Trials@uspto.gov
`571-272-7822
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`Paper 9
`Entered: September 8, 2014
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`CAMBRIDGE ASSOCIATES, LLC,
`Petitioner,
`
`v.
`
`CAPITAL DYNAMICS,
`Patent Owner.
`____________
`
`CBM2014-00079
`Patent 7,698,196 B1
`
`
`Before FRANCISCO C. PRATS, GRACE KARAFFA OBERMANN, and
`DONNA M. PRAISS, Administrative Patent Judges.
`
`PRAISS, Administrative Patent Judge.
`
`DECISION
`Institution of Covered Business Method Patent Review
`37 C.F.R. § 42.208
`
`
`571-272-7822
`
`
`
`
`
`
`
`Paper 9
`Entered: September 8, 2014
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`CAMBRIDGE ASSOCIATES, LLC,
`Petitioner,
`
`v.
`
`CAPITAL DYNAMICS,
`Patent Owner.
`____________
`
`CBM2014-00079
`Patent 7,698,196 B1
`
`
`Before FRANCISCO C. PRATS, GRACE KARAFFA OBERMANN, and
`DONNA M. PRAISS, Administrative Patent Judges.
`
`PRAISS, Administrative Patent Judge.
`
`DECISION
`Institution of Covered Business Method Patent Review
`37 C.F.R. § 42.208
`
`
`
`CBM2014-00079
`Patent 7,698,196 B1
`
`
`I. INTRODUCTION
`Cambridge Associates, LLC (“Petitioner”) filed a Corrected Petition
`(Paper 4, “Pet.”) on March 19, 2014 seeking covered business method patent
`review of U.S. Patent No. 7,698,196 B1 (“the ’196 Patent”) pursuant to § 18
`of the Leahy-Smith America Invents Act, Pub. L. No. 112–29, § 6, 125 Stat.
`284, 299–305 (2011) (“AIA”). Capital Dynamics (“Patent Owner”) filed a
`Preliminary Response (Paper 8, “Prelim. Resp.”) on June 12, 2014. We
`have jurisdiction under 35 U.S.C. § 324.
`The standard for instituting a covered business method patent review
`is set forth in 35 U.S.C. § 324(a), which provides as follows:
`THRESHOLD--The Director may not authorize a post-grant review to
`be instituted unless the Director determines that the information presented in
`the petition filed under section 321, if such information is not rebutted,
`would demonstrate that it is more likely than not that at least 1 of the claims
`challenged in the petition is unpatentable.
`Petitioner challenges claims 1-17 of the ’196 Patent as unpatentable
`for failure to comply with 35 U.S.C. §§ 101 and 103. Having considered the
`information presented in the Corrected Petition and Patent Owner’s
`Preliminary Response, we determine that it is more likely than not that the
`challenged claims are unpatentable. Pursuant to 35 U.S.C. § 324 and § 18(a)
`of the AIA, we authorize a covered business method patent review of
`claims 1-17 of the ’196 Patent on the grounds identified in the Order section
`of this decision.
`
`
`II. BACKGROUND
`A. Pending Litigation
`A person may not file a petition under the Transitional Program for
`Covered Business Method Patents unless the person or the person’s real
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`party in interest or privy has been sued for infringement or has been charged
`with infringement under that patent. See AIA § 18(a)(1)(B). Petitioner
`represents that it has been sued for infringement of the ’196 Patent by Patent
`Owner in Capital Dynamics AG and Capital Dynamics, Inc. v. Cambridge
`Associates, LLC, 1:13-cv-07766 (S.D.N.Y.). Pet. 9.
`
`
`B. The ’196 Patent (Ex. 1001)
`The ’196 Patent is directed to a method for analyzing a performance
`of a financial product or asset having an irregular cash flow by
`“benchmarking the performance” of the asset relative to “a public or other
`index.” Ex. 1001, 1:15-18, 7:58-65. An example of a financial product
`having an irregular cash flow is a private equity investment where funds are
`invested into an asset (referred to as draw downs) and funds are returned to
`the investor (referred to as disbursements). Id. at 1:26-29. An example of a
`public index is exchange traded securities. Id. at 1:40-42. A direct
`comparison between these two types of assets is said to be difficult because
`the former is measured in terms of an internal rate of return while the latter
`is measured by time weighted returns. Id. at 1:35-42. Therefore the method
`of the invention uses the traditional asset class as a benchmark or standard in
`a way that will determine, predict, or model how the non-traditional asset,
`which has a limited performance history (id. at 3:62-65), “would perform
`under various market scenarios for which actual performance data for the
`private equity is not available.” Id. at 1:24-25. The method of the ’196
`Patent is said to “permit more accurate analysis of the performance of
`private equity assets relative to the performance of a public index, and also
`permit the simulation of private equity asset behavior.” Id., Abstract.
`
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`C. Illustrative Claim
`Claim 1 of the ’196 Patent is illustrative of the claims at issue:
`1. A method for benchmarking relative to an index a
`performance of a financial product having an irregular cash
`flow, said being method implemented with a computer system
`comprising one or more computer processors, the method
`comprising the steps of:
`receiving using at least one of said computer processors
`first cash flow data for the financial product over a period of
`time, the data including at least one input event and at least one
`output event;
`receiving using at least one of said computer processors
`values for the index over the period of time;
`determining using at least one of said computer
`processors a performance characteristic of the financial product;
`determining using at least one of said computer
`processors a value of a scaling function, wherein a performance
`characteristic of an investment of a second cash flow in shares
`valued relative to the index during the period of time has a
`specified relationship to the performance characteristic of the
`financial product, the second cash flow corresponding to the
`first cash flow modified by the scaling function;
`the determined value of the scaling function providing a
`measure of the performance of the financial product relative to
`the index.
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`Beezer
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`D. The Prior Art
`Petitioner relies on the following prior art:
`Reference
`Publication
`Long
`US 7,421,407 B2
`Andrew Ang et al., Downside
`Ang
`Correlation and Expected Stock
`Returns (USC Finance &
`Business Econ., Working Paper
`No. 01-25, 2002).
`Robert A. Beezer, Module 750:
`Closing in on the Internal Rate
`of Return, in Tools for Teaching
`1996 47–78 (COMAP, Inc. ed.,
`1997).
`
`Exhibit No.
`Date
`Ex. 1003
`Sept. 2, 2008
`Mar. 12, 2002 Ex. 1004
`
`1997
`
`Ex. 1005
`
`E. The Asserted Grounds
`Petitioner challenges claims 1-17 of the ’196 Patent on the following
`grounds:
`Basis
`§ 101
`§ 103(a)
`§ 103(a)
`§ 103(a)
`
`
`Description
`Lack of patentable subject matter
`Obvious over Long
`Obvious over Long and Ang
`Obvious over Long and Beezer
`
`Claims Challenged
`1-17
`1-7, 10, 11, and 17
`8 and 12-16
`9
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`F. Claim Interpretation
`During a review before the Board, we provide claims with the
`broadest reasonable interpretation in light of the specification. 37 C.F.R.
`§ 42.300(b); see 77 Fed. Reg. 48,680, 48,697-98 (August 14, 2012). We
`begin our analysis with the plain language of the claims themselves, but look
`to the specification for guidance as to how one skilled in the art would have
`understood the ordinary meaning of the claims at the time of the invention.
`In interpreting claims care must be exercised, as there is a fine line between
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`interpreting claims in light of the specification and reading limitations into
`the claims from the specification. Comark Comm’ns, Inc. v. Harris Corp.,
`156 F.3d 1182, 1186 (Fed. Cir. 1998).
`Petitioner has identified three claim terms for which claim
`construction is sought: “performance characteristic,” “scaling function,” and
`“final value.” Pet. 14-15. These terms are analyzed below.
`1. “performance characteristic”
`Petitioner points out that this term is not contained in the ’196 Patent
`Specification, outside of the claims. Pet. 14. Petitioner’s proposed claim
`construction for this term is “a consequence or indication of performance.”
`Id. The Specification uses the term “performance value” to mean a
`“measure of performance,” a “measure of speed of investment or
`divestment,” or a “measure of exposure to the asset class.” Id. (citing Ex.
`1001, 8:41-55. The term “value” as in “scaling value” is used in the
`Specification to mean a “predetermined relationship between the behavior of
`the private equity relative to [a] benchmark” which can include a
`“performance attribute” and an “assumption.” Id. (citing Ex. 1001, 13:36-
`47).
`Patent Owner contends that “[t]here is no need to limit this term” as
`“[t]here can be many different types of performance characteristics as
`described in the specification” and points out that the Specification uses the
`term “characteristics” as “including ‘a measure of performance,’ ‘a measure
`of speed of investment or divestment’ and a ‘measure of the exposure of the
`asset class . . . .’” Prelim. Resp. 13 (citing Ex. 1001, 8:43-52). Patent
`Owner concludes that “a more appropriate construction would be ‘a measure
`of performance’ of a financial product.” Id.
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`We agree with Patent Owner that the Specification does not limit
`performance to any particular measurement of a financial product as the
`Specification provides a variety of areas in which measurements can be
`taken. We also agree with Petitioner that the Specification does not limit
`values and measures to single data points as the Specification indicates that a
`relationship can be a value. Therefore, for purposes of this decision we find
`the broadest reasonable interpretation of the recited claim term “performance
`characteristic” is a measure or indication of performance.
`2. “scaling function”
`Petitioner’s proposed claim construction for this term is “a formula or
`constant” based on the description in the Specification of “a constant scaling
`factor” and “scaling can be linear, piece-wise linear, or based on any
`function of one or more variables.” Pet. 15 (emphasis omitted, citing Ex.
`1001, 15:39-60).
`Patent Owner agrees that the scaling function “can certainly be a
`constant” (Prelim. Resp. 14), but concludes that “a more reasonable
`construction” in the context of the patent is “a function for modifying cash
`flows.” Id. at 15. Patent Owner directs us to the Summary of the Invention
`section of the Specification that explains “a cash flow scaling factor or
`function is selected so that when applied to a portion of the cash flow . . .
`a performance attribute of the private equity asset . . . and the corresponding
`attribute of a hypothetical investment in a fund on the benchmark have a
`determined relationship at the end of the period at interest.” Id. at 14-15
`(emphasis in original) (citing Ex. 1001, 5:63-6:3). Patent Owner relies on
`the claims as “defin[ing] scaling as ‘modifying’ the cash flows.” Id. at 15
`(citing Ex. 1001, 21:8-10, 22:46-48).
`
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`We agree with Petitioner that the term scaling function is described in
`the Specification as optionally being dependent on one or more variables,
`and the parties agree that the scaling function can also be a constant. We
`also agree with Patent Owner that cash flows are modified by the scaling
`function in the claims (see claim 1 “the second cash flow corresponding to
`the first cash flow modified by the scaling function”). Defining “scaling
`function” as proposed by Patent Owner incorporates language that is
`included elsewhere in the claim. Defining “scaling function” as proposed by
`Petitioner, on the other hand, is the broadest reasonable interpretation, based
`on the description of the scaling function in the Specification. Therefore, for
`purposes of this decision, we adopt Petitioner’s proposed construction of
`“scaling function,” namely, “a formula or constant.”
`3. “final value”
`Petitioner’s proposed claim construction for this term is “a value that
`accounts for any residual balance” based on the Specification example of a
`final value where “the end balance” in a benchmark portfolio valuation
`matches the end value of a private equity assert for determining a scaling
`factor. Pet. 15 (citing Ex. 1001, 8:56-9:8, 11:37-46).
`Patent Owner contends that Petitioner’s proposed construction would
`change the clear meaning of the term, which does not need to be construed.
`Alternatively, Patent Owner proposes “a value at the end of the period of
`interest” as a proper construction because the Specification describes the
`relationship between the final value of the private equity assert and the value
`of the benchmark invention as being at the end of the period of interest.
`Prelim. Resp. 15-16 (citing Ex. 1001, 8:60-63).
`
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`We agree with Patent Owner that the term “final value” does not need
`to be construed as its ordinary meaning is clear. The claims specify “at the
`end of the period of time” for the final values (see claim 5), which obviates
`any clarification that phrase might add to the definition of “final value.” We
`agree with Petitioner that the Specification description indicates the final
`value may be considered a balance. However, Petitioner does not explain
`how a “residual balance” would differ from a “balance.” Therefore we
`decline to add ambiguity to the ordinary meaning of “final value.”
`
`
`III. ANALYSIS
`A. Petitioner Has Standing to Seek Covered Business Method Patent Review
`
`Section 18 of the AIA provides for the creation of a transitional
`program for reviewing covered business method patents, and limits review
`to persons or their privies that have been sued or charged with infringement
`of a “covered business method patent.” AIA § 18(a)(1)(B); see 37 C.F.R.
`§ 42.302. A “covered business method patent” means:
`a patent that claims a method or corresponding apparatus for
`performing data processing or other operations used in the
`practice, administration, or management of a financial product
`or service, except that the term does not include patents for
`technological inventions.
`AIA § 18(d)(1); see also 37 C.F.R. § 42.301(a).
`
`For the reasons set forth below, we conclude that the ’196 Patent
`meets the definition of a “covered business method patent,” and Petitioner
`has standing to file a Petition for a covered business method patent review.
`
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`1. Petitioner Has Been Sued for Infringement of the ’196 Patent
`As discussed above in section II-A, Petitioner represents it has been
`sued for infringement of the ’196 Patent, and Patent Owner does not
`challenge that statement. Pet. 9; Prelim. Resp. generally.
`
`2. Claims 1-17 are Directed to a Financial Product or Service
`The legislative history of the AIA “explains that the definition of
`covered business method patent was drafted to encompass patents ‘claiming
`activities that are financial in nature, incidental to a financial activity or
`complementary to a financial activity.’” 77 Fed. Reg. 48,374, 48,735
`(Aug. 14, 2012) (quoting 157 Cong. Rec. S5432 (daily ed. Sep. 8, 2011)).
`The challenged claims are directed to “[a] method for benchmarking
`relative to an index a performance of a financial product having an irregular
`cash flow,” “benchmarking relative to an investment index,” and “analyzing
`a performance of at least one asset having an irregular cash flow.” Ex. 1001,
`20:57-58, 21:54-55, 22:29-30. Moreover, independent claims 1, 12, and 17
`each refer to, for example, “cash flow” data and “performance characteristic
`of the financial product” or “performance characteristic of an investment.”
`Id. at 20:63, 21:2, 60, 66, 22:34, 42-43. Based on the plain terms of the
`claims, which expressly relate to a financial product, we determine that the
`’196 Patent claims activities that are financial in nature, and therefore,
`claims a method “for performing data processing or other operations used in
`the practice, administration, or management of a financial product or
`service,” as required by § 18(d)(1) of the AIA.
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`3. Claims 1-17 Are Not Directed to a Technological Invention
`To determine whether a patent is directed to a technological invention,
`we consider “whether the claimed subject matter as a whole recites a
`technological feature that is novel and unobvious over the prior art; and
`solves a technical problem using a technical solution.” 37 C.F.R.
`§ 42.301(b). Simply making use of technology is not the test for meeting the
`“technological invention” exception. As explained in the Office Patent Trial
`Practice Guide, 77 Fed. Reg. 48,756 (Aug. 14, 2012), the following
`exemplary claim drafting techniques typically are not sufficient to avoid
`classification as a covered business method patent:
`(a) Mere recitation of known technologies, such as computer
`hardware, communication or computer networks, software,
`memory, computer-readable storage medium, scanners,
`display devices or databases, or specialized machines, such
`as an ATM or point of sale device.
`(b) Reciting the use of known prior art technology to
`accomplish a process or method, even if that process or
`method is novel and nonobvious.
`(c) Combining prior art structures to achieve the normal,
`expected, or predictable result of that combination.
`Id. at 48,764.
`
`Claims 1, 12, and 17 of the ’196 Patent are directed to a method,
`
`performed, at least in part, by “a computer system comprising one or more
`computer processors.” Ex. 1001, 20:59-60, 21:56-57. No other technical
`feature – apart from “a financial analysis system” in claim 17 – is recited in
`the claims. Nothing in the Specification of the ’196 Patent indicates that the
`components of the computer system were novel or unobvious, or that the
`combined components achieve anything other than the normal, expected or
`predictable result of the combination. On the contrary, the Specification of
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`the ’196 Patent discloses that “the present invention can be implemented on
`a computer system that includes one or more computers, such as PCs,
`terminals, workstations, or other devices.” Id. at 16:16-19. According to the
`Specification, suitable databases for use with the system include “the
`publicly available database of private equity performance as well as a
`database of historic public stock market index values and other information.”
`Id. at 16:24-27. The Specification further states that the method of the
`invention:
`can be implemented using a wide variety of programming
`techniques and algorithms and can be made available as part of
`an individual tool or incorporated into a complex program, such
`as a financial risk analysis system. Specific programming
`techniques to implement the invention will be known to those
`of skill in the art.
`Id. at 16:34-39. On this record, we conclude that the claims of the ’196
`Patent do not recite a technological feature that is novel and unobvious over
`the prior art.
`
`In addition, the advantage of the invention is said to be that it
`
`“provides a reliable framework for the comparison of private equity returns
`with returns of other asset classes and enables the computation of the
`correlation between long-term public and private equity returns.” Id. at
`9:59-63. These goals or problems are not technical in nature. Nor has any
`other technical problem been identified that is solved by the claimed
`method.
`
`We conclude that the ’196 Patent is directed to a financial product or
`
`service, and is not directed to a technological invention within the meaning
`of § 18(d)(1) of the AIA. Thus, the ’196 Patent is eligible for covered
`business method patent review.
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`B. Claims 1-17 are More Likely than Not Unpatentable Under § 101
`Petitioner challenges claims 1-17 of the ’196 Patent as directed to
`ineligible subject matter under 35 U.S.C. § 101. Pet. 16-31.
`Patent-eligible subject matter is defined in 35 U.S.C. § 101 as “any
`new and useful process, machine, manufacture, or composition of matter, or
`any new and useful improvement thereof . . . .” There are three limited,
`judicially-created exceptions to the broad categories of patent-eligible
`subject matter in § 101: laws of nature; natural phenomena; and abstract
`ideas. Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct.
`1289, 1293 (2012). Although a law of nature or an abstract idea by itself is
`not patentable, a practical application of the law of nature or abstract idea
`may be deserving of patent protection. Id. at 1293-94. In Alice Corp. Pty,
`Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 2355 (2014), the Supreme Court
`applied the same two-part framework set forth in Mayo to “distinguish[]
`patents that claim laws of nature, natural phenomena, and abstract ideas
`from those that claim patent-eligible applications of these concepts.” The
`first step is to determine whether the claims are directed to one of the above
`patent-ineligible categories. Id. The second step is to determine whether
`additional elements of the claims transform the claims such that the
`combination is “sufficient to ensure that the patent in practice amounts to
`significantly more than a patent upon the [ineligible concept] itself.’” Id.
`(quoting Mayo, 132 S.Ct. at 1294).
`1. The Claims are Directed to an Abstract Idea
`Petitioner asserts that the claims are not patent eligible because they
`are directed to a mathematical computation which is an abstract idea.
`
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`Pet. 18. According to Petitioner, the independent claims “use computers and
`processors as nothing more than calculators to expedite a purely
`mathematical analysis.” Id. at 21. Petitioner also asserts that the dependent
`claims only add field-of-use-type limitations that identify the financial
`products to be analyzed, characterize an output variable, or specify other
`variables or limitations for the calculation. Id. at 24.
`Petitioner further asserts that the claims are directed to an abstract
`idea because they “can be performed by a human without a computer.” Id.
`at 27. Petitioner relies upon the Declaration of Dr. David Robinson (Ex.
`1006 (“Robinson Decl.”) ¶ 20) and the ’196 Patent itself (Ex. 1001, Fig. 11,
`16:55-17:25) to show that the data is merely manipulated through
`multiplication or division making it amenable to a pencil-and-paper analysis
`and that the scaling function step is explicitly described as being determined
`without a computer. Pet. 27.
`The Patent Owner, on the other hand, avers that because there are
`different ways to benchmark and analyze financial products with irregular
`cash flows, such as the method described in Long, the ’196 Patent claims
`have meaningful limitations, rather than limitations that “completely cover
`an alleged abstract idea.” Prelim. Resp. 9-10. In addition, the Patent Owner
`relies on the claimed methods being tied to a computer system comprising
`one or more processors as an indication of patent eligibility. Id. at 10. The
`computer processors are said to be required to receive cash flow data as well
`as values for the public index over a period of time, and to determine a
`performance characteristic and the value of a scaling function. Id. at 11.
`Patent Owner’s arguments are not persuasive. The claims describe
`the concept of mathematically modeling a financial product with irregular
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`cash flow using the performance of a traditional index as a benchmark.
`Claim 1 recites, in relevant part, the following steps: “receiving . . . cash
`flow data for the financial product over a period of time,” “receiving . . .
`values for the index over the period of time,” “determining . . . a
`performance characteristic of the financial product,” and “determining . . . a
`value of a scaling function” that is a relationship between the performance
`characteristic of an investment of a second cash flow to the index and the
`performance characteristic of the financial product. Claim 12 further recites
`“outputting . . . the determined value” of the scaling function. Claim 17
`further recites “generating . . . scaled cash flow data using the scaling
`function.”
`The ’196 Patent discloses, in its “Background” section, that
`“comparing public and private equity data [using] a conventional technique
`known as PME, short for Public Market Equivalent” is known. Ex. 1001,
`1:66-2:3. The ’196 Patent then describes the shortcomings of known
`benchmarking analyses:
`What has been absent from conventional analysis is a
`technique to allow the use of a private equity data set that is
`valid for a first time period relative to a benchmark as the
`source for a derived data set for use in analyzing performance
`against the (historical or generated) benchmark over a second
`time period for which good private equity data is lacking. This
`would permit the accurate use of sophisticated data analysis
`techniques and tools, such as Monte-Carlo and historic
`simulation systems. These simulation systems have been
`developed for use in analyzing and predicting the behavior and
`comparative risk of investments in public equities or other more
`traditional assets for which there is a much longer set of market
`data for a much greater number of entities and for which
`performance data, such as pricing, is available on a
`comparatively continuous basis during that time span.
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`Id. at 4:16-30. According to the “Summary of the Invention” section of the
`’196 Patent, the objects of the invention “are achieved by scaling the cash
`flows of a private equity asset (or other investment or liability, such as a
`hedge fund) or scaling a corresponding cash flow applied to a benchmarking
`index, in a way that addresses the deficiencies of the conventional PME
`process.” Id. at 5:59-63. “[A] cash flow scaling factor or function is
`selected . . .” Id. at 5:63-64. The Specification discloses how the scaling
`factor or function is selected or derived:
`[C]omplex scaling factors, functions and models can also be
`used and applied to either or both cash flow components (i.e.,
`disbursements and/or draw downs). For example different
`scaling factors can be used for different time periods,
`determined using a mathematical function (linear, exponential,
`or any other), derived from a set of market data (public equity,
`bonds, treasuries, interest rates, exchange rates, trading volume,
`etc.), set to provide a level of stress or providing a multi-
`dimensional set of descriptive parameters, or various
`combinations of the above.
`Id. at 6:18-27.
`
`The disclosures above evidence that the individual steps of the
`independent claims were known to analyze the performance of private
`equity assets relative to the performance of a public index, that sophisticated
`data analysis tools exist, and that the scaling factor or function is determined
`using a mathematical function and derived from a set of market data. Thus,
`on this record, the individual functions performed by the computer appear to
`be “‘well-understood, routine, conventional activit[ies]’ previously known to
`the industry,” and previously performed, at least in part, by computer. See
`Alice, 134 S. Ct. at 2359; Mayo, 132 S. Ct. at 1294. “In short, each step does
`
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`CBM2014-00079
`Patent 7,698,196
`
`no more than require a generic computer to perform generic computer
`functions.” Alice, 134 S. Ct. at 2359.
`
`Patent Owner disputes Petitioner’s characterization of the ’196 Patent
`claims as simply a mathematical formula or algorithm. Prelim. Resp. 10 n.4.
`However, the presence or absence of a mathematical formula or equation in
`the claims does not carry any significance in determining whether the claims
`are directed to the abstract idea of benchmarking the performance of private
`equity assets relative to a public index. See Alice, 134 S. Ct. at 2356-57
`(noting that no special significance was given to the fact that one of the
`claims in Bilski v. Kappos, 561 U.S. 593 (2010), reduced hedging to a
`mathematical formula). In any event, the Specification itself describes the
`step of “determining . . . a value of the scaling function” as being determined
`using a mathematical function derived from a set of market data. Ex. 1001,
`6:21-24. Therefore, the recited claim step expresses the use of a
`mathematical formula or algorithm for the purpose of obtaining a value for
`the scaling function. The incorporation of a computer having one or more
`computer processors to receive the cash flow data and determine a
`performance characteristic of the financial product and value of a scaling
`function does not change the claims from being directed to the abstract idea
`of benchmarking a financial product with irregular cash flow.
`
`On this record, we are persuaded that the independent claims amount
`to “a mere instruction to ‘implemen[t]’ an abstract idea ‘on . . . a
`computer,’” and recitation of the “computer system comprising one or more
`computer processors” and “using at least one of said computer processors”
`in the independent claims “cannot impart patent eligibility” to the claimed
`abstract idea. Alice, 134 S. Ct. at 2360 (quoting Mayo, 132 S. Ct. at 1298).
`
`
`
`
`17
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`
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`CBM2014-00079
`Patent 7,698,196
`
`
`
`
`2. The Claims Lack a Patent Eligible Inventive Concept
`Petitioner asserts that the claims fail the machine-or-transformation
`test for determining patent eligibility. Petitioner argues that the only
`machine mentioned in the claims is a general purpose computer and its
`processors rather than a specific combination of computer components
`interacting in a specific way to accomplish the claimed methods. Pet. 29.
`Patent Owner points to the claim limitations tying each method step of
`claim 1 to a computer as an important indication of patent eligibility.
`Prelim. Resp. 10-11.
`The fact that a claim relies on a method that is implemented on a
`computer does not, by itself, demonstrate that the claim is patent eligible.
`Rather, a challenged claim, properly construed, must incorporate enough
`meaningful limitations to ensure that what is claimed is more than just an
`abstract idea and is not a mere “drafting effort designed to monopolize [an
`abstract idea] itself.” Mayo, 132 S. Ct. at 1297. In order for a machine to
`impose a meaningful limitation on the scope of a method claim, it must play
`“a significant part in permitting the claimed method to be performed, rather
`than function solely as an obvious mechanism for permitting a solution to be
`achieved more quickly.” SiRF Tech., Inc. v. Int’l Trade Comm’n, 601 F.3d
`1319, 1333 (Fed. Cir. 2010). Claims that recite a method of doing business
`on a computer, and do no more than merely recite the use of the computer
`for its ordinary function of performing repetitive calculations, are not patent
`eligible. Bancorp Servs., L.L.C. v. Sun Life Assurance Co., 687 F.3d 1266,
`1278-79 (Fed. Cir. 2012) (finding computer used for its most basic function,
`
`
`
`
`18
`
`
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`CBM2014-00079
`Patent 7,698,196
`
`the performance of repetitive calculation, does not impose a meaningful
`claim limitation).
`Claims 1-17 of the ’196 Patent are directed to a method for analyzing
`a performance of an asset or financial product by benchmarking the
`performance relative to an index. On this record, Petitioner has shown that
`each of the independent claims involve gathering data and performing
`calculations with the data. Pet. 21-26. Independent claim 1 recites steps
`directed to data gathering (e.g., “receiving . . . cash flow data for the
`financial product” and “receiving . . . values for the index”) followed by
`steps directed to performing calculations on the data (e.g., “determining . . .
`a performance characteristic of the financial product” and “determining . . . a
`value of a scaling function”). Id. at 21. We agree with Petitioner that the
`claimed steps do not add a technological advance because they are directed
`to the abstract idea of manipulating and calculating data for a financial
`product. See id.
`Independent claim 12 recites data gathering and calculating steps
`similar to those recited in claim 1 and adds a step of “outputting using at
`least one of said computer processors an indication of the determined value.”
`We agree with Petitioner that this output step is an insignificant post-
`solution activity. Id. at 22.
`Independent claim 17 recites data gathering and calculating steps
`similar to those recited in claim 1 and adds “at least one of” four steps. We
`agree with Petitioner that those steps are either insignificant post-solution
`activities (e.g., “providing . . . a measure of the performance of the asset” or
`“providing the scaled cash flow data as input to to a financial
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