Ex Parte Conary et al

Patent Trial and Appeal Board

Mar 30, 2018

13112188 (P.T.A.B. Mar. 30, 2018)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE FIRST NAMED INVENTOR
13/112, 188 05/20/2011 Neil W. CONARY
23483 7590 04/03/2018
WILMERHALE/BOSTON
60 STATE STREET
BOSTON, MA 02109
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.
2204808.00120US2 6999
EXAMINER
MERCHANT, SHAHID R
ART UNIT PAPER NUMBER
3693
NOTIFICATION DATE DELIVERY MODE
04/03/2018 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):
whipusptopairs@wilmerhale.com
teresa.maia@wilmerhale.com
PTOL-90A (Rev. 04/07)
UNITED ST ATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte NEIL W. CONARY and STEPHENR. MIELE JR.
Appeal2016-008024 1
Application 13/112, 1882
Technology Center 3600
Before MICHAEL C. ASTORINO, T ARAL. HUTCHINGS, and
ALYSSA A. FINAMORE, Administrative Patent Judges.
HUTCHINGS, Administrative Patent Judge.
DECISION ON APPEAL
STATEMENT OF THE CASE
Appellants appeal under 35 U.S.C. § 134(a) from the Examiner's
non-fmal rejection of claims 1-7 and 9-20, which constitute all the claims
pending in this application. We have jurisdiction under 3 5 U.S. C. § 6(b ).
1 Our decision references Appellants' Appeal Brief ("Appeal Br.," filed
Dec. 30, 2015) and Reply Brief ("Reply Br.," filed Aug. 22, 2016), and the
Examiner's Answer ("Ans.,"mailed June 22, 2016) and Non-Final Office
Action ("Non-Final Act.," mailed July 31, 2015).
2 Appellants identify Level ATS Corporation as the real party in interest.
Appeal Br. 1.
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Application 13/112, 188
We AFFIRM and designate our affirmance as a NEW GROUND OF
REJECTIONpursuantto our authority under37 C.F.R. §41.50(b).
CLAIMED INVENTION
Appellants' claimed invention "relates to systems and methods for
trading large block of securities." Spec. if 2.
Claims 1 and 13 are the independent claims on appeal. Claim 1,
reproduced below, is illustrative of the claimed subject matter:
1. A computer-implemented trading system for auto-
trading securities when transaction pricing is within target prices
and in a controlled manner when transaction pricing is outside of
such target prices, comprising:
a plurality of electronic input and display devices for
traders to input buy and sell orders and trading instructions, and
receiving trading transaction information;
a computer-based dark pool facility for receiving buy and
sell orders and trading instructions transmitted from the
electronic input and display devices and matching crossing buy
and sell orders, and transmitting trading transaction information
to the plurality of electronic input and display devices, with the
computer-based dark pool facility including at least,
a processor-implemented matching engine for matching
crossing counterparty buy and sell orders,
a system database for storing buy and sell orders for
matching, and trading transaction information that includes at
least order fulfillment information based on matches completed
by the matching engine,
processor-implemented frrst programming means for
controlling the matching engine and database to auto-match
crossing counterparty buy and sell orders according to
programming of the frrst programmable means and trading
instructions of counterparty traders to a trading transaction input
through respective electronic input and display devices,
processor-implemented second programming means for
controlling the frrst programming means, matching engine, and
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database to auto-match crossing counterparty buy and sell orders
under conditions when transaction pricing in matching crossing
counterparty buy and sell orders according to the programming
of the frrst programming means is outside of the buy or sell target
price instructions input as part of the trading instructions by a
buyer or seller, respectively, with the second programming
means including trading control programming to control trading
transactions by limiting the volume of trading transactions that
can be completed in a predetermined fixed time period while the
transaction pricing remains outside of the buy or sell target price
instructions input by the buyer or seller, respectively, and
a processor-implemented communications interface for
receiving buy and sell orders and trading instructions from the
plurality of electronic input and display devices and transmitting
trading transaction information to the plurality of electronic input
and display devices; and
an electronic communications link for transmitting buy
and sell orders and trading instructions input by traders at the
plurality of electronic input and display devices to the
communications interface of the dark pool facility and
transmitting trading transaction information from the
communications interface to the plurality of electronic input and
display devices.
REJECTIONS
Claims 10 and20 are rejected under 35 U.S.C. § 112, second
paragraph, as indefmite for failing to particularly point out and distinctly
claim the subject matter that Appellants regard as the invention.
Claims 1-7 and 9-20 are rejected under 35 U.S.C. § 101 as directed to
non-statutory subject matter.
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ANALYSIS
Indefiniteness
We are not persuaded by Appellants' arguments that the Examiner
erred in rejecting claims 10 and 20 under 35 U.S. C. § 112, second
paragraph. Appeal Br. 13-15; Reply Br. 9-10. Instead, we agree with the
Examiner that the term "large block," as recited in claims 10 and20, is a
relative term that renders the claims indefmite at least because the term is
not defmed, and the Specification does not provide a standard, i.e.,objective
boundaries, for determining what constitutes a "large block" of securities.
Non-Final Act. 10; see also Ans. 7-8. Our reviewing court has made clear
that "the objective boundaries requirement applies to terms of degree." See
Berkheimerv. HP Inc., 881F.3d1360, 1364 (Fed. Cir. 2018); see also
IntervalLicensingLLCv. AOL, Inc., 766F.3d 1364, 1371 (Fed. Cir. 2014)
(requiring "objective boundaries" for assessing scope of term of degree);
DatamizeLLCv. PlumtreeSoftware, Inc.,4l7F.3d 1342, 1350(Fed. Cir.
2005) ("[A] claim term, to be defmite, requires an objective anchor.").
Appellants do not dispute that the Specification fails to provide
objective boundaries for the meaning of the term "large blocks." Instead,
Appellants submit and rely upon three appendices to show that the phrase
'"large blocks of securities' would be clearly understood by a person of
ordinary skill in the art" to require at least 10,000 shares per trade. Appeal
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Br. 13-15 (citing Appendices B-D). 3 ' 4 ' 5 In response, the Examiner correctly
fmds that Appendices C and D describe a block as having either a minimum
of 10,000 shares, or a minimum market value of $200,000. See Final Act.
10-11 (quoting Appendices C andD); compare App. B 1 (defming a block
as having at least 10,000 shares) with App. C 6 and App. D 50. As such, the
Examiner reasons that a block could be interpreted to require the minimum
of 10,000 shares or a market value of $200,000. Id. at 10. In our view, the
Examiner and Appellants have shown that the term "block" would be
understood by one of ordinary skill in the art under a broadest reasonable
interpretation to require at least 10,000 shares or a minimum market value of
$200,000, whichever is smaller. See, e.g., App.Cat 6.
Nonetheless, no objective standard has been provided to show what a
"large" block means, as such, the term "large block" is indefmite.
Accordingly, we are not persuaded, on the present record, that the Examiner
erred in rejecting claims 1-20under 35 U.S.C. § 112, second paragraph.
Therefore, we sustain the Examiner's rejection. Because our rationale
differs from that provided by the Examiner, we designate our affrrmance as a
NEW GROUND OF REJECTION.
3 Appendix B: NYSE Equities, Block Trading, The NYSE is the Leader in
Block Trading (June 2008).
4 Appendix C: NYSE, Rule 72, Priority of Bids and Offers and Allocation
of Executions, pages 1-7 (December3, 2014).
5 Appendix D: U.S. CONGRESS, OFFICE OF TECHNOLOGY AsSESSMENT'
Electronic Bulls and Bears: US. Securities Markets and Information
Technology, OT A-CIT-469, Washington, DC: U.S. Government Printing
Office (September 1990).
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Non-Statutory Subject Matter
Under 35 U.S.C. § 101, an invention is patent-eligible if it claims a
"new and useful process, machine, manufacture, or composition of matter."
35 U.S. C. § 101. The Supreme Court, however, has long interpreted§ 101
to include an implicit exception: "[l]aws of nature, natural phenomena, and
abstract ideas" are not patentable. See, e.g., Alice Corp. Pty. Ltd. v. CLS
Bankint'l, 134 S. Ct. 2347, 2354 (2014).
The Supreme Court, in Alice, reiterated the two-step framework
previously set forth in Mayo Collaborative Services v. Prometheus
Laboratories, Inc., 566 U.S. 66 (2012), "for distinguishing patents that claim
laws of nature, natural phenomena, and abstract ideas from those that claim
patent-eligible applications of those concepts." Alice Corp., 134 S. Ct.
at 2355. The first step in that analysis is to "determine whether the claims at
issue are directed to one of those patent-ineligible concepts." Id. If the
claims are not directed to a patent-ineligible concept, e.g., an abstract idea,
the inquiry ends. Otherwise, the inquiry proceeds to the second step where
the elements of the claims are considered "individually and 'as an ordered
combination'" to determine whether there are additional elements that
"'transform the nature of the claim' into a patent-eligible application." Id.
(quoting Mayo, 566U.S. at79, 78).
"The 'abstract idea' step of the inquiry calls upon us to look at 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
of Tex., LLCv. DIRECTV, LLC, 838 F.3d 1253, 1257-58 (Fed. Cir. 2016)
(internal citations omitted). In cases involving software innovations, this
inquiry often turns on whether the claims focus on "the specific asserted
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improvement in computer capabilities ... or, instead, on a process that
qualifies as an 'abstract idea' for which computers are invoked merely as a
tool." Enfish, LLCv. Microsoft Corp., 822 F.3d 1327, 1335-36 (Fed. Cir.
2016).
Here, in rejecting the claims under§ 101, the Examiner determines
that the claims are directed to "auto-trading securities when transaction
pricing is within target prices and in a controlled manner when transaction
pricing is outside o[fJ such target prices," which is an abstract idea.
Non-Final Act. 6. Specifically, the Examiner determines that the claims are
"directed to activities that could be performed by human hands or mental
processes," and, thus, is drawn to an abstract idea. Id. at 7; see also Ans. 3
(explaining that the claims are directed to the collection and comparison of
data, which can be performed mentally). Turning to step two, the Examiner
determines that the claims do not include additional elements that constitute
"significantly more" than the abstract idea because "the claims do not
include an improvement to another technology or technical field, an
improvement to the functioning of the computer itself, or meaningful
limitations beyond generally linking the use of the abstract ideas to a
particular technological environment." Non-Final Act. 7.
In the Appeal Brief, "Appellants submit that claims 1-7 and 9-12 are
directed to 'the electronic trading of large blocks of securities,"' which "may
be considered drawn to an abstract idea." Appeal Br. 10. We agree with
Appellants that the claims are directed to an abstract idea.
In the Reply Brief, however, Appellants change their position and
argue, for the frrst time, that the claims are not directed to an abstract idea,
but instead to an improvement in computer-related technology. See Reply
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Br. 4--7. Specifically, Appellants contend that the claims are akin to the
patent-eligible claims at issue in Enfish, because they are directed to "an
improvement in the operation of a computer-implemented trading system for
auto-trading securities by allowing trading in a controlled manner when
transaction pricing is outside of target prices." Id. at 7.
Yet, the improvement Appellants identify (i.e., allowing trading in a
controlled manner when transaction pricing is outside of target prices) is not
an improvement to computer capabilities akin to Enfish 's self-referential
table for a computer database. See Enfish, 822 F.3d at 1335-36. Instead, it
is an improvement to a process that qualifies as an abstract idea, for which
computers are invoked merely as a tool. We agree with the Examiner (see,
e.g., Ans. 2--4) that the concept of allowing trading in a controlled manner
when transaction pricing is outside of target prices is not meaningfully
distinct from cases involving mental processes or the collection, analysis,
and manipulation of data. See, e.g., Elec. Power Grp., LLC v. Alstom S.A.,
830F.3d1350, 1353-54 (Fed. Cir. 2016) (collecting numerous cases
describing mental processes, and data collection, analysis, and display as
abstract-idea processes).
Appellants argue that the claims do not preempt the use of"( 1) trading
securities or (2) trading securities when the price is below the favored sale
price or above the favored buy price." Appeal Br. 12. Appellants' argument
is not persuasive of Examiner error. There is no dispute that the Supreme
Court has described "the concern that drives [the exclusion of abstract ideas
from patent eligible subject matter] as one of pre-emption." Alice Corp.,
134 S. Ct. at 2354. But, characterizing preemption as a driving concern for
patent eligibility is not the same as characterizing preemption as the sole test
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for patent eligibility. "The Supreme Court has made clear that the principle
of preemption is the basis for the judicial exceptions to patentability" and
"[fJorthis reason, questions on preemption are inherent in and resolved by
the§ 101 analysis." AriosaDiagnostics,Inc. v. Sequenom,Inc., 788F.3d
1371, 1379 (Fed. Cir. 2015) (citing Alice Corp., 134 S. Ct. at 2354).
Although "preemption may signal patent ineligible subject matter, the
absence of complete preemption does not demonstrate patent eligibility." Id.
Turning to step two of the Alice framework, Appellants argue that
"limiting the volume of trading transactions that can be completed in a
predetermined fixed time period while the transaction pricing remains
outside of the buy or sell target price instructions input by the buyer or
seller," as recited in claim 1, and similarly recited in claim 13, transforms
the abstract idea of "(1) trading securities and (2) trading securities when the
trading price is below the favored sale price or above the favored buy price"
into patent-eligible subject matter. Appeal Br. 12. Yet, limiting the volume
of trading transactions, as recited in claims 1 and 13, is no more than an
abstract data manipulation step, which is insufficient to transform the
abstract idea. Here, Appellants do not indicate, and we do not fmd, that the
limitation requires any new techniques for performing the data analysis step,
any inventive components, any inventive program, or any inventive
arrangement of known, conventional pieces to improve technology. Instead,
the limitation recites desired results (functions) without any particular ways
of achieving them, which is insufficient. Elec. Power Grp., 830 F.3d at
1356; see id. at 1355 (explaining that the "[i]nquiry [at step two] therefore
must tum to any requirements for how the desired result is achieved").
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In the Reply Brief, Appellants argue that the claims recite
significantly more than the abstract idea. Specifically, Appellants argue that
claim 1 is analogous to the claims at issue in DDRHoldings, LLCv.
Hotels.com, L.P., 773F.3d1245 (Fed. Cir. 2014), because it is "directed to
problems particular to algorithmic and other computer-based trading
systems" and "allow[ s] automatic trading to continue when pricing becomes
aggressive." Reply Br. 8 (citing Spec. if 33). Yet, the claims at issue in
DDR Holdings modified the routine, conventional functioning of Internet
hyperlink protocol to direct a user of a host website to a "store within a
store" on the host website, rather than to an advertiser's third-party website,
when the user clicks an advertisement. DDR Holdings, 773 F.3d at 1257-
58. Here, in contrast, Appellants' Specification describes executing trades
when the transaction process is outside the trading instructions requires
buyers or sellers to "manually enter the system and selectively make
trades[,] which is inefficient and ineffectual." Spec. if 33. In other words,
the claimed solution is an improvement to an abstract business practice, not
an improvement to computer networks.
Appellants argue that an inventive concept can be found in the
combination of elements, analogous to the situation in Bascom Global
Internet Servs., Inc. v. AT&T Mobility LLC, 827F.3d1341 (Fed. Cir. 2016).
Reply Br. 8-9. However, Appellants do not persuasively explain how, and
we do not see how, Appellants' claims parallel the claims in Bascom, which
recited a "non-conventional and non-generic arrangement of known,
conventional pieces" within a network, the arrangement of elements being "a
technical improvement over the prior art ways of filtering." Bascom, 827
F.3d at 1350.
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In view of the foregoing, we sustain the Examiner's rejection of
claims 1-7 and9-20 under35U.S.C.§101.
DECISION
The Examiner's rejection of claims 10 and 20 under35U.S.C.§112,
second paragraph, is affirmed. We designated our affrrmance as including a
new groundofrejectionpursuantto 37 C.F.R. §41.50(b).
The Examiner's rejection of claims 1-7 and9-20 under35 U.S.C.
§ 101 is affrrmed.
This decision contains new grounds of rejection pursuant to 37 C.F.R.
§ 41.50(b). 37 C.F.R. § 41.50(b)provides "[a] new ground of rejection
pursuant to this paragraph shall not be considered fmal for judicial review."
37 C.F.R. § 41.50(b) also provides that Appellants, WITHIN TWO
MONTHS FROM THEDATE OF THE DECISION, must exercise one of
the following two options with respect to the new ground of rejection to
avoid termination of the appeal as to the rejected claims:
(1) Reopen prosecution. Submit an
appropriate amendment of the claims so rejected or
new evidence relating to the claims so rejected, or
both, and have the matter reconsidered by the
examiner, in which event the proceeding will be
remanded to the Examiner ....
(2) Request rehearing. Request that the
proceeding be reheard under § 41. 5 2 by the Board
upon the same record ....
Should Appellants elect to prosecute further before the Examiner
pursuantto 37 C.F.R. § 41.50(b )(1), in order to preserve the right to seek
review under 35 U.S. C. §§ 141 or 145 with respect to the affrrmed rejection,
the effective date of the affrrmance is deferred until conclusion of the
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prosecution before the Examiner unless, as a mere incident to the limited
prosecution, the affrrmed rejection is overcome.
If Appellants elect prosecution before the Examiner and this does not
result in allowance of the application, abandonment, or a second appeal, this
case should be returned to the Patent Trial and Appeal Board for final action
on the affrrmed rejection, including any timely request for rehearing thereof.
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).
AFFIRMED: 37 C.F.R. §41.50(b)
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