Ex Parte Crowley et al

Patent Trials and Appeals Board

Apr 29, 2019

14174001 - (D) (P.T.A.B. Apr. 29, 2019)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
14/174,001 02/06/2014
35811 7590 05/01/2019
IP GROUP OF DLA PIPER LLP (US)
ONE LIBERTY PLACE
1650 MARKET ST, SUITE 4900
PHILADELPHIA, PA 19103
FIRST NAMED INVENTOR
Chris Crowley
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.
CRD-13-1064R 1450
EXAMINER
HAMILTON, LALITA M
ART UNIT PAPER NUMBER
3691
NOTIFICATION DATE DELIVERY MODE
05/01/2019 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 CHRIS CROWLEY and MARK ROWELL 1
Appeal2017-010516
Application 14/174,001
Technology Center 3600
Before BIBHU R. MOHANTY, NINA L. MEDLOCK, and
KENNETH G. SCHOPPER, Administrative Patent Judges.
MOHANTY, Administrative Patent Judge.
DECISION ON APPEAL
STATEMENT OF THE CASE
The Appellants seek our review under 35 U.S.C. § 134 of the final
rejection of claims 1-10, 12-25, and 27-32, which are all the claims pending
in the application. We have jurisdiction under 35 U.S.C. § 6(b).
SUMMARY OF THE DECISION
We AFFIRM.
1 The real party in interest is Creditex Group, Inc. App. Br. 1.
Appeal2017-010516
Application 14/174,001
THE INVENTION
The Appellants' Specification discloses a multilateral exchange
auction that results in offsetting positions associated with first and second
financial instruments (Spec., para. 1). Claim 1, reproduced below with the
italics added, is representative of the subject matter on appeal.
1. A method of converting non-compliant data into compliant data
that is processable by a downstream computing system, the method
compnsmg:
receiving, by at least one computer executing specialized
software, the non-compliant data comprising financial position data
defining one or more long positions and one or more short positions
associated with a first financial asset;
matching, by the at least one computer, at least one of the one
or more long positions with at least one of the one or more short
positions associated with said first financial asset;
converting, by the at least one computer, the non-compliant
data into the compliant data by:
generating a first proposed trade from the non-compliant data
that includes the matched positions and an opt-out option, generating
a second proposed trade from compliant financial position data that is
processable by the downstream computing system, said compliant
financial position data defining one or more long positions and one or
more short positions associated with a second financial asset, said
second proposed trade also having an opt-out option, wherein a net
notional associated with the first proposed trade is equal to a net
notional associated with the second proposed trade, and
executing the first proposed trade simultaneously with the
second proposed trade when no opt-out indication is exercised,
said execution resulting in a replacement of the non-compliant
financial position data with the compliant financial position data; and
processing, by the downstream processing computer system, the
compliant financial position data.
App. Br. 22 (Claims Appendix).
2
Appeal2017-010516
Application 14/174,001
THE REJECTIONS
The following rejections are before us for review:
1. Claims 1-10, 12-25, and 27-32 are rejected under 35 U.S.C.
§ 112, first paragraph.
2. Claims 1-10, 12-25, and 27-32 are rejected under 35 U.S.C.
§ 112, second paragraph.
3. Claims 1-10, 12-25, and 27-32 are rejected under 35 U.S.C.
§ 101 as being directed to non-statutory subject matter.
FINDINGS OF FACT
We have determined that the findings of fact in the Analysis section
below are supported at least by a preponderance of the evidence. 2
ANALYSIS
Rejection under 35 U.S. C. § 112, first paragraph
The Examiner has rejected the cited claims above and determined that
the Specification fails to support the terms "non-compliant financial data" or
"compliant financial position data" (Final Act. 5; Ans. 3).
In contrast, the Appellants argue that the Specification provides
support for the terms at paragraph 2 and that one of ordinary skill in the art
would understand the cited terms in light of the Specification.
We agree with the Appellants. The Specification at paragraph 2
describes "non-compliant" credit default swap contracts as well as
2 See Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1427 (Fed. Cir. 1988)
( explaining the general evidentiary standard for proceedings before the
Patent Office).
3
Appeal2017-010516
Application 14/174,001
standardized versions of credit default swap contracts ( which would be
compliant) and the terms are both supported by the Specification.
Accordingly, this rejection is not sustained.
Rejection under 35 U.S. C. § 112, second paragraph
The Examiner has rejected the cited claims above and determined that
the terms "non-compliant financial data" or "compliant financial position
data" are indefinite (Final Act. 5; Ans. 3).
In contrast, the Appellants argue that the Specification provides
proper support at paragraph 2 and that one of ordinary skill in the art would
understand the cited terms in light of the Specification.
We agree with the Appellants. The Specification at paragraph 2
describes "non-compliant" credit default swap contracts as well as
standardized versions of credit default swap contracts (which would be
compliant), and thus, the terms are both supported by the Specification. One
of ordinary skill in the art would understand the scope of the terms "non-
compliant financial data" and "compliant financial position data" in the
claims. Both of the cited terms are also used in the conventional manner
used in the art. Accordingly, this rejection is not sustained.
Rejection under 35 U.S.C. § 1 OJ
The Appellants argue that the rejection of claim 1 is improper because
the claim has not been shown to be directed to an abstract idea (Reply Br. 2).
The Appellants argue further that the claim is "significantly more" than the
alleged abstract idea (App. Br. 2-10; Reply Br. 3).
4
Appeal2017-010516
Application 14/174,001
In contrast, the Examiner has determined that the rejection of record is
proper (Final Action 2-8; Ans. 3-10).
We agree with the Examiner. 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 (Gottschalkv. Benson, 409 U.S. 63, 69 (1972)). Concepts
determined to be patent eligible include physical and chemical processes,
such as "molding rubber products" (Diamond v. Diehr, 450 U.S. 175, 192
( 1981) ); "tanning, dyeing, making waterproof cloth, vulcanizing India
5
Appeal2017-010516
Application 14/174,001
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. (internal citation omitted) ( 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.").
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 MPEP § 2106.05(a}-(c), (e}-(h)).
6
Appeal2017-010516
Application 14/174,001
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.
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 ( citation 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 monopolize the
[abstract idea]."' Id. (alterations 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.
Here, the Examiner has determined that claim 1 is directed to the
concept of "conducting multilateral exchange auctions, and more
particularly to methods and systems for conducting a multilateral exchange
auction that results in offsetting of positions associated with a first financial
instrument and replacing the offset positions with replacement positions
associated with a second financial instrument" which is an abstract idea and
a mathematical relationship (Final Act. 5, 6). We substantially agree with
the Examiner in this regard as claim 1 is directed to the steps that are
italicized in the claim above. These steps are directed substantially to [ 1]
7
Appeal2017-010516
Application 14/174,001
"receiving ... non-compliant ... financial position data defining .. .long ... and
short positions"; [2] "matching ... at least one of the one or more long ... and
short positions"; [3] "generating a first proposed trade from ... non-compliant
data that includes the matched positions and an opt-out"; [ 4] "generating a
second proposed trade ... wherein a net notational with the first proposed
trade is equal to the net notational associated with the second proposed
trade"; [5] "executing" the trades simultaneously when no opt-out is
exercised; and [6] "processing ... the compliant financial position data."
Here, these claimed steps are directed to the concept of financial trading
which is fundamental economic practice and an abstract concept. A
fundamental economic practice has been held to be directed to a judicial
exception. Thus, we consider the claim to be directed to an abstract idea as
identified above. In Trading Technologies International, Inc. v. !BG (Fed.
Cir. 2017-2257, April 18, 2019) the claims were directed to a financial
trading method on a computer in which bid and offer information was sent in
an order to an electronic exchange and it was held that the concept of
placing an order based on displayed market information was a fundamental
economic practice and directed to an abstract idea. Thus, we consider the
claim to be directed to an abstract idea as identified above.
Turning to the second step of the Alice and Mayo framework, we
determine that claim 1 does not contain an inventive concept sufficient to
"transform" the abstract nature of the claim into a patent-eligible application.
The claim does not improve computer functionality, improve another field or
technology, utilize a particular machine, or effect a physical transformation.
Rather, we determine that nothing in the claim imposes a meaningful limit
8
Appeal2017-010516
Application 14/174,001
on the judicial exception, such that the claim is more than a drafting effort to
monopolize the judicial exception.
For example, in claim 1 the steps of [1] "receiving ... non-compliant
data"; [2] "matching" the short and long positions; [3] "generating" a first
proposed trade; [ 4] "generating" a second proposed trade; [ 5] "executing"
the trades simultaneously; and "processing ... the compliant financial position
data" are merely conventional steps performed by a generic computer that do
not improve computer functionality. That is, these recited steps [1]-[5] "do
not purport to improve the functioning of the computer itself' but are merely
generic functions performed by a conventional processor. Likewise, these
same steps [1]-[5] listed above do not improve the technology of the
technical field and merely use generic computer components and functions
to perform the steps. Also, the recited method steps [1]-[5] above do not
require a "particular machine" and can be utilized with a general purpose
computer, and the steps performed are purely conventional. In this case the
general purpose computer is merely an object on which the method operates
in a conventional manner and does not provide "significantly more" to the
claim beyond a nominal or insignificant execution of the method. Further,
the claim as a whole fails to effect any particular transformation of an article
to a different state in a manner that would render the claim "significantly
more" than the abstract idea. The recited steps [1]-[5] fail to provide
meaningful limitations to limit the judicial exception and rather are mere
instructions to apply the method to a generic computer. Considering the
elements of the claim both individually and as "an ordered combination" the
functions performed by the computer system at each step of the process are
9
Appeal2017-010516
Application 14/174,001
purely conventional. Each step of the claimed method does no more than
require a generic computer to perform a generic computer function.
Further the claim fails to add a specific limitation beyond the judicial
exception that is not well-understood, routine, and conventional in the field.
Rather the claim uses well-understood, routine, and conventional activities
previously known in the art at a high level of generality to the judicial
exception. The Specification at paragraphs 13 and 14, for example,
describes using conventional computer components such as computing
devices, processors, laptops, and the Internet in a conventional manner. The
claim specifically includes recitations for a computer to implement the
method but the computer is used in a manner that is well-understood,
routine, and conventional in the field. The Appellants have not shown these
claimed generic computer components, which are used to implement the
claimed method, are not well understood, routine, or conventional in the
field. The Appellants have not demonstrated that the computer components
described in the Specification at paragraphs 13-15 and 48 or the claimed
computer for instance are not general purpose computer components beyond
those known to be routine and conventionally known to perform similar
functions in a well-understood manner. The Appellants have also cited
to Enfzsh, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016) to show
that the claim is not abstract but the claims in that case were not similar in
scope to those here and were, in contrast, directed to a self-referential data
table. The Appellants have also cited to McRO, Inc. v. Bandai Namco
Games Am. Inc., 837 F.3d 1299 (Fed. Cir. 2016) but the claims in that case
are distinguished from this case in being directed to rules for lip sync and
facial expression animation.
10
Appeal2017-010516
Application 14/174,001
For these reasons the rejection of claim 1-10, 12-25, and 27-32 under
35 U.S.C. § 101 is sustained.
CONCLUSIONS OF LAW
We conclude that Appellants have shown that the Examiner erred in
rejecting 1-10, 12-25, and 27-32 under 35 U.S.C. § 112, first paragraph.
We conclude that Appellants have shown that the Examiner erred in
rejecting 1-10, 12-25, and 27-32 under 35 U.S.C. § 112, second paragraph.
We conclude that Appellants have not shown that the Examiner erred
in rejecting 1-10, 12-25, and 27-32 under 35 U.S.C. § 101.
DECISION
The Examiner's rejection of claims 1-10, 12-25, and 27-32 is
sustained.
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
11