Patent Owner Loses under § 101 in CBM Where Claims Not Limited to Technological Innovation Allegedly Disclosed in Patent Specification

All claims of a patent directed to a “security-based order processing technique” are unpatentable under 35 U.S.C. § 101, said the Patent Trial and Appeal Board (PTAB) in a final written decision in a Covered Business Method Review. Miami Int’l. Holdings, Inc. v. NASDAQ, Inc., CBM2018-00030, Patent 7,921,051 B2 (PTAB October 3, 2019). The decision is instructive for two reasons. First, the Patent Owner made unsuccessful arguments that elements described in the specification but not explicitly claimed somehow breathed a patentable technological innovation into the claims. Second, the PTAB continues to explicitly rely on the USPTO’s 2019 revised § 101 guidance that has been questioned, and even disregarded, by the Federal Circuit.

The CBM proceeding had been instituted for all claims (1-49) of the ’051 patent, solely on the issue of patent-eligibility under 35 U.S.C. § 101. The PTAB considered independent claim 13 to be illustrative:

A computer implemented method of routing securities orders in an electronic market, the method comprising:
accessing, by one or more computer systems a configurable look-up table stored in a computer storage medium, in response to a received order involving a specific security, the configurable look-up table including assignment entries that assign each of a plurality of securities to one or more securities processors, each assignment entry determining which security processor will execute an order for that specific security, with the configurable look-up table including a specific entry table and a rule entry table and with the rule entry table including one or more id-range entries that assign a range of securities to a specific securities processor;
determining by the one or more computer systems which securities processor the specific security is assigned to; and
sending the received security order to the securities processor to which the specific security is assigned for processing of the order involving the specific security.

As with so many PTAB cases, this one was over at claim interpretation. This case was grandfathered in to the broadest reasonable interpretation (BRI) standard, but that did not help the Patent Owner in its quest for an expansive reading of the claims. Even though the parties agreed that no explicit claim construction was needed, the PTAB considered two terms, “load balancing” and “two-part data structure,” on which the Patent Owner had relied in its arguments.

First, the Patent Owner argued that the claims improved conventional load balancing with an “innovative systems architecture” that “utilizes a lookup table that diverts trades to specific securities processors programmed to handle trades for specific securities based on the content or characteristics of trades received.” Not relevant, said the PTAB, because none of the patent claims “explicitly requires assigning securities to security processors in a manner that achieves load balancing.” Nor did the claims recite “how ‘load balancing’ would happen.” (Emphasis in original.)

Second, the Patent owner argued that the recited “configurable look-up table” was an innovative “two-part look-up table that improves electronic securities trade processing itself.” Unfortunately for the patent owner, no claim “explicitly require[d] the lookup table to have a unique ‘two-part’ data structure.” Moreover, the patent specification did not “describe the look-up table as having a unique two-part data structure.” At most, the claims – with which the patent Specification was consistent – “require the look-up table to include a specific entry table and a rule entry table, but do not specify a unique ‘two-part’ data structure for the look-up table.”

You can see where this is going. After confirming that the ’051 patent qualified for CBM review, the PTAB considered § 101 patent eligibility under the two-part Mayo/Alice patent-eligibility test, the outcome by this point being in little doubt. 

Abstract idea? Check: “the ’051 Patent claims are directed to routing information to a particular destination using a lookup table implemented using generic computer technology and configured by a person.” Referring to the USPTO’s 2019 § 101 guidance, the PTAB noted that routing securities information was a fundamental economic practice. Following the 2019 guidance to “consider whether the claims integrate the judicial exception into a practical application,” the PTAB agreed with the Petitioner that the claims simply automated a manual process.

No additional elements transforming the abstract idea into a patent-eligible claim? Check: “[u]sing computers and a look-up table to distribute (i.e., route) securities orders across multiple securities processors in an electronic market is well-understood, routine, and conventional activity.” The “Patent Owner’s arguments concerning the two-part structure of the look-up table” failed because “the claims do not require, nor does the ’051 patent disclose, a unique two-part data structure for look-up table.”

Lessons for Practice

Just as when overcoming rejections or invalidity arguments based on prior art, when arguing for § 101 patent-eligibility, you can only rely on what is in your claims. So if you really have, for example, a novel data structure, as the Patent Owner here asserted, make sure your claims really call out, with limiting detail, that structure. Not only is it important to disclose a technological solution – it is important to claim that solution.

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