Ex Parte Cahn

Patent Trial and Appeal Board

Feb 21, 2018

13028392 (P.T.A.B. Feb. 21, 2018)

United States Patent and Trademark Office
UNITED STATES DEPARTMENT OF COMMERCE
United States Patent and Trademark Office
Address: COMMISSIONER FOR PATENTS
P.O.Box 1450
Alexandria, Virginia 22313-1450
www.uspto.gov
APPLICATION NO. FILING DATE FIRST NAMED INVENTOR ATTORNEY DOCKET NO. CONFIRMATION NO.
13/028,392 02/16/2011 Robert S. Cahn Cahn 0109 8652
27981 7590 02/23/2018
WF.NDY W KORA
EXAMINER
PO BOX 556 MANDEL, MONICA A
SPRINGTOWN, PA 18081
ART UNIT PAPER NUMBER
3621
NOTIFICATION DATE DELIVERY MODE
02/23/2018 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):
wendykoba@usa.net
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte ROBERT S. CAHN
Appeal 2016-0064431
Application 13/028,392
Technology Center 3600
Before LARRY J. HUME, CATHERINE SHIANG, and
MATTHEW J. McNEILL, Administrative Patent Judges.
HUME, Administrative Patent Judge.
DECISION ON APPEAL
This is a decision on appeal under 35 U.S.C. § 134(a) of the Final
Rejection of claims 6-11. Appellant has withdrawn claims 1-5 from
consideration, and, thus, these claims are not before us on appeal. We have
jurisdiction under 35 U.S.C. § 6(b).
We AFFIRM.
1 According to Appellant, the real party in interest is the sole inventor,
Robert S. Cahn. Br. 1.
Appeal 2016-006443
Application 13/028,392
STATEMENT OF THE CASE2
The Invention
Appellant's
present invention relates to a system for protecting individuals
(including institutions) involved in securities transactions and,
more particularly, to the utilization of an "independent"
depository as an intermediary between a security owner and a
brokerage firm to protect the security owner from untoward
actions on the part of the brokerage firm.
Spec. ^ 2.
Exemplary Claim
Claim 6, reproduced below, is representative of the subject matter on
appeal (emphasis added to contested limitations):
6. A method of performing securities transactions
between an account owner and a broker through an independent
intermediary defined as a depository, the depository retaining
possession of securities on behalf of an account owner, the
method including the steps of:
establishing an account record in an account owner
database at the depository, the account record including an
account owner ID and listing of securities possessed by the
depository on behalf of the account owner;
receiving, at the depository, a transaction message from
the account owner defining a transaction involving a
predetermined security,
2 Our Decision relies upon Appellant's Appeal Brief ("Br.," filed
Oct 8, 2015); Examiner's Answer ("Ans.," mailed Apr. 8, 2016); Final
Office Action ("Final Act.," mailed May 8, 2015); and the original
Specification ("Spec.," filed Feb. 16, 2011). We note Appellant did not file a
Reply Brief in response to the factual findings and legal conclusions in the
Examiner's Answer.
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performing an authentication process on the transaction
message at the depository and sending an error message to the
account owner to terminate the transaction if the transaction
message cannot be authenticated, otherwise if the transmission
message is authenticated;
retrieving the account owner record and determining if
the transaction can be processed based upon the record
information associated with the predetermined security, sending
a rejection message to the account owner and terminating the
transaction if the transaction cannot be processed, otherwise
processing the transaction by affirming the transaction message
at the depository and;
transmitting the affirmed transaction message to the
broker for action involving only the predetermined security,
with all other securities possessed by the account owner
remaining in the possession of the depository.
Prior Art
The Examiner relies upon the following prior art as evidence in
rejecting the claims on appeal:
David et al. ("David") US 6,493,683 B1 Dec. 10, 2002
Wheeler et al. ("Wheeler") US 6,978,369 B2 Dec. 20, 2005
Rejections on Appeal
Rl. Claims 6-11 stand rejected under 35 U.S.C. § 101 as being
directed to patent-ineligible subject matter. Final Act. 4.
R2. Claims 6-11 stand rejected under 35 U.S.C. § 103(a) as being
unpatentable over the combination of David and Wheeler. Final Act. 5.
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CLAIM GROUPING
Based on Appellant's arguments (Br. 5 et seq.), we decide the appeal
of patent-ineligible subject matter Rejection R1 of claims 6-11 on the basis
of representative claim 6; and we decide the appeal of obviousness Rejection
R2 of claims 6-11 on the basis of representative claim 6.3
ISSUES AND ANALYSIS
In reaching this decision, we consider all evidence presented and all
arguments actually made by Appellant. We do not consider arguments
Appellant could have made but chose not to make in the Briefs, and we
deem any such arguments waived. 37 C.F.R. § 41.37(c)(l)(iv).
We disagree with Appellant's arguments with respect to claims 6-11
and, unless otherwise noted, we incorporate by reference herein and adopt as
our own: (1) the findings and reasons set forth by the Examiner in the action
from which this appeal is taken, and (2) the reasons and rebuttals set forth in
the Examiner's Answer in response to Appellant's arguments. We highlight
and address specific findings and arguments regarding claim 6 for emphasis
as follows.
3 "Notwithstanding any other provision of this paragraph, the failure of
appellant to separately argue claims which appellant has grouped together
shall constitute a waiver of any argument that the Board must consider the
patentability of any grouped claim separately." 37 C.F.R. § 41.37(c)(l)(iv).
In addition, when Appellant does not separately argue the patentability of
dependent claims, the claims stand or fall with the claims from which they
depend. In re King, 801 F.2d 1324, 1325 (Fed. Cir. 1986).
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ANALYSIS
1. $101 Rejection R1 of Claims 6-11
Issue 1
Appellant argues (Br. 6) the Examiner's rejection of claim 6 under 35
U.S.C. § 101 as being directed to patent-ineligible subject matter is in error.
These contentions present us with the following issue:
Did the Examiner err (Final Act. 4) in concluding the representative
claim is directed to the abstract idea of
performing securities transactions which is a basic economic
practice .... [and does] not include additional elements . . .
sufficient to amount to significantly more than the judicial
exception because although a computer is utilized as the
depository as an intermediary in the claimed method, the claims
do no more than implement the abstract idea of performing
securities transactions on a generic computer,
as generally recited in claim 6, and claims 7-11 depending therefrom?
Analysis
Alice Step 1 —Abstract Idea
Appellant asserts ... the claims are not directed to performing a
"securities transaction" between buyer and seller, as that term is
understood in the banking industry. Rather, the invention as
defined by the claims is related to a method for using a
depository to hold securities for an owner, and only transfer
securities to the owner's broker (for example, to initiate a
transaction with a third party) at the time the transaction is
initiated. This is not a "basic practice" of the industry, where
the various brokerage firms often perform transactions using
securities held in its "street name", as described above.
Br. 6.
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Appellant further alleges:
The steps in independent claim 6 allow for an "affirmed
transaction message" to be transmitted to a broker "for action",
"with all other securities possessed by the account owner
remaining in the possession of the depository". The act of
using the depository to "hold" all securities not involved in a
current transaction goes beyond any type of "abstract concept"
related to the buying/selling of a specific security."
Id.
The Examiner concludes the claims "are directed to the abstract idea
of performing securities transactions which is a basic economic practice."
Final Act. 4.
Section 101 provides that anyone who "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. 35 U.S.C. § 101.
The Supreme Court has repeatedly emphasized that patent protection should
not extend to claims that monopolize "the basic tools of scientific and
technological work." Gottschalk v. Benson, 409 U.S. 63, 67 (1972); Mayo
Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 71 (2012);
Alice Corp. Pty Ltd. v. CLS Bank Infl, 134 S. Ct. 2347, 2354 (2014).
Accordingly, laws of nature, natural phenomena, and abstract ideas are not
patent-eligible subject matter. Id.
The Supreme Court's two-part Mayo!Alice framework guides us in
distinguishing between patent claims that impermissibly claim the "building
blocks of human ingenuity" and those that "integrate the building blocks into
something more." Alice, 134 S. Ct. at 2354 (quotation marks, citation, and
bracketing omitted). First, we "determine whether the claims at issue are
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directed to a patent-ineligible concept." Id. at 2355. If so, we "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." Id. at 2357 (quoting Mayo, 566 U.S. at 72, 79). While the two
steps4 of the Alice framework are related, the "Supreme Court's formulation
makes clear that the first-stage filter is a meaningful one, sometimes ending
the § 101 inquiry." Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350,
1353 (Fed. Cir. 2016). We note the Supreme Court "has not established a
definitive rule to determine what constitutes an 'abstract idea'" for the
purposes of step one. Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1334
(Fed. Cir. 2016) (citing Alice, 134 S. Ct. at 2357).
However, our reviewing court has held claims ineligible as being
directed to an abstract idea when they merely collect electronic information,
display information, or embody mental processes that could be performed by
humans. Elec. Power Grp., 830 F.3d at 1353-54 (collecting cases). At the
same time, "all inventions at some level embody, use, reflect, rest upon, or
apply laws of nature, natural phenomena, or abstract ideas." Mayo, 566 U.S.
at 71. Under this guidance, we must, therefore, ensure at step one that we
articulate what the claims are directed to with enough specificity to ensure
the step one inquiry is meaningful. Alice, 134 S. Ct. at 2354 ("[W]e tread
carefully in construing this exclusionary principle lest it swallow all of
patent law").
4 Applying this two-step process to claims challenged under the abstract
idea exception, the courts typically refer to step one as the "abstract idea"
step and step two as the "inventive concept" step. Affinity Labs of Tex., LLC
v. DIRECTV, LLC, 838 F.3d 1253, 1257 (Fed. Cir. 2016).
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Under the "abstract idea" step, we must evaluate "the 'focus of the
claimed advance over the prior art' to determine if the claim's 'character as a
whole' is directed to excluded subject matter." Affinity Labs, 838 F.3d at
1257 (citation omitted).
Turning to the claimed invention, claim 6 recites:
A method of performing securities transactions between
an account owner and a broker through an independent
intermediary defined as a depository, the depository retaining
possession of securities on behalf of an account owner ....
Claim 6 (preamble).
Method claim 6's limitations also require the steps of:
(1) "establishing an account record in . . . [a] database";
(2) "receiving ... a transaction message";
(3) if the transaction message is not authenticated,
"sending an error message ... to terminate the transaction";
(4) if the transaction message is authenticated, "retrieving
the account owner record and determining if the transaction can
be processed . . . [and] sending a rejection message . . . and
terminating the transaction if the transaction cannot be
processed";
(5) "otherwise processing the transaction by affirming the
transaction message"; and
(6) "transmitting the affirmed transaction message to the
broker for action involving only the predetermined security,
with all other securities possessed by the account owner
remaining in the possession of the depository."
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In response to Appellant's arguments, the Examiner
is of the position that whether or not an idea is a "basic
practice" is not relevant to the determination of whether it is
similar to those found by the courts to be abstract. Appellant's
argument that "the invention as a whole amounts to
significantly more than simply organizing and comparing data"
is not relevant because the rejection did not allege that the
claims amount to no more than "simply organizing and
comparing data." In response to Applicant's statement: "[t]he
act of using the depository to 'hold' all securities . . . goes
beyond any type of'abstract concept,"' it is noted that in
addition to being a basic economic practice, the method as
claimed can also technically be carried out by a human being
with a ledger (manually).
Ans. 2; see also Final Act. 4.5
Under step one, we agree with the Examiner that the invention
claimed in independent claim 6 is directed to an abstract idea, i.e.,
organizing human activities pertaining to securities transactions. Final
Act. 4; see also Ans. 2.
As the Specification itself observes, "[t]he present invention relates to
a system for protecting individuals (including institutions) involved in
securities transactions and, more particularly, to the utilization of an
'independent' depository as an intermediary between a security owner and a
5 In the Final Office Action, the Examiner concludes, "[establishing an
account record in a database and using it to determine whether a transaction
on a security can be carried out amounts to looking up information in a
database, which is one of the most basic functions of a computer. The same
is true of using a computer . . . [for] receiving, sending and authenticating
messages." Final Act. 4.
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brokerage firm to protect the security owner from untoward actions on the
part of the brokerage firm." Spec. ^ 2.6 7We find this type of activity, i.e.,
protecting individuals involved in securities transactions includes
longstanding conduct that existed well before the advent of computers and
the Internet, and could be carried out by a human with pen and paper. See
CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1375 (Fed. Cir.
2011) ("That purely mental processes can be unpatentable, even when
performed by a computer, was precisely the holding of the Supreme Court in
Gottschalkv. Benson").1
Our reviewing court has previously held other patent claims ineligible
for reciting similar abstract concepts. For example, while the Supreme
Court has altered the § 101 analysis since CyberSource in cases like Mayo
6 See also, Spec. 29 ("Abstract"):
A system for protecting individuals (including
institutions) involved in securities transactions has been created
that utilizes an "independent" depository as an intermediary
between a security owner and a brokerage firm. The inclusion
of a depository is considered to protect the security owner from
untoward actions on the part of the brokerage firm. The
depository is used to "hold" the securities behalf of the owner.
The security owners and brokerage firms must be registered
with the depository and maintain accounts with the depository.
All transactions involving the securities are still performed by
the broker, but the requests are transmitted from the security
owner to the depository, and the depository then relays
messages regarding the transactions to the broker. Thus, the
securities are only in the possession of the broker on a
transaction-by-transaction basis.
7 CyberSource further guides that "a method that can be performed by
human thought alone is merely an abstract idea and is not patent-eligible
under § 101." CyberSource, 654 F.3d at 1373.
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and Alice, they 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.'" Synopsys,
Inc. v. Mentor Graphics Corp., 839 F.3d 1138, 1146—47 (Fed. Cir. 2016)
(alteration in original) (quoting Elec. Power Grp., 830 F.3d at 1354).
In this regard, the claims are similar to claims our reviewing court has
found patent ineligible in Elec. Power Grp., 830 F.3d at 1353-54 (collecting
information and "analyzing information by steps people go through in their
minds, or by mathematical algorithms, without more, . . . [are] essentially
mental processes within the abstract-idea category").
Therefore, in agreement with the Examiner, we conclude claim 6
involves nothing more than collecting, storing, comparing, authenticating,
and transmitting data, without any particular inventive technology — an
abstract idea. See Elec. Power Grp., 830 F.3d at 1354. We further refer to
Content Extraction, where the Federal Circuit has provided additional
guidance on the issue of statutory subject matter by holding claims to
collecting data, recognizing certain data within the collected data set, and
storing that recognized data in memory were directed to an abstract idea and,
therefore, unpatentable under § 101. Content Extraction & Transmission
LLCv. Wells Fargo Bank, N.A., 776 F.3d 1343 (Fed. Cir. 2014).
Accordingly, on this record, and under step one of Alice, we agree
with the Examiner's conclusion the claims are directed to an abstract idea.
Alice Step 2 —Inventive Concept
If the concept is directed to a patent-ineligible concept such as an
abstract idea, as we conclude above, we proceed to the "inventive concept"
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step. For that step we must "look with more specificity at what the claim
elements add, in order to determine 'whether they identify an "inventive
concept" in the application of the ineligible subject matter' to which the
claim is directed." Affinity Labs, 838 F.3d at 1258 (quoting Elec. Power
Grp., 830 F.3d at 1353).
In applying step two of the Alice analysis, our reviewing court guides
we must "determine whether the claims do significantly more than simply
describe . . . [the] abstract method" and, thus, transform the abstract idea into
patentable subject matter. Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709,
715 (Fed. Cir. 2014). We look to see whether there are any "additional
features" in the claims that constitute an "inventive concept," thereby
rendering the claims eligible for patenting even if they are directed to an
abstract idea. Alice, 134 S. Ct. at 2357. Those "additional features" must be
more than "well-understood, routine, conventional activity." Mayo, 566
U.S. at 79.
Evaluating representative claim 6 under step 2 of the Alice analysis,
we agree with the Examiner that it lacks an "inventive concept" that
transforms the abstract idea of performing securities transactions into a
patent-eligible application of that abstract idea. See Final Act. 4;8 see also
Ans. 2. We agree with the Examiner because, as in Alice, we find the
recitation of a method of "performing securities transactions between an
account owner and a broker through an independent intermediary defined as
8 "The claims do not include additional elements that are sufficient to
amount to significantly more than the judicial exception because although a
computer is utilized as the depository as an intermediary in the claimed
method, the claims do no more than implement the abstract idea of
performing securities transactions on a generic computer." Final Act. 4.
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a depository, the depository retaining possession of securities on behalf of an
account owner" is simply not enough to transform the patent-ineligible
abstract idea here into a patent-eligible invention. See Alice, 134 S. Ct. at
2357 ("[CJlaims, which merely require generic computer implementation,
fail to transform . . . [an] abstract idea into a patent-eligible invention").
Accordingly, based upon the findings above, on this record, we are
not persuaded of error in the Examiner's conclusion that the appealed claims
are directed to patent-ineligible subject matter. Therefore, we sustain the
Examiner's § 101 rejection of independent claim 6, and grouped claims 7-11
which fall therewith. See Claim Grouping, supra.
2. $ 103(a) Rejection R2 of Claims 6-11
Issue 2
Appellant argues (Br. 7-9) the Examiner's rejection of claim 6 under
35 U.S.C. § 103(a) as being obvious over the combination of David and
Wheeler is in error. These contentions present us with the following issues:
Did the Examiner err by:
(1) finding the cited prior art combination teaches or
suggests "[a] method of performing securities transactions
between an account owner and a broker through an independent
intermediary defined as a depository, the depository retaining
possession of securities on behalf of an account owner" that
includes, inter alia, the step of"receiving, at the depository, a
transaction message from the account owner defining a
transaction involving a predetermined security," as recited in
claim 6 (emphasis added)?
(2) not providing proper motivation to combine Wheeler
with David in the manner suggested?
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Analysis
(1) All Limitations are Taught or Suggested
Appellant contends the David reference "is directed to a specific type
of system for performing securities transactions - one where a broker is not
used." Br. 7. Further, "[t]here is no 'depository' in David that sits between
an account owner and his broker, functioning as a gatekeeper in passing
securities on a transaction-by-transaction basis." Br. 8.
In response, the Examiner finds, and we agree:
Applicant's excerpt fails to emphasize that David also mentions
"[m]ore particularly, the system allows individuals to trade
directly with each other" (C.9, L.l-2). As such, the individuals
can be any type of individuals. While David does mention that
a third party can be construed in an example as a broker, David
does not limit the third parties to brokers. David also does not
prohibit or mention anything that would cause the system to
become inoperable if a broker was introduced. On the contrary,
David explicitly allows brokers in [its] system as evidenced by
. . . [citations to David col. 3,11. 39-42, col. 8,11. 57-59].
Ans. 3.9 The Examiner further finds "the claims do not recite 'a 'depository'
that sits between an account owner and his broker, functioning as a
gatekeeper in passing securities on a transaction-by-transaction basis,"' as
argued by Appellant. Ans. 4.
9 "The custodian may be an independent entity; it may be associated with
banks, brokerage houses or other similar entities normally involved in
trading or may be established specifically for this purpose." David col. 3,
11. 39 42. Further, "[i]n an alternate embodiment of the invention, the
customer may be given the option of sending the order to a brokerage-type
service. The order is then processed by a broker through a conventional
exchange." David col. 8,11. 57-59.
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Thus, on this record, we are not persuaded the Examiner erred in
finding the contested limitation is taught or suggested by the cited prior art
combination.
(2) The Examiner Provided Proper Motivation to Combine
Appellant contends:
Inasmuch as an "advantage" of David is to eliminate the
need to pay "commissions or other fees to third parties", it is
difficult to understand the motivation as suggested by the
examiner to "replace" an end customer by a broker. The brokers
are involved in the prior art "standard exchange systems"
mentioned by David. There is no reason to revert to such an
arrangement in David.
Thus, Appellant asserts that there is no motivation to
combine to the teachings of Wheeler et al. with David in the
manner suggested by the Examiner. These references, as a
result, are not properly combinable to support a finding of
obviousness.
Br. 8.
As discussed, supra, the Examiner finds "David does not limit the
third parties to brokers . . . [and] does not prohibit or mention anything that
would cause the system to become inoperable if a broker was introduced."
Ans. 3. "As stated in the respective rejection, a person having ordinary skill
in the art would have been motivated to combine these features because it
would facilitate the receiving end customer by reducing the amount of time
spent performing the transaction and reduce the possibility of error." Id.
Therefore, based upon the findings above, on this record, we are not
persuaded of error in the Examiner's reliance on the cited prior art
combination to teach or suggest the disputed limitation of claim 6, nor do we
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find error in the Examiner's resulting legal conclusion of obviousness.
Therefore, we sustain the Examiner's obviousness rejection of independent
claim 6, and grouped claims 7-11 which fall therewith. See Claim
Grouping, supra.
CONCLUSIONS
(1) The Examiner did not err with respect to patent-ineligible
subject matter Rejection R1 of claims 6-11 under 35 U.S.C. § 101, and we
sustain the rejection.
(2) The Examiner did not err with respect to obviousness Rejection
R2 of claims 6-11 under 35 U.S.C. § 103(a) over the cited prior art
combination of record, and we sustain the rejection.
DECISION
We affirm the Examiner's decision rejecting claims 6-11.
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(f).
AFFIRMED
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