Ex Parte Markov et al

Patent Trial and Appeal Board

Jan 4, 2018

14095684 (P.T.A.B. Jan. 4, 2018)

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.
40144/00310 9793
EXAMINER
HAMILTON, LALITA M
ART UNIT PAPER NUMBER
3691
MAIL DATE DELIVERY MODE
14/095,684 12/03/2013
30636 7590 01/04/2018
FAY KAPLUN & MARCIN, LLP
150 BROADWAY, SUITE 702
NEW YORK, NY 10038
Michael MARKOV
01/04/2018 PAPER
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.
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte MICHAEL MARKOV, VADIM MOTTL, and
ILYA MUCHNIK
Appeal 2016-0043 861
Application 14/095,6842
Technology Center 3600
Before PHILIP J. HOFFMANN, KENNETH G. SCHOPFER, and
TARA L. HUTCHINGS, Administrative Patent Judges.
HUTCHINGS, Administrative Patent Judge.
DECISION ON APPEAL
This is an appeal under 35 U.S.C. § 134 from the Examiner’s final
rejection of claims 118—123. We have jurisdiction under 35 U.S.C. § 6.
We AFFIRM.
1 Our decision references Appellants’ Appeal Brief (“App. Br.,” filed
Aug. 3, 2015) and Reply Brief (“Reply Br.,” filed Mar. 17, 2016), and the
Examiner’s Answer (“Ans.,” mailed Jan. 20, 2016), Advisory Action (“Adv.
Act.,” mailed April 15, 2015), and Final Office Action (“Final Act.,” mailed
Dec. 2, 2014).
2 Appellants identify “Markov Processes International, LLC” as the real
party in interest. App. Br. 2.
Appeal 2016-004386
Application 14/095,684
CLAIMED INVENTION
Appellants’
present invention provides methods and systems for estimating
time-varying factor exposures in models or problems, such as,
for example, in the RBSA model and other financial and
economic models or problems, through a multi-factor dynamic
optimization of the models or problems, while meeting the
constraints for the estimated time-varying factor exposures.
Spec. 8,11. 2—6. Claims 118, 122, and 123 are the independent claims on
appeal. Claim 118, reproduced below, is illustrative of the subject matter on
appeal.
118. A method for determining at least one factor
exposure of an asset collection for each of a plurality of time
intervals in a period of time, the asset collection including at least
one asset, comprising:
determining an objective function which includes an
estimation error term or at least one transition error term, the
estimation error term representing an estimation error at each
time interval between a performance of the asset collection
and a sum of products of each of the at least one factor
exposure and its respective factor, the at least one transition
error term representing a transition error at each time interval
after a first time interval for each of the at least one factor
exposure between the time interval and a prior time interval;
defining at least one hedging constraint or leveraging
constraint on the at least one factor exposure for at least one
of the plurality of time intervals; and
determining the at least one factor exposure by
optimizing a value of the objective function, wherein each
step of determining the objective function and the step of
determining the least one factor exposure is performed by at
least one processor.
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REJECTION3
Claims 118—123 are rejected under 35 U.S.C. § 101 as directed to
ineligible subject matter in the form of an abstract idea.
ANALYSIS
Appellants argue independent claims 118, 122, and 123 as a group.
See App. Br. 4—10. We select independent claim 118 as representative. The
remaining claims stand or fall with claim 118. See 37 C.F.R.
§41.37(c)(l)(iv).
The Supreme Court in Alice reiterated a two-step framework, set forth
previously in Mayo Collaborative Servs. v. Prometheus Labs., 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. CLS Bank Int 7, 134
S. Ct. 2347, 2355 (2014). The first step in that analysis is to “determine
whether the claims at issue are directed to one of those patent-ineligible
concepts.” Id. If so, the second step is to consider the elements of the
claims “individually and ‘as an ordered combination”’ to determine whether
the additional elements “‘transform the nature of the claim’ into a patent-
eligible application.” Id. (citing Mayo, 132 S. Ct. at 1298, 1297). In other
words, the second step is to “search for an ‘inventive concept’—i.e., an
element or combination of elements that is ‘sufficient to ensure that the
patent in practice amounts to significantly more than a patent upon the
[ineligible concept] itself.’” Id. (citing Mayo, 132 S. Ct. at 1294).
3 The Examiner has withdrawn the double patenting and § 112, second
paragraph, rejections. Adv. Act. 2.
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Application 14/095,684
In rejecting the claims under 35U.S.C. § 101, the Examiner
determines that the claims are “directed to a method for determining at least
one factor exposure of an asset allocation.” Final Act. 6. We have reviewed
Appellants’ arguments that the claims are not directed to an abstract idea
(see App. Br. 4—7; see also Reply Br. 2), yet we are not persuaded of
Examiner error.
Here, independent claim 118 recites a method for “determining at
least one factor exposure of an asset collection” by performing a sequence of
three steps: (1) determining an objective function, (2) defining at least one
hedging constraint or leveraging constraint, and (3) determining the at least
one factor exposure by optimizing a value of the objective function. Each of
the recited steps can be performed entirely by mental thought. The
Background of the Specification describes various factor models and their
respective shortcomings. See Spec. 1—7. Moreover, Appellants’ invention
provides “[a] solution for dynamic multi-factor problems in finance” that
“can be applied to any dynamic multi-factor financial or economic
problem.” Spec. 15,11. 13—16. Thus, the focus of Appellants’ claims is on a
series of steps for determining a factor exposure of an asset collection, i.e., a
mental process or mathematical algorithm. See Final Act. 6.
We agree with the Examiner that there is no meaningful distinction
between the concept of risk hedging in Bilski v. Kappos, 130 S. Ct. 3218
(2010), and the concept of determining a factor exposure of an asset
collection here. See Ans. 3 (analogizing Appellants’ claims to those in
Bilski); see also Bilski, 130 S. Ct. at 3223—24 (2010) (“Claim 1 describes a
series of steps instructing how to hedge risk.”); Gottschalk v. Benson, 409
U.S. 63, 65 (1972) (“The procedures set forth in the present claims ... are a
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generalized formulation for programs to solve mathematical problems of
converting one form of numerical representation to another.”); Electric
Power Grp., LLC v. Alstom, 830 F.3d 1350, 1353 (“we have treated
analyzing information by steps people go through in their minds, or by
mathematical algorithms, without more, as essentially mental processes
within the abstract-idea category”) (citations omitted).
The Federal Circuit has held that if a method can be performed by
human thought alone, or by a human using pen and paper, it is merely an
abstract idea and is not patent-eligible under § 101. CyberSource Corp. v.
Retail Decisions, Inc., 654 F.3d 1366, 1373 (Fed. Cir. 2011) (“[A] method
that can be performed by human thought alone is merely an abstract idea and
is not patent-eligible under § 101.”). Additionally, mental processes, e.g.,
determining a function, defining a constraint, and determining a factor
exposure, as recited in claim 118, remain unpatentable even when automated
to reduce the burden on the user of what once could have been done with
pen and paper. Id. at 1375 (“That purely mental processes can be
unpatentable, even when performed by a computer, was precisely the
holding of the Supreme Court in Gottschalk v. Benson.”). Independent
claim 118 therefore is directed to an abstract idea, because it can be
performed by human thought alone or by a human using pen and paper.
Because we find that claim 118 is directed to an abstract idea, it must
include an “inventive concept” in order to be patent-eligible, i.e., there must
be an element or combination of elements that is sufficient to ensure that the
claim in practice amounts to significantly more than the abstract idea itself.
Here, the only additional element that appears not to belong to the abstract
idea is the requirement for the step of “determining the at least one factor
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exposure” to be “performed by at least one processor.” Appellants
appropriately do not argue that the generically claimed “processor” satisfies
step two of the Alice framework. See, e.g., DDR Holdings, LLC v.
Hotels.com, L.P., 773 F.3d 1245, 1256 (Fed. Cir. 2014) (citing Alice, 134 S.
Ct. at 2358) (“after Alice, there can remain no doubt: recitation of generic
computer limitations does not make an otherwise ineligible claim patent-
eligible”).
Appellants argue that the claims are directed “to much more than
[asset reconciliation], such as, but not limited to, defining a hedging
constraint or a leveraging constraint, determining a factor exposure, and
optimizing a value of the objective function.”4 App. Br. 8; see also Reply
Br. 3^4. Rather than constituting an inventive concept significantly more
than the abstract idea, these limitations are, in fact, themselves the abstract
idea.
Appellants argue that “these additional features [e.g., defining a
hedging constraint, etc.] are not well-understood, routine, and conventional
activities previously known to the industry.” Id. Appellants charge that
these claimed steps (e.g., defining a hedging constraint or a leveraging
constraint, determining a factor exposure, and optimizing a value of the
objective function) are novel. Id.', see also id. at 10 (arguing novelty); Reply
Br. 6 (arguing novel subject matter).
4 Appellants assert that the Examiner characterized the claims as being
directed to “asset reconciliation.” App. Br. 8. In fact, the Examiner
characterized the claims as being directed to determining at least one factor
exposure of an asset allocation. See Final Act. 6; see also Adv. Act. 2;
Ans. 2.
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Appellants’ argument is not persuasive at least because a finding of
novelty or non-obviousness does not automatically lead to the conclusion
that the claimed subject matter is patent-eligible. “Groundbreaking,
innovative, or even brilliant discovery does not by itself satisfy the § 101
inquiry.” Ass’n. for Molecular Pathology v. Myriad Genetics, Inc.,
133 S. Ct. 2107, 2117 (2013). Although the second step in the Alice
framework is termed a search for an “inventive concept,” the analysis is not
an evaluation of novelty or non-obviousness, but rather, a search for “‘an
element or combination of elements that is sufficient to ensure that the
patent in practice amounts to significantly more than a patent upon the
[patent-ineligible concept] itself.’” Alice Corp., 134 S. Ct. at 2355. A novel
and nonobvious claim directed to a purely abstract idea is, nonetheless,
patent-ineligible. See Mayo, 566 U.S. at 90. See also Diamond v. Diehr,
450 U.S. 175, 188—89 (1981) (“The ‘novelty’ of any element or steps in a
process, or even of the process itself, is of no relevance in determining
whether the subject matter of a claim falls within categories of possibly
patentable subject matter.”).
Appellants argue that the invention “provide[s] improvements in the
operation of a processor/memory arrangement” and “solves a technological
problem that was in conventional industry practice.” App. Br. 9. Yet,
Appellants offer no persuasive argument or technical reasoning to support
that position. Here, we understand the focus of Appellants’ claimed
invention to be on a process that qualifies as an abstract idea (i.e.,
determining at least one factor exposure of an asset collection) for which a
computer is used in its ordinary capacity, and not on any improvement in
computer capabilities. See Enfish, LLC v. Microsoft Corp., 822 F.3d 1327,
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Application 14/095,684
1336 (Fed. Cir. 2016) (the relevant question at step one is “whether the focus
of the claim is on the 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”); see also Spec 15,1. 13
(describing invention as a solution for multi-factor problems in finance, not
an improvement in computer capabilities).
Appellants argue that the claims “would not preempt the making,
using, and selling of basic tools of scientific and technological work.” App.
Br. 9. We find this argument unpersuasive, at least because preemption is
not a separate test under the Alice framework, and the absence of complete
preemption does not demonstrate patent eligibility. See Ariosa Diagnostics,
Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015) (“preemption
may signal patent ineligible subject matter, [but] the absence of complete
preemption does not demonstrate patent eligibility”).
We are not persuaded, for the reasons set forth above, that the
Examiner erred in rejecting independent claim 118 under 35U.S.C. § 101.
Therefore, we sustain the Examiner’s rejection of claim 118 and claims 122
and 123, which fall with claim 118.
Appellants argue dependent claims 119-121 are patent-eligible for the
same reasons set forth with respect to independent claim 118. App. Br. 9—
10. Therefore, we also sustain the Examiner’s rejection of those claims
under § 101.
DECISION
We AFFIRM the rejection of claims 118—123 under 35 U.S.C. § 101.
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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).
AFFIRMED
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