John D. Freeman

Patent Trials and Appeals Board

Aug 26, 2019

13861286 - (D) (P.T.A.B. Aug. 26, 2019)

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.
13/861,286 04/11/2013 John D. Freeman FREE.001C1 1472
20995 7590 08/26/2019
KNOBBE MARTENS OLSON & BEAR LLP
2040 MAIN STREET
FOURTEENTH FLOOR
IRVINE, CA 92614
EXAMINER
KAZIMI, HANI M
ART UNIT PAPER NUMBER
3691
NOTIFICATION DATE DELIVERY MODE
08/26/2019 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):
efiling@knobbe.com
jayna.cartee@knobbe.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
____________________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________________

Ex parte JOHN D. FREEMAN
____________________

Appeal 2018-0038941
Application 13/861,286
Technology Center 3600
____________________

Before MURRIEL E. CRAWFORD, MICHAEL W. KIM, and
PHILIP J. HOFFMANN, Administrative Patent Judges.

KIM, Administrative Patent Judge.

DECISION ON APPEAL

STATEMENT OF THE CASE
This is an appeal from the final rejection of claims 28–32. We have
jurisdiction to review the case under 35 U.S.C. §§ 134 and 6.
The invention relates generally to “constructing and applying financial
indexes.” Spec. ¶ 2. Independent claim 28 is illustrative:
28. A method of improving an existing investment strategy by
using a robust volatility-based index, the method comprising:
retrieving, by a computing system comprising computer
hardware, information about an existing investment strategy, the
information including existing investments in a collection of asset

1 The Appellant identifies Freeman Investment Management Company,
LLC, as the real party in interest. Appeal Br. 4.
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classes representing investable securities, wherein each asset class
corresponds to a collection of individual, non-aggregated investable
securities, the information also including asset classes available for
investment;
selecting, from the collection of asset classes, one or more asset
classes to be re-weighted, the collection of asset classes to be re-
weighted comprising a “large cap” asset class and a “small cap” asset
class which together comprise the largest approximately 3000 securities
based on market capitalization, the large cap asset class comprising the
largest approximately 1000 securities and the small cap asset class
comprising the remaining approximately 2000 securities, the two asset
classes being mutually exclusive as to the individual investable
securities comprising each, and wherein the two asset classes together
represent substantially the entire market for U.S. securities;
determining a group of individual, non-aggregated investable
securities by taking a union of respective collections of individual, non-
aggregated investable securities associated with the one or more asset
classes to be re-weighted, the group comprising all of the largest
approximately 3000 securities based on market capitalization;
determining an index for the group, by using the computing
system to determine relative volatilities of each of the individual, non-
aggregated investable securities in the determined group of investable
securities, wherein the determining relative volatilities comprises:
using analyzed data corresponding to historical total return
fluctuations associated with each of the individual, non-aggregated
investable securities in the determined group of individual, non-
aggregated investable securities;
using calculated relative volatilities associated with each of the
individual, non-aggregated investable securities in the determined
group of investable securities, wherein a process resulting in the
calculated relative volatilities comprises:
calculating the standard deviation of the actual total return of
each of the individual non-aggregated investable securities over a
period of time sufficient to demonstrate long term volatility, wherein
such period of time comprises at least about 60 months, to determine a
specific long-term volatility without reference to any price-
denominated fundamental accounting measures of the investable
securities;
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creating within the group a relative ranking of the individual,
non-aggregated investable securities primarily based on long-term
volatility;
determining, for each relatively-ranked, individual, non-
aggregated investable security, the market value of its float;
determining the total market value of float for all relatively-
ranked, individual, non-aggregated investable securities;
selecting the integer 2 to define the number of cohorts for the
index;
dividing the volatility-ranked total market value of float by the
selected integer to divide the total market value of float into halves,
each half having equal amounts of available float assigned to it; and
dividing the investable securities into cohorts of similarly-
volatile investable securities to produce a robust index of the individual
investable securities that holds each constituent at its market weight and
allocates capital equally between cohorts;
using the index to sort the individual, non-aggregated investable
securities in the existing investments according to which cohort of the
index each existing investment falls by:
placing a first subgroup of the existing investments into a lower
volatility asset class based on their determined relative ranking and
cohort of the index; and
placing a second subgroup of the remaining existing investments
into a higher volatility asset class based on their determined relative
ranking;
substituting the lower volatility and higher volatility asset classes
for the one or more asset classes to be re-weighted to form a different
group of asset classes; and
recalibrating the existing investment strategy for the different
group of asset classes.
The Examiner rejected claims 28–32 under 35 U.S.C. § 101 as
directed to patent ineligible subject matter in the form of abstract ideas.
We AFFIRM.
ANALYSIS
An invention is patent-eligible if it claims a “new and useful process,
machine, manufacture, or composition of matter.” 35 U.S.C. § 101.
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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. E.g., Alice Corp. v. CLS Bank Int’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. at 217–18 (citing Mayo Collaborative Servs. v. Prometheus
Labs., Inc., 566 U.S. 66, 75–77 (2012)). In accordance with that framework,
we first 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
risk.”); see also Bilski v. Kappos, 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 (Parker v. Flook, 437 U.S. 584, 594–95 (1978)); and
mental processes (Gottschalk v. Benson, 409 U.S. 63, 69 (1972)). Concepts
determined to be patent eligible include physical and chemical processes,
such as “molding rubber products” (Diamond v. Diehr, 450 U.S. 175, 191
(1981)); “tanning, dyeing, making water-proof cloth, vulcanizing India
rubber, smelting ores” (id. at 182 n.7 (quoting Corning v. Burden, 56 U.S.
252, 267–68 (1854))); and manufacturing flour (Benson, 409 U.S. at 69
(citing Cochrane v. Deener, 94 U.S. 780, 785 (1876))).
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In Diehr, 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.” Diehr, 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 and Flook); see, e.g., id. at 187 (“It is now
commonplace that an application of a law of nature or mathematical formula
to a known structure or process may well be deserving of patent
protection.”).
If the claim is “directed to” an abstract idea, we turn to the second
step of the Alice and Mayo 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. at 221 (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.
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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 Manual of Patent Examining Procedure
(“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
(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.
The Examiner finds the “claims are directed to an abstract idea of an
algorithm to create an index. The claims are directed to an algorithm for
using mathematical correlations and formula to create a robust volatility
based index.” Non-Final Act. 42. Based on the finding that the claimed
“algorithm involves steps such as calculating relative volatilities, calculating
standard deviation, using relative rankings and so forth,” the Examiner finds
the claims are “interpreted as mathematical operations/formula or organizing
data through mathematical correlations.” Id. The Appellant does not

2 The Final Rejection, mailed July 1, 2016, merely references, but does not
restate, the rejection set forth in the Non-Final Action, mailed Sept. 15,
2015.
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challenge this finding expressly. Furthermore, when viewed through the
lens of the Guidance, we agree with the Examiner’s assessment that at least
the steps of “determine relative volatilities, “calculating the standard
deviation,” and “creating within the group a relative ranking” are each a
“mathematical concept” in the form of “mathematical relationships” and
“mathematical calculations.” 84 Fed. Reg. at 52.
In the interests of completeness, however, we now further analyze the
claim language as to whether it discloses additional abstract ideas according
to the Guidance.
We start with claim 28, the only independent claim on appeal.
Independent claim 28 recites a “method of improving an existing investment
strategy by using a robust volatility-based index.” As noted by the
Appellant, “[e]arly securities indexes were designed to provide general
insights into broad market behaviors.” Spec. ¶ 3. This quotation recognizes
that indexes, which themselves represent a selected population of traded
financial securities, are well-known elements of our financial system. Thus,
the creation and use of financial instrument indexes, to gauge market
behavior, is a fundamental economic practice. And for the reasons that
follow, although the claim limitations, individually and in the aggregate,
purport to improve investment strategies, it is fundamentally a roadmap for
creating a new financial index, which is then used to select securities.
An index is, essentially, an abstraction of financial market behavior.
Well-known examples of financial indices include the S&P 500, NASDAQ
Composite, Dow Jones Industrial, Russell 2000, and FTSE 100.
The claimed steps begin with “retrieving, by a computing system
comprising computer hardware, information about an existing investment
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strategy.” The retrieval of data is considered insignificant extra-solution
activity, which does not receive patentable weight in the abstract-idea
analysis. See Bilski v. Kappos, 545 F.3d 943, 963 (Fed. Cir. 2008) (en
banc), aff'd sub nom Bilski v. Kappos, 561 U.S. 593 (2010) (characterizing
data gathering steps as insignificant extra-solution activity). This
“receiving” limitation, along with its required use of computer hardware,
and specifications on the nature of the received data, does not factor in the
analysis of abstract ideas. See MPEP § 2106.05(g) (cited at 84 Fed. Reg. at
55 n.31).
The claim recites several “selecting,” “determining,” “dividing,” and
“placing” steps, as well as a step for “calculating,” a step for “substituting,”
and a step for “recalibrating.”
As part of the limitations directed to the creating of the index, the
“selecting” limitation recites selecting “one or more asset classes” from
among the received data, where the claim specifies the “asset classes to be
re-weighted” comprise a “‘large cap’ asset class” and a “‘small cap’ asset
class,” where “the two asset classes together represent substantially the
entire market for U.S. securities.” Not only does this clearly relate to
fundamental economic practices, but the selecting of asset classes can also
be performed mentally by a person by observing the established assets
classes and making selection evaluations. See Spec. ¶ 69 (cited at Appeal
Br. 5).
Next, the claim recites “determining a group of . . . securities by
taking a union of respective collections of . . . securities.” Along with being
a part of a fundamental economic practice, this step can also be performed
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mentally by a person, by selecting groups of securities to combine into a
new group. See Spec. ¶ 69 (cited at Appeal Br. 6).
The claim then recites “determining an index for the group . . . to
determine relative volatilities . . . of each of the individual, non-aggregated
investable securities.” The Specification describes that “historical price,
volume, or other fundamental or technical indices can be obtained from data
store 112 or from market data provider 120 by the index service 111 and
used to obtain a volatility measure for each security.” Spec. ¶ 41, cited at
Appeal Br. 6. Here, although no particular way of determining volatilities is
described, the claim recites that “the determining relative volatilities
comprises . . . using analyzed data corresponding to historical total return
fluctuations” and “using calculated relative volatilities associated with each
of the individual, non-aggregated investable securities,” by employing a
process involving “calculating the standard deviation of the actual total
return of each of the . . . securities . . . without reference to any price-
denominated fundamental accounting measures.” In addition to being a part
of a fundamental economic practice, the limitation also broadly encompasses
the determining of volatilities by consulting already-established
“fundamental or technical indices,” which means this step can be
accomplished as a simple data-gathering step (see Guidance at 55, fn. 31),
followed by a calculating step that could be performed mentally using pen
and paper (id. at 52, fn. 14).
The process next calls for “ranking of the . . . securities primarily
based on long-term volatility,” “determining, for each . . . security, the
market value of its float,” “determining the total market value of float for all
relatively-ranked . . . securities,” “dividing the volatility-ranked total market
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value of float into halves,” “dividing the . . . securities into cohorts . . . to
produce an index . . . that . . . allocates capital equally between cohorts.”
As part of the limitations directed to the use of the index, after
creating the index, the claim calls for “sort[ing] . . . securities according to
which cohort of the index each existing investment falls.” The sorting is
accomplished, according to the claim language, by “placing a first subgroup
of the existing investments into a lower volatility asset class,” “placing a
second subgroup of the remaining existing investments into a higher
volatility asset class,” both “based on their determined relative ranking,”
and, for the first subgroup, additionally based on “cohort of the index.” This
is followed, according to the claim language, by “substituting the lower
volatility and higher volatility asset classes for the one or more asset classes
to be re-weighted to form a different group of asset classes; and recalibrating
the existing investment strategy for the different group of asset classes.”
All of these “ranking,” “determining,” “selecting,” “dividing,”
“placing,” “substituting,” and “recalibrating” steps are not only performed as
a part of a fundamental economic practice, but can also be performed
mentally by a person using pen and paper, by analyzing, rearranging, and
grouping data and making mathematical calculations. See Guidance at 52,
fn. 14. Though claim language that limits the nature of the data being
considered indicates that, for example, “the large cap asset class comprising
the largest approximately 1000 securities and the small cap asset class
comprising the remaining approximately 2000 securities,” and handling data
representing 3000 securities may be considerable in volume, there are no
time limits expressed in the claim as to how quickly the handling of data and
calculations need be performed. We thus do not consider the number of
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securities or the nature of mathematical calculations to be an impediment to
performing the method mentally, by a person using pen and paper.
All of the above steps, therefore, are a method of organizing
information about human activity, as part of a fundamental economic
practice of creating and using an abstract financial index, which can be
performed mentally. The above steps, which include everything claimed
except the use of computers for some steps, and restrictions on the nature of
the data (such as that a “period of time comprises at least about 60 months”),
are encompassed by the fundamental economic practice of the creation and
use of a financial index, according to the recited algorithm. On this basis,
under Prong One of Revised Step 2A, we agree with the Examiner that claim
28 is directed to an abstract idea.
Dependent claims 29–32 do not alter the abstract nature of the claims.
For example, claim 29 “accounts for not only long-term volatility but also
shorter-term volatility.” Claim 30 “accounts for additional fundamental
accounting measures that are not price-denominated.” Claim 31 specifies
that “the additional fundamental accounting measures comprise leverage,
return on assets, and/or quality of debt.” Finally, claim 32 assigns “relative
weights to the long and short-term volatilities and to the additional
fundamental accounting measures that are not price-denominated.” These
claims thus alter the nature of the data and the calculations, but these are part
of creating and using a financial index.
The claims thus essentially are directed to an abstract idea in the form
of a fundamental economic practice of creating and using a financial index
to select financial securities.
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Under Prong Two of Revised Step 2A of the Guidance, we are
directed to determine whether the abstract idea claimed is integrated into a
practical application.
The claimed method does not improve the underlying “computing
system” recited as performing several of the limitations of claim 28, because
any computer can be used to execute the claimed method. See Spec. ¶ 33
(“No particular aspect or aspects of the example method, product, computer
readable media, and/or system embodiments described herein are intended to
limit the scope of the present invention.”); see also ¶¶ 27–34. In addition,
the method is directed to “systems and methods for constructing and
applying financial indexes” (Spec. ¶ 2), and as such the claimed method
does not improve another technology, because “constructing and applying
financial indexes” is what the claims accomplish. MPEP § 2106.05(a).
Because a particular computer is not required, the claim also does not define
or rely on a “particular machine.” MPEP § 2106.05(b). Further, the method
does not transform matter. MPEP § § 2106.05(c).
Instead, the claim receives data, makes determinations from the data,
performs calculations, and organizes data (“dividing,” “placing,”
“substituting,” and “recalibrating”). As such, the method has no other
meaningful limitations (MPEP § 2106.05(e)), and thus merely recites
instructions to execute the abstract idea on a computer, merely using the
computer as a tool (MPEP § 2106.05(f)).
Thus, we determine that claim 28 does not integrate the judicial
exception into a practical application. The dependent claims also do not
integrate the judicial exception into a practical application, because they
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merely refine steps or the nature of the data within the scope of the abstract
idea.
In Step 2B of the Guidance, we are directed to examine the claims for
“something more,” that may be an “inventive concept” that transforms the
abstract idea into eligible subject matter. Guidance at 56.
However, the only elements of claim 28 that fall outside the scope of
creating and using a financial index using the prescribed algorithm, is the
“computer system” employed to perform parts of the method. However, the
“computer system” itself is not described in the Specification in any detail.
It is not even clear what computer, such as from among the three displayed
in Figure 1 or some other unspecified computer, is used to perform the
calculations and determinations of the claimed method. For example, the
Specification indicates that “one or more steps of the methods described
herein may be performed using, for example, any of the computer systems
310, 306A, and 314A.” Spec. ¶ 46. However, we find no illustration or
description of any of “computer systems 310, 306A, or 314A” within the
drawings or Specification. We must assume, therefore, given the general
description of system design, that a general purpose computer is used. See
Spec. ¶¶ 27–34. Because the use of general-purpose computers for tasks
such as analyzing and manipulating data are well-known, routine, and
conventional, under Step 2B, we do not find the claim recites an “inventive
concept.” See Inventor Holdings, LLC v. Bed Bath & Beyond, Inc., 876 F.3d
1372, 1378 (Fed. Cir. 2017) (holding that considering claims reciting data
retrieval, analysis, modification, generation, display, and transmission as an
“ordered combination” reveals that they “amount to ‘nothing significantly
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more’ than an instruction to apply [an] abstract idea” using generic computer
technology).
Because the claims recite abstract ideas of creating a financial index,
are not integrated into a “practical application,” and do not recite any
“inventive concept,” claims 28–32 recite ineligible subject matter in the
form of abstract ideas.
We next turn to and consider the Appellant’s arguments.
We are not persuaded that the Office improperly reopened “a settled
issue,” leading to “double jeopardy” for the Appellant in violation of the
Administrative Procedures Act. Appeal Br. 10–11; see also Reply Br. 2–3.
First, the Interview Summary of January 21, 2015, which
memorialized a telephone interview conducted on January 8, 2015, did not
constitute a “rejection,” as asserted. This was a discussion of issues that
included § 101, but appears to be part of the pilot program to conduct
interviews before a First Action.
Second, claim 28 was amended on May 21, 2015, such that in the
September 15, 2015 Non-Final Rejection, a new rejection under § 101 was
entered, but this rejection applies to the new claim language only.
We thus do not see, from the cited sections of the record, any § 101
rejection of record that the Examiner deviated from without cause. Instead,
it appears to us that the 2015 Non-Final Action represents the first rejection
on the record of claims under § 101, which was maintained in the Final
Rejection mailed July 1, 2016.
We are not persuaded by the Appellant’s argument that “the claims do
not seek to tie up all ‘algorithms’ or all ways of creat[ing] an index.”
Appeal Br. 15. While preemption may signal patent ineligible subject
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matter, the absence of complete preemption does not demonstrate patent
eligibility.” Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379
(Fed. Cir. 2015); see also OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d
1359, 1362-63 (Fed. Cir. 2015) (“[T]hat the claims do not preempt all price
optimization or may be limited to price optimization in the ecommerce
setting do not make them any less abstract.”). And, “[w]here a patent's
claims are deemed only to disclose patent ineligible subject matter under the
Mayo framework, as they are in this case, preemption concerns are fully
addressed and made moot.” Ariosa, 788 F.3d at 1379.
We are unpersuaded by the Appellant’s arguments that the claims are
not directed to abstract ideas, because the Examiner failed to consider that
the claims recite the use of an index, in addition to the creation of an index,
and because a “computing system” is recited for use in the method. Appeal
Br. 16–19; see also Reply Br. 6–7 (“Answer does not address the numerous
passages in Claim 28 that require use of a computer system.”). Our analysis
above, under the direction of the Guidance, addresses the use of the index
for selection of securities. Further, merely implementing an abstract mental
process, using a computer as a tool, allegedly because of the volume of data
involved (Appeal Br. 20) does not transform an abstract mental process to
eligible subject matter. See Intellectual Ventures ILLC v. Capital One Bank,
792 F.3d 1363, 1370 (“[M]erely adding computer functionality to increase
the speed or efficiency of the process does not confer patent eligibility on an
otherwise abstract idea.”). Even if 3000 or more securities are involved in
an index, we are unpersuaded that a human being is unable to practically
perform the recited steps mentally. To be sure, such an endeavor may be
time consuming, which is why the computer is used as a tool to speed up the
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process. But merely calling for a computer to perform an abstract process
(Appeal Br. 20–22) is insufficient to take an abstract mental process out of
the abstract realm. If a claim, under its broadest reasonable interpretation,
covers performance in the mind, but for the recitation of generic computer
components, then it is still in the mental processes category unless the claim
cannot practically be performed in the mind. See Intellectual Ventures I
LLC v. Symantec Corp., 838 F.3d 1307, 1318 (Fed. Cir. 2016).
The argument that example 21 of the “July 2015 Examples”
demonstrates subject matter eligibility, because the “present claims amount
to significantly more than organizing and comparing data,” is also
unpersuasive. Appeal Br. 23–24. Our analysis above demonstrates that the
claims are directed to abstract ideas, utilizing mental processes to organize
human behavior, in the fundamental economic practice of creating and using
a financial index.
We are not persuaded by the Appellant’s arguments, citing “Example
34 in the December 2016 Examples,” that the claims are not abstract ideas
because they “combine elements in an unconventional and non-generic
way,” are “not routine or conventional to those in the field of securities
investment,” and “confine the alleged abstract idea to a particular and
practical application.” Appeal Br. 24; see also Appeal Br. 29–30, Reply
Br. 7–8. Even unconventional abstract ideas are still unpatentable. See SAP
America, Inc. v. InvestPic, LLC, 890 F.3d 1016, 1018 (Fed. Cir. 2018).
“What is needed is an inventive concept in the non-abstract application
realm.” SAP Am., Inc. v. InvestPic, LLC, 898 F.3d 1161, 1168 (Fed. Cir.
2018).
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We are unpersuaded that the present claims recite eligible subject
matter because, unlike the claims in “Digitech Image Tech., LLC v.
Electronics for Imaging, Inc.” the present claims do “not ‘generically recite’
a ‘process of combining two data sets,” but instead provide “numerous
specific limitations,” and claim “a specific use of the index created through
the claimed process.” Appeal Br. 26. Even though the claims do not recite a
process for combining two data sets, and do recite “numerous specific
limitations,” as set forth above, the claims merely recite an abstract mental
process implemented on a general purpose computer, including the steps to
use the index created with the claimed algorithm.
The Appellant next argues that the Office has failed to establish a
prima facie case of subject matter ineligibility, “because the claims are
acknowledged to be novel and nonobvious.” Appeal Br. 27; see also Reply
Br. 6 (“the fact that all 102 and 103 rejections have been withdrawn in the
present case tends to show the present claims should also not be rejected
based on § 101”). We disagree with the Appellant, because a novel and
nonobvious claim directed to a purely abstract idea is, nonetheless, patent-
ineligible. See Mayo, 566 U.S. at 90.
The Appellant also argues that “a volatility-based index has never
been created” before, so “using these relative volatilities to create a
customized and unique strategy also amount to significantly more than an
abstract idea.” Appeal Br. 31–32. We disagree, because, as we stated
before, a novel and nonobvious claim directed to a purely abstract idea is,
nonetheless, patent-ineligible. See Mayo, 566 U.S. at 90.
Citing the “McRO Memo,” the Appellant argues the “present claims
are clearly not limited to claiming ‘the idea of a solution or outcome’ but
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describe a specific way to solve specific problems with old indexes.” Reply
Br. 4. We are unpersuaded by this argument. In McRO, Inc. v. Bandai
Namco Games Am. Inc., 837 F.3d 1299 (Fed. Cir. 2016), the Federal Circuit
addressed claims directed to “[a] method for automatically animating lip
synchronization and facial expression of three-dimensional characters.”
McRO, 837 F.3d at 1307. The court reviewed the specification of the patent
at issue and found that, rather than invoking the computer merely as a tool,
“[c]laim 1 of the [asserted] patent is focused on a specific asserted
improvement in computer animation.” Id. at 1314. The court found that the
plain focus of the claim was on an improvement to computer functionality
itself, not on economic or other tasks for which a computer is used in its
ordinary capacity. Unlike McRO, which focused on a specific means or
method that improved the relevant technology, as discussed, claims 28–32
here are directed to a result and effect (creating and using a financial index)
that itself is an abstract idea, in the form of a fundamental economic
practice, by merely invoking mental processes implemented on general-
purpose computers. Thus, the focus here is not on improving any
technology, but on using generic computer operations, in which a computer
is used in its ordinary capacity, for creating a financial index using an
allegedly novel algorithm, and using the created index for selecting
securities.
We are unpersuaded by the Appellant’s argument that the claims,
under Steven E. Berkheimer v. HP Inc., 2017-1437 (Fed. Cir. Feb. 8, 2018)
and Aatrix Software, Inc., v. Green Shades Software, Inc., 2017-1452 (Fed.
Cir. Feb. 14, 2018), recite eligible subject matter, because the Examiner
failed to demonstrate that the claims recite methods that are well-understood,
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routine, and conventional, since there is no prior art rejection pending.
Reply Br. 5. It is not relevant that the abstract idea itself is well-understood,
routine, and conventional, but rather “whether the additional elements
amount to significantly more than the exception itself.” Guidance at 56.
The elements recited in claim 28, beyond the scope of the abstract idea of
creating and using a financial index, are only reciting the use of a
“computing system.” As we demonstrated above, the claimed computer
system must be assumed to be a general-purpose computer, whose operation
within the scope of the claim steps is merely well-understood, routine, and
conventional. This is because the operations of storing, analyzing,
receiving, and writing data are primitive computer operations found in any
computer system. See In re Katz Interactive Call Processing Patent Litig.,
639 F.3d 1303, 1316 (Fed. Cir. 2011) (“Absent a possible narrower
construction of the terms ‘processing,’ ‘receiving,’ and ‘storing,’ discussed
below, those functions can be achieved by any general purpose computer
without special programming.”).
The Appellant also argues, with respect to each of dependent
claims 29–32, that the Examiner has failed to consider and address the claim
language of each dependent claim sufficient to establish a prima facie case
of subject matter ineligibility, and that the “additional detail” in each claim
“narrows the scope of preemption” such that the dependent claims are
eligible. Appeal Br. 33–39. We note initially that the Appellant does not
argue the rejection of the dependent claims with any specificity. Moreover,
given our analysis of the dependent claims above, the arguments are moot.
As a result, claims 28–32 are directed to abstract ideas, without
integrating the abstract ideas into a practical application, or providing
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Application 13/861,286

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“something more” as an “inventive concept” to transform the abstract ideas
into eligible subject matter. Therefore, we sustain the rejection of
claims 28–32 under 35 U.S.C. § 101 as directed to abstract ideas.
DECISION
We affirm the rejection of claims 28–32 under 35 U.S.C. § 101.
No time period for taking any subsequent action in connection with
this appeal may be extended under 37 C.F.R. § 1.136(a)(1)(iv).

AFFIRMED