DETAILED ACTION
Notice of Pre-AIA or AIA Status
1. The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA .
Claim Objections
2. Claims 1 and 20 are objected to because of the following informalities:
Claims 1 and 20 recite “the system” in lines 18 and 22 respectively. There is a lack of antecedent basis for this limitation in the claims.
Appropriate correction is required.
Claim Rejections - 35 USC § 101
3. 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.
4. Claims 1-7, 10-12, 14-15, 17-24 are rejected under 35 U.S.C. 101 because the claimed invention recites an abstract idea without significantly more.
Using the language in claim(s) 1 to illustrate, the limitations of: receiving a request to register a security, the request received from an authorized entity; registering the security within a marketplace for securitized intellectual property (IP), wherein a plurality of shares for the security are publicly listed within the marketplace based on a request from the authorized entity to list the shares, wherein registering comprises: receiving an escrow account for the security; executing a smart contract, comprising a program stored on a blockchain, wherein the smart contract is cryptographically signed by the authorized entity; and generating the plurality of shares; receiving, within the marketplace, a trading request corresponding to at least a subset of the plurality of the listed shares of the security associated with one or more IP assets, wherein the trading request represents one of a purchase request or a sale request; calculating a total price for the trading request based on the subset of shares in the trading request; and
determining that the trading request pertains to a trade that would lead to a change in a price of the security beyond a price change threshold, and based on the determination, the system rejects the trading request, otherwise processing the trading request by: generating a unique token for the trading request; executing a transfer of the shares from a seller of the shares to a clearinghouse application; executing a transfer of currency in the amount of the purchase price from a buyer to the clearinghouse application; broadcasting a transaction of the transfer to a plurality of nodes of a blockchain; wherein nodes of blockchain each host a capitalization table; and if over a predetermined percentage of nodes of blockchain report an error, rejecting transaction, otherwise, executing a transfer of the shares from the clearinghouse application to the buyer and a transfer of the currency from the clearinghouse application to the seller, and removing from a cluster of nodes those nodes that reported an error, as drafted, is a process that, under its broadest reasonable interpretation, covers certain methods of organizing human activity, in particular, fundamental economic principles or practices, but for the recitation of generic computer components.
The claims as a whole recite a method of organizing human activity.
The claimed invention allows for financial trading including use of a marketplace for trading securitized intellectual property with tokenization of shares and transfer of shares which is a fundamental economic practice. The mere nominal recitation of generic one or more server(s), and a blockchain do not take the claim out of the methods of organizing human activity grouping. Thus, under Eligibility Step 2A, prong one, (MPEP §2106.04(a)), the claims recite an abstract idea.
Under Eligibility Step 2A, prong two, (MPEP §2106.04(d)), this judicial exception is not integrated into a practical application. In particular, the claims only recite the additional elements— one or more servers and a blockchain. The one or more servers and blockchain are recited at a high-level of generality (i.e., as generic server(s) performing generic computer functions of calculating a total price for the trading request, determining that the trading request pertains to a trade that would lead to change in a price, processing the trading request by generating a unique token, executing a transfer of shares from a seller of the shares to a clearinghouse application, executing a transfer of currency, broadcasting a transaction to nodes of a blockchain, and wherein the nodes of the blockchain each host a capitalization table, if over a predetermined percentage of nodes report an error, reject the transaction, otherwise executing a transfer of the shares from the clearinghouse application to the buyer and transfer of currency from clearinghouse to the seller, and remove nodes that reported an error) such that they amount to no more than mere instructions to apply the exception using generic computer components (see MPEP §2106.05(f)).
Although a blockchain is recited, such recitation is generic. The object of the claims is to trade securities associated with IP assets, registering a security, executing a smart contract cryptographically signed by an authorized entity, generating a unique token for a trading request, executing a transfer of currency, and broadcasting the transaction of the transfer to nodes of a blockchain, rejecting erroneous transactions, removing nodes reporting an error. This calls for the generic use of the blockchain in the manner this technology customarily operates. Simply reciting a particular technological module or technological environment does not confer eligibility. Accordingly, these additional elements do not integrate the abstract idea into a practical application because they do not impose any meaningful limits on practicing the abstract idea.
Similar arguments can be extended to independent claims 18 and 20 and hence claims 18 and 20 are rejected on similar grounds as claim 1. In addition, claim 18 recites a system comprising one or more processors that amount to generic computer implementation and claim 20 merely recites a non-transitory computer-readable medium containing instructions. The claims are directed to an abstract idea.
Under Eligibility Step 2B, (MPEP §2106.05), the claim(s) does/do not include additional elements that are sufficient to amount to significantly more than the judicial exception. As discussed above with respect to integration of the abstract idea into a practical application, the additional elements of using one or more servers to implement claimed functions and using a blockchain, amounts to no more than mere instructions to apply the exception using generic computer components. Mere instructions to apply an exception using generic computer components cannot provide an inventive concept. The claims are not patent eligible.
The dependent claims have been given the full two part analysis including analyzing the additional limitations both individually and in combination. The dependent claim(s) when analyzed both individually and in combination are also held to be patent ineligible under 35 U.S.C. 101 because for the same reasoning as above and the additional recited limitation(s) fail(s) to establish that the claim(s) is/are not directed to an abstract idea. Dependent claims 2-7, 10-12, 14-15, 17, 19, 21-24 simply help to define the abstract idea. The additional limitations of the dependent claim(s) when considered individually and as an ordered combination do not amount to significantly more than the abstract idea.
Viewing the claim limitations as an ordered combination does not add anything further than looking at the claim limitations individually. When viewed either individually, or as an ordered combination, the additional limitations do not amount to a claim as a whole that is significantly more than the abstract idea. Accordingly, claim(s) 1-7, 10-12, 14-15, 17-24 is/are ineligible.
Response to Arguments
5. Applicant’s arguments, see pages 10-12, filed 7/13/2026, with respect to rejection of claims 1, 18 and 20 under 35 USC 112(a) have been fully considered and are persuasive. The rejection of claims 1-20 under 35 USC 112(a) has been withdrawn.
The remaining arguments have been fully considered but they are not persuasive.
Applicants argue that the claims are not directed to a fundamental economic practice of financial trading. The argument is not convincing. The claims recite receiving a request to register a security, generating a plurality of shares, receiving a trading request, calculating a total price for the trading request, generating a token for the trading request broadcasting transaction of transfer of shares and currency to nodes of a blockchain, and executing transfer of shares from the clearinghouse application to the buyer and transferring currency from clearinghouse application to seller, i.e., buying and selling securities and storing information pertaining to the transaction on a blockchain, i.e., a fundamental economic principle or practice (certain methods of organizing human activity).
The focus of the claims is not on an improvement to the identified additional elements as tools, but on the abstract ideas that use the additional elements as tools. The use of generic computer components to carry out the abstract idea does not impose any meaningful limit on the computer implementation of the abstract idea.
Applicants argue that under Step 2A, Prong Two: the additional elements integrate any alleged abstract idea into a practical application and even assuming arguendo that the claims recite a judicial exception, the additional elements, individually and as an ordered combination, apply any such exception in a manner that imposes meaningful limits and reflects an improvement in the functioning of a computer network itself. See MPEP §§ 2106.04(d), 2106.05(a).
Applicants further argue that the claims improve the functioning of the distributed network itself because the claimed architecture distributes a capitalization table to every node of the blockchain, subjects each broadcast transaction to a threshold-based error-consensus check across those nodes, and critically-removes from the cluster those nodes that reported an error when the transaction otherwise proceeds. The technical consequence of this ordered combination is twofold: (i) the surviving cluster is guaranteed to maintain a consistent transaction history and consistent per- node capitalization tables, improving the integrity and fault tolerance of the distributed ledger; and (ii) computational and network resources are conserved, because faulty nodes are pruned from the cluster and subsequent transactions need not be broadcast to, validated by, or reconciled against nodes with inconsistent state. The argument is not
persuasive.
As an initial matter, claim 1 (method) fails to recite any computer implementation of the receiving a request to register a security, receiving an escrow account, executing a smart contract, generating the plurality of shares, and receiving a trading request. Although the claim recites that the marketplace comprises one or more server, the servers are not recited as executing these steps. Similarly, claim 20 (non-transitory computer readable medium) fail to recite that most of the limitations are executed by a server or computer or processor. Alice Corp. v. CLS Bank emphasized that merely storing data on a medium is not enough-the claim must include additional limitations that transform the idea into a patent-eligible application. In addition, the claims recite generic computer components, i.e., a server and blockchain technology.
Regarding the argument that the claims improve the functioning of the distributed network itself and that the claims of the instant invention are similar to the features recited in the claims at issue in Enfish, the claims in Enfish were not simply adding conventional computer components to well-known business practices; mathematical formulas performed on any general purpose computer; or generalized steps performed on a computer using conventional computer activity. In Enfish, the claims at issue focused not on asserted advances in uses to which existing computer capabilities could be put, but on a specific improvement—a particular database technique—in how computer could carry out one of their basic functions of storage and retrieval of data. Enfish, 822 F.3d at 1335-36. The present case is different: the focus of the claims is not on such an improvement in computers as tools, but on certain independently abstract ideas that use computers as tools.
Regarding the argument that the claims at issue are analogous to those found in Amdocs, the claims in Amdocs were not simply adding conventional computer components to well-known business practices; mathematical formulas performed on any general purpose computer; or generalized steps performed on a computer using conventional computer activity. The patent claims here are not directed to a specific implementation to a solution to a problem involving a “distributed network” that was not a conventional or routine use of computer technology at the time the invention was made. The patent claims in Amdocs were directed to improvements to “distributed architecture” therefore Amdocs has no applicability.
The applicant argues that the claimed invention is similar to the claims found in Bascom. The Examiner respectfully disagrees. In Bascom, the court found that the claims were directed to an abstract idea under step one. Id. at 1347-49. Under step two, the court found that the limitation of the claims, taken individually, recited a generic computer, network, and Internet components which were not inventive themselves. Id. at 1349-52. However, the court found that the ordered combination of these limitations provided the requisite inventive concept. Id. The claimed and described inventive concept was the “installation of a filtering tool at a specific location, remote from the end-users, with customizable filtering features specific to each end user.” Id. at 1350. The design permitted the filtering tool to have “both the benefits of a filter on a local computer and the benefits of a filter on the [Internet Service Provider] server.” Id. This was not customary or generic, and the claims did not preempt all ways of filtering content on the Internet—instead, the patent claimed and explained how a particular arrangement of elements was a “technical improvement over prior art ways of filtering such content.” Id. The court thus distinguished ineligible “abstract-idea-based solutions[s] implemented with generic technical components in a conventional way” from the eligible “technology-based solution” and software based invention[] that improve[s] the performance of the computer system itself.”” Id. at 1351 (citation omitted).
The claims in the instant application do not require an arguably inventive distribution of functionality within a network. The claims in this application specify receiving request to register a security, receiving an escrow account, executing a smart contract, generating the plurality of shares, receiving a trading request, calculating a total price, determining that the trading requests pertains to a trade, generating a unique token, executing a transfer of shares, executing a transfer of currency, broadcasting a transaction to a plurality of nodes of a blockchain, rejecting a transaction associated with nodes of blockchain reporting an error, executing transfer of shares and transfer of currency and removing cluster of nodes that reported an error from blockchain, but they do not include any requirement for performing these claimed functions using computer technology (some claim limitations in claims 1 and 20) or by use of anything but entirely conventional, generic technology.
Regarding the suggestion that the claims at issue are rooted in computer technology and solve a problem specifically arising in distributed-ledger networks similar to those found in the DDR Holdings, LLC v. Hotels.com, L.P. (Fed. Cir. 2014), the patent claims in the instant application do not address problems unique to the Internet, so DDR has no applicability. In DDR, the claims address a business challenge (retaining website visitors), it is a challenge particular to the Internet. In particular, the court said that “these claims stand apart because they do not merely recite the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet. Instead, the claimed solution is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.” The court concluded that “instead of the computer network operating in its normal, expected manner by sending the website visitor to the third-party website that appears to be connected with the clicked advertisement, the claimed system generates and directs the visitor to t[a] hybrid web page that presents product information from the third-party and visual ‘look and feel’ elements from the host website. When the limitations of the … patent’s asserted claims are taken together as an ordered combination, the claims recite an invention that is not merely the routine or conventional ‘use of the Internet.’” The DDR claims “do not broadly and generically claim ‘use of the Internet’ to achieve the desired result, but instead “specify how interactions with the Internet are manipulated to yield a desired result.” Id. at 1258. Claims that specify how to overcome a technological challenge are eligible. The claims here do not solve a technological problem with a technological solution.
Applicants argue that pursuant to McRO, the claims of the instant application are limited to a specific architecture, and do not preempt trading of securitized intellectual property generally, nor even blockchain-based trading generally. The argument is not persuasive.
In McRO, the claimed process used a combined order of specific rules that rendered information in a specific format that was applied to create a sequence of synchronized, animated characters. McRO, 837 F.3d at 1315. Notably, the recited process automatically animated characters using particular information and techniques—an improvement over manual three-dimensional animation techniques that was not directed to an abstract idea. Id, at 1316.
Unlike in McRO, the recited one or more servers, recited one or more processors, and using blockchain technology are not a rule-based improvement of a technological process. The claims here are not directed to a specific implementation to a solution to a problem in the software arts of improving computer animation through the use of specific rules to set morph weights and transition parameters between phonemes. The McRO court indicated that it was the incorporation of the particular claimed rules in computer animation that “improved [the] existing technological process.” The claims at issue in McRo described a specific way (use of particular rules to set morph weights and transitions through phonemes) to solve the problem of producing accurate and realistic lip synchronization and facial expressions in animated characters. In contrast, Applicants’ claims address financial trading including use of a marketplace for trading securitized intellectual property with tokenization of shares and transfer of shares and using blockchain technology. The claims in McRO were directed to an improvement in the operation of the computer at a task, rather than applying a computer to perform generic data manipulation steps, as in the claims of the instant application. See id, at 1314.
Applicant argues that the NFOA that the ordered combination is well understood, routine or conventional as required in the Berkheimer Memo. The Examiner respectfully disagrees with this argument.
The Federal Circuit in Berkheimer made clear that “not every § 101 determination contains genuine disputes over the underlying facts material to the § 101 inquiry.” Berkheimer v. HP Inc., 881 F.3d 1360, 1368 (Fed. Cir. 2018). In fact, the Federal Circuit in Berkheimer did not require evidentiary support for independent claim 1 because “[t]he limitations [of claim 1] amount to no more than performing the abstract idea of parsing and comparing data with conventional computer components.” Id. at 1370.
Applicants argue that the dependent claims are separately patent eligible. As indicated in the 35 USC 101 rejection, the dependent claims have been given the full two part analysis including analyzing the additional limitations both individually and in combination. The dependent claim(s) when analyzed both individually and in combination are also held to be patent ineligible under 35 U.S.C. 101 because for the same reasoning as above and the additional recited limitation(s) fail(s) to establish that the claim(s) is/are not directed to an abstract idea. Dependent claims 2-7, 10-12, 14-15, 17, 19, 21-24 simply help to define the abstract idea. The additional limitations of the dependent claim(s) when considered individually and as an ordered combination do not amount to significantly more than the abstract idea.
Further, the case law cited by the applicants, e.g., Bascom, Enfish, Amdocs, etc., have been addressed above and apply to the dependent claims as well.
Regarding claims 12 and 19, Applicants suggest that the claims at issue parallels the eligibility rationale in MPEP 2106.05(a), Ancora Techs, Inc. v. HTC Am., Inc. 908 F.3d 1343. 1348-49 (Fed. Cir. 2018). The argument is not persuasive. The court in Ancora Techs Inc. v. HTC Am., Inc. found that the claimed method specifically identified how the functionality improvement is effectuated in an assertedly unexpected way: a structure containing a license record is stored in a particular, modifiable, non-volatile
portion of the computer’s BIOS, and the structure in that memory location is used for verification by interacting with the distinct computer memory that contains the
program to be verified. In this way, the claim addresses a technological problem with computers: vulnerability of license-authorization software to hacking. ’941 patent,
col. 1, lines 12–35; cf. HTC, 2017 WL 6032605, at *3–5 (PTAB conclusion regarding “technological inventions”). It does so by relying on specific and unique characteristics
of certain aspects of the BIOS that the patent asserts were not previously used in the way now claimed, and the result is a beneficial reduction of the risk of hacking. ’941 patent, col. 1, line 39, through col. 2, line 59; id., col. 3, lines 4–17; id., col. 6,
lines 59–67.
Here, alone and in combination, the claims use the claimed generic computer components, i.e., processor(s), server(s) in their ordinary capacity to implement the claimed invention. The blockchain technology (claims 1, 18, 20) and cryptographic signing using a private key and public key (claim 19) are recited at a high level of generality in the manner this technology customarily operates. Simply reciting a particular technological module or technological environment does not confer eligibility.
Applicants contend that the claims at issue is a practical application of the judicial exception because the claims are similar to those found in Example 41 of the Guidance, the argument is not persuasive.
As an initial matter, many of the examples in the Guidance are hypothetical and are intended to be illustrative of the analysis only. While some of the fact patterns draw from U.S. Supreme Court and U.S. Court of appeal for the Federal Circuit decisions, the examples do not carry the weight of the court decisions and therefore are non-precedential. Nonetheless, the Examiner finds no parallel between Applicants’ claims and the hypothetical, patent-eligible claim described in Example 41 on the Guidance.
The example showing the patent eligibility of claim 1 of Ex. 41, describes that the combination of additional elements in the claim (receiving the plaintext word signal at the first computer terminal, transforming the plaintext word signal to one or message block word signals MA, and transmitting the encoded ciphertext word signal CA to the second computer terminal over a communication channel) integrates the exception into a practical application. In particular, the combination of additional elements use the mathematical formulas and calculations in a specific manner that sufficiently limits the use of the mathematical concepts to the practical application of transmitting the ciphertext word signal to a computer terminal over a communication channel. Thus, the mathematical concepts are integrated into a process that secures private network communications, so that a ciphertext word signal can be transmitted between computers of people who do not know each other or who have not shared a private key between them in advance of the message being transmitted, where the security of the cipher relies on the difficulty of factoring large integers by computers. Thus, the claim is not directed to the recited judicial exception, and the claim was found to be eligible.
Here, the claims recite server(s) and blockchain technology (claims 1 and 20) and processor(s) , server(s) and blockchain technology. These elements do not impose a “meaningful limit on the judicial exception, such that the claim is more than a drafting effort designed to monopolize the judicial exception.” -see Guidance, 84 Fed. Reg. at 53. The claim steps performed by the computers are generic computer functions and the use of blockchain technology is recited at a high level of generality in the manner this technology customarily operates All these functions are customary computer activities.- see Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1354 (Fed. Cir. 2016); see also In re Katz Interactive Call Processing Patent Litig., 639 F.3d 1303, 1316 (Fed. Cir. 2011) (“Absent a possible narrower construction of the terms ‘processing,’ ‘receiving,’ and ‘storing,’ . . . those functions can be achieved by any general purpose computer without special programming.”). In short, each step does no more than require a generic computer to perform generic computer functions. As to the data operated upon, “even if a process of collecting and analyzing information is ‘limited to particular content’ or a particular ‘source,’ that limitation does not make the collection and analysis other than abstract.” SAP Am. Inc. v. InvestPic, LLC, 898 F.3d 161, 1168 (Fed. Cir. 2018).
Conclusion
6. The prior art made of record and not relied upon is considered pertinent to applicant's disclosure.
US 2019/0251629 (Gordon, III et al.)-blockchain instrument for transferable equity including a tokenized securities offering entity (e.g., a broker or a company) registers on the blockchain-based security token platform. The blockchain-based security token platform then creates a proxy contract with the broker or company for a tokenized securities offering. The tokenized securities offering entity then creates tokenized securities on the blockchain-based security token platform, which deploys tokenized securities contracts for the tokenized securities offering entity. The tokenized securities offering entity then adds its investors and/or owners to the blockchain-based security token platform, which requests a capitalization table for verification from the investors and/or owners. Interested investors can register on the blockchain-based security token platform for participating in the tokenized securities offering.
Rees, Katie. “No, You Cannot Remove Data From the Blockchain. Here’s Why.” Aug 4, 2022.-cited for Blockchains being immutable and any data on it has been verified and data added to the block cannot be altered or deleted. Once data is added to a block, it is shared with every node within the network. Hashing is part of the cryptographic process used by blockchains to keep data safe. Hashes cannot be altered once created.
Ralzada, Suyash. “Blockchain Nodes,” Blockchain Council. Feb 22, 2022.-cited for its reference to Blockchain nodes, creation of blockchain nodes, usage of nodes, updating nodes.
“What Would a Full Node Do If It Finds an Error?” Bitcoin. Nov 12, 2017.-cited for its reference to if an invalid transaction is found, the full node will not report the transaction to the user. For an invalid block, the confirmation of a transaction is not reported. An invalid transaction is treated as no transaction. When a node receives a block with an invalid transaction, it will notice this during full validation of the block it performs. It will then reject the block, not add it to its blockchain and ban the node that relayed it. Nodes will never relay information that they consider invalid.
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.
Any inquiry concerning this communication or earlier communications from the examiner should be directed to ELDA MILEF whose telephone number is (571)272-8124. The examiner can normally be reached Monday-Thursday 6:30am-3:30pm; Friday 7am-12pm.
Examiner interviews are available via telephone, in-person, and video conferencing using a USPTO supplied web-based collaboration tool. To schedule an interview, applicant is encouraged to use the USPTO Automated Interview Request (AIR) at http://www.uspto.gov/interviewpractice.
If attempts to reach the examiner by telephone are unsuccessful, the examiner’s supervisor, Bennett Sigmond can be reached at (303)297-4411. The fax phone number for the organization where this application or proceeding is assigned is 571-273-8300.
Information regarding the status of published or unpublished applications may be obtained from Patent Center. Unpublished application information in Patent Center is available to registered users. To file and manage patent submissions in Patent Center, visit: https://patentcenter.uspto.gov. Visit https://www.uspto.gov/patents/apply/patent-center for more information about Patent Center and https://www.uspto.gov/patents/docx for information about filing in DOCX format. For additional questions, contact the Electronic Business Center (EBC) at 866-217-9197 (toll-free). If you would like assistance from a USPTO Customer Service Representative, call 800-786-9199 (IN USA OR CANADA) or 571-272-1000.
/ELDA G MILEF/Primary Examiner, Art Unit 3694
Prosecution Insights