Ex Parte Farrell et al

Patent Trial and Appeal Board

Sep 22, 2017

13916960 (P.T.A.B. Sep. 22, 2017)

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.
13/916,960 06/13/2013 James Farrell 4672-07641EUS 5547
12684 7590 09/26/2017
Lempia Summerfield Katz LLC/CME
20 South Clark Street
Suite 600
Chicago, IL 60603
EXAMINER
LEMIEUX, JESSICA
ART UNIT PAPER NUMBER
3693
NOTIFICATION DATE DELIVERY MODE
09/26/2017 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 JAMES FARRELL and JAMES KRAUSE
Appeal 2016-0024591
Application 13/916,9602
Technology Center 3600
Before ANTON W. FETTING, CYNTHIA L. MURPHY, and
TARA L. HUTCHINGS, 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
rejection of claims 1—20. We have jurisdiction under 35 U.S.C. § 6(b).
We AFFIRM.
1 Our decision references Appellants’ Appeal Brief (“App. Br.,” filed
June 29, 2015) and Reply Brief (“Reply Br.,” filed Dec. 21, 2015), and the
Examiner’s Answer (“Ans.,” mailed Nov. 2, 2015) and Final Office Action
(“Final Act.,” mailed Feb. 3, 2015).
2 Appellants identify Chicago Mercantile Exchange Inc. as the real party in
interest. App. Br. 2.
Appeal 2016-002459
Application 13/916,960
CLAIMED INVENTION
Appellants’ claimed invention “relates to monitoring financial
transactions, and particularly, to mediating an unbalanced market.”
Spec. 12.
Claims 1, 7, and 15 are the independent claims on appeal. Claim 1,
reproduced below, is illustrative of the claimed subject matter:
1. A computer implemented method of mitigating the
effect of a market spike caused by the triggering and election of
a conditional order, comprising:
monitoring, by a processor, a plurality of orders submitted
to an automated trading engine in an automated matching
system;
comparing, by the processor, the execution price of the
conditional order to a predetermined price threshold;
flagging, by the processor, a market for an instrument
when the execution price of the conditional order lies beyond the
predetermined price threshold;
matching, by the processor, those orders of the plurality of
orders for the instrument in the flagged market, which have a
price within the predetermined price threshold, at the
predetermined price threshold against other orders which have a
price beyond the predetermined price threshold.
REJECTION
Claims 1—20 are rejected under 35 U.S.C. § 101 as directed to non-
statutory subject matter.
ANALYSIS
Appellants argue claims 1—20 as a group. Appeal Br. 4—7. We select
claim 1 as representative, and claims 2—20 stand or fall with claim 1. See 37
C.F.R. § 41.37(c)(l)(iv).
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We are not persuaded by Appellants’ argument that that the Examiner
erred in rejecting claims 1—20 under 35 U.S.C. § 101 because the Examiner
has not shown objective evidence, such as a citation to a finance or banking
textbook or standard, that the claims are directed to a fundamental economic
practice. App. Br. 4, n. 1. We are aware of no controlling authority that
requires the Office to provide factual evidence to support a finding that a
claim is directed to an abstract idea. Instead, the Federal Circuit has
repeatedly noted that “the prima facie case is merely a procedural device that
enables an appropriate shift of the burden of production.” Hyatt v. Dudas,
492 F.3d. 1365, 1369 (Fed. Cir. 2007) (citing In re Oetiker, 977 F.2d 1443,
1445 (Fed. Cir. 1992)). The court has, thus, held that the USPTO carries its
procedural burden of establishing a prima facie case when its rejection
satisfies the requirements of 35 U.S.C. § 132 by notifying the applicant of
the reasons for rejection, “together with such information and references as
may be useful in judging of the propriety of continuing the prosecution of
[the] application.” See In re Jung, 637 F.3d 1356, 1362 (Fed. Cir. 2011); see
also USPTO’s July 2015 Update: Subject Matter Eligibility, 6 (available at
https://www.uspto.gov/sites/default/files/documents/ieg-july-2015-
update.pdf). Thus, all that is required of the Office is that it set forth the
statutory basis of the rejection in a sufficiently articulate and informative
manner as to meet the notice requirement of § 132. Id.', see also Chester v.
Miller, 906 F.2d 1574, 1578 (Fed. Cir. 1990) (“Section 132 is violated when
a rejection is so uninformative that it prevents the applicant from
recognizing and seeking to counter the grounds for rejection.”).
Here, in rejecting claims 1—20 under § 101, the Examiner analyzed the
claims using the two-framework set forth in Mayo Collaborative Services v.
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Prometheus Laboratories, Inc., 132 S. Ct. 1289, 1300 (2012), “for
distinguishing patents that claim laws of nature, natural phenomena, and
abstract ideas from those that claim patent-eligible applications of these
concepts.” Alice Corp. Pty Ltd. v. CLSBankInt’l, 134 S. Ct. 2347, 2354
(2014). Specifically, the Examiner notified Appellants that the pending
claims are directed to “order matching,” which is a fundamental economic
practice, i.e., an abstract idea. Final Act. 4. The Examiner also found that
the claimed steps recite monitoring orders, comparing execution prices,
flagging an instrument, and matching orders, which are all well-established
fundamental economic practices that could be performed through the use of
organized human activities given enough time. Id. at 2.
The Examiner found that there are no meaningful limitations that
transform the claims into something significantly more than the abstract idea
itself. Id. at 4. In this regard, the Examiner finds the claim elements viewed
individually and as a whole amount to no more than mere instructions to
implement the abstract idea on a computer to perform well-understood,
routine, and conventional computer functions previously known to the
pertinent industry. Id. The Examiner, thus, set forth a proper rejection
under § 101 such that the burden shifted to Appellant to explain why the
claims are patent-eligible.
Appellants argue that the claims are not directed to a fundamental
economic practice, to methods of organizing human activities, or a
mathematical relationship or formula. App. Br. 4. Appellants assert that the
claims instead are directed to “a novel and patentable system for protecting a
transaction processing system of an electronic market from a cascade of
transactions,. . . [which] may cause a market spike.” Id. at 5.
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With respect to computer-enabled claimed subject matter, it can be
helpful to determine whether “the claims at issue . . . can readily be
understood as simply adding conventional computer components to well-
known business practices” or not. Enflsh, LLC v. Microsoft Corp., 822 F.3d
1327, 1338 (Fed. Cir. 2016). The court put the question as being “whether
the focus of the claims is on [a] specific asserted improvement in computer
capabilities ... or, instead, on a process that qualifies as an ‘abstract idea’
for which computers are invoked merely as a tool.” Id. at 1335—36. The
relevant question is whether the claims as a whole “focus on a specific
means or method that improves the relevant technology” or are “directed to
a result or effect that itself is the abstract idea and merely invoke generic
processes and machinery.” McRO, Inc. v. Bandai Namco Games Am. Inc.,
837 F.3d 1299, 1314 (Fed. Cir. 2016).
Here, claim 1, for example, involves a method for mitigating the
effect of a market spike caused by the triggering and election of a
conditional order that recites the steps of: (1) monitoring a plurality of
orders; (2) comparing, the execution price of the conditional order to a
predetermined price threshold; (3) flagging a market for an instrument when
the execution price of the conditional order lies beyond the predetermined
price threshold; and (4) matching those orders of the plurality of orders for
the instrument in the flagged market, which have a price within the
predetermined price threshold, at the predetermined price threshold against
other orders which have a price beyond the predetermined price threshold.
Independent claims 7 and 15 recite similar language. Yet these steps recite
nothing more collecting data, and processing the data — steps that the
Federal Court has repeatedly held constitute an abstract idea. See, e.g., Elec.
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Power Grp. LLC v. Alstom, 830 F.3d 1350, 1353—54 (Fed. Cir. 2016)
(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”); see also
Cybersource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1371 (Fed. Cir.
2011) (methods that can be performed entirely in the human mind are
unpatentable). As such, claim 1 is directed to the abstract idea of collecting
and processing data.
We also are not persuaded of Examiner error by Appellants’ argument
that the concept of “order matching” cannot properly be construed as a
fundamental economic practice or a method of organizing human activities
that is patent ineligible. See App. Br. 10. Because we have established that
the claims are directed to the abstract idea of data gathering, displaying, and
processing, we need not reach this issue. Nonetheless, Appellants present no
persuasive argument or technical reasoning to explain why, and we do not
see why, the steps of monitoring, comparing, flagging, and matching cannot
be properly characterized as a method of organizing human activity that
qualifies for treatment as an abstract idea.
We also are not persuaded that the claimed invention is akin to
Example 1 at pages 1—3 of the USPTO’s Examples: Abstract ideas (Jan. 27,
2015), available at
https://www.uspto.gov/sites/default/files/documents/abstract_idea_examples
.pdf (hereafter “Examples”). Example 1 relates to isolating and removing
malicious code from electronic messages to prevent a computer from being
compromised. Examples 1. The USPTO describes that the claim is directed
to “physically isolating a received communication on a memory sector and
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extracting malicious code from that communication to create a sanitized
communication in a new data file,” and not an abstract idea. Id. at 3. That
is, the USPTO explains that the claim is directed to isolating and eradicating
computer viruses, worms, and other malicious code, which is a concept
inextricably tied to computer technology. Id. Appellants argue that the
pending claims are similar because they “prevent undesirable transaction
execution cascades.” Reply Br. 7. Yet, Appellants’ Specification describes
the problem as implementing the abstract idea using a computer so that the
results of processing the data occurs faster than results that a human could
achieve. See, e.g., Spec. 1 5. Thus, the claims here can be understood as
simply adding conventional computer components to well-known business
practices, not as focusing on a specific means or method that improves the
relevant technology. The Specification supports this determination. See,
e.g., Spec. 2, 20—21, and 29.
We are not persuaded by Appellants argument that the claims do not
preempt the entire field of order matching. App. Br. 4. Contrary to
Appellants’ suggestion, there is no requirement for the Examiner to establish
pre-emption, and “the absence of complete preemption does not demonstrate
patent eligibility.” Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d
1371, 1379 (Fed. Cir. 2015) (citing Alice, 134 S. Ct. at 2354); see also OIP
Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1362—63 (Fed. Cir. 2015)
(“[T]hat 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.”).
Turning to the second step of the Mayo/Alice analysis, Appellants
argue that even if the claims recite an abstract idea, the claims are patent-
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eligible because they amount to significantly more than the alleged abstract
idea itself. App. Br. 6—7. In this regard, Appellants contend that the
invention “solves the technical problem introduced by computerized
transaction processing systems” that causes completion of transactions to
“occur rapidly and before a human may intervene to prevent such results.”
Id. at 7. Yet improving the speed at which a business practice can be
implemented by invoking generic computer processes and machinery
indicates the claims are directed to an abstract idea, not a solution to a
technical problem. See McRO, Inc. v. Bandai Namco Games Am. Inc., 837
F.3d 1299, 1314 (Fed. Cir. 2016).
We also are not persuaded by Appellants’ argument that the claims
are similar to Example 3 at pages 7—10 of the Examples. App. Br. 7.
Example 3 describes an invention that improves upon previous halftoning
techniques (i.e., digital image processing techniques) by developing an
improved mask called a “blue noise” mask. Examples 7. The USPTO
explains that the exemplary claim generates the blue noise mask through an
iterative mathematic operation and, thus, is an abstract idea. Id. at 8.
However, the USPTO explains that the blue noise mask allows a computer
to use less memory than required for prior masks, “result[ing] in faster
computation time without sacrificing the quality of the resulting image as
occurred in prior processes.” Id. at 9. The USPTO determines that the
exemplary claim is an innovation in digital image processing, resulting in
both an improvement in the functioning of the computer and an
improvement in another technology. Id. Here, we find no analogous
improvement to a computer or another “technology.”
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In the Reply Brief, Appellants additionally argue that the claims are
analogous to the invention deemed patentable in DDR Holdings, LLC v.
Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014). In DDR Holdings, the
Federal Circuit determined that, although the patent claims at issue involved
conventional computers and the Internet, the claims addressed the problem
of retaining website visitors who, if adhering to the routine, conventional
functioning of Internet hyperlink protocol, would be transported instantly
away from a host’s website after “clicking” on an advertisement and
activating a hyperlink. DDR Holdings, 773 F.3d at 1257. The Federal
Circuit, thus, held that the claims were “necessarily rooted in computer
technology in order to overcome a problem specifically arising in the realm
of computer networks,” and were not directed to an abstract idea. Id. at
1265. No such technological advance is evident here. Unlike the situation
in DDR Holdings, Appellants do not identify any problem particular to
computer networks and/or the Internet that the claims allegedly overcome.
We are not persuaded for the foregoing reasons that the Examiner
erred in rejecting claim 1 under 35 U.S.C. § 101. Therefore, we sustain the
Examiner’s rejection of claim 1 under 35 U.S.C. § 101. We also sustain the
rejection of claims 2—20, which fall with claim 1.
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DECISION
The Examiner’s rejection of claims 1—20 under 35 U.S.C. § 101 is
affirmed.
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
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