Ex Parte Labuszewski et al

Patent Trial and Appeal Board

Apr 30, 2018

14248092 (P.T.A.B. Apr. 30, 2018)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
14/248,092 04/08/2014
12684 7590 05/02/2018
Lempia Summerfield Katz LLC/CME
20 South Clark Street
Suite 600
Chicago, IL 60603
FIRST NAMED INVENTOR
John W. Labuszewski
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.
4672/916 7595
EXAMINER
DONLON, RY AND
ART UNIT PAPER NUMBER
3695
NOTIFICATION DATE DELIVERY MODE
05/02/2018 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):
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 JOHN W. LABUSZEWSKI and RICHARD CO
Appeal2017-001025
Application 14/248,092 1
Technology Center 3600
Before JUSTIN BUSCH, CARLL. SILVERMAN, and JASON M. REPKO,
Administrative Patent Judges.
REPKO, 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 21--40. App. Br. 2. 2 Claims 1-20 were canceled. We
have jurisdiction under 35 U.S.C. § 6(b ).
We affirm.
1 Appellants identify the real party in interest as Chicago Mercantile
Exchange Inc. App. Br. 2.
2 Throughout this opinion, we refer to the Final Rejection ("Final Act.")
mailed December 9, 2015; the Appeal Brief ("App. Br.") filed May 18,
2016; the Examiner's Answer ("Ans.") mailed August 15, 2016; and the
Reply Brief ("Reply Br.") filed October 14, 2016.
Appeal2017-001025
Application 14/248,092
THE INVENTION
Appellants' invention relates to collateralized lending using a central
counterparty. Spec. i-f 9. Lenders place orders to enter into long contracts
with an intermediary-i.e., central counterparty-that obligate them to lend
an asset. Id. Borrowers place orders to enter into short contracts with the
intermediary that obligate them to borrow an asset or a substantial
equivalent. Id. The intermediary then matches and settles the appropriate
orders. Id. The net effect is a lending transaction between the lender and
borrower. Id. But the risk of borrower's default is undertaken by the
intermediary instead of the lender. Id. Appellants' system matches buy/sell
or lending/borrowing transactions, clears and settles those transactions, and
manages risk. Id. i-f 37. The system also administers loans between delivery
and redemption. Id. In one embodiment, the intermediary is an exchange,
such as the Chicago Mercantile Exchange (CME). Id. i-f 48.
Claim 21 is reproduced below:
21. An apparatus, comprising:
a communications device configured to:
receive a first request for a first loan transaction
relating to a loan of an asset for a specified duration, the
first loan transaction including a long or a short Special
Repo Futures (SRF) contract where a supply of the asset
is below a supply threshold, otherwise the first loan
transaction including a long or a short General Repo
Futures ( GRF) contract, wherein the GRF contract
includes a long position paying a notional value in cash
and a short position securing borrowing by posting a
general collateral equal in value to the notional value,
wherein the first request is from a first entity; and
receive a second request for a second loan
transaction at least partially counter to the first loan
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Application 14/248,092
transaction, wherein the second request is from a second
entity;
a matching device communicatively coupled to the
communications device, the matching device configured
to match the first request with the second request; and
a trader device communicatively coupled to the
matching device, the trader device configured to:
perform the first loan transaction between the
first entity and an intermediary; and
perform the second loan transaction between
the second entity and the intermediary.
THE REJECTION
Claims 21--40 stand rejected under 35 U.S.C. § 101 as directed to
patent-ineligible subject matter. Final Act. 2-5.
ANALYSIS
The Examiner rejected representative3 claim 21under35 U.S.C. § 101
because the claim as a whole (1) is directed to an "abstract idea" and
(2) does not contain an "inventive concept" sufficient to transform the
claimed "abstract idea" into a patent-eligible application. Final Act. 2-5.
For the reasons discussed below, Appellants have not persuaded us of error.
I
The Supreme Court's two-step framework guides the patent-eligibility
analysis. See Alice Corp. Pty. Ltd. v. CLS Bank Int 'l, 134 S. Ct. 2347, 2355
(2014). Step one involves determining "whether the claims at issue are
directed to a patent-ineligible concept," such as an abstract idea. Id.
3 Appellants argue claims 21--40 together. See App. Br. 4--7. We select
independent claim 21 as representative of claims 21--40. See 37 C.F.R.
§ 41.37(c)(l)(iv).
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Application 14/248,092
Appellants argue that the claims are directed to a system for indirectly
moving monetary value between traders. App. Br. 4; Reply Br. 2.
According to Appellants, the system operates within a central counter-party-
based trading system. App. Br. 4. Appellants explain that the claimed
invention efficiently matches lenders with borrowers, moves collateral to
indirectly effect the transfer, and maintains anonymity between the
transacting parties. Id. at 5. According to Appellants, the claims are
directed to a novel system for accomplishing these tasks-not merely the
algorithms themselves or instructions to apply such algorithms. Id.
The Examiner concludes that claim 21 is directed to a "fundamental
economic practice." Final Act. 2. We note the Manual of Patent Examining
Procedure (MPEP) instructs Examiners that "courts have used the phrases
'fundamental economic practices' or 'fundamental economic concepts' to
describe concepts relating to the economy and commerce."
MPEP § 2106.04(a)(2) I. (9th ed. Rev. 08.2017, Jan. 2018). We note the
MPEP further instructs Examiners that "[t]he term 'fundamental' is used in
the sense of being foundational or basic, and not in the sense of necessarily
being 'old' or 'well-known."' Id. (citing In re Smith, 815 F.3d 816, 818-19
(Fed. Cir. 2016)). We agree with the Examiner. See Final Act. 2.
Here, the claimed apparatus comprises a device for receiving two
loan-transaction requests from two entities, a device for matching the
requests, and a trader device for performing the requested loan transactions
between the entities and an intermediary. The second recited loan-
transaction request is partially counter to the first. In this arrangement, the
risk of the borrower's default is undertaken by the intermediary instead of
the lender. Spec. i-f 9. So, as a whole, the claims are drawn to the concept of
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Application 14/248,092
matching opposing transactions and performing them with an intermediary,
thereby mitigating risk. See id.; accord App. Br. 5.
In this regard, we agree with the Examiner that the claimed system
here is similar to the claimed system in Alice. Final Act. 2. The claims at
issue in Alice were to a computer system used as a third-party intermediary.
Alice, 134 S. Ct. at 2352. The computer mitigated settlement risk by
allowing only those transactions in which the parties had sufficient resources
to satisfy their obligations. Id. The Supreme Court, however, held that these
claims were directed to the "abstract idea of intermediated settlement,"
which is a "fundamental economic practice." Id. at 2355-56.
Likewise, the claims here are directed to a system that facilitates a
transaction that mitigates risk. Although the claims recite devices, we are
unpersuaded that the claims are rooted in computer technology. App. Br. 4--
5. Indeed, Appellants claim the devices predominantly using broad
functional terms-i.e., receiving requests, matching requests and performing
transactions. Appellants have not cited any persuasive evidence in the
Specification that the claimed invention improves the way the computer
carries out these functions. Here, like the claims in Alice and other cases
cited by the Examiner, claim 21 is directed to a foundational or basic
concept concerning the economy and commerce, as the Examiner concludes.
Final Act. 2-3 (citing OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359
(Fed. Cir. 2015); buySAFE, Inc. v. Google, Inc., 765 F.3d. 1350 (Fed.
Cir. 2014); Bilski v. Kappas, 561 U.S. 593 (2010)).
On this record, we are unpersuaded that the Examiner erred in
concluding that claim 21 is directed to an abstract idea.
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II
Because the claims are "directed to an abstract idea," we analyze the
claims to determine if the limitations, when considered both "individually
and 'as an ordered combination"' contain an inventive concept sufficient to
transform the claimed abstract idea into a patent-eligible application. Alice,
134 S. Ct. at 2355-58.
Appellants argue the request matching and separate performance with
an intermediary, instead of between the requestors, amount to more than
mere computer implementation of matching orders. App. Br. 5. According
to Appellants, the combination of recited functions shows that the claims are
not to the idea of matching opposing transactions. Id.
In Appellants' view, the combination of steps imposes meaningful
limitations and improves a computer's functioning. Id. Appellants contend,
for example, that the claimed system maintains anonymity between the
transacting parties. Id. at 6-7. According to Appellants, the claims solve a
"transaction/data processing-centric problem." Id. at 7. In this regard,
Appellants explain that the claimed system is rooted in technology like the
system in DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir.
2014).
But here, there is no indication that the recited computing devices
produce "a result that overrides [their] routine and conventional" use. Id. at
1258. Rather, we agree with the Examiner that the claims involve
generically recited computer components. Ans. 5.
Specifically, the claimed apparatus uses a communication device to
receive requests. Appellants point to paragraph 49 of the Specification,
among other paragraphs, as describing this feature. App. Br. 2 (citing
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Spec. i-fi-19, 49, 63, Figs. 6, 7). In paragraph 49, the Specification discloses
that a processor can include "any general or special purpose[ s] ... processor
as is known" to receive the requests. Spec. i149 (emphasis added). For
example, the processor may use a computer program to receive via a
network interface the request. Id. This conventional role for a general-
purpose processor, however, is insufficient to supply an inventive concept.
See buySAFE, 765 F.3d at 1355 (explaining that "computers in Alice were
receiving and sending information over networks connecting the
intermediary to the other institutions involved, and the Court found the
claimed role of the computers insufficient.").
Claim 21 further recites "a matching device." But this device is
broadly and abstractly recited as being "configured to match the first request
with the second request." The relevant portion of the Specification discloses
that a processor executing logic matches the requests. Spec. i1 51.
According to the Specification, what constitutes a match "may be
implementation dependent and may be defined by the exchange 608, market
participants 604, 606 and/or governmental or regulatory organizations, or
combinations thereof." Id. i152, cited in App. Br. 2. Typically, the
transactions are matched in the clearing process. Spec. i138. Moreover, the
other paragraphs Appellants cite do not describe any unconventional
matching device. See id. i-fi-137, 47, 64. Instead, the system uses a
conventional database to maintain the matched transactions. Id. i154.
Claim 21 further recites "a trader device." The recited trader device
performs the requested transactions. Like the above recited components, the
device can be a processor executing programs or specialized hardware. See,
e.g., id. i-fi-147--49. Notably, claim 21 defines the trader device, as well as the
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other devices, by their result. And the Specification discloses generic
devices to perform the recited functions. In this way, the claims are like
those that abstractly cover results where "it matters not by what process or
machinery the result is accomplished," which is the type of claim that the
abstract idea exception is intended to prevent from being patented. McRO,
Inc. v. Bandai Namco Games America Inc., 837 F.3d 1299, 1314 (Fed. Cir.
2016) (quoting O'Reilly v. Morse, 56 U.S. 62, 113 (1853)).
Appellants explain that, although anonymity is not explicitly claimed,
it is the specific technical improvement achieved by operating the claimed
invention. Reply Br. 3. This argument is based, in part, on the novation by
the central counter party. See id. at 3, 5---6. That is, the clearing house
assumes responsibility for protecting buyers and sellers from financial loss
by assuring performance. See, e.g., Spec. i-fi-138-39. The exchange, as the
intermediary, novates itself into the transactions between the entities.
Id. i154. In this way, the intermediary anonymizes the transactions between
the entities. Id. i1 53.
Similar uses of an intermediary system to handle information have
been recognized as well-understood, routine, and conventional. For
example, the Federal Circuit, has recognized that using a computer to
forward information is conventional. Intellectual Ventures I LLC v.
Symantec Corp., 838 F.3d 1307, 1321-22 (Fed. Cir. 2016); see also
buySAFE, 765 F.3d at 1355 (Fed. Cir. 2014) (discussing the intermediary
computers in Alice). Here, Appellants' purported improvement is not to the
intermediary computers themselves. As discussed above, the computers in
the recited system are generic, and the anonymization follows from their
conventional use.
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To be sure, the above-discussed generic computer processors alone do
not render the claims ineligible, as Appellants note (see Reply Br. 3---6). We,
however, disagree that claim 21 involves some inventive distribution of
function among the recited components. See, e.g., BASCOM Global Internet
Servs. v. AT&T Mobility LLC, 827 F.3d 1341, 1348 (Fed. Cir. 2016), cited in
Reply Br. 5. Considering the limitations as an ordered combination, the
recited devices are used in their ordinary capacity-i.e., to communicate, to
match, and to perform a transaction-in carrying out the abstract idea.
Essentially, claim 21 recites an abstract idea "while adding the words 'apply
it with a computer,"' which does not render the claims patent eligible. See
Alice, 134 S. Ct. at 2358.
Therefore, Appellants have not persuaded us of error in the rejection
of representative claim 21 and the rejection of claims 22--40, which are not
separately argued (App. Br. 4--7; Reply Br. 2---6).
DECISION
We affirm the Examiner's rejection of claims 21--40.
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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