Ex Parte Naas et al

Patent Trials and Appeals Board

Apr 5, 2019

10828497 - (D) (P.T.A.B. Apr. 5, 2019)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE
10/828,497 04/21/2004
128144
RimonPC
7590
One Embarcadero Center
Suite 400
San Francisco, CA 94111
04/09/2019
FIRST NAMED INVENTOR
Marcel Naas
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.
10-587-US (gr13) 4289
EXAMINER
KAZIMI, HAN! M
ART UNIT PAPER NUMBER
3691
NOTIFICATION DATE DELIVERY MODE
04/09/2019 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):
eofficeaction@appcoll.com
docketing.rimonlaw@clarivate.com
PTOL-90A (Rev. 04/07)
UNITED ST ATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte MARCEL NAAS and GERD HARTUNG
Appeal2017-004944 1
Application 10/828,497
Technology Center 3600
Before HUBERT C. LORIN, MEREDITHC. PETRAVICK, and
MICHAEL W. KIM, Administrative Patent Judges.
KIM, Administrative Patent Judge.
DECISION ON APPEAL
STATEMENT OF THE CASE
This is an appeal from the fmal rejection of claims 1, 3---6, 8-11, 13-
17, 19-22, 24--27, and 29-32, which constitute all the claims pending in this
application. 2, 3 We have jurisdiction to review the case under 3 5 U.S. C.
§§ 134(a) and 6(b ).
1 The Appellants identify Deutsche Borse AG as the real party in interest.
Appeal Br. 2.
2 Claims 33-38, 40-58, and 60-73 are withdrawn. App. Br. 2.
3 There was previous appeal in this application addressed by the same panel.
Ex parte Naas, Appeal 2010-011473 (BP AI Jan. 23, 2012).
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The invention relates generally to "controlling transfers of a group of
resources which are defmed in association with a condition under which,
after the resource group transfer has been completed, a reverse transfer of
the same or a similar group of resources has to occur." Spec. 1 :8-11.
Such resource group transfers may take place in various
technical fields. For example, resources may be memmy
resources in computer systems, and such memory resources may
be allocated groupwise for some reasons. . .. Another field
where the invention may be applied to, are fmancial trading,
clearing and settlement systems, and more particular the trading,
clearing and settlement of collateralised [sic] money ( credit)
contracts in the repo ( repurchase agreement) market.
Spec. 1 :13-27. The claimed invention (see claim 17 infra) is limited
particularly to completing repo transactions in a repo market:
A Repurchase Agreement ( repo) is the sale of securities by
one party ( the seller of securities or cash taker) to another ( the
buyer of securities or cash provider) with the added conditions
that those securities or those similar to it will be resold at a given
price at a specified future date.
Spec. 2:1--4.
Independent claim 17 is illustrative:
1 7. A computerized repo basket transaction method
executed by one or more computing devices, the method
compnsmg:
generating, by at least one of the one or more computing
devices, a security basket defmition indicating at least one class
of securities defming a synthetic security, said security basket
defmition not indicating specific securities;
receiving, by at least one of the one or more computing
devices, repo quotes from market participants in an electronic
trading system by operating computer devices, the repo quotes
specifying a repo basket transaction and including the security
basket defmition;
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negotiating, by at least one of the one or more computing
devices, a repo transaction in said electronic trading system
based on the repo quotes;
generating, by at least one of the one or more computing
devices, settlement instructions in a clearing system for the
synthetic security based on said negotiating step;
in response to the settlement instructions, allocating, by at
least one of the one or more computing devices, at least one
specific security that meets the security basket defmition; and
completing, by at least one of the one or more computing
devices, the repo transaction by posting said allocated specific
securities on sub-ledger and securities and cash accounts.
The Examiner rejected claims 1, 3---6, 8-11, 13-17, 19-22, 24--27, and
29-32 under 35 U.S.C. § 101 as directed to patent ineligible subject matter.
We AFFIRM and designate as a NEW GROUND of rejection under
37 C.F.R. § 4I.50(b).
PRINCIPLES OF LAW
An invention is patent-eligible if it claims a "new and useful process,
machine, manufacture, or composition of matter." 35 U.S.C. § 101.
However, the Supreme Court has long interpreted 35 U.S.C. § 101 to include
implicit exceptions: "[l]aws of nature, natural phenomena, and abstract
ideas" are not patentable. Seee.g.,Alice Corp. v. CLSBankint'l, 573 U.S.
208,216 (2014).
In determining whether a claim falls within an excluded category, we
are guided by the Supreme Court's two-step framework, described in Mayo
and Alice. Id. at217-18 (citing Mayo CollaborativeServs. v. Prometheus
Labs., Inc., 566U.S. 66, 75-77 (2012)). Inaccordancewiththat framework,
we frrst determine what concept the claim is "directed to." See Alice, 573
U.S. at 219 ("On their face, the claims before us are drawn to the concept of
intermediated settlement, i.e., the use of a third party to mitigate settlement
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risk."); see also Bilski v. Kappas, 561 U.S. 593,611 (2010) ("Claims 1 and 4
in petitioners' application explain the basic concept of hedging, or protecting
against risk.").
Concepts determined to be abstract ideas, and thus patent ineligible,
include certain methods of organizing human activity, such as fundamental
economic practices (Alice, 573 U.S. at 219-20; Bilski, 561 U.S. at 611 );
mathematical formulas (Parkerv. Flook, 437 U.S. 584, 594--95 (1978)); and
mental processes (Gottschalkv. Benson, 409 U.S. 63, 69 (1972)). Concepts
determined to be patent eligible include physical and chemical processes,
such as "molding rubberproducts"(Diamondv. Diehr,450U.S. 175,191
(1981)); "tanning, dyeing, making water-proof cloth, vulcanizing India
rubber, smelting ores" (id. at 182 n. 7 (quoting Corningv. Burden, 56 U.S.
(15 How.) 252, 267---68 (1854))); and manufacturing flour (Benson, 409 U.S.
at 69 (citing Cochranev. Deener, 94 U.S. 780, 785 (1876))).
In Di ehr, the claim at issue recited a mathematical formula, but the
Supreme Court held that "[a] claim drawn to subject matter otherwise
statutory does not become nonstatutory simply because it uses a
mathematical formula." Di ehr, 450 U.S. at 187; see also id. at 191 ("We
view respondents' claims as nothing more than a process for molding rubber
products and not as an attempt to patent a mathematical formula."). Having
said that, the Supreme Court also indicated that a claim "seeking patent
protection for that formula in the abstract ... is not accorded the protection
of our patent laws, ... and this principle cannot be circumvented by
attempting to limit the use of the formula to a particular technological
environment." Id. (citing Benson andFlook); see, e.g., id. at 187 ("It is now
commonplace that an application of a law of nature or mathematical formula
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to a known structure or process may well be deserving of patent
protection.").
If the claim is "directed to" an abstract idea, we tum to the second
step oftheAlice andMayo framework, where "we must examine the
elements of the claim to determine whether it contains an 'inventive
concept' sufficient to 'transform' the claimed abstract idea into a patent-
eligible application." Alice, 573 U.S. at221 (quotation marks omitted). "A
claim that recites an abstract idea must include 'additional features' to
ensure 'that the [claim] is more than a drafting effort designed to
monopolize the [abstract idea]."' Id. (quoting Mayo, 566 U.S. at 77).
"[M]erely requir[ing] generic computer implementation[] fail[ s] to transform
that abstract idea into a patent-eligible invention." Id.
The PTO recently published revised guidance on the application of
§ 101. 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed.
Reg. 50 (Jan. 7, 2019) ("Guidance"). Under the Guidance, we first look 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 MPEP § 2106.05(a}-(c), (e}-(h)).
Only if a claim (1) recites a judicial exception and (2) does not integrate that
exception into a practical application, do we then look to whether the claim:
(3) adds a specific limitation beyond the judicial exception that
is not "well-understood, routine, conventional" in the field (see
MPEP §2106.05(d)); or
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( 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 Guidance.
ANALYSIS
"recites a Judicial exception "
Independent claim 1 7 recites
generating . . . a security basket definition . . . defming a
security ... ; receiving quotes from market participants ...
specifying a . . . transaction including the security basket
defmition; negotiating, by at least one of the one or more
computing devices, a . . . transaction based on the . . . quotes;
generating . . . settlement instructions . . . for the . . . security
based on said negotiating step; in response to the settlement
instructions, allocating . . . at least one specific security that
meets the security basket defmition; and completing ... the ...
transaction by posting said allocated specific securities on sub-
ledger and securities and cash accounts.
When considered collectively, these limitations of independent claim 17
recite a security transaction. Specifically, the frrst step in a security
transaction is identifying a type of security to be bought or sold. That is
reflected in the claim limitation of "generating ... a security basket
defmition ... defming a security . . . . " The next step in a security
transaction is identifying the parties to that security transaction, and
negotiating a price. That is reflected in the following claim limitations:
"receiving quotes from market participants ... specifying a ... transaction
including the security basket defmition; negotiating, by at least one of the
one or more computing devices, a ... transaction based on the ... quotes."
The fmal step is consummating the deal by exchanging the consideration,
and transferring ownership of the security from the seller to the buyer. That
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is reflected in the following claims limitations: "generating ... settlement
instructions ... for the ... security based on said negotiating step; in
response to the settlement instructions, allocating ... at least one specific
security that meets the security basket defmition; and completing ... the ...
transaction by posting said allocated specific securities on sub-ledger and
securities and cash accounts."
A security transaction is a fundamental economic practice, which is
one of certain methods of organizing human activity, and thus an abstract
idea. See 84 Fed. Reg. at 52 & n. 13 (citing Alice, 573 U.S. at219-20
( concluding that use of a third party to mediate settlement risk is a
"fundamental economic practice" and thus an abstract idea); id. ( describing
the concept of risk hedging identified as an abstract idea in Bilski as "a
method of organizing human activity"); Bilski, 561 U.S. at 611-12
( concluding that hedging is a "fundamental economic practice" and therefore
an abstract idea); Inventor Holdings, LLCv. Bed Bath & Beyond, Inc., 876
F.3d 1372, 1378-79 (Fed. Cir. 2017) (holding that concept of "local
processing of payments for remotely purchased goods" is a "fundamental
economic practice, which Alice made clear is, without more, outside the
patent system."); GIP Techs., Inc. v. Amazon. com, Inc., 788 F.3d 1359,
1362---63 (Fed. Cir. 2015) (concluding that claimed concept of"offer-based
price optimization" is an abstract idea "similar to other 'fundamental
economic concepts' found to be abstract ideas by the Supreme Court and
this court.")). For example, independent claim 1 at issue in Bilski reads as
follows:
(a) initiating a series of transactions between said
commodity provider and consumers of said commodity wherein
said consumers purchase said commodity at a fixed rate based
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upon historical averages, said fixed rate corresponding to a risk
position of said consumers;
(b) identifying market participants for said commodity
having a counter-risk position to said consumers; and
( c) initiating a series of transactions between said
commodity provider and said market participants at a second
fixed rate such that said series of market participant transactions
balances the risk position of said series of consumer transactions.
The security transaction recited in independent claim 1 7 is even more basic
than the claim determined to be ineligible in Bilski, because independent
claim 17 only involves one security transaction, while the claim in Bilski
involves "initiating a series of transactions" between multiple entities.
"does not integrate that exception into a practical application"
We are unable to discern any improvement to computer technology.
See MPEP § 2106.05(a). Focusing again on independent claim 17, while
that claim repeatedly recites terms such as "computerized," "computing
devices," and "electronic trading system," the steps themselves only involve
those of a security transaction, admittedly on a computer, but does not alter
how a computer operates. For example, consider the limitation "negotiating,
by at least one of the one or more computing devices, a repo transaction in
said electronic trading system based on the repo quotes." There are no
details as to how the computing device performs this task. The recitation of
a result-oriented solution that lacks any details as to how the computer
performed the modifications is the equivalent of the words "apply it."
Intellectual Ventures Iv. Capital One Fin. Corp., 850 F.3d 1332, 1341--42
(Fed. Cir. 2017) (citing Elec. Power Grp., LLC, 830 F.3d 1350, 1356 (Fed.
Cir. 2016) ( cautioning against claims "so result focused, so functional, as to
effectively cover any solution to an identified problem")). The wording of
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this limitation is indistinguishable from mere instructions to negotiate a
transaction based on quotes, which is a part of any security transaction, on a
computer. See MPEP §§ 2106.05(±), (h).
Furthermore, the hallmark of an improvement to computer technology
is a technological solution to a technological problem. See DDR Holdings,
LLC v. Hotels.com, L.P., 773 F.3d 1245, 1259 (Fed. Cir. 2014). Yet, as
identified by the Appellants (App. Br. 12), the Specification describes
problems related to the "delivery versus payment" method, specifically, "the
different time schedule of the cash and security settlement cycle," in that
"the cash settlement cycles are much more flexible or near-time organized
than the security settlement cycles." Spec. 6: 15-26. This is described as
"rather complex and of insufficient flexibility" and "often cumbersome and
difficult." Spec. 6:27-30. While that may be so, none of this involves
technology. And the apparent solution is "improvements of the cash funding
facilities of the repo market by improvements in the basket handling and
collateral management within [General Collateral] repo workflow." Spec.
10:23-26. This also does not involve technology.
Relatedly, we are unable to discern a particular machine. See MPEP
§ 2106. 05(b ). The recited "computing devices," and "electronic trading
system" are not described in any detail, and the Specification asserts that
"those areas in which it is believed that those of ordinary skill in the art are
familiar, have not been described herein in order to not unnecessarily
obscure the invention described herein." Spec. 23:10-12. Accordingly, we
conclude that the recited "computing devices" and "electronic trading
system" are general purpose computers that do not qualify as a particular
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machine. Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 716-17 (Fed. Cir.
2014).
We are also unable to discern a particular transformation. See MPEP
§ 2106. 05( c ). The only limitations that could be considered a
"transformation" in independent claim 17 are the generation of "a security
basket defmition" and "settlement instructions," both of which are intangible
objects only discernible in the human mind, and neither of which involve
articles. Cf Benson, 409 U.S. at 70 ( a process of '"tanning, dyeing, making
water-proof cloth, vulcanizing India rubber [or] smelting ores' ... are
instances ... where the use of chemical substances or physical acts, such as
temperature control, changes articles or materials [ in such a manner that is]
sufficiently defmite to confme the patent monopoly within rather defmite
bounds").
Furthermore, several of the recited steps involve mere data gathering
or output. See MPEP § 2106. 05(g). For example, the "receiving ... repo
quotes" step is data gathering necessary for any security transaction. See
CyberSourcev. Retail Decisions, Inc., 654 F.3d 1366, 1375 (Fed. Cir. 2011)
( obtaining information about transactions using the Internet to verify credit
card transactions is data gathering). In another example, the "allocating ...
at least one specific security" and "posting said allocated specific securities
on sub-ledger and securities and cash accounts" steps are insignificant post-
solution activity, in that every security transaction needs to ultimately be
fulfilled. Flook, 437 U.S. at 590 (step of adjusting an alarm limit variable to
a figure computed according to a mathematical formula is "post-solution
activity").
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The only other non-computer limitations involve terms such as "repo
basket," "security basket definition," "synthetic security," and "repo
quotes," which we discern are merely different types of security or security-
related terms that do not add meaningfully to the recited security transaction.
See MPEP § 2105. 06( e ). Our conclusion is the same even when all these
limitations are considered as a whole, as a security transaction involving
specific securities is still a security transaction.
"well-understood, routine, conventional"
We discern that each of the above-recited non-computer limitations
are "well-understood, routine, conventional,"MPEP §2106.05(d), which do
not constitute an "inventive concept" that is "significantly more" under
Alice. For example, the Specification defines "repo" as follows:
A Repurchase Agreement ( repo) is the sale of securities by one
party ( the seller of securities or cash taker) to another ( the buyer
of securities or cash provider) with the added conditions that
those securities or those similar to it will be resold at a given
price at a specified future date.
Spec. 2:1--4. This is no more than a form ofrecordkeeping, which the courts
have determined are "well-understood, routine, conventional." Alice, 573
U.S. at 225 ("to create and maintain 'shadow' accounts amounts to
electronic recordkeeping----one of the most basic functions of a computer");
Ultramercial, 772 F.3d at 716 (updating an activity log is routine and
conventional). The same is even more true for "synthetic security," which
the Specification defmes as follows: "The synthetic security represents a
defmed security quality or class of securities." Spec. 11 :7-8.
As for the recited computer components, we fmd that they are "well-
understood, routine, conventional," and thus not an "inventive concept" that
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is "significantly more" under Alice, for the same reasons set forth above for
"particular machine." See also Alice, 573 U.S. at 226 ("As a result, none of
the hardware recited by the system claims 'offers a meaningful limitation
beyond generally linking 'the use of the [ method] to a particular
technological environment,' that is, implementation via computers."')
(internal citations omitted).
Other Independent and Dependent Claims
We have performed the same analysis for each limitation of the
independent and dependent claims. They do not differ from our above
conclusions for independent claim 17. For example, independent claims 1
and 16 each recite systems for performing the steps recited in independent
claim 17. Independent claim 32 recites a computer-readable medium for
doing the same. Accordingly, they each recite a security transaction, which
is a method of organizing human activity in the form of fundamental
economic practice, and thus an abstract idea.
Dependent claim 3 recites "wherein said securities pooling and
allocation unit further allocates said at least one specific security based on
predefmed rules." This is a part of a "security transaction," as we are
unclear how securities would otherwise be allocated. Dependent claim 4
recites "wherein said predefmed rules are standardized general settlement
rules or market participant specific rules." Without specifics as to the
functional differences between those rules, however, they are not meaningful
limitations. Praxair Distrib., Inc. v. Mallinckrodt Hosp. Prod. IP Ltd., 890
F.3d 1024, 1032 (Fed. Cir. 2018) ("Claim limitations directed to the content
of information and lacking a requisite functional relationship are not entitled
to patentable weight because such information is not patent eligible subject
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matter under 35 U.S. C. § 101. "). The same is true for the "general ledger"
and "sub-ledger" recited in dependent claims 13 and 14. Dependent claims
5 and 6 each recite "storage." That is a generic computer component.
VersataDev. Group, Inc. v. SAP Am., Inc., 793 F.3d 1306, 1334 (Fed. Cir.
2015). Dependent claims 8 and 9 each recite performing calculations.
Those calculations, which are each recited at a high level of generality, are
"well-understood, routine, conventional." GIP Techs., 788 F.3dat 1362---63
( determining an estimated outcome and setting a price is "well-understood,
routine, conventional"). Dependent claim 10 recites "wherein said clearing
system is further arranged for sending repo confrrmation messages to the
trading system prior to said calculation." That is merely data output, which
is an insignificant extra-solution activity. Apple Inc. v. Ameranth, Inc., 842
F.3d 1229, 1241--42 (Fed. Cir. 2016) (printing or downloading generated
menus is an insignificant application). Dependent claim 11 recites "wherein
said clearing system is arranged for determining whether the security basket
amount exceeds a predefmed threshold, and if so, generating plural
settlement instructions each causing said settlement system to allocate
amounts not exceeding said threshold." The frrst phrase is mere data
gathering. Mayo, 566 U.S. at 79 ( determining the level of a biomarker in
blood is mere data gathering). The second phrase is the inevitable result of
that data gathering, and thus not a meaningful limitation. Dependent claims
13-15 recite various forms of electronic recordkeeping, which is "well-
understood, routine, conventional." Alice, 573 U.S. at 225. The other
dependent claims mirror those addressed above, and have the same fate.
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Appellants' Arguments and New Grounds
The Appellants assert that the Examiner has not identified specific
claim limitations, nor provided an adequate explanation, as to why
independent claims 1 and 17 are directed to "controlling resource group
transfers for repo basket transaction systems." App. Br. 5---6. Specifically,
there are two sets of claims between which a restriction was issued. The
elected set of claims, which are at issue here, have the preamble "repo basket
transaction." See e.g., App. Br. 25 (independent claim 17 set forth in the
Claims Appendix). The non-elected set of claims, which have been
withdrawn, have the preamble "controlling the transfer of groups of
resources. See e.g., App. Br. 28 (independent claim 33 set forth in the
Claims Appendix). The Appellants assert that, in formulating what the
claims are directed to, the Examiner merely combined the preamble across
these disparate sets of claims, which does not make sense generally,
especially given the restriction, and further did not provide sufficient
analysis justifying this approach. We agree with this assertion. It is moot,
however, in view of our analysis set forth above. In light of the above,
however, we determine that it is appropriate to exercise our discretion, and
denominate our above analysis as a new ground of rejection.
DECISION
We AFFIRM the rejection of claims 1, 3---6, 8-11, 13-17, 19-22, 24--
27, and 29-32 under 35 U.S.C. § 101.
This decision contains a NEW GROUND of rejection pursuantto 37
C.F.R. § 41.50(b) (2008). 37 C.F.R § 41.50(b)provides "[a] new ground of
rejection pursuant to this paragraph shall not be considered final for judicial
review."
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37 C.F.R. § 41.50(b) also provides that the Appellants, WITHIN
TWO MONTHS FROM THE DATE OF THE DECISION, must exercise
one of the following two options with respect to the new ground of rejection
to avoid termination of the appeal as to the rejected claims:
( 1) Reopen prosecution. Submit an appropriate
amendment of the claims so rejected or new Evidence relating to
the claims so rejected, or both, and have the matter reconsidered
by the examiner, in which event the prosecution will be
remanded to the examiner ....
(2) Request rehearing. Request that the proceeding be
reheard under§ 41. 52 by the Board upon the same Record ....
No time period for taking any subsequent action in connection with
this appeal may be extended under 37 C.F.R. § 1.136(a). See 37 C.F.R.
§ 1.136(a)(l)(iv).
No time period for taking any subsequent action in connection with
this appeal may be extended under 37 C.F.R. § 1.136(a). See 37
C.F.R. § 1.136(a)(l)(iv).
AFFIRMED; 37 C.F.R. § 4I.50(b)
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