Ex Parte Yang et al

Patent Trial and Appeal Board

Oct 23, 2017

13407368 (P.T.A.B. Oct. 23, 2017)

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.
13/407,368 02/28/2012 Qunfeng Yang Pll,0055-01 (38255-0005) 6080
26574 7590 10/25/2017
SCHIFF HARDIN, LLP - Chicago
PATENT DEPARTMENT
233 S. Wacker Drive-Suite 7100
CHICAGO, IL 60606-6473
EXAMINER
ALLADIN, AMBREEN A
ART UNIT PAPER NUMBER
3693
NOTIFICATION DATE DELIVERY MODE
10/25/2017 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):
patents-CH @ schiffhardin.com
jbombien @ schiffhardin. com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte QUNFENG YANG
and HENG SUN
Appeal 2015-0071671
Application 13/407,3682
Technology Center 3600
Before MICHAEL C. ASTORINO, AMEE A. SHAH, and
MATTHEW S. MEYERS, Administrative Patent Judges.
MEYERS, Administrative Patent Judge.
DECISION ON APPEAL
STATEMENT OF THE CASE
Appellants appeal under 35 U.S.C. § 134(a) from the Examiner’s final
rejection of claims 1—5, 7—11, 13, 14, and 17—21. We have jurisdiction
under 35 U.S.C. § 6(b).
We AFFIRM.
1 Our decision references Appellants’ Appeal Brief (“Appeal Br.,” filed
April 30, 2015) and Reply Brief (“Reply Br.,” filed July 23 2015), the
Examiner’s Answer (“Ans.,” mailed July 17, 2015), and Final Office Action
(“Final Act.,” mailed March 12, 2015).
2 Appellants identify “The Depository Trust and Clearing Corporation
(DTCC)” as the real party in interest (Appeal Br. 1).
Appeal 2015-007167
Application 13/407,368
CLAIMED INVENTION
Appellants’ claims relate generally to “single-pot margining with
differing liquidation periods” (Spec. 127).
Claims 1 and 21 are the independent claims on appeal. Claim 1
reproduced below, with minor formatting changes and added bracketed
notations, is illustrative of the subject matter on appeal:
1. A computer-implemented method of determining a
margin for a clearinghouse customer position including both
securities and derivatives, comprising the steps of:
[a] receiving data at a margin calculation computer server
on at least one securities position held by a clearing member and
which has a distinct first liquidation period defined by 3 days, the
data on the at least one securities position being received by the
margin calculation computer server via at least one
communication channel, the at least one securities position being
at least one of bonds, stocks, asset-backed securities, exchange
traded funds, and credit-length notes;
[b] receiving data at a margin calculation computer server
on at least one derivatives position held by the clearing member
and which has a distinct different second liquidation period
defined by 1 day, the data on the at least one derivatives position
being received by the margin calculation computer server via at
least one communication channel, the at least one derivatives
position being at least one of options, futures, warrants, forwards
and swaps; and
[c] calculating using the margin calculation computer
server a single margin requirement for the clearing member for
both the at least one securities position and the at least one
derivatives position using said first 3 day liquidation period for
the at least one securities position and said second different 1 day
liquidation period for the at least one derivatives position in the
calculation of the margin requirement, the calculating step being
performed by a processor of the margin calculation computer
server programmed to perform the calculation by executing
software stored on a non-transitory computer readable media.
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REJECTIONS
Claims 1—5, 7—11, 13, 14, and 17—21 are rejected under 35 U.S.C.
§ 101 as directed to non-statutory subject matter.
Claims 1, 2, 4, 7—10, 13, 14, 17, 20, and 21 are rejected under
35 U.S.C. § 103(a) as being unpatentable over Glinberg (US 7,428,508 B2,
iss. Sept. 23, 2008) and The Depository Trust & Clearing Corporation News
and Information for DTCC customers, dated June 2009 (“DTCC”).
Claims 3, 5, 11, 18, and 19 are rejected under 35 U.S.C. § 103(a) as
being unpatentable over Glinberg, DTCC, and Lange (US 7,389,262 Bl, iss.
June 17, 2008).
ANALYSIS
Non-Statutory Subject Matter
Appellants argue claims 1—5, 7—11, 13, 14, and 17—21 as a group (see
Appeal Br. 13—18; see also Reply Br. 3). We select claim 1 as
representative. Claims 2—5, 7—11, 13, 14, and 17—21 stand or fall with
independent claim 1. See 37 C.F.R. § 41.37(c)(l)(iv).
Alice Corp. Pty. Ltd. v. CLSBanklnt’l, 134 S. Ct. 2347 (2014)
identifies a two-step framework for determining whether claimed subject
matter is judicially-excepted from patent eligibility under § 101.
According to Alice step one, “[w]e must first determine whether the
claims at issue are directed to a patent-ineligible concept,” such as an
abstract idea. Alice, 134 S. Ct. at 2355.
The “directed to” inquiry [jcannot simply ask whether the claims
involve a patent-ineligible concept, because essentially every
routinely patent-eligible claim involving physical products and
actions involves a law of nature and/or natural phenomenon—
after all, they take place in the physical world. See Mayo, 132 S.
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Ct. at 1293 (“For all inventions at some level embody, use,
reflect, rest upon, or apply laws of nature, natural phenomena, or
abstract ideas.”) Rather, the “directed to” inquiry applies a stage-
one filter to claims, considered in light of the specification, based
on whether “their character as a whole is directed to excluded
subject matter.” Internet Patents Corp. v. Active Network, Inc.,
790 F.3d 1343, 1346 (Fed. Cir. 2015); see Genetic Techs. Ltd. v.
Merial L.L.C., 818 F.3d 1369, 1375 (Fed. Cir. 2016) (inquiring
into “the focus of the claimed advance over the prior art”).
Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1335 (Fed. Cir. 2016). “The
‘abstract idea’ step of the inquiry calls upon us to look at the ‘focus of the
claimed advance over the prior art’ to determine if the claim’s ‘character as a
whole’ is directed to excluded subject matter.” Affinity Labs of Texas, LLC
v. DIRECTV, LLC, 838 F.3d 1253, 1257 (Fed. Cir. 2016) (citing Elec. Power
Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1353 (Fed. Cir. 2016)); see also
Enfish, 822 F.3d at 1335.
In rejecting claims 1—5, 7—11, 13, 14, and 17—21, the Examiner finds
“the claims are directed towards determining a margin” (Final Act. 2), and
further finds “[performing calculations for determining a margin is a
fundamental economic practice and thus, the claims include an abstract idea”
(id.; see also id. at 21). The Examiner also finds
[t]he claims do not include limitations that are “significantly
more” than the abstract idea because the claims do not include an
improvement to another technology or technical field, an
improvement to the functioning of the computer itself, or
meaningful limitations beyond generally linking the use of an
abstract idea to a particular technological environment.
(Id.; see also id. at 21—25).
In response, Appellants argue the claims “are drawn to patent-eligible
subject matter since the claims contain meaningful limitations distinguishing
over the prior art and recite an improvement in the field of securities trading
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and calculating margin requirements, and therefore is thus not a fundamental
economic practice” (Appeal Br. 13—14). More particularly, Appellants
argue
calculation of a single margin requirement for both the at least
one securities position and the at least one derivatives position
using the three day liquidation period for the at least one
securities position and the second different one day liquidation
period for the at least one derivatives position in the calculation
of the margin requirement is not found in the prior art and thus is
not a fundamental economic practice long prevalent in the
system of commerce as the court found for the claims in Alice
Corp.
(Appeal Br. 14). We cannot agree.
Instead, under step one of the framework set forth in Alice, we agree
with and adopt the Examiner’s findings and reasoning that the claims are
directed broadly to the concept of “[performing calculations for determining
a margin” (see Final Act. 2; see also Ans. 31—32 (citing cases with similar
abstract ideas), and as such, the claims are directed to a fundamental
economic practice long prevalent in our system of commerce given that risk
management is intrinsic part of investing money (cf Spec. ^fl[ 2—6), similar
to the intermediated settlement of Alice, 134 S. Ct. at 2357, and hedging of
Bilski v. Kappos, 130 S. Ct. 3218, 3231.
And, to the extent Appellants argue that the claims are not directed to
an abstract idea because “the claims contain meaningful limitations
distinguishing over the prior art” (Appeal Br. 13; see also Reply Br. 3),
Appellants’ argument is not persuasive. In this regard, an abstract idea does
not transform into an inventive concept just because the prior art does not
disclose or suggest it. See Mayo, 132 S. Ct. at 1304—05. A finding of
novelty or nonobviousness does not necessarily lead to the conclusion that
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subject matter is patentable 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).
Indeed, “[t]he ‘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 the § 101 categories of possibly patentable subject
matter.” Diamond v. Diehr, 450 U.S. 175, 188—89 (1981) (emphasis added);
see also Mayo, 132 S. Ct. at 1303-04 (rejecting “the Government’s
invitation to substitute §§ 102, 103, and 112 inquiries for the better
established inquiry under § 101”).
We also are not persuaded by Appellants’ argument that the claims
are not directed to an abstract idea because they “recite an improvement in
the field of securities trading and calculating margin requirements” (Appeal
Br. 13—14; see also id. at 15—16). Here, we note that no technological
advance is evident in the claims, and Appellants have not provided evidence
that the programming related to their “improvement,” i.e., calculating a
single margin “using the first 3 day liquidation period for the at least one
securities position and the second different 1 day liquidation period for the at
least one derivatives position” (see Appeal Br. 15) entails anything atypical
from conventional programming.
Turning to the second step of the Alice framework, Appellants argue
that the claims quality as patent-eligible subject matter because the claims
“recite an additional element that amounts to significantly more” (Appeal
Br. 16—18). More particularly, Appellants argue that
the claim element set forth in claim 1 of using the three-day
liquidation period for the at least one securities position and the
second different one-day liquidation period for the at least one
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derivatives position in the calculation of the margin
requirement... is a specific limitation in claim 1 which is other
than what is well-understood, routine and conventional in the
field, and adds an unconventional step that confines the claim to
a particular useful application.
(Appeal Br. 16). However, we agree with the Examiner that the steps
recited by independent claim 1 are “performed by a standard and
conventional computer system” (Ans. 33—35 (citing Spec. Tflf 33, 35, 40, 42—
44, 46, 51, 51, 70, 86—88)) and “the instant application simply instructs the
practitioner to implement the abstract idea (i.e. performing calculations for
determining a margin) with routine and conventional computerized activity”
(Ans. 37) In this regard, the steps of receiving and calculating, as recited by
independent claim 1 do not supply an inventive concept because they merely
require the application of conventional, well-known analytical steps. See
Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 716 (Fed. Cir. 2014) (“[T]he
claimed sequence of steps comprises only ‘conventional steps, specified at a
high level of generality,’ which is insufficient to supply an ‘inventive
concept.’”) (Citing Alice, 134 S. Ct. at 2357). We also note that there is no
indication in the record that any specialized computer hardware or other
non-generic computer components are required. In fact, the Specification
observes that “[t]he margin calculation computer server 105 may be any
suitable combination of hardware and software to allow for the receipt of
data on derivatives and securities positions, and the calculation of a margin
requirement based on the data” (Spec. 133).
And, considered as an ordered combination, the components of
Appellants’ independent claim 1 add nothing that is not already present
when the limitations are considered separately. Viewed as a whole,
Appellants’ claims simply recite the concept of “determining a margin” for
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both securities and derivatives (see Final Act. 2) as performed by a server
computer (see Spec. 133). The claims do not, for example, purport to
improve the functioning of the computer itself. Nor do they effect an
improvement in any other technology or technical field. Instead, the claims
at issue amount to nothing significantly more than an instruction to apply the
abstract idea of “determining a margin,” i.e., receiving data and calculating a
single margin requirement, which under our precedents, is not enough to
transform an abstract idea into a patent-eligible invention. See Alice, 134
S. Ct. at 2360.
In view of the foregoing, we sustain the Examiner’s rejection under
35 U.S.C. § 101 of independent claim 1, and claims 2—5, 7—11, 13, 14, and
17—21, which fall with independent claim 1.
Obviousness
We are not persuaded by Appellants’ argument that the Examiner
erred in rejecting independent claim 1 under 35 U.S.C. § 103(a) because
Glinberg, upon which the Examiner relies, fails to disclose or suggest
limitation [c] of independent claim 1 which recites:
calculating using the margin calculation computer server a single
margin requirement for the clearing member for both the at least
one securities position and the at least one derivatives position
using said first 3 day liquidation period for the at least one
securities position and said second different 1 day liquidation
period for the at least one derivatives position in the calculation
of the margin requirement.
(See Appeal Br. 5—13; see also Reply Br. 1—3). Independent claim 21
includes a substantially similar limitation. Instead, we agree with, and adopt
the Examiner’s findings and rationales, as set forth at pages 3—6 of the Final
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Office Action and pages 19—31 of the Answer (see Final Act. 4 (citing
Glinberg, col. 5,11. 18—67; col. 10,1. 61 — col. 11,1. 55; col. 17,11. 39-67;
col. 18,1. 14-col. 19,1.41; col. 19,1.61-col. 23,1. 50; col. 24,1. 14-
col. 25,1. 12; col. 26,1. 26 —col. 27,1. 67; col. 29 —col. 32,1. 40; cols. 33—
36; col. 40,1. 6 —col. 42,1. 67; cols. 51—59, 60, 62—63); see also Ans. 19-31
(citing Glinberg, col. 2,11. 40-67; col. 7,1. 56 — col. 8,1. 14; col. 8,11. 47—65;
col. 17,1. 39-col. 18,1. 7; col. 22,1. 31 - col. 23,1. 50; col. 60,1. 7-
col. 61,1. 48)). We add the following discussion for emphasis.
Glinberg is directed to a method of managing risk associated with a
portfolio using a system called Standard Portfolio Analysis of Risk (SPAN).
(Glinberg, col. 7,11. 56—58). Glinberg discloses that “it is desirable to
approximate the requisite performance bond or margin requirement as
closely as possible to the actual positions of the account at any given time”
(id. at col. 6,11. 61—65). Glinberg discloses that its SPAN calculation
algorithm is capable of calculating “risk performance bond (margin)
requirements ... for equity securities and debt securities (stocks, bonds,
etc.), and options” (id. at col. 17,11. 29-54). Glinberg discloses that its
system can perform a SPAN calculation “at either the clearing-level or the
customer-level” (id. at col. 18,11. 15—18).
Glinberg discloses that “a customer-level portfolio may have any
number of business functions represented within the portfolio” (id. at
col. 18,11. 38—39). In this regard, Glinberg discloses “[a] business function
represents a particular purpose for which an exchange or clearing
organization using SPAN wishes to perform the SPAN calculation or have it
performed, at either the clearing-level or the customer-level” (id. at col. 18,
11. 15—19). Glinberg further discloses that “[f]or each business function for
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which an exchange or clearing organization is using SPAN, the set of
products eligible for that business function are grouped into combined
commodities” {id. at col. 19,11. 7—10) and “SPAN requirements calculated
for individual combined commodities represented in the portfolio are then
aggregated to yield SPAN requirements for the different business functions
represented within the portfolio, and for the entire portfolio” {id. at col. 19,
11. 18—22). Glinberg also discloses “[f]or futures-style products, there is a
daily mark-to-market for open positions, and the resulting settlement
variation amounts are paid or collected daily. For premium-style products,
the full trade price (premium) is paid or collected when the position is
opened” {id. at col. 30,11. 33—37). In this regard, Glinberg discloses
the exchange or clearing organization using SPAN may establish
a business rule regarding the timing of the recognition of value
for premium-style products. For example, suppose an unsettled
trade for a stock done for the current business day is included in
the portfolio of positions to be margined, and that this trade will
settle three days subsequently. In this case, the clearing
organization might decide not to give full or even partial credit
for the premium value of this trade until it has settled and the full
premium has been paid or collected. If so, the total premium
value used for the purpose of determining whether a margin
excess or deficit exists, should be adjusted by the amount of this
premium value for which credit is not being given.
{Id. at col. 31,11. 7-19).
Appellants acknowledge “that single-pot margining was known [in
the] prior art where the same liquidation period was assumed for derivatives
and securities” (Appeal Br. 5), but argue
[cjlaim 1 distinguishes over the primary reference
Glinberg at least by reciting the at least one securities position as
a distinct first liquidation period defined by 3 days, the at least
one derivatives position having a distinct different second
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liquidation period defined by 1 day, and the margin calculation
computer server calculating a single margin requirement for both
the at least one securities position and the at least one derivatives
position using said first 3 day liquidation period for the at least
one securities position and said second different 1 day liquidation
period for the at least one derivatives position in the calculation
of the margin requirement.
{Id. at 7; see also Reply Br. 2—3). We cannot agree.
At the outset, we note that Glinberg discloses a method of managing
risk associated with a portfolio using a system called Standard Portfolio
Analysis of Risk (SPAN). (Glinberg, col. 7,11. 56—58). Glinberg discloses
that its system is capable of calculating “risk performance bond (margin)
requirements ... for equity securities and debt securities (stocks, bonds,
etc.), and options” {id. at col. 17,11. 29-54). Glinberg further identifies that
“it is desirable to approximate the requisite performance bond or margin
requirement as closely as possible to the actual positions of the account at
any given time” {id. at col. 6,11. 61—65).
As the Examiner points out, Glinberg’s “SPAN margining method
allows for any number of business functions and clearing organizations to be
represented in positions for a customer level portfolio across clearing firms”
(Ans. 28 (citing Glinberg, col. 26,1. 26 —27,1. 23)). Glinberg discloses that
one of these business functions can be related to position types for the
position value calculations wherein “[pjroducts can be categorized by
whether their valuation method is futures-style or premium-style” (Glinberg,
col. 30,11. 30-37) and further identifies that “futures-style products,” i.e., “at
least one derivatives position,” are settled daily {see id. at col. 30,11. 33—35)
whereas “premium-style products,” i.e., “at least one securities position,” are
settled after three days {see id. at col. 31. 10—13). Thus, we find supported
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the Examiner’s position that Glinberg discloses the argued limitation (see
Ans. 29-31).
In view of the foregoing, we sustain the Examiner’s rejection of
independent claims 1 and 21 under 35 U.S.C. § 103(a). We also sustain the
Examiner’s rejections of dependent claims 2—5, 7—11, 13, 14, and 17—20,
which are not argued separately (see Appeal Br. 13).
DECISION
The Examiner’s rejection of claims 1—5, 7—11, 13, 14, and 17—21
under 35 U.S.C. § 101 is affirmed.
The Examiner’s rejections of claims 1—5, 7—11, 13, 14, and 17—21
under 35 U.S.C. § 103(a) are 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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