features recited in Applicants' claims.
Br. 21 ( emphasis added).
Appellants' arguments contradict the record, as the Examiner
determines:
It would have been obvious to one having ordinary skill at the
time of the invention was made to modify the electronic system
of Rotman to include the electronic clearance system of
Kajiwara since Kajiwara teaches the motivation of determining
the amount of guaranty deposit in order to cover any potential
losses in the event a trader defaults.
13
Appeal2017-010344
Application 13/213,703
It would have been obvious to one having ordinary skill at the
time of the invention was made to modify the generic electronic
systems of Rotman to includes specific computer components
as taught by Scheinberg since Scheinberg provides the
motivation of the computer components needed to implement
electronic exchange computer system (i.e. first computer
system) and teaches the computer components of the electronic
clearance system (i.e. second computer system) needed to
implement electronic clearing functions in order to clear
transactions regarding trades of products on the exchange
system.
Final Act. 12-14.
To the extent Appellants are asserting the above rationales
provided by the Examiner do not constitute the requisite "articulated
reasoning with some rational underpinning to support the legal
conclusion of obviousness" (KSR Int'! Co. v. Teleflex, Inc., 550 U.S.
398,418 (2007)), Appellants have not provided any analysis to
support that assertion. 5 As a result, Appellants have not persuaded us
of Examiner error.
Because Appellants have not persuaded us the Examiner erred, we
sustain the Examiner's rejection of independent claim 10.
We also sustain the Examiner's rejection of corresponding dependent
claims 12-15, as Appellants do not advance separate substantive arguments
about those claims.
5 As a result, Appellants' assertion that "[w]ithout any reasonable basis, it
appears the Office Action is fraught with impermissible hindsight reasoning"
(Br. 21) is also unpersuasive.
14
Appeal2017-010344
Application 13/213,703
DECISION
We affirm the Examiner's decision rejecting claims 10 and 12-15.
No time period for taking any subsequent action in connection with
this appeal may be extended under 37 C.F.R. § 1.136(a)(l )(iv). See 37
C.F.R. § 41.50(±).
AFFIRMED
15