Ex Parte Milne

Patent Trial and Appeal Board

Apr 10, 2018

14304471 (P.T.A.B. Apr. 10, 2018)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
14/304,471 06/13/2014
12684 7590 04/12/2018
Lempia Summerfield Katz LLC/CME
20 South Clark Street
Suite 600
Chicago, IL 60603
FIRST NAMED INVENTOR
Andrew Milne
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.
4672-09738DUS 1079
EXAMINER
RANKINS, WILLIAM E
ART UNIT PAPER NUMBER
3694
NOTIFICATION DATE DELIVERY MODE
04/12/2018 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 ANDREW MILNE
Appeal 2016-006582
Application 14/304,471
Technology Center 3600
Before ANTON W. PETTING, MICHAEL C. ASTORINO, and
AMEE A. SHAH, Administrative Patent Judges.
SHAH, Administrative Patent Judge.
DECISION ON APPEAL 1
The Appellant2 appeals under 35 U.S.C. § 134(a) from the Examiner's
final decision rejecting claims 1---6 and 8-20, which are all of the pending
claims, 3 under 35 U.S.C. § 101 as being directed to non-statutory subject
matter. 4 We have jurisdiction under 35 U.S.C. § 6(b). We AFFIRM.
1 Throughout this decision, we refer to the Appellant's Appeal Brief
("Appeal Br.," filed Oct. 28, 2015), Reply Brief ("Reply Br.," filed June 17,
2016), and Specification ("Spec.," filed June 13, 2014), and to the
Examiner's Answer ("Ans.," mailed Apr. 19, 2016) and Final Office Action
("Final Act.," mailed Apr. 30, 2015).
2 According to the Appellant, the real party in interest is Chicago Mercantile
Exchange Inc. Appeal Br. 2.
3 Claim 7 is cancelled. Appeal Br. 10; see Ad. Act. 1 (mailed July 7, 2015).
4 The Examiner has withdrawn the rejection under 35 U.S.C. § 112. Ans. 2.
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Application 14/304,471
STATEMENT OF THE CASE
The Appellant's invention "relate[s] to providing liquidity in a full
size contract to a trader of one or more small contracts" and "to generating
ratio spreads that may be used in implied market trading." Spec. i-f 24.
Claims 1, 10, and 15 are the independent claims on appeal. Claim 1
(Appeal Br. 9 (Claims App.)) is illustrative of the subject matter on appeal
and is reproduced below:
1. A computer implemented method comprising:
receiving, by a hardware matching processor in a data
transaction processing system in which data items are transacted
by the hardware matching processor that matches electronic data
transaction request messages for the same one of the data items
based on multiple transaction parameters from different client
computers over a data communication network, from a client
computer, a first electronic data transaction request message
having data indicating a first order to trade a first quantity of at
least a first contract, the first contract being characterized by an
underlier and a first size indicative of a first volume of the
underlier represented by the first contract;
comparing, by the hardware matching processor, the data
indicating the first order with one or more other electronically
stored data records stored in a database coupled with the
hardware matching processor and indicating orders which are
counter to the first order and that have been previously received
as data transaction request messages by the hardware matching
processor from client computers coupled therewith;
determining, by the hardware matching processor, that the
one or more other electronically stored data records indicate
orders that have been previously received which are counter to
the first order and are for at least a collective second quantity of
a second contract or a combination of at least the first contract
and the second contract, the second contract being characterized
by the underlier and a second size indicative of a second volume
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of the underlier represented by the second contract, the second
size being different from the first size;
determining, by the hardware matching processor, when
the previously received one or more orders are for the second
contract, whether a first product of the first quantity multiplied
by the first size is equivalent to a second product of the collective
second quantity multiplied by the second size; and
executing, by the hardware matching processor, a
transaction between the first order and the one or more other
orders when the first product is equal to the second product,
removing the electronically stored data records of the orders
having been transacted, and generating a new electronically
stored data record that indicates the transaction.
ANALYSIS
The Appellant argues claims 1---6 and 8-20 as a group. See Appeal
Br. 5, 8. We consider claim 1 as representative of the group; claims 2-6 and
8-20 stand or fall with claim 1. See 3 7 C.F .R. § 41.3 7 ( c )( 1 )(iv).
Under 35 U.S.C. § 101, a patent may be obtained for "any new and
useful process, machine, manufacture, or composition of matter, or any new
and useful improvement thereof." The Supreme Court has "long held that
this provision contains an important implicit exception: Laws of nature,
natural phenomena, and abstract ideas are not patentable." Alice Corp. Pty.
Ltd. v. CLS Bankint'l, 134 S. Ct. 2347, 2354 (2014) (quotingAss'nfor
Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 588-89
(2013)).
The Supreme Court in Alice reiterated the two-step framework, set
forth previously in Mayo Collaborative Services v. Prometheus
Laboratories, Inc., 566 U.S. 66, 78-79 (2012), "for distinguishing patents
that claim laws of nature, natural phenomena, and abstract ideas from those
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that claim patent-eligible applications of those concepts." Alice, 134 S. Ct.
at 2355. The first step in that analysis is to "determine whether the claims at
issue are directed to one of those patent-ineligible concepts." Id. (citing
Mayo, 566 U.S. at 79) (emphasis added). 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. (quoting Mayo,
566 U.S. at 79, 78).
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. (alteration in original) (quoting
Mayo, 566 U.S. at 72-73). The Court acknowledged in Mayo, that "all
inventions at some level embody, use, reflect, rest upon, or apply laws of
nature, natural phenomena, or abstract ideas." Mayo, 566 U.S. at 71. We,
therefore, look to whether the claims focus on a specific means or method
that improves the relevant technology or are instead directed to a result or
effect that itself is the abstract idea, and merely invoke generic processes and
machinery, i.e., "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." See Enfzsh, LLC v. Microsoft Corp., 822 F.3d 1327, 1335-36
(Fed. Cir. 2016).
Under the first step of the Mayol Alice framework, the Examiner
determines that claim 1 is directed to "a series of steps instructing how to
match and execute trades which is a fundamental economic practice and thus
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an abstract idea." Final Act. 5. Conversely, the Appellant contends that the
claims are not directed to an abstract idea but "to a tangible arrangement and
communication between claimed physical components." Appeal Br. 5. We
disagree with this contention, but agree with the Appellant's contention that
"[u]ltimately, the claim is directed towards executing transactions." Id. at 6.
The Specification is titled "Ratio Spreads for Contracts of Different
Sizes in Implied Market Trading" and provides that the invention "relate[ s]
to providing liquidity in a full size contract to a trader of one or more small
contracts" and "to generating ratio spreads that may be used in implied
market trading." Spec. i-f 24. A "ratio spread includes a spread between two
contracts of different sizes" and is "created with tradable volumes being
determined by lot points assigned to each linked contract." Id. The size,
e.g., volume, of the contract is "defined by an exchange, government entity,
or other organization group." Id. Claim 1 provides for a computer
implemented method comprising the steps of receiving, by a system in
which data items are transacted, a first data transaction request having data,
comparing, by the processor, the data with data stored in a database,
determining, by the processor, that one or more stored data records are
counter to the first data and are for a collective second quantity of a second
contract, determining, by the processor, a mathematical correlation between
the first and second data, and based on the correlation, executing a
transaction, removing the stored records, and generating a new record. See
Appeal Br. 9. The system "may be a server, supercomputer, personal
computer, central processing system, or other processor that receives and
matches orders," i.e., a generic computer/processor. Spec. i-f 33. The
Specification does not specifically provide for a "hardware matching
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processor," as claimed, but does provide for the system to receive orders and
transmit data (id. i-f 40), for the system to "be implemented with one or more
mainframe, desktop or other computers" (id.), and for the order matching
function to be performed by one or more specialized modules, i.e., Match
Engine Modules 106, that comprises program code (id. i-fi-143, 45, 46). "The
operations of the Match Engine 106 may be performed in more than one part
of a trading network 1000 or in related systems." Id. i-f 44. The
Specification envisions that the operations can be performed without the
Match Engine, in that calculation of implied orders can be performed by
traders at their stations and "outside the trading network 1000 for the
evaluation of possible trading strategies, for instruction, regulation or in the
solution of other problems where trading is used as a model." Id. As such,
the Specification provides for a generic computer programmed to perform
specific functions and not for a technologically-specific arrangement.
In that context, considering the claim in light of the Specification and
on its "character as a whole" (Enfzsh, 822 F.3d at 1335), the claim is directed
to receiving, comparing, and determining data to generate ratio spreads for
market trading, and conditionally executing a transaction based on the
spread. 5 In this manner, the claim is similar to those deemed to be abstract
ideas by our reviewing courts in Bilski v. Kappas, 561 U.S. 593, 609-611
(2010) (hedging risk as applied to energy markets and mathematical formula
thereto), In re Chorna, 656 Fed. Appx. 1016, 1019-20 (Fed. Cir. 2016)
5 We note that "[a Jn abstract idea can generally be described at different
levels of abstraction." Apple, Inc. v. Ameranth, Inc., 842 F.3d 1229, 1240
(Fed. Cir. 2016). The Board's "slight revision of its abstract idea analysis
does not impact the patentability analysis." Id. at 1241.
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(trading of hindsight financial instruments, i.e. contractual relations), and
Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1354 (Fed. Cir. 2016)
(process of gathering and analyzing information of a specified content and
displaying the result). Here, the claim involves nothing more than receiving,
comparing, and determining data and conditionally executing a transaction
and removing and generating data records without any particular inventive
technology- an abstract idea. See Electric Power, 830 F.3d at 1354. The
mere presence of physical components in a tangible arrangement (see
Appeal Br. 5) in the claim does not preclude the claim from being directed to
an abstract idea at least because the Court has instructed that the significance
of these elements is determined in step two of the Mayo/Alice framework.
The claims in Alice, for example, were not devoid of technical elements, but
were determined to be directed to an abstract idea. Cf In re TL! Commc 'ns
LLC Patent Litig., 823 F.3d 607, 611 (Fed. Cir. 2016) ("[N]ot every claim
that recites concrete, tangible components escapes the reach of the abstract-
idea inquiry.").
We find unpersuasive the Appellant's argument that the claim
provides a technical solution to a technical problem. Appeal Br. 6 (citing
Example 1 of the Office Examples of January 27, 2015 ("2015 Examples"));
see also Reply Br. 2--4 (citing DDR Holdings, LLC v. Hotels.com, L.P., 773
F.3d 1245 (Fed. Cir. 2014). In DDR Holdings, the Federal Circuit
determined that 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
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were directed to statutory subject matter because they claim a solution
"necessarily rooted in computer technology in order to overcome a problem
specifically arising in the realm of computer networks." Id. The court
cautioned that "not all claims purporting to address Internet-centric
challenges are eligible for patent." Id. at 1258. And the court contrasted the
claims to those at issue in Ultramercial Inc. v. Hulu, LLC, 772 F.3d 709
(Fed. Cir. 2014), in that, in DDR Holdings, the computer network was not
operating in its "normal, expected manner" and the claims did not "recite an
invention that is ... merely the routine or conventional use of the Internet."
Id. at 1258-59.
In contrast, here, the solution asserted by the Appellant of
"comparing, generating, and removing data related to orders of multiple
sizes" (Appeal Br. 6) requires only a generic computer, as discussed above.
The Appellant does not direct attention to, and we do not see, where the
Specification provides that the components act in an abnormal manner.
Rather, the claims "recite an invention that is ... merely the routine or
conventional use of the Internet." DDR Holdings, 773 F.3d at 1258-59.
Although the communication is network-centric, the Appellant does not
provide reasoning or support that the problem of "allowing orders of
different sizes to be effectively traded" (id.) is a problem rooted in
technology arising out of computer networks. The Specification discusses
that previously, "[ t ]raders of small contracts [were] limited to trading with
other traders of small contracts," and that it was "not possible for small
contracts to be exchanged with full size contracts nor for small contracts to
participate in trades with combination contracts defined in terms of the full
size contract," (Spec. i-f 12), but does not explain or discuss how or why
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small contracts were not exchanged with large contracts because of technical
or technological issues. Unlike Example 1, the claimed invention here is not
"directed towards performing isolation and eradication of computer viruses,
worms, and other malicious code, a concept inextricably tied to computer
technology and distinct from the types of concepts found by the courts to be
abstract." 2015 Examples 3.
We disagree with the Appellant's contention that claim 1 is not
directed to an abstract idea because the "'additional steps' may add
meaningful limitations." Appeal Br. 6 (citing Example 3 of 2015
Examples). In Example 3, the court deemed the claims to be directed to an
abstract idea. 2015 Examples 8. Based on the second step, the court
determined that the claim's additional steps that tied the mathematical
operation to the processor's ability to process digital images went beyond
simply retrieving and combining data using a computer. Id. at 9. The
Appellant makes no such assertion here.
We also find unpersuasive the Appellant's argument that the claim is
not directed to an abstract idea because, like Enfish, the claim is "directed to
'a specific improvement to the way computers operate,'" providing a system
which facilitates the ability to non-homogenous transactions, e.g.
transactions characterized by different sizes, by implementing the technical
solution of evaluating transactions for equivalence based, not only on size,
but quantity to establish when transactions may be equivalent when
evaluated in the aggregate. 6 See Reply Br. 2-3. The claims at issue in
Enfish were directed to a specific type of data structure, i.e., a self-referential
6 The Appellant may present a new argument based on a recent relevant
decision of either the Board or a federal court.
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table for a computer database, designed to improve the way a computer
carries out its basic functions of storing and retrieving data. Enfzsh, 822
F.3d. at 1335-36. There, in rejecting a§ 101 challenge, the court held that
"the plain focus of the claims is on an improvement to computer
functionality itself, not on economic or other tasks for which a computer is
used in its ordinary capacity." Id. at 1336. The Appellant has not adequately
explained here how the court's holding in Enfish impacts the present
analysis under the Mayo/Alice framework. For example, the Appellant does
not point to anything in the claims that resembles the inventive self-
referential data structure at issue in Enfzsh. We also find nothing in the
Appellant's Specification, nor does the Appellant direct us to anything in the
Specification, to indicate that the invention provides an improvement in
computer functionality. And, as discussed above, evaluating, by a generic
computer, transactions based on quantity is not a technical solution.
Under the second step of the Mayo/Alice framework, we adopt and
find supported the Examiner's determination that the claim limitations, taken
individually or as an ordered combination, do not recite an inventive
concept. See Final Act. 5; Ans. 4, Ad. Act. We are unpersuaded by the
Appellant's arguments to the contrary. See Appeal Br. 7.
We find unpersuasive the Appellant's arguments that the claim is
patent-eligible under § 101 because claim 1 is "directed to transactions
whose size increments are not the same, e.g. the underlier size is different"
and because "[ t ]he specific environment in which the claimed invention
operates is indicative of the claims being significantly more than the abstract
idea." Appeal Br. 7; see also Reply Br. 3. The Appellant does not provide
support or reasoning as to how the size of the transactions or trading
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environment affect the recited steps of receiving, comparing, and
determining data, and conditionally executing a transaction, or
technologically improves the generic computer that implements the steps.
Similarly, the Appellant does not provide adequate reasoning or
support as to how the "claims as a whole result in an improvement to the
specific transaction processing systems utilized to match transactions."
Appeal Br. 7. As discussed above, the Specification provides for the method
of claim 1 to be implemented by generic computer components. See Spec.
i-fi-133-38, 40, 42--44. We note that a general purpose computer programmed
to perform conventional functions does not amount to an inventive concept
such that the claims are significantly more than the abstract idea. See Alice,
134 S. Ct. at 2357---60 (Applying an abstract idea, such as an algorithm, on a
general purpose computer is not enough to transform a patent-ineligible
abstract idea into a patent-eligible invention.) and EON Corp. IP Holdings
LLC v. AT & T Mobility LLC, 785 F.3d 616, 623 (Fed. Cir. 2015) ("A
microprocessor or general purpose computer lends sufficient structure only
to basic functions of a microprocessor. All other computer-implemented
functions require disclosure of an algorithm.").
In response to the Appellant's argument that the claim "would not
preempt the general technology of transaction processing systems" (Appeal
Br. 7), we note that although 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 preemption" (see Alice, 134
S. Ct. at 2354), characterizing preemption as a driving concern for patent
eligibility is not the same as characterizing preemption as the sole test for
patent eligibility. "The Supreme Court has made clear that the principle of
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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, 134 S. Ct. at 2354). Although
"preemption may signal patent ineligible subject matter, the absence of
complete preemption does not demonstrate patent eligibility." Id. The
aforementioned concept is not sufficiently limiting so as to fall clearly on the
side of patent-eligibility.
Based on the foregoing, we are not persuaded that the Examiner erred
in rejecting independent claim 1under35 U.S.C. § 101, and we sustain the
rejection of claim 1 and of claims 2---6 and 8-20, which fall with claim 1.
DECISION
The Examiner's rejection of claims 1-6 and 8-20 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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