NASDAQ Patent Doesn’t Claim Covered Business Method

The PTAB has declined to institute a Covered Business Method (CBM) review for a patent, owned by NASDAQ, claiming a computerized system for executing securities transactions. Investors Exchange LLC v. NASDAQ, Inc., Case CBM2018-00038 (Patent 7,895,112 B2). According to the PTAB, the Petitioner did not meet its burden of showing that the claims were not a technical solution to a technical problem, and therefore did not meet the requirements of Section 18(d) of the Leahy-Smith America Invents Act (“AIA”).

Representative claim 1 recites:

1. A computer system for execution of transactions involving execution of orders for securities, the computer system comprises:

a central processor device;

a sequential access storage device that provides a persistent store of recorded information;

a main memory coupled to the central processor and the main memory storing:

an order book that includes orders and/or quotes for a particular security, the orders and/or quotes having various prices, sizes and time priorities;

executable code that causes the processor device to match the orders and/or quotes in the order book for the security to a received order for the security, with the order book only accessible by the executable code that matches orders and/or quotes; and

the executable code that matches further comprising:

order management executable code that sends a message to report matching of the received order, or a portion of the received order, to orders and/or quotes in the order book to an order activity log file located in the sequential access storage device.

(Emphasis added to highlight the claim recitation at issue.) The Petitioner argued, under the standard set forth in AIA § 18(d)(1), that the above claim was both directed to “a financial product or service,” and was not directed to a “technological invention.” But the PTAB found that the Petitioner had failed to meet its burden to show a technological invention under the applicable two-pronged test: (1) whether the claimant recited a novel and unobvious technological feature over the prior art, and (2) whether the claim solves a technical problem with a technical solution, were met.

Even though the Petitioner provided expert testimony showing that computer processes having dedicated memories were known, the Petitioner did not show that “one of ordinary skill in the art would have known to use such a computer process for the claimed matching into store the claimed order book, by default, in the computer process’ dedicated address space.” The PTAB agreed with the Patent Owner that the Petitioner had not submitted any “evidence that teaches or suggests to a skilled artisan to isolate a trading platform’s matching operation into a process separate from other non-matching related operations.” Thus, the Petitioner had failed both prongs of the “technological invention” test.

Lessons for Practice

Is there really a technological invention here? There does not seem to be any disputes that the claims here use known techniques for dedicating memory to certain processes in the context of storing information relating to a financial transaction. In other words, the claims arguably take a known transaction, and known technology, and recite to apply the known technology to the known transaction. And indeed, it was the failure to show that one of ordinary skill would have applied the known technology to the claimed matching and order book storage that lost the day for the Petitioner. Thus, the lesson here is that, at least for this PTAB panel, novel applications of pre-existing technology can be technological inventions.

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