DETAILED ACTION
Notice of Pre-AIA or AIA Status
The present application is being examined under the pre-AIA first to invent provisions.
Receipt of Applicant’s Amendment filed November 20, 2025, is acknowledged.
Response to Amendment
Claims 22-24, 26, 32, 34, and 35 have been amended. Claims 1-21 have been canceled. Claims 22-43 are pending and are provided to be examined upon their merits.
Response to Arguments
Applicant's arguments filed November 20, 2025, have been fully considered but they are not persuasive. A response is provided below in bold where appropriate.
Applicant notes Claim Objections, pg. 7 of Remarks:
CLAIM OBJECTIONS
The claims were objected to because of an issue identified in the numbering of the claims. The listing of claims provided herewith has been renumbered to correct this inadvertent error. Claims 34-42 have been renumbered to claims 35-43 with the second claim 34 (from the previous listing) now listed as claim 35.
The objection is withdrawn.
Applicant argues 35 USC §112 Rejection, pg. 7 of Remarks:
REJECTIONS UNDER § 112
Claims 22-43 stand rejected under 35 U.S.C. 112(b) as being indefinite. While Applicant disagrees, Applicant has amended claim 22 and claim 34 in the manner interpreted in the Office Action. Applicant respectfully requests reconsideration and withdrawal of the rejections.
The rejection is withdrawn based on the claim amendment.
Applicant argues 35 USC §101 Rejection, starting pg. 7 of Remarks:
REJECTIONS UNDER § 101
The previously presented claims were rejected under 35 U.S.C. 101 because the Office alleged that the claimed invention is directed to an abstract idea without significantly more. Applicant respectfully disagrees.
While Applicant disagrees, Applicant has amended independent claim 22 and independent claim 34 to further prosecution and to clarify the subject matter of the claims. As amended, the claims recite that "wherein the creation and execution of the bespoke hedge is performed automatically in response to the risk selection which comprises a single selection of the risk switch." This subject matter coupled with the existing subject matter demonstrates and clarifies that Applicant's system is not merely directed to an abstract idea but is directed to an inventive concept that is patent-eligible under § 101.
From MPEP 2106.04(a)…
The enumerated groupings of abstract ideas are defined as:
1) Mathematical concepts – mathematical relationships, mathematical formulas or equations, mathematical calculations(see MPEP § 2106.04(a)(2) (s2106.html#ch2100_d29a1b_13ae3_321) , subsection I);
2) Certain methods of organizing human activity – fundamental economic principles or practices (including hedging, insurance, mitigating risk); commercial or legal interactions (including agreements in the form of contracts; legal obligations;advertising, marketing or sales activities or behaviors; business relations); managing personal behavior or relationships orinteractions between people (including social activities, teaching, and following rules or instructions) (see MPEP §2106.04(a)(2) (s2106.html#ch2100_d29a1b_13ae3_321) , subsection II); and
3) Mental processes – concepts performed in the human mind (including an observation, evaluation, judgment, opinion)(see MPEP § 2106.04(a)(2) (s2106.html#ch2100_d29a1b_13ae3_321) , subsection III).
Therefore, hedging is an abstract idea.
From Claim 34…
creating and executing, by the trading platform, a bespoke hedge specific to the risk selection of the user based on the risk selection, wherein the bespoke hedge maintains a fixed -1 correlation to the retail investor portfolio and achieves a 0% hedge error, wherein the creation and execution of the bespoke hedge is performed automatically in response to the risk selection which comprises a single selection or toggle of the risk switch.
Creating and executing a hedge is abstract.
INTRODUCTION AND SUMMARY
Applicant provides (and attaches a copy to this response) of the Decision of the Federal Circuit in Trading Technologies International, Inc. v. CQG, Inc., et al., Case No. 2016-1616 decided on January 18, 2017 (hereinafter "Trading Tech. Opinion"). The Trading Tech. Opinion is instructive in the present application and is included in the July 2018: Eligibility Quick Reference Sheet Decisions Holding Claims Eligible available at: In the Trading Tech. Opinion, the Federal Circuit found the claims in the case to be directed to patent eligible subject matter despite describing and claiming a method and system for the electronic trading of stocks, bonds, futures, options and similar products.
Applicant is citing a non-precedential case. Subsequent precedential CAFC cases (April and May 2019) directed to Trading Technologies and their interface were found to be abstract and non-statutory.
For example, from MPEP 2106.05(a) I:
“Examples that the courts have indicated may not be sufficient to show an improvement in computer-functionality: …
… viii. Arranging transactional information on a graphical user interface in a manner that assists traders in processing information more quickly, Trading Technologies v. IBG LLC, 921 F.3d 1084, 1093-94, 2019 USPQ2d 138290 (Fed. Cir.2019).”
Therefore, a user interface that assisted traders in processing information more quickly was found to be abstract.
From MPEP 2106.05(a) II:
“… However, it is important to keep in mind that an improvement in the abstract idea itself (e.g. are cited fundamental economic concept) is not an improvement in technology. For example, in Trading Technologies Int’l v. IBG, 921 F.3d 1084, 1093-94, 2019 USPQ2d 138290 (Fed. Cir. 2019), the court determined that the claimed user interface simply provided a trader with more information to facilitate market trades, which improved the business process of market trading but did not improve computers or technology.”
Therefore, improving the abstract idea of trading with a trading interface that allowed trading to be quicker was found to be non-statutory.
Among other reasons for the court's decision, the Federal Circuit held that the claims describe a trading system that includes a graphical user interface that included novel displays that provided the improvement of preventing order entry at a changed price. In reaching the decision, the decision states the "court distinguished this system from the routine or conventional use of computers or the Internet, and concluded that the specific structure and concordant functionality of the graphical user interface are removed from abstract ideas, as compared to conventional computer implementations of known procedures. Thus, the court held that the criteria of Alice Step 2 were also met." (Trading Tech. Opinion at p. 7). In conclusion, the court stated "For Section 101 purposes, the claimed subject matter is directed to a specific improvement to the way computers operate, for the claimed graphical user interface method imparts a specific functionality to a trading system directed to a specific implementation of a solution to a problem in the software arts." (Trading Tech. Opinion at p. 9).
The graphical user interface had a particular structure that improved trading accuracy.
From MPEP 2105.05(a) II:
“Examples that the courts have indicated may be sufficient to show an improvement in existing technology include: …
… viii. A specific, structured graphical user interface that improves the accuracy of trader transactions by displaying bid and asked prices in a particular manner that prevents order entry at a changed price, Trading Techs. Int’l, Inc. v. CQG, Inc., 675Fed. App'x 1001 (Fed. Cir. 2017) (non-precedential);…”
Therefore, a user interface that improves accuracy of the transactions was found to be sufficient to show an improvement to technology.
When the analysis of the court is applied similarly to the instant claims, a similar result is reached. Applicant's claims are directed to an electronic or software implemented trading system in which the specific claimed implementation solves a problem in the field. Here, Applicant's claimed system and method exist only in the context of "a trading platform located on a remote server... the remote server connected to a communication network coupling the trading platform to a personal trading computer." In this context, the claimed implementation is an improvement in the operation of the technology by providing a simple, yet powerful user interface that solves a problem of allowing a retail investor to eliminate all risk associated with a portfolio. With a single click or selection/toggle of the risk switch, multiple actions are performed that are not possible with existing technology. The bespoke hedge with -1 correlation and 0% hedge error is created and executed (see claims 22 and 34). Also, in response to a second single selection or toggle, the system closes and settles the bespoke hedge (see claims 23 and 35). Because of this technological improvement in field of software trading technologies, the claimed subject matter is patent eligible.
From Applicant’s argument above…
>>”Here, Applicant's claimed system and method exist only in the context of "a trading platform located on a remote server... the remote server connected to a communication network coupling the trading platform to a personal trading computer." In this context, the claimed implementation is an improvement in the operation of the technology by providing a simple, yet powerful user interface that solves a problem of allowing a retail investor to eliminate all risk associated with a portfolio. With a single click or selection/toggle of the risk switch, multiple actions are performed that are not possible with existing technology. The bespoke hedge with -1 correlation and 0% hedge error is created and executed (see claims 22 and 34).”<<
Applicant is arguing an improvement to the operation of technology by solving a problem of allowing a retail investor to eliminate all risk associated with a portfolio. This is solving a business problem of eliminating portfolio risk. Respectfully, Applicant is not solving a technical problem of interface technology.
The above comments are further described in the context of the Two-Step Patent Eligibility framework below:
PATENT ELIGIBILITY ANALYSIS FRAMEWORK
Step 1: The Claims Are Directed to Multiple Statutory Categories
As admitted in the Office Action, Applicant's claims are directed to a system and to a method. Both of these are listed among the statutory categories of invention. Applicant's claims satisfy step 1 of the patent eligibility framework.
Step 2A (Prong One): The Claims Are Not Directed to a Judicial Exception
Step 2A - prong one of the patent eligibility framework determines whether the Applicant's claims are directed to judicial exception such as laws of nature, natural phenomena, and abstract ideas. Like the claims in Trading Technologies, Applicant's claims are not directed to an abstract idea and are instead, directed a fully specified trading system that overcomes the technological and practical limitations of known or existing systems.
The Office Action alleges that Applicant's claims cover certain methods of organizing human activity. (See Office Action, p. 22). The Office Action also concludes that the claims amount "to no more than mere instructions to apply the exception using a generic computer component." (Id.) These conclusions are incorrect for several reasons.
The error in the analysis of the Office Action is not considering the claim as a whole and/or improperly trivializing or generalizing the claimed subject matter as a concept rather than considering the individual claimed components and the novel functions that they provide to achieve the inventive concept. As noted in this regard, Courts have recognized that "at some level, all inventions... embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas." Alice Corporation Pty. Ltd. v. CLS Bank Int'l, 134 S.Ct. 2347, 2354 (2014). The analysis of the claims should follow "the general rule that patent claims must be considered as a whole." Id. at 2355.
If this procedure is followed, it is readily recognized that the claims are directed to more than an alleged "fundamental economic practice." Applicant's claims are directed not to a financial concept but to a powerful risk scaling system that is performed by a novel and powerful platform with an innovative user interface otherwise unknown and unavailable in the field. (See Decl. of M. Tjarnberg, submitted herewith).
From Applicant’s Specification:
“The present invention generally relates to a hedging scaling system for an investor equity portfolio using a trading platform, more specifically for a 0 to 100% hedging scaling system for avoidance of both idiosyncratic risk and market risk on a retail or other type of equity portfolio using a trading platform, and more specifically to a trading platform with a capacity by a user to adjust the hedging from a full custom hedge to no hedge.” [0001]
The invention is about portfolio hedging, from Applicant’s title:
“Hedging Scaling System For An Investor Equity Portfolio Using A Trading Platform And Method of Use Thereof” (Title).
Claim 22, for example, recites that Applicant's system is configured to, inter alia,:
display a user interface on the personal trading computer, the user
interface including a risk switch for a risk selection by the user between a first level of risk in which a retail investor portfolio of a user comprising a plurality of individual financial instruments is subject to full market exposure and a second level of risk in which the retail investor portfolio of the user is totally disengaged from market exposure equivalent to a position in which the retail investor portfolio is sold;
create and execute a bespoke hedge specific to the risk selection of
the user based on the risk selection, wherein the bespoke hedge maintains a fixed -1 correlation to the retail investor portfolio and achieves a 0% hedge error, wherein the creation and execution of the bespoke hedge is performed automatically in response to the risk selection which comprises a single selection or toggle of the risk switch
The above portion of claim 22 highlights a central practical and specific implementation on Applicant's simple, yet innovative user interface. As clarified in Applicant's amendment included in this response, a single selection or toggle of the risk switch in Applicant's user interface initiates the automatic performance of functions that is unavailable using existing tools and interfaces. The single switch or toggle is not a mere button or cosmetic user interface but, instead, is a powerful risk scaling tool. As further described in claim 23 (dependent on claim 22), the risk switch is further configured to:
close and settle the bespoke hedge in response to obtaining the second risk selection comprising a single selection or toggle of the risk switch, wherein if a value of the retail investor portfolio increased between the first risk selection and the second risk selection, the user pays an amount of the increase in the retail investor portfolio, and if the value of the retail investor portfolio decreased between the first risk selection and the second risk selection, the user is paid an amount of the decrease in the retail investor portfolio.
Thus, the selection (i.e., by simply pushing a button or toggling the risk switch) initiates and then causes a powerful chain of events to occur that include creating and then executing the bespoke hedge that maintains a fixed -1 correlation to the retail investor portfolio and achieves a 0% hedge error and then closes and settles the bespoke hedge upon the second selection (i.e., by a second button press or second toggle of the risk switch). (See Decl. of M. Tjarnberg, submitted herewith).
Respectfully, the toggle switch is not improving computer technology itself. This is just programming a computer interface, similar to a radio button on a computer interface, to determine if a portfolio should be hedged.
Not only does Applicant's system achieve these multiple actions and results without further interaction through the innovative interface, the underlying actions are technical in nature rather than abstract or mere ideas. The trading platform coordinates and executes actions between the personal computer and a trading desk to allow such actions to occur immediately create and execute the bespoke hedge that maintains a fixed -1 correlation to the retail investor portfolio and achieves a 0% hedge error and performs in a manner equivalent to a position in which the retail investor portfolio is sold but requires nor executes any underlying sales of the assets in the retail investor's portfolio. Support for these concepts and further description is available in the Specification as indicated below:
1. Elimination of exposure/Complete Market Disengagement/Complete risk mitigation for retail investor/as if positions were sold: Specification at [0001], [0016], 11 [0036], [0149], [0074], [0051], [0073], [0074], [0086], [0111], [0112], [0089], FIG. 10, FIG. 11, FIG. 12, FIG. 13, FIG. 14, Abstract
2. Perfect Bespoke Hedge for retail investors: Specification at [0001], [0016], [0036], [0149], [0074], [0051], [0073], [0074], [0086], [0111], [0112], [0089], FIG. 10, FIG. 11, FIG. 12, FIG. 13, FIG. 14, Abstract
3. Bespoke Hedge with -1 correlation: Specification at [0068], [0160], [0161], [0084], [0037], [0074], [0075]
4. Creating Bespoke Hedge to eliminate or scale exposure from retail investor portfolio: Specification at [0068], [0090], [0163], [0075], [0035], [0097], [0016]
5. 0% Bespoke Hedge Error: Specification at [0013, [0035], [0068], [0049], FIG. 10, FIG. 11, FIG. 12, FIG. 13, FIG. 14
The actions recited in the claims are not simply a "sell all" action or combine otherwise known executions that may be available on existing trading platforms but the claimed user interface and risk switch performs innovative and otherwise unknown actions to automatically and effectively scale risk as desired by a retail investor. These actions are not merely providing instructions and causing them to be performed on a general purpose computer.
An additional issue with existing electronic trading systems is latency or the time required to calculate or obtain a trading quote because of the real-time changes in trading prices/values. Applicant resolves this issue by automatically, in response to a single selection or toggle, creating and executing a bespoke hedge. This can immediately and robustly be accomplished via the trading system without the need for communication back and forth between the trading platform and the personal computer. This is a technical improvement over this known problem in the field.
For at least these reasons, the claims are not directed to abstract idea or to a method of organizing human activity, but instead to a powerful risk scaling system developed to implement actions that solve a technical problem.
The above is solving a hedging problem of mitigating financial risk.
Step 2A (Pron Two): The Claims Integrate the Alleged Abstract Idea into a Practical Application
Even if Applicant's claims are viewed to be directed to an abstract idea under Prong One (which is not conceded by Applicant), Applicant's claims are patent eligible when Prong Two of Step 2A is considered. Prong Two considers whether the claims recite additional elements that integrate the judicial exception into a practical application.
In the Office Action, the Office alleges that the claims "do not integrate the abstract idea to a practical application because they do not impose any meaning limits on practicing the abstract idea." (Office Action, p. 23). Applicant respectfully disagrees with this assessment because Applicant recites a particular way and using a particular, concrete risk scaling system for implementing the multiple actions that occur in the chain of events that result in Applicant's risk scaling. For example, Applicant recites a particular user interface with a particular risk switch that performs actions that are otherwise unknown in the field. (See Decl. of M. Tjarnberg, submitted herewith). Applicant's claims impose meaningful limits on the alleged concept of risk scaling.
Novelty is not a statutory 35 USC §101 issue.
Here, the system includes a risk switch in a user interface that performs the powerful chain of events described above. In view of this, the Office cannot take the position that there are no meaningful limits in Applicant's claims. Turning back to Trading Technologies (opinion attached hereto), the preamble of the claim in that case recited the following:
A method for displaying market information relating to and
facilitating trading of a commodity being traded in an electronic exchange having an inside market with a highest bid price and a lowest ask price on
a graphical user interface, the method comprising;
As can be seen, the claim recites a graphical user interface displaying information traded in an electronic exchange. There is no particular hardware recited other than a general purpose computer. The general concept of displaying information in a graphical user interface, in Trading Technologies was found to be patent eligible because, among other things, the interface performed actions that were otherwise not known in the art and resulted in an improvement for users of the electronic trading system. The same underlying reasoning can be applied here.
With all due respect, the Trading Technologies case being argued was found to improve accuracy of a trade based on a particular structure.
Applicant's system adds sufficiently more in the form of a concrete implementation strategy that includes server infrastructure (see Specification, [0131]), user input mapping (see Specification, [0059], [0062-64]), and real-time hedge execution (see Specification, [0064], [0068]). The operations of Applicant's system are automatically executed without the need for multiple exchanges of communication that are normally present when prices and/or trades are executed on trading platforms. Instead, in response to the single selection or toggle by the user, the bespoke hedge is created with a -1 correlation and 0% hedge error to the retail investor's portfolio. These actions are implemented using a single risk switch as claimed for all of the selected financial instruments of the plurality of individual financial instruments in the retail investor portfolio. For at least these reasons, Applicant's claims are integrated into a practical application.
Step 2B (Pron Two): The Claims Integrate the Alleged Abstract Idea into an Inventive Concept
Even if Applicant's claims are considered to be patent ineligible under step 2A (which Applicant does not concede), Applicant's claims include significantly more than the alleged abstract idea to make the claims patent eligible. Step 2B considers whether the claims recite additional elements that amount to significantly more that the judicial exception.
In the Office Action, the Office alleges that Applicant's claims amount to merely applying an exception using a generic computer component. (Office Action, p. 24). The Office alleges that "even if switch for risk selection were not itself abstract, using switches and/or sliders for risk purposes has been around for a while." (Office Action, p. 24, citations to references omitted). This statement in the Office Action misses the critical aspects of Applicant's inventive concept, namely, that Applicant's user interface may be simple but is a powerful that performs a power chain of actions otherwise unknown in the field. The "something more" in Applicant's claim is the power functionality of the risk switch or risk toggle in Applicant's risk scaling system. As stated in the MPEP, "Evaluating additional elements to determine whether they amount to an inventive concept requires considering them both individually and in combination to ensure that they amount to significantly more than the judicial exception itself." MPEP 2106.05. Here, when such an evaluation is performed and the claimed elements are considered individually an in combination, Applicant's inventive concept becomes apparent. As stated in the accompanying Declaration of M. Tjarnberg:
What appears simple on the surface is the entry point to a complex and
highly integrated trading mechanism. The interface acts as the control point that activates a full sequence of automated system operations, allowing the user to achieve precise risk scaling without selling, modifying, or otherwise touching the underlying portfolio.
This functionality goes beyond incremental improvement. It introduces
a materially different way of managing portfolio risk: one that replicates the effect of liquidation through a trading system rather than through asset disposal. This is a significant advancement in the design and operation of retail trading platforms and a substantial step forward in how portfolio risk can be controlled.
This invention addresses a long-standing and unresolved limitation in
existing trading environments and provides retail investors with a level of
precision and control that was not previously available.
The so-called "entry point" described above by Mr. Tjarnberg is Applicant's claimed risk scaling system with user interface and risk switch. The mere fact that other systems may allegedly have switches on interfaces misses the point. This other switches do not negate Applicant's inventive concept because the other switches do not provide the powerful risk scaling of the Applicant's claimed system.
The above is a novelty argument, not a 35 USC 101 argument. Novel claims can be non-statutory, e.g. Alice vs. CLS Bank, Supreme Court, (2014), where Alice overcame prior art as a patent yet was found to be non-statutory.
The MPEP supports the determination of Applicant's claimed system as an inventive concept. The MPEP states that patent eligibility can be found when the claim includes significantly more in the form of "adding a specific limitation other than what is well-understood, routine, conventional activity in the field, or adding unconventional steps that confine the claim to a particular useful application." MPEP 2106.05. Here, this is exactly what Applicant has done. Applicant's claimed automatic creation and execution of the bespoke hedge with a -1 correlation and 0% hedge error to the retail investor's portfolio is not well-understood, routine or conventional activity. Nor is creating such risk scaling using a single input on a graphical user interface. This subject matter is included in Applicant's claims and thus limits Applicant's claims meaningfully relative to the alleged judicial exception.
The abstract idea of hedging above cannot provide the additional element.
The power of Applicant's claimed system and the "something more" or the "specific limitations other than what is well-understood, routine, conventional activity in the field, or adding unconventional steps that confine the claim to a particular useful application" as the "something more" is described by the MPEP can also be found Applicant's dependent claims.
The “something more” cannot itself be abstract.
Claim 26 further clarifies the power of Applicant's claimed system and recites "wherein the bespoke hedge is automatically executed on behalf of the user without input from the user other than the risk switch selection, wherein the risk switch comprises a button configured to receive the single selection or toggle." This subject matter clearly limits the claimed subject matter from merely a concept or abstract idea. This functionality of Applicant's user interface and risk switch provides risk scaling that no existing system or tool provides.
Claim 31 further clarifies the inventive concept and the functionality of Applicant's risk scaling system and recites "wherein the user continues to hold all positions in the retail investor portfolio after the trading platform obtains the risk selection until the user makes a subsequent risk selection indicating a desire to return to the first risk level in which the retail investor portfolio is subject to full market exposure." Once again, this not merely an abstract idea but describes functionality associated with Applicant's user interface and risk switch that are not known in field and provide functionality otherwise not known or other unavailable in the field.
Claim 32 further is directed to the inventive concept and powerful functionality of Applicant's risk scaling system. Claim 32 recites "wherein the user interface comprises a risk dimmer, wherein the risk dimmer is configured to, in response to a user's input with a sliding toggle on the user interface, selectively scale market exposure for individual stocks within the retail investor portfolio such that a first portion of a selected stock in the retail investor portfolio is disengaged from market exposure and a second portion of the selected stock in the retail investor portfolio is subject to market exposure." This places meaningful limits on the alleged abstract idea or judicial exception not only in the manner of the user input by describing the sliding toggle in the user interface but also in the necessary functionality regarding the scaling of market exposure.
Respectfully, the above are novelty arguments, not 35 USC 101 arguments directed to statutory matter.
For all these reasons, Applicant's claims are directed to patent eligible subject matter and Applicant respectfully requests reconsideration and withdrawal of the rejections.
Novel abstract claims are still abstract. To provide an additional element or significantly more, the element(s) cannot itself be abstract.
From MPEP 2106.05(a):
“It is important to note, the judicial exception alone cannot provide the improvement. The improvement can be provided by one or more additional elements. See the discussion of Diamond v. Diehr , 450 U.S. 175, 187 and 191-92, 209 USPQ 1, 10 (1981)) in subsection II, below. In addition, the improvement can be provided by the additional element(s) in combination with the recited judicial exception. See
MPEP § 2106.04(d) (s2106.html#ch2100_d2e7df_235a2_338) (discussing Finjan, Inc. v. Blue Coat Sys., Inc., 879 F.3d 1299, 1303-04, 125 USPQ2d 1282, 1285-87 (Fed. Cir. 2018)). Thus, it is important for examiners to analyze the claim as a whole when determining whether the claim provides an improvement to the functioning of computers or an improvement to other technology or technical field.”
Therefore, additional elements are not abstract. Based on the above response, the rejection is respectfully maintained but modified for the claim amendments.
Applicant’s 37 CFR 1.132 Declaration (filed 11/20/2025)
From the affidavit (Examiner response in bold below):
The Affidavit under 37 CFR 1.132 filed November 20, 2025, is insufficient to overcome the rejection of claims 22-43 based upon 35 USC 101 as set forth in the last Office action because: they fail to show the claims are statutory.
I, Mikael Tjarnberg, respectfully submit this declaration in support of the above-referenced patent application and in response to the examiner's concerns regarding subject matter eligibility under 35 U.S.C. §101.
I have over fifteen years of experience working with financial markets, including direct experience as a trader on a trading desk trading complex instruments with multiple underlying assets. I was actively trading and managing portfolios of these positions, where precise control of exposure, correlation, and risk was essential. It was through this hands-on work with portfolio-level risk and complex structures that the foundation for this invention was formed – translating that level of precision and control into a system for managing risk across retail equity portfolios.
The above working experience is related to working with financial markets, trading and risk.
In practice, retail investors today do not manage risk in a precise or systematic way. Risk is typically addressed through fragmented tools and approximations, often requiring selling positions, rebalancing, or engaging in multiple imperfect transactions. This invention changes that fundamentally.
The system described in this application introduces a new capability: the ability to scale portfolio risk while continuing to hold all underlying positions. It allows an investor to replicate the economic effect of fully liquidating a portfolio - the most precise way to eliminate risk - without actually selling any securities. This is achieved not through manual intervention, but through an integrated trading system that constructs and manages a perfectly inverse exposure in real time.
In practical terms, the system allows a user to move seamlessly between full market exposure and full disengagement, as if the positions had been sold, while ownership of those positions remains unchanged. This represents a precise and deterministic form of risk control that does not exist in current retail trading platforms.
The above allegation states the system introduces new capability related to the ability to scale portfolio risk and allows a user to move seamlessly between full market exposure and full disengagement, as if the positions had been sold. These are abstract concepts of Certain Methods of Organizing Human Activity under fundamental economic practice and commercial interactions as it relates to hedging, risk management and trading.
The abstract idea itself cannot integrate the abstract idea into a practical application.
A central component of this invention is its deliberately simple user interface. The risk switch and risk dimmer provide a clear and intuitive control. With a single user action, the system does not merely change a display setting; it sets off a coordinated chain of events within the trading platform. That action triggers exposure recalculation, hedge construction with fixed -1 correlation and 0% hedge error, execution of that hedge, and continuous system-level maintenance of the resulting exposure.
What appears simple on the surface is the entry point to a complex and highly integrated trading mechanism. The interface acts as the control point that activates a full sequence of automated system operations, allowing the user to achieve precise risk scaling without selling, modifying, or otherwise touching the underlying portfolio.
The above is an allegation that the interface is simple, but it acts as an entry point to a complex and highly integrated trading mechanism. The interface has a risk switch and risk dimmer and with a single action sets off a coordinated chain of events.
The risk switch and dimmer amount to computer software control on a user interface of risk, where controlling risk itself is abstract. This is no different than a graphical user interface assisting traders to make trades, which has been shown to be abstract (MPEP 2106.05(a) I). The complex and highly integrated trading mechanism itself, is not claimed, but would likely be abstract as it is directed to trading.
This functionality goes beyond incremental improvement. It introduces a materially different way of managing portfolio risk: one that replicates the effect of liquidation through a trading system rather than through asset disposal. This is a significant advancement in the design and operation of retail trading platforms and a substantial step forward in how portfolio risk can be controlled.
This invention addresses a long-standing and unresolved limitation in existing trading environments and provides retail investors with a level of precision and control that was not previously available.
The above is an allegation and arguing improvement to managing portfolio risk and addresses a long-standing and unresolved limitation in existing trading environments and provides retail investors a level of precision and control not previously available.
The above statements are more about novelty and not about statutory eligibility. There is no teaching of precision and control and even if there was it would likely be an intended result.
I submit this declaration to affirm that the invention represents a genuine and substantial technical contribution to trading system architecture and portfolio risk control. This is not a theoretical model or a conceptual proposal. It is a fully realised trading system, deliberately designed and built from multiple interdependent components that work together to perform automated, precise portfolio risk scaling in real time. The invention reflects concrete system engineering and practical implementation, and should not be characterised as an abstract financial idea.
The above is an allegation from Applicant that the claims are not abstract because they provide genuine and substantial technological contribution to a trading system architecture. There is no factual evidence presented to support the above statement. The above statements indicate an improvement to trading and risk, which would be abstract. Also, the Applicant has not cited from their specification any technical problems and any new or improved technology to address such problems.
The affidavit refers only to the system described in the above referenced application and not to the individual claims of the application. Thus, there is no showing that the objective evidence of statutory eligibility is commensurate in scope with the claims. See MPEP § 716.
Claim Interpretation
Claim 22 recites “and create and execute a bespoke hedge specific to the risk selection of the user based on the risk selection, wherein the bespoke hedge maintains a fixed -1 correlation to the retail investor portfolio and achieves a 0% hedge error.”
Applicant’s specification teaches regarding “bespoke hedging product”…
“The Product (the hedge) 17 FIGS. 1-5 is a bespoke hedging product that always has a perfect -1 correlation with the retail equity portfolio it is intended to hedge. It is a hedge with a 0% hedge error. The Product achieves the -1 correlation because the trading platform and scaling system create a bespoke financial contract, asset, security, or reference index for each equity investor, and the return on this bespoke asset inversely mirrors or mirrors the return in the specific portfolio it is meant to hedge. Financial innovations are often about creating products with a Beta of 1 (index products) or a correlation of as close to -1 as possible (hedging products). The Product 17 FIG. 1-5 is a financial hedging product with a perfect -1 correlation.” [0051]
Therefore, “bespoke” hedging product is interpreted as a portfolio that always has a -1 correlation and 0% error, and the return inversely mirrors the return in the specific portfolio is it meant to hedge. Claim 34 has a similar issue.
Claim 22 recites “…a second level of risk in which the retail investor portfolio of the user is totally disengaged from market exposure as if positions in the retail investor portfolio are sold;”
The specification does not teach totally “disengaged” from market exposure.
However, from the specification….
“The Risk Switch hedge ("The Product") shown as 17 on FIGS. 1-5, is a financial
product that perfectly hedges investors' equity portfolios. It allows investors to temporarily "switch off' their risk and remove all their exposure without selling or touching their positions. The Product 17 as part of a system 100 hedges 100% of the risk in an investor's portfolio as illustrated by a switch 8 at FIGS. 1-5, or if the investor uses the "dimmer" option 7 as illustrate at FIGS. 1-5, on the trading platform of the system 100, it reduces risk in any increment from O to 100%, instead of switching it off completely.” [0036]
Therefore, totally disengaged from market exposure is interpreted to mean when all risk is removed without selling or touching the positions. Claim 34 has a similar issue.
Claim Rejections - 35 USC § 101
35 U.S.C. 101 reads as follows:
Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.
Claims 22-43 are rejected under 35 U.S.C. 101 because the claimed invention is directed to an abstract idea without significantly more.
Claims 22-43 are directed to a system or method, which are statutory categories of invention. (Step 1: YES).
The Examiner has identified method Claim 34 as the claim that represents the claimed invention for analysis and is similar to system Claim 22.
Claim 34 recites the limitations of:
A method of scaling risk exposure in a retail investor portfolio, the system comprising:
displaying a user interface on a personal trading computer that is coupled to a trading platform located on a remote server, the trading platform comprising at least one processor and memory, the user interface including a risk switch for a risk selection by the user between a first level of risk in which a retail investor portfolio of a user comprising a plurality of individual financial instruments is subject to full market exposure and a second level of risk in which the retail investor portfolio of the user is totally disengaged from market exposure equivalent to a position in which the retail investor portfolio is sold;
obtaining by the trading platform from the personal trading computer the risk selection of the user indicating a desire of the user to change an exposure of the retail investor portfolio from the first level of risk to the second level of risk; and
creating and executing, by the trading platform, a bespoke hedge specific to the risk selection of the user based on the risk selection, wherein the bespoke hedge maintains a fixed -1 correlation to the retail investor portfolio and achieves a 0% hedge error wherein the creation and execution of the bespoke hedge is performed automatically in response to the risk selection which comprises a single or toggle of the risk switch.
.
These above limitations, under their broadest reasonable interpretation, cover performance of the limitation as certain methods of organizing human activity. The claim recites elements, in non-bold above, which covers performance of the limitation as a fundamental economic practice. Displaying an interface including a risk switch for a risk selection by the user between a first level of risk in which a retail investor portfolio of a user is subject to full market exposure and a second level of risk in which the retail investor portfolio of the user is totally disengaged from market exposure as if positions in the retail investor portfolio are sold; obtaining the risk selection of the user indicating a desire of the user to change an exposure of the retail investor portfolio from the first level of risk to the second level of risk; and creating and executing, a bespoke hedge specific to the risk selection of the user based on the risk selection, wherein the bespoke hedge maintains a fixed -1 correlation to the retail investor portfolio and achieves a 0% hedge error is providing a hedge and mitigating a financial risk, which is abstract under fundamental economic practices. Trading is a commercial interaction, which is also abstract. If a claim limitation, under its broadest reasonable interpretation, covers performance of the limitation as a fundamental economic practice or commercial interaction, then it falls within the “Certain Methods of Organizing Human Activity” grouping of abstract ideas. Accordingly, the claim recites an abstract idea. Claim 22 is abstract for similar reasons. (Step 2A-Prong 1: YES. The claims are abstract)
This judicial exception is not integrated into a practical application. In particular, the claims only recite: trading platform on a remote server, processor, memory, personal trading computer (claim 22); personal trading computer, trading platform on a remote server comprising processor, memory (Claim 34). The computer hardware is recited at a high-level of generality (i.e., as a generic processor performing a generic computer function) such that it amounts no more than mere instructions to apply the exception using a generic computer component. The risk switch is for selection of risk levels, therefore, further limiting the abstract idea of risk mitigation and hedging (see para. [0066] where a risk switch is used for hedging a portfolio. The maintains -1 fixed correlation and 0% hedge error, is abstract as a fundamental economic practice, but also could be abstract as a mathematical concept as it would inherently require an algorithm to maintain the -1 correlation and provide the 0% error. Accordingly, these additional elements, when considered separately and as an ordered combination, do not integrate the abstract idea into a practical application because they do not impose any meaningful limits on practicing the abstract idea. Therefore claims 22 and 34 are directed to an abstract idea without a practical application. (Step 2A-Prong 2: NO. The additional claimed elements are not integrated into a practical application)
The claims do not include additional elements that are sufficient to amount to significantly more than the judicial exception because, when considered separately and as an ordered combination, they do not add significantly more (also known as an “inventive concept”) to the exception. As discussed above with respect to integration of the abstract idea into a practical application, the additional element of using a computer hardware amounts to no more than mere instructions to apply the exception using a generic computer component. Mere instructions to apply an exception using a generic computer component cannot provide an inventive concept. Even if switch for risk selection were not itself abstract, using switches and/or sliders for risk purposes has been around for a while (see Pub. No. US 2008/0071702 to Howard et al, para. [0125] and Fig. 6; Pub. No. US 2009/0073174, para. [0093] to Berg et al.; Pub. No. US 2014/0279681, para. [0054] to Cole; Pub. No. US 2022/0138857 to Sun et al. para. [0046] as just some examples). Accordingly, these additional elements, when considered separately and as an ordered combination, do not integrate the abstract idea into a practical application because they do not impose any meaningful limits on practicing the abstract idea. Steps such as obtaining (receiving) are steps that are considered insignificant extra solution activity and mere instructions to apply the exception using general computer components (see MPEP 2106.05(d), II). Thus claims 22 and 34 are not patent eligible. (Step 2B: NO. The claims do not provide significantly more)
Dependent claims 23-33 and 35-43 further define the abstract idea that is present in their respective independent claims 22 and 34 and thus correspond to Certain Methods of Organizing Human Activity and hence are abstract for the reasons presented above. The dependent claims do not include any additional elements that integrate the abstract idea into a practical application or are sufficient to amount to significantly more than the judicial exception when considered both individually and as an ordered combination. Claims 23, 25, 27, 31, 34, 36, 38, and 41 recited trading platform, also applied at a high level of generality and used for performing abstract concepts. Claims 23 and 34 recite computer applied at a high level of generality. Therefore, the claims 23-33 and 35-43 are directed to an abstract idea. Thus, the claims 22-43 are not patent-eligible.
Examiner Request
The Applicant is requested to indicate where in the specification there is support for amendments to claims should Applicant amend. The purpose of this is to reduce potential 35 U.S.C. §112(a) or §112 1st paragraph issues that can arise when claims are amended without support in the specification. The Examiner thanks the Applicant in advance.
Prior Art Rejection
A prior art search was conducted but does not result in a prior art rejection at this time. The prior art deemed closest to the claims is Pub. No. US 2022/0138857 to Sun et al., that teaches portfolio with risk and Shield button for hedge protection. However, Sun does not teach a bespoke hedge that maintains a fixed -1 correlation and achieves 0% hedge error, among other things.
Conclusion
THIS ACTION IS MADE FINAL. Applicant is reminded of the extension of time policy as set forth in 37 CFR 1.136(a).
A shortened statutory period for reply to this final action is set to expire THREE MONTHS from the mailing date of this action. In the event a first reply is filed within TWO MONTHS of the mailing date of this final action and the advisory action is not mailed until after the end of the THREE-MONTH shortened statutory period, then the shortened statutory period will expire on the date the advisory action is mailed, and any nonprovisional extension fee (37 CFR 1.17(a)) pursuant to 37 CFR 1.136(a) will be calculated from the mailing date of the advisory action. In no event, however, will the statutory period for reply expire later than SIX MONTHS from the mailing date of this final action.
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/KENNETH BARTLEY/Primary Examiner, Art Unit 3684