Ex Parte Finkelstein et al

Patent Trials and Appeals Board

Apr 16, 2019

09818483 - (D) (P.T.A.B. Apr. 16, 2019)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
09/818,483 03/27/2001
63710 7590 04/18/2019
INNOVATION DIVISION
CANTOR FITZGERALD, L.P.
110 EAST 59TH STREET (6TH FLOOR)
NEW YORK, NY 10022
FIRST NAMED INVENTOR
Ephraim Brian Finkelstein
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.
00-8201 9569
EXAMINER
O'CONNOR, GERALD J
ART UNIT PAPER NUMBER
3697
NOTIFICATION DATE DELIVERY MODE
04/18/2019 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):
patentdocketing@cantor.com
lkorovich@cantor.com
phowe@cantor.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte EPHRAIM BRIAN FINKELSTEIN, KEN M. BLACKSTEIN and
KENNETH D. NAKDIMEN
Appeal 2017-011775
Application 09/818,483
Technology Center 3600
Before JEAN R. HOMERE, CARL W. WHITEHEAD JR. and
JON M. JURGOV AN, Administrative Patent Judges.
WHITEHEAD JR., Administrative Patent Judge.
DECISION ON APPEAL
STATEMENT OF THE CASE
Appellants 1 are appealing the final rejection of claims 283-339 and
376 under 35 U.S.C. § 134(a). Appeal Brief 3. Claims 1-282 and 340-375
have been canceled. Claims Appendix. We have jurisdiction under
35 U.S.C. § 6(b).
We affirm.
Introduction
1 Appellants identify Helix Financial Systems, L.P. as the real party in
interest. Appeal Brief 3.
Appeal2017-011775
Application 09/818,483
According to Appellants, the claimed subject matter is directed to
"provid[ ing] an exchange system which facilitates matching of buyer and
seller by initially providing search information to inform potential
counterparties of mutual interest in a transaction, but optionally maintains
potential counterparty anonymity until one party seeks to initiate contact
with the other to finalize [negotiations] for the deal." Specification 31.
Illustrative Claim
283. A method comprising the steps of:
by computer of an automated repurchase agreement trading
system, transmitting to offerees messages describing an offeror' s offer
for a repurchase agreement contract for acceptance or negotiation by a
one of the off erees, the repurchase agreement off er message proposing
a pair of transactions:
(a) an obligation of a selling party proposing the pair of
transactions to sell securities to a prospective buyer, at a price
less than the market value of the securities, the offered sell
transaction proposing to obligate the seller to a short sale of the
securities; and
(b) an obligation of the selling party to repurchase securities
from the buyer at a future date as agreed, at a future price as
agreed; and
messages in the automated repurchase agreement trading system
communicating offers for presentation to offerees, the messages
designating two or more securities issues from among which an
offeree may choose one or more as provided by programs of the
automated repurchase agreement trading system, the repurchase
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agreement offer having one or more open material terms that may be
supplied in a counteroffer by the offeree, the paired transactions
related by the automated repurchase agreement trading system to
require simultaneous and inseparable negotiation and/or acceptance
by a one of the offeror and offeree;
by computer of an automated repurchase agreement trading
system, providing the capability to display repurchase agreement
offers to the offerees in a tree format that permits off erees to select
repurchase agreement offers of interest; and
by computer of an automated repurchase agreement trading
system, accepting input from the offeree by which the offeree
indicates interest in the repurchase agreement offer, the input
designating a selection from among the two or more offered securities
that are to be the subject of the repurchase agreement contract, the
input supplying the open material terms, the automated repurchase
agreement trading system requiring that the two transactions of a pair
be contracted for between the offeror and offeree simultaneously and
inseparably, the automated repurchase agreement trading system
transmitting to offerees messages describing the repurchase agreement
offer or negotiating the repurchase agreement contract based at least
in part on a preexisting master repurchase agreement between the
offeror and the offeree to whom the repurchase agreement offer is
made available, the automated repurchase agreement trading system is
programmed to void any outstanding negotiations when agreement is
reached between the offeror and offeree.
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Rejection on Appeal
Claims 282-339 and 376 stand rejected under 35 U.S.C. § 101
because the claimed invention is directed to patent ineligible subject matter.
Final Action 2-17.
ANALYSIS
Rather than reiterate the arguments of Appellants and the Examiner,
we refer to the Appeal Brief (filed March 22, 2017), the Reply Brief (filed
September 27, 2017), the Final Action (mailed January 21, 2016) and the
Answer (mailed July 28, 2017), for the respective details.
35 U.S.C. § 101 rejection
The Examiner determines the claims are directed to patent ineligible
subject matter under 35 U.S.C. § 101 because the claims are directed to an
abstract idea comprising mental processes and do not include additional
elements that are sufficient to amount to significantly more than the abstract
idea. Final Action 5 ("The concept of computing in a computer a net
counterparty exposure of a party for at least one of an existing repurchase
agreement and a party-counterparty pair is a fundamental economic practice
long prevalent in our system of commerce, which is in the realm of abstract
ideas identified by the Supreme Court."); see Alice Corp. Pty. Ltd. v. CLS
Banklnt'l, 573 U.S. 208,217 (2014) (describing the two-step framework
"for distinguishing patents that claim laws of nature, natural phenomena, and
abstract ideas from those that claim patent-eligible applications of those
concepts").
After the mailing of the Answer and the filing of the Briefs in this
case, the US PTO published revised guidance on the application of§ 101.
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Application 09/818,483
2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. 50
(Jan. 7, 2019) (hereinafter "Memorandum"). Under the Memorandum, the
Office first looks 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 Manual of Patent Examining
Procedure ("MPEP")) § 2106.0S(a}-(c), (e}-(h) (9th ed. 2018).
Only if a claim (1) recites a judicial exception and (2) does not integrate
that exception into a practical application, does the Office then look to
whether the claim:
(3) adds a specific limitation beyond the judicial exception that
are 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.
See Memorandum.
We are not persuaded the Examiner's rejection is in error. We adopt
the Examiner's findings and conclusions as our own, and we add the
following primarily for emphasis and clarification with respect to the
Memorandum.
Appellants argue the pending claims are not directed to an abstract
idea because:
The Office Action's conclusion that the claims merely
recite long prevalent commercial practices and nothing more
is in direct conflict with the Office's conclusion that the claims
are both novel and nonobvious. Indeed, how can the claims
recite nothing more than long prevalent commercial practices
and yet no references can be found that disclose or suggest any
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of the claims? Indeed, if a claim merely recites long prevalent
commercial practices as asserted by the Office, there should also
be a rejection of the claims under §102 or §103, since references
disclosing such long prevalent commercial practices should be
readily available. No such references have been provided by the
Office.
Appeal Brief 9.
As the Federal Circuit has explained, a "'claim for a new abstract idea
is still an abstract idea."' SAP Am., Inc. v. Investpic, LLC, No. 2017-2081,
2018 WL 2207254, at *1 (Fed. Cir. May 15, 2018) (quoting Synopsys, Inc. v.
Mentor Graphics Corp., 839 F.3d 1138, 1151 (Fed. Cir. 2016)). Even
assuming the technique claimed was "'innovative, or even brilliant,"' that
would not be enough for the claimed abstract idea to be patent eligible. See
SAP America, 2018 WL 2207254 at * 1.
We agree with the Examiner's determination that the claims are
directed to an abstract idea. See Final Action 2-17.
The Specification discloses:
[I]t is an object of the present invention to provide an exchange
system which facilitates matching of buyer and seller by initially
providing search information to inform potential counterparties
of mutual interest in a transaction, but optionally maintains
potential counterparty anonymity until one party seeks to initiate
contact with the other to finalized [negotiations] for the deal. The
system then provides a list of potential opportunities, any one of
which may be selected to activate a communications link
between potential counterparties, for disclosure of identity and
other information. Typically, the communications are free form,
but may include coded data or tokens. A transaction is only
completed when both sets of transaction parameters are agreed
upon by all parties to the transaction.
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It is a further objective of the present invention to provide
a negotiated trading system which enables users to enter
expressions of interest with respect to a type of transaction, and
to allow other traders to evaluate a variety of offers before
consummating a transaction.
It is another objective of the present invention to provide
a negotiated trading system which identifies parties who are
potentially interested in transacting business and place these
parties in communication with one another.
It is another object of the present invention to provide a
negotiated trading system that accommodates the numerous
complex and non-standardized exposure evaluation procedures
of various financial institutions within a single automated
exchange system while allowing preservation of the
confidentiality of these procedures.
Yet another object of the present invention is to provide a
list of opportunities for a trader, sorted by a prioritization scheme
which weights importance to the trader, which facilitates
communication between traders to conclude negotiations of the
deal. The identity of potential of counterparties may be preserved
until just before the deal has been struck.
The aforementioned objects, as well as other objects, of
the present invention are achieved by providing a negotiated
matching system with a sorted list of opportunities, each element
on the list identifying the nature of the opportunity and linking to
a communications session with a potential counterparty.
Specification 31-32.
Claim 283 recites, "by computer of an automated repurchase
agreement trading system, transmitting to offerees messages describing an
offeror' s offer for a repurchase agreement contract for acceptance or
negotiation by a one of the offerees;" "(a) an obligation of a selling party
proposing the pair of transactions to sell securities to a prospective buyer;"
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"(b) an obligation of the selling party to repurchase securities from the buyer
at a future date as agreed, at a future price as agreed;" "the repurchase
agreement offer having one or more open material terms that may be
supplied in a counteroffer by the offeree, the paired transactions related by
the automated repurchase agreement trading system to require simultaneous
and inseparable negotiation and/or acceptance by a one of the offeror and
offeree;" "by computer of an automated repurchase agreement trading
system, accepting input from the offeree by which the offeree indicates
interest in the repurchase agreement offer;" and "the automated repurchase
agreement trading system is programmed to void any outstanding
negotiations when agreement is reached between the offeror and offeree."
These steps comprise fundamental economic principles or practices
and/or commercial or legal interactions, which is one of "certain methods of
organizing human activity," identified in the Memorandum, and thus an
abstract idea. Memorandum, Section I (Groupings of Abstract Ideas); see
Specification 1 ("The present invention relates to a system and method for
implementing an exchange for rights and instruments which require
negotiations between the parties thereto, including Repurchase Agreements,
also known as 'Repos', and securities lending transactions."). Our
reviewing court has found claims to be directed to abstract ideas when they
recited similar subject matter. See Ultramercial, Inc. v. Hulu, LLC, 772 F .3d
709, 715 (Fed. Cir. 2014) (sequence of receiving, selecting, offering for
exchange, display, allowing access, and receiving payment recited an
abstraction); Dealertrack, Inc. v. Huber, 674 F.3d 1315, 1333 (Fed. Cir.
2012) (claims directed to abstract idea of processing loan information
through a clearinghouse). Therefore, we conclude the claims recite an
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abstract idea pursuant to Step 2A, Prong One of the guidance. See
Memorandum, Section III(A)(l) (Prong One: Evaluate Whether the Claim
Recites a Judicial Exception).
Having determined that the claims recite a judicial exception, our
analysis under the Memorandum turns now to determining whether there are
"additional elements that integrate the judicial exception into a practical
application." See MPEP § 2106.05(a}-(c), (e}-(h).
Appellants argue, "The claims here, as the claims in Enfzsh, are
directed to an improvement in computerized trading systems. These claims
improve the usability, efficiency and speed of conventional trading
systems." Appeal Brief 14 ( emphasis added).
We do not find Appellants' arguments persuasive because the claims
utilize a computer system as merely a tool to automate a repurchase
agreement trading system. See Specification 31-33,for example; see also
Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1335-36 (Fed. Cir. 2016)
("[W]e find it relevant to ask whether the claims are directed to an
improvement to computer functionality versus being directed to an abstract
idea ... the focus of the claims is on the specific asserted improvement in
computer capabilities (i.e., the self-referential table for a computer database)
or, instead, on a process that qualifies as an 'abstract idea' for which
computers are invoked merely as a tool."). Also, the Supreme Court has
described "the concern that drives this exclusionary principle [i.e., the
exclusion of abstract ideas from patent eligible subject matter] as one of pre-
emption." Alice, 573 U.S. 208 at 216. But characterizing pre-emption as a
driving concern for patent eligibility is not the same as characterizing
preemption as the sole test for patent eligibility. As our reviewing court has
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explained, "[t]he Supreme Court has made clear that the principle of
preemption is the basis for the judicial exceptions to patentability" and "[ fJor
this reason, questions on preemption are inherent in and resolved by the
§ 101 analysis." Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371,
1379 (Fed. Cir. 2015) (citing Alice, 573 U.S. 208 at 216). And although
"preemption may signal patent ineligible subject matter, the absence of
complete preemption does not demonstrate patent eligibility." Id.
Moreover, "[w]here a patent's claims are deemed only to disclose patent
ineligible subject matter under the [Alice/Mayo] framework ... , preemption
concerns are fully addressed and made moot." Id.; see also OIP Techs., Inc.
v. Amazon.com, Inc., 788 F.3d 1359, 1362-63 (Fed. Cir. 2015), cert. denied,
136 S. Ct. 701 (2015)("[T]hat the claims do not preempt all price
optimization or may be limited to price optimization in the ecommerce
setting do not make them any less abstract.").
The claims do not recite an additional element or elements that reflect
an improvement in the functioning of a computer, or an improvement to
other technology or technical field. See Alice, 573 U.S. at 222 ("In holding
that the process was patent ineligible, we rejected the argument that
'implement[ing] a principle in some specific fashion' will 'automatically
fal[l] within the patentable subject matter of§ 101. "' ( alterations in original)
(quoting Parker v. Flook, 437 U.S. 584, 593 (1978))).
Accordingly, we determine the claim does not integrate the judicial
exception into a practical application. See Memorandum, Section III(A)(2)
(Prong Two: If the Claim Recites a Judicial Exception, Evaluate Whether the
Judicial Exception Is Integrated Into a Practical Application). Next, we
determine whether the claim includes additional elements that provide
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significantly more than the recited judicial exception, thereby providing an
inventive concept. Alice, 573 U.S. at217-18 (quoting Mayo, 566 U.S. at
72-73).
Appellants contend:
Similar to the claims in DDR Holdings, these claims solve
a problem rooted in computer technology to improve the
functionality of electronic markets that arise from the realm of
computer systems and networks[.] Prior to electronic trading, a
broker would work an order through an open outcry trading pit.
In such trading pits, the public became aware of a trader's
intentions as orders where yelled out. The advent of electronic
trading brought with it public order books such as that of the New
York Stock Exchange where orders are visible to the public and
market values are readily changing and apparent. The claims
enable efficient trading in repurchase agreements [and] use of
computer displays in an efficient manner to navigate the
complexities of such agreements.
Appeal Brief 16-1 7.
We find Appellants' claims are distinguished from those claims that
our reviewing court has found to be patent eligible by virtue of reciting
technological improvements to a computer system. See, e.g., DDR
Holdings, 773 F.3d at 1249, 1257 (holding that claims reciting computer
processor for serving "composite web page" were patent eligible because
"the claimed solution is necessarily rooted in computer technology in order
to overcome a problem specifically arising in the realm of computer
networks"). Appellants describe automating a previous manual process.
The automation of a previous manual process2 fails to render the claims
2 In re Venner, 262 F.2d 91, 95 (CCPA 1958) ("[I]t is well settled that it is
not 'invention' to broadly provide a mechanical or automatic means to
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patent eligible because there are no additional elements recited in the claims
that would provide significantly more than the recited judicial exception and
accordingly, we find the claims do not includes a specific limitation or a
combination of elements that amounts to significantly more than the judicial
exception itself. See Memorandum, Section III(B) (Step 2B: If the Claim Is
Directed to a Judicial Exception, Evaluate Whether the Claim Provides an
Inventive Concept); see also Aatrix Software, Inc. v. Green Shades Software,
Inc., 890 F.3d 1354, 1359 (Fed. Cir. 2018) (Moore, J., concurring) ("the
'inventive concept' cannot be the abstract idea itself').
Other than the abstract idea itself, the remaining claims only recite
generic components, such as a memory and computer that are well-
understood, routine, and conventional. See Alice, 573 U.S. at 226.
Accordingly, we conclude that claims 283-339 and 376 recites a
mental process, which is one of the certain processes identified in the
Memorandum and thus an abstract idea. See Final Action 2-17.
DECISION
The Examiner's patent ineligible subject matter rejection of claims
283-339 and 376 is affirmed.
replace manual activity which has accomplished the same result."); see also
Manual of Patent Examining Procedure § 2144(IV). Further, the alleged
novelty of the invention has no bearing on the whether the claimed subject
matter is patent eligible. See SAP America, 2018 WL 2207254 at * 1.
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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). See 37 C.F.R.
§ 1.136(a)(l)(v).
AFFIRMED
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