Ex Parte Kastel

Board of Patent Appeals and Interferences

Jun 13, 2012

10990751 (B.P.A.I. Jun. 13, 2012)

UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE BOARD OF PATENT APPEALS
AND INTERFERENCES
____________

Ex parte PETER KASTEL
___________

Appeal 2010-010909
Application 10/990,751
Technology Center 3600
____________

Before JOSEPH A. FISCHETTI, BIBHU R. MOHANTY, and
MEREDITH C. PETRAVICK, Administrative Patent Judges.

PETRAVICK, Administrative Patent Judge.

DECISION ON APPEAL
Appeal 2010-010909
Application 10/990,751

2
STATEMENT OF THE CASE
Peter Kastel (Appellant) seeks our review under 35 U.S.C. § 134 of
the final rejection of claims 15-36 and 38. We have jurisdiction under 35
U.S.C. § 6(b).

SUMMARY OF DECISION
We REVERSE. 1

THE INVENTION
This invention is “systems and methods for valuing a bundle of
constructs that may individually fail.” Spec. para. [0001].
Claim 15, reproduced below, is illustrative of the subject matter on
appeal.
15. A data processing system for valuing a futures
contract that is based on a basket of credit default
swaps as underlyings, in case of a separation event
causing said futures contract to separate a failing
credit default swap from the basket, the system
comprising:
a present value determination unit adapted to
apply a market pricing model to determine a
present value of said futures contract after having
separated said failing credit default swap from the
basket;
a static value determination unit adapted to
determine a static value by reducing a static base

1 Our decision will make reference to the Appellant’s Appeal Brief (“App.
Br.,” filed Dec. 14, 2009) and Reply Brief (“Reply Br.,” filed Jun. 28, 2010),
and the Examiner’s Answer (“Ans.,” mailed Apr. 27, 2010).

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Application 10/990,751
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number each time a separation event occurs; and
a contract value calculation unit adapted to
calculate a futures contract value based on the
determined present value and the determined static
value, said contract value calculation unit being
adapted to calculate a sum of the determined
present value and the determined static value.

THE REJECTIONS
The Examiner relies upon the following as evidence of
unpatentability:
Ginsberg
Griffin
US 5,857,176
US 2005/0044029 A1
Jan. 5, 1999
Feb. 24, 2005

The following rejections are before us for review:
1. Claims 15-36 and 38 are rejected under 35 U.S.C. §103(a) as
being unpatentable over Ginsberg and Griffin.

ISSUES
The issue is whether claims 15-36 and 38 are unpatentable under 35
U.S.C. § 103(a) over Ginsberg and Griffin. Specifically, the major issue is
whether the combination of Ginsberg and Griffin teaches “a present value
determination unit adapted to apply a market pricing model to determine a
present value of said futures contract after having separated said failing
credit default swap from the basket.”

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FINDINGS OF FACT
We find that the following findings of fact (FF), which appear in the
Analysis below, are supported by at least a preponderance of the evidence.
Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1427 (Fed. Cir. 1988) (explaining the
general evidentiary standard for proceedings before the Office).
1. Ginsberg’s Figure 2 depicts a process which in real-time
classifies continuous incoming market data (e.g., closing data
from the Federal Reserve (col 6, ll. 14-17) and data collected
from terminals operated by traders in the bond market sector
(col. 4, ll. 36-37) into various data matrixes, including a P(I, N)
proper matrix and A(I, N) active matrix. Col. 6, l. 3 – col. 7, l.
5.
2. The P(I, N) matrix stores, for example, closing data received on
a daily basis from the United States Federal Reserve. Ginsberg
col. 6, ll. 8-19. See also Ginsberg Fig. 2, steps 230, 240, and
250.
3. The A(I, N) matrix stores active (i.e., most recent qualified
incoming transaction data for each security in the incoming
market data) which was determined to be qualified and valid.
Ginsberg col. 6, ll. 21-67. See also Ginsberg Fig. 2, step 270,
280, 300, 310, 320, 330 and 340.
4. Ginsberg describes using a measure of the spread for a security
as qualifying criteria. Col. 6, ll. 44-55. See also Ginsberg Fig.
2, step 310.
5. Ginsberg describes that incoming active transaction data which
is determined not to be qualified is discarded or removed from
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the data set. Ginsberg col. 6, ll. 53-55 and 61-63. See also
Ginsberg Fig. 2, step 340.
6. Ginsberg describes using the information from the P (I, N)
matrix to determine a spot rate for a set of securities (I) at a pre-
selected time (N, e.g., closing). See col. 7, ll. 45- col. 8, l. 67.
7. The spot rate is required to determine the net present value
(NPV) of the future coupon payment given today’s market.
Ginsberg col. 7, ll. 37-40.
8. The NPV of all components in a portfolio is used to determine
the portfolio price (Ginsberg col. 9, ll. 36-50) and subsequently,
the portfolio price and other information is used as a measure of
current valuation in support of a futures market based on the
portfolio (Ginsberg col. 7, ll. 54-57).
9. Ginsberg describes continuously updating the data in the P(I,N)
with the data from the A(I, N+1) matrix in order to
continuously update the spot rate calculation and, thus, the NPV
calculation and portfolio price. See Col. 9, ll. 1-35 and Fig. 4.
10. Ginsberg describes that, if the A(I, N) matrix does not contain
new price data for a given security, proximate securities having
new data are used to recalculate the spot rate for the security
without updated data. Col. 9, ll. 15-24.

ANALYSIS
The rejection of claims 15, 26, and 38 under §103(a) as being unpatentable
over Ginsberg and Griffin.
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We agree with the Appellant (see App. Br. 7-8 and Reply Br. 3-4 )
that Ginsberg does not teach “a present value determination unit adapted to
apply a market pricing model to determine a present value of said futures
contract after having separated said failing credit default swap from the
basket” as recited in claim 15. In response to the Appellant’s argument, the
Examiner states:
In [Ginsberg’s column 6, lines 43-63], note in
particular that each of the individual securities in
the basket of securities is scrutinized as to whether
or not they require “qualification.” Qualification
of a security may occur when the disclosed
measure of spread “reflects unusual market
conditions for the security,” resulting in the
security being “removed” (reads on separated)
from the index/portfolio/basket. Subsequently, the
NPV of the remaining basket is determined
(Ginsberg: col 7, lns 30-42), as recited in the
claim.
Ans. 12 (emphasis added).
However, this statement mischaracterizes the teachings of Ginsberg.
While Ginsberg’s column 6, lines 43-63, cited by the Examiner, does
describe using criteria (e.g., spread measurement) to determine whether
incoming active market data is valid and qualified, Ginsberg does not
describe that the result of the determination is removing a security from a
portfolio. See FF 1 and 3-5. IThis cited passage describes that unqualified
active data is discarded and not stored in the A(I, N) matrix. See FF 3 and 5.
The discarding of the unqualified active data does not result in the security
being separated from the portfolio, as the Examiner asserts. We note that the
Examiner does not provide any other rationale as to why one of ordinary
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skill would look to the removal of active unqualified data for a teaching of
removing a security.
Ginsberg describes calculating the spot rate of a set of securities, and
using the spot rate to determine the NPV of all of the components in a
portfolio of securities in order to determine the portfolio price. See FF 6-8.
Ginsberg describes continuously recalculating the spot rate, NPV, and
portfolio price using an updated P(I, N) matrix. FF 9. The P(I, N) matrix is
updated with information from an A(I, N+1) matrix. Id. If the A(I, N+1)
matrix does not include new data for a security in the portfolio, Ginsberg’s
system calculates the new spot rate for the security using other information.
See FF 10. Ginsberg does not remove the security from the portfolio, as the
Examiner seems to assert in their statement (Ans. 12). Therefore, we find
that the Examiner erred in their findings regarding the teachings of
Ginsberg.
We note that the Examiner does not rely upon Griffin to cure the
deficiencies in the teachings of Ginsberg at issue above
Independent claims 26 and 38 recite limitations similar to the one at
issue above and were rejected using the same rationale used to reject claim
15 (see Ans. 5). Accordingly, the rejection of claims 15, 26, and 38, and
claims 16-25 and 27-36, dependent thereon, under 35 U.S.C. § 103(a) as
being unpatentable over Ginsberg and Griffin is reversed.

DECISION
The decision of the Examiner to reject claims 15-36 and 38 is
reversed.
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REVERSED

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