DETAILED ACTION
1. Notice of Pre-AIA or AIA Status
The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA .
2. Status of Application and Claims
Claims 1-9, 11 and 12 are pending.
Claims 1 and 11 were amended or newly added in the Applicant’s filing on 1/16/2026.
Claim 10 was cancelled in the Applicant’s filing on 1/16/2026.
This office action is being issued in response to the Applicant's filing on 1/16/2026.
3. Claim Interpretation
The subject matter of a properly construed claim is defined by the terms that limit its scope when given their broadest reasonable interpretation. see MPEP §2013(I)(C). Specifically, the “broadest reasonable construction ‘in light of the specification as it would be interpreted by one of ordinary skill in the art.’” See MPEP §2111, citing Phillips v. AWH Corp., 75 USPQ2d 1321, 1329 (Fed. Cir. 2005). However, “[t]hough understanding the claim language may be aided by explanations contained in the written description, it is important not to import into claim limitations that are not part of the claim.” See MPEP §2111.01, citing Superguide Corp. v. DirecTV Enterprises, Inc., 69 USPQ2d 1865, 1868 (Fed. Cir. 2004). Construing claims broadly during prosecution is not unfair to the applicant, because the applicant has the opportunity to amend the claims to obtain more precise claim coverage. See MPEP §2111, citing In re Yamamoto, 222 USPQ 934, 936 (Fed. Cir. 1984).
As a general matter, grammar and the plain meaning of terms as understood by one having ordinary skill in the art used in a claim will dictate whether, and to what extent, the language limits the claim scope. See MPEP §2013(I)(C). Language that suggests or makes a feature or step optional but does not require that feature or step does not limit the scope of a claim under the broadest reasonable claim interpretation. See MPEP §2013(I)(C).
As such, claim limitations that contain statement(s) such as “if,” “may,” “might,” “can,” and “could” are treated as containing optional language. See MPEP §2013(I)(C). As matter of linguistic precision, optional claim elements do not narrow claim limitations, since they can always be omitted. See MPEP §2013(I)(C).
Similarly, a method step exercised or triggered upon the satisfaction of a condition, where there remains the possibility that the condition was not satisfied under the broadest reasonable interpretation, is an optional claim limitation. See MPEP §2111.04(II). As the Applicant does not address what happens should the optional claim limitations fail, Examiner assumes that nothing happens (i.e., the method stops). An alternate interpretation is that merely the claim limitations based upon the condition are not triggered or performed.
In addition, when a claim requires selection of an element from a list of alternatives, the prior art teaches the element if one of the alternatives is taught by the prior art. See MPEP §2143.03, citing Fresenius USA, Inc. v. Baxter Int’l, Inc., 582 F.3d 1288, 1298 (Fed. Cir. 2009);
Language in a method or system claim that states only the intended use or intended result, but does not result in a manipulative difference in the steps of the method claim nor a structural difference between the system claim and the prior art, fails to distinguish the claims from the prior art.
The following types of claim language may raise a question as to its limiting effect (this list is not exhaustive):
Statements of intended use or field of use, including statements of purpose or intended use in the preamble. See MPEP §2111.02;
Clauses such as “adapted to”, “adapted for”, “wherein”, and “whereby.” See MPEP §2111.04;
Contingent limitations. See MPEP §2111.04(II);
Printed matter. See MPEP §2111.05; and
Functional language associated with a claim term. See MPEP §2181.
As such, while all claim limitations have been considered and all words in the claims have been considered in judging the patentability of the claimed invention, the following italicized, underlined and/or boldened language is interpreted as not further limiting the scope of the claimed invention.
Additionally, the following italicized, underlined and emboldened language is not necessarily an exhaustive list of claim language that is interpreted as not further limiting the scope of the claimed invention. Applicant should review all claims for additional claim interpretation issues.
Claim 1 recites a method comprising:
generating, by the system, an initial margin for the one or more financial portfolios using a single model to simultaneously process linear products and non-linear products within the collected data according to a historical simulation process, the single model configured to scale with a total number of the linear products and the non-linear products.
Method claims are defined by the method steps being actively performed (i.e., generating an initial margin and using a single model), not method steps that may or may not be performed.
The method claims, as written, do not require interpretation that the collected data contains data pertaining to linear products and non-linear products. The single model could (i.e., the single model has the capacity to) “simultaneously process linear products and non-linear products within the collected data” if there were linear products and non-linear products within the collected data. But there is no requirement that there are “linear products and non-linear products within the collected data” and, as such, there is no performance of a method step of simultaneously processing linear products and non-linear products.
Additionally, reciting a system element in a method claim is configured to perform a method step (i.e., configured to scale) does not mean that the method step is actually performed (i.e., scaling).
Claim 1 recites a method comprising:
reformatting, by the system, based on preferences of a plurality of data recipients stored in the one or more databases, the summary report into a respective plurality of non-standardized formats for display on a respective graphical user interface (GUI) of each of the plurality of data recipients;
Method claims are defined by the method steps being actively performed (i.e., reformatting), not method steps possibly performed in the future (i.e., displaying). The motivation for the reformatting of the data does not further limit the method step.
4. 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 1-12 are rejected under 35 U.S.C. § 101 because the claimed invention is directed to an abstract idea without significantly more.
STEP 1
The claimed invention falls within one of the four statutory categories of invention (i.e., process, machine, manufacture and composition of matter). See MPEP §2106.03.
STEP 2A – PRONG ONE
The claim(s) recite(s) a method comprising:
receiving, …, current real-time data and historical data associated with one or more financial portfolios from a plurality of data sources …;
storing, …, the current real-time data and the historical data as collected data …
generating, …, an initial margin for the one or more financial portfolios using a single model to simultaneously process linear products and non-linear products within the collected data according to a historical simulation process, the single model configured to scale with a total number of the linear products and the non-linear products;
determining, …, a stress metric to account for increases or decreases in the one or more components of the collected data by:
determining daily changes in the historical data,
determining a percentile of the daily changes using a variable that accounts for daily changes in volatility, and
applying a stress volatility treatment to the percentile using a risk factor anti-pro- cyclicality index;
determining, …, a portfolio level liquidity charge for the one or more financial portfolios based on bid and ask spread data associated with the one or more financial portfolios;
determining, …, a concentration charge for the one or more financial portfolios;
determining, …, a total portfolio margin based on a combination of the initial margin, the stress metric, the portfolio level liquidity charge and the concentration charge;
storing, …, the total portfolio margin …
creating, …, a summary report in a standardized format, the summary risk report comprising the total portfolio margin;
storing, …, the summary report in the standardized format in one or more …;
reformatting, …, based on preferences of a plurality of data recipients …, the summary risk report into a plurality of non-standardized formats for display … of each of the plurality of data recipients; and
distributing, …, the reformatted summary risk report in the respective format of the plurality of non-standardized formats to the plurality of data recipients according to one or more of a predefined time interval and a predetermined condition particular to each of the plurality of data recipients.
These limitations, as drafted, under its broadest reasonable interpretation, covers a series of steps instructing how to determine an initial margin which is a fundamental economic practice, a sub-category of certain method(s) of organizing human activity, an enumerated grouping of abstract ideas. See MPEP §2106.04(a)(2)(II)(A).
Examiner notes that determining a margin (i.e., a loan from a brokerage firm that uses eligible securities as collateral) is mitigation of financial risk and that the mitigation of financial risk is a court-provided example of a fundamental economic practice. See MPEP §2106.04(a)(2)(II)(A), citing Alice Corp. v. CLS Bank, 573 U.S. 208, 218, 110 USPQ2d 1976, 1982 (2014).
Additionally, these limitations, as drafted, under its broadest interpretation, covers a series of steps that can be practically performed in the human mind (e.g., observations, evaluations, judgments and opinions) which are mental process, a second enumerated grouping of abstract ideas. See MPEP §2106.04(a)(2)(III).
Examiner notes that “’collecting information, analyzing it, and displaying certain results of the collection and analysis,’ where the data analysis steps are recited at a high level of generality such that they could practically be performed in the human mind” is a mental process. See MPEP §2106.04(a)(2)(III)(A) citing Electric Power Group v. Alstom, SA. (Fed. Cir. 2016).
Accordingly, the claimed invention recites an abstract idea.
STEP 2A – PRONG TWO
The claimed invention recites additional elements (i.e., computer elements) of a system comprising one or more processors configured to execute machine-readable instructions stored in a non-transitory storage medium (Claim(s) 1), a data interface comprising circuitry specifically configured to communicate with a plurality a plurality of data sources (Claim(s) 1), a temporary random-access memory (RAM) (Claim(s) 1), a database (Claim(s) 1), graphical user interface(s) (Claim(s) 1) and a data recipient interface (Claim(s) 1).
The claimed invention does not include additional elements that integrate the judicial exception into a practical application of the exception because the claims do not provide improvements to another technology or technical field; improvements to the functioning of the computer itself; are not applying or using a judicial exception to effect a particular treatment or prophylaxis for a disease or medical condition; are not applying the judicial exception with or by use of a particular machine; are not effecting a transformation or reduction of a particular article to a different state or thing; and are not applying the judicial exception in some other meaningful way beyond generally linking the use of the judicial exception to a particular technological environment. See MPEP §2106.04(d).
The additional elements are recited at a high-level of generality such that it amounts no more than mere instructions to apply the exception using a generic computer component. See MPEP §2106.05(f). Alternately, the additional elements amount to no more than generally linking the exception to a particular technological environment or field of use. See MPEP §2106.05(h). Accordingly, these additional element(s), when considered separately and as an ordered combination, do not integrate the abstract idea into a practical application because it does not impose any meaningful limits on practicing the abstract idea.
Accordingly, the claimed invention is directed to an abstract idea without a practical application.
STEP 2B
Upon reconsideration of the indicia noted under Step 2A in concert with the Step 2B considerations, the additional claim element(s) amounts to adding the words “apply it” (or an equivalent) with the judicial exception, or mere instructions to implement an abstract idea on a computer. See MPEP §2106.07(a)(II). The same analysis applies in Step 2B, i.e., mere instructions to apply an exception using a generic computer component cannot integrate a judicial exception into a practical application at Step 2A or provide an inventive concept in Step 2B. The claim does not provide an inventive concept significantly more than the abstract idea.
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.
DEPENDENT CLAIMS
Dependent Claim(s) 2-9, 11 and 12 recite claim limitations that further define the abstract idea recited in respective independent Claim(s) 1. As such, the dependent claims are also grouped an abstract idea utilizing the same rationale as previously asserted against the independent claims.
No additional computer components other than those found in the respective independent claims is recited, thus it is presumed that the claim is further utilizing the same generically recited computer.
As such, the dependent claims do not include any additional elements that integrate the abstract idea into a practical application of the judicial exception or are sufficient to amount to significantly more than the judicial exception when considered both individually and as an ordered combination.
Accordingly, the dependent claim(s) are also not patent eligible.
Appropriate correction is requested.
5. Terminal Disclaimer
Examiner asserts that a Terminal Disclaimer is warranted due to the instant application 18/409,121 and US Patent 11,928,734 (formerly application 17/719,983) sharing the same inventive entity and claim language which would otherwise result in a double patenting rejection.
6. No Prior Art Rejection
Applicant’s amended claims have overcome the prior art of record. No further prior art has been asserted against the claimed invention.
The following is a statement of reasons for indication of allowable subject matter. The prior art fails to teach or suggest the limitations of:
generating, by the system, an initial margin for the one or more financial portfolios using a single model to simultaneously process linear products and non-liner products within the collected data according to a historical simulation process, the single model configured to scale with a total number of the linear products and the non-linear products;
determining, by the system, a stress metric to account for increases or decreases in one or more components of the collected data by:
determining daily changes in the historical data,
determining a percentile of the daily changes using a variable that accounts for daily changes in volatility, and
applying a stress volatility treatment to the percentile using an anti-pro-cyclicality index;
determining, by the system, a portfolio level liquidity charge for the one or more financial portfolios based on bid and ask spread data associated with the one or more financial portfolios;
determining, by the system, a concentration charge for the one or more financial portfolios;
determining, by the system, a total portfolio margin based on a combination of the initial margin, the stress metric, the portfolio level liquidity charge and the concentration charge; (as in Claim 1).
It is old and well known in the art to calculate a margin for a financial portfolio.
Furthermore, it is also old and well known in the art to utilize multiple alternative metrics and algorithms to calculate a margin for a financial portfolio.
The instant application distinguishes from these old and well-known practices by calculating an initial margin for a financial portfolio using a single model that can “simultaneously process linear products and non-liner products,” and determining a total margin based upon the initial margin (i.e., results of the single model) in combination with a stress metric, portfolio level liquidity charge and a concentration charge.
7. Response to Arguments
Applicant's arguments filed 1/16/2026 have been fully considered but they are not persuasive.
§101 Rejection
Step 2A Prong One
Applicant argues that the claimed invention does not recite a judicial exception, neither a fundamental economic practice nor a mental process, and, as such, satisfies Step 2A Prong One of the §101 Guidelines. See Arguments, pp. 10-11.
The Examiner respectfully disagrees.
Applicant argues that the claimed invention does not recite a mental process and, as such, satisfies Step 2A Prong One of the §101 Guidelines. See Arguments, p. 11.
Specifically, Applicant argues:
As noted by Deputy Commissioner Kim, "[t]he mental process grouping is not without limits" and "Examiners are reminded not to expand this grouping in a manner that encompasses claim limitations that cannot practically be performed in the human mind." 2025 Memorandum, p. 2. A person of ordinary skill in the art (POSITA) would readily understand that "input data and additional data associated with linear products and non-linear products of one or more portfolios [received] from the one or more data sources" constitutes a massive amount of data. In this art, systems receive and process tens of millions of transactions and updates per day, and each involves or implicates a plurality of instruments. It is simply not practical for a human mind to process this amount of data -and specifically perform the claimed steps done by the single model in any reasonable amount of time to be able to generate a summary risk report and distribute it to data recipients in any sort of meaningful way. It would be useless for a human to attempt to perform this process with a pen and paper. See Arguments, p. 11
The Examiner respectfully disagrees.
First, the claimed invention, as written, does not require a claim interpretation that the claimed invention is receiving a “massive amount” of input, and “process[ing] tens of millions of transactions and updates per day.” A human being can perform the claims, as written. A human being can receive “current real-time data and historical data associated with one or more financial portfolios,” generate “an initial margin for the one or more portfolios using a single model,” perform additional computations (i.e., a stress metric, a stress volatility treatment and a portfolio level liquidity charge), and determine a total margin based upon the initial margin and the additional computations.
Second, a mental process can utilize a computer. See MPEP §2106.04(a)(2)(III)(C).
Admittedly, claims that recite limitations “that cannot practically be performed in the human mind” are not mental processes. See MPEP §2106.04(a)(2)(III)(A). For example, a limitation that cannot be practically performed in the human mind is “detecting suspicious activity by using network monitors and analyzing network packets” and “rendering a halftone image of a digital image by comparing, pixel by pixel, the digital image against a blue noise mask, where the method required the manipulation of computer data structures (e.g., the pixels of a digital image and a two-dimensional array known as a mask) and the output of a modified computer data structure.” See MPEP §2106.04(a)(2)(III)(A). The examples provided require a computer. A computer is inherent to the underlying process (e.g., there is no network traffic, data packets or pixels without a computer). This is not the case with the claimed invention.
Claim 1 recites a computer system receiving data, determining an initial margin based upon a model, performing additional computations, determining a total margin based upon the initial margin and the additional computations, creating a report comprising the total margin, and distributing the report to recipients. Examiner notes that these are processes that have been performed before the advent of computers.
As such, claimed invention recites processes that can practically be performed in the human mind.
Examiner notes that the claimed invention was also identified as reciting a fundamental economic practice, a sub-category of certain method(s) of organizing human activity, but no rebuttal was indicated outside of conclusionary statement that the claimed invention is not a fundamental economic practice.
Step 2A Prong Two
Applicant argues that the claimed invention recites a practical application, specifically “an improvement in the functioning of a computer, or an improvement to other technology or technical field,” and, as such, satisfies Step 2A Prong Two of the §101 Guidelines. See Arguments, pp. 12-16.
Specifically, Applicant argues:
Here, when read as whole, the claims are directed to a specific means or method that improves the relevant technology rather than a result or effect that is an abstract idea. More specifically, the claims provide an improvement to how a clearinghouse system functions (i.e., processes data) and an improvement to the technology and technical field of high-volume data processing and analysis. More specifically, the claimed method and arrangement of hardware components that perform the processing steps provide an increased efficiency in processing data over conventional clearinghouse systems. See Arguments, p. 12 – emphasis added.
A person of ordinary skill in the art (POSITA) would readily understand that clearinghouse systems receive and process tens of millions of transactions and updates per day, and each involves or implicates a plurality of instruments. Bottlenecks and delays in processing or transmitting such data (e.g., by having to continually update and maintain models) prevent conventional systems from operating with optimal efficiency, processing speeds and accuracy. Indeed, with the high volume of data and the speed at which this data is susceptible to change, any latency in their processing and/or transmission can negatively impact the operation of the system, as well as cause the data to be out-of-date and/or unusable. Thus, any mechanism that can reduce latency, (i.e., by increasing processing efficiency of the clearinghouse system by performing calculations at a portfolio level rather than on each individual product), certainly constitutes a technical improvement. See Arguments, p. 13 – emphasis added.
Applicant submits that a mechanism that can reduce processing latency of a clearinghouse system (i.e., by eliminating the need for operators to continually update computer models to accommodate differently configured products) constitutes the specific means or method that improves the relevant technology that the Federal Circuit identified in Contour IP Holding rather than simply being directed to a result or effect that itself is the abstract idea. Any conclusion that the claims are "directed to a result or effect that itself is the abstract idea" disregards the disclosed technological means for obtaining a technological result. Contour IP Holding, 113 F.4th at 1380 (internal citations omitted). See Arguments, pp. 13 – emphasis added.
The Examiner respectfully disagrees.
As to the indirect improvements to the technology (e.g., increased efficiency in processing data and less ongoing maintenance of multiple models) based upon performance of the claimed invention, any software can be argued to improve a computer. It can always be argued that the software runs the process more efficiently thereby reducing the demands placed upon the computer system.
In the claimed invention, the computer has not been improved. The non-technological process that the software is performing may have been improved but, according to Alice, improving the process without any technological innovation is not statutory. The computer still operates according to its known and standard capabilities. A reduction of load on the computer does not bring about an improvement to the computer, it merely offers resources to other processes that are running on the computer.
Applicant further argues:
At the time of invention, conventional clearinghouses were "designed for financial products, such as equities and futures, that are themselves linear in nature (i.e., the products have a linear profit/loss scale of 1:1)." Specification, [0003]. Because of this, conventional clearinghouse systems were "not well suited for more complex financial products, such as options, volatile commodities (e.g., power), spread contracts, non-linear exotic products or any other financial products having non-linear profit/loss scales." Id. The Specification goes on to explicitly state that "there is a need for a system and method that efficiently and accurately calculates IM for both linear and non-linear products, and that considers diversification and product correlations when determining IM for a portfolio of products." Id. at [0005]. See Arguments, p. 12 – emphasis added.
The Examiner respectfully disagrees.
An improvement to another technology or technical field requires an improvement to another technology (i.e., machinery or equipment developed from the application of scientific knowledge) or a technical field (i.e., a field concerned with applied and industrial sciences).
While conventional clearinghouses may not be “not well-suited” (i.e., not appropriate for the particular purpose of) for processing more complex financial products that does not mean that the lack of suitability is a technological problem (i.e., the lack of suitability is a problem rooted in the underlying computer technology of conventional clearinghouses). Additionally, while the computer technology of a conventional clearinghouse may not be “not well-suited” for processing more complex financial products that does not mean that the computer technology of a conventional clearinghouse is incapable of processing more complex financial products.
While the claimed invention may be more efficient and accurate in calculating the initial margin for both linear and non-linear products that does not mean that there was a technological problem (i.e., a problem rooted in the underlying computer technology of conventional clearinghouses) preventing the performance of said calculations.
Applicant further argues:
Applicant acknowledges that the mere automation of manual processes may not be sufficient to show an improvement in computer-functionality. See MPEP § 2106.05(a)(I).
However, the processes at issue here were not done manually in conventional clearinghouse systems. Rather, they were performed by multiple computer models (i.e., for linear products and for non-linear products) that required "ongoing maintenance" from human operators to accommodate the different product types. The pending claims improve the technology of clearinghouses by using a single model (rather than multiple models) to process both linear products and non-linear products without the need for continual intervention and maintenance, both of which take up time and slow down the clearinghouse system's processing. See Arguments, pp. 12-13 – emphasis added.
The Examiner respectfully disagrees.
MPEP §2106.05(a) recites:
If it is asserted that the invention improves upon conventional functioning of a computer, or upon conventional technology or technological processes, a technical explanation as to how to implement the invention should be present in the specification. That is, the disclosure must provide sufficient details such that one of ordinary skill in the art would recognize the claimed invention as providing an improvement. The specification need not explicitly set forth the improvement, but it must describe the invention such that the improvement would be apparent to one of ordinary skill in the art. Conversely, if the specification explicitly sets forth an improvement but in a conclusory manner (i.e., a bare assertion of an improvement without the detail necessary to be apparent to a person of ordinary skill in the art), the examiner should not determine the claim improves technology. – emphasis added.
However, the specification does not provide any evidence that the claimed invention results in an improvement to the functioning of a computer, an improvement to conventional technology or technological processes, or is addressing a technology-based problem.
Additionally, the specification does not provide any evidence that there is even a technical (i.e., technology-based) problem to be solved. For example, the specification does not provide any evidence that existing technology was incapable of performing the claimed functions (e.g., utilizing a single model) but for the claimed technical solution (e.g., inability of computers to utilize a single model).
Additionally, MPEP §2106.05(f)(1) recites:
Whether the claim recites only the idea of a solution or outcome i.e., the claim fails to recite details of how a solution to a problem is accomplished. The recitation of claim limitations that attempt to cover any solution to an identified problem with no restriction on how the result is accomplished and no description of the mechanism for accomplishing the result, does not integrate a judicial exception into a practical application or provide significantly more because this type of recitation is equivalent to the words “apply it”. See Electric Power Group, LLC v. Alstom, S.A., 830 F.3d 1350, 1356, 119 USPQ2d 1739, 1743-44 (Fed. Cir. 2016); Intellectual Ventures I v. Symantec, 838 F.3d 1307, 1327, 120 USPQ2d 1353, 1366 (Fed. Cir. 2016); Internet Patents Corp. v. Active Network, Inc., 790 F.3d 1343, 1348, 115 USPQ2d 1414, 1417 (Fed. Cir. 2015). In contrast, claiming a particular solution to a problem or a particular way to achieve a desired outcome may integrate the judicial exception into a practical application or provide significantly more. See Electric Power, 830 F.3d at 1356, 119 USPQ2d at 1743. – emphasis added.
Even assuming there was a technical problem, the claims, as written, fail to recite the details of how a technical solution to the technical problem was accomplished.
If there was a technical problem then the claims should recite the details of the technical solution. Based upon the Applicant’s arguments, Examiner assumes that the technical solution is a single model capable of processing linear and non-linear financial products. However, the claims, as written, provide no such details of how the technical solution (i.e., creation of a single model) was accomplished. The claimed invention, as written, merely recites that a single model capable of processing linear and non-linear financial products exists and is being utilized.
The Examiner asserts that the claimed invention is more analogous to Electric Power Group LLC v. Alstom SA (Fed. Cir. 2016) wherein the court stated:
The claims here are unlike the claims in Enfish. There, we relied on the distinction made in Alice between, on one hand, computer-functionality improvements and, on the other, uses of existing computers as tools in aid of processes focused on “abstract ideas” (in Alice, as in so many other § 101 cases, the abstract ideas being the creation and manipulation of legal obligations such as contracts involved in fundamental economic practices). Enfish, 822 F.3d at 1335-36; see Alice, 134 S. Ct. at 2358-59. That distinction, the Supreme Court recognized, has common-sense force even if it may present line-drawing challenges because of the programmable nature of ordinary existing computers. In Enfish, we applied the distinction to reject the § 101 challenge at stage one because 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 computers could carry out one of their basic functions of storage and retrieval of data. Enfish, 822 F.3d at 1335-36; see Bascom, 2016 U.S. App. LEXIS 11687, 2016 WL 3514158, at *5; cf. Alice, 134 S. Ct. at 2360 (noting basic storage function of generic computer). 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. see Electric Power Group LLC v. Alstom SA, 119 USPQ2d 1739, 1742 (Fed. Cir. 2016) – emphasis added.
The claimed invention is not an improvement to computer technology or computer functionality. Rather, the claimed invention is applying a computer’s existing capabilities to implement a particular abstract idea. As in Electric Power Group, the focus of the claimed invention is not on an improvement in computers as tools but on improving an abstract idea (i.e., determine the risk of a financial portfolio) that use computers as tools.
Applicant continually asserts that utilization of a singular model that handles both linear financial products and non-linear financial products is an improvement over utilizing multiple models wherein each model handles either linear financial products or non-linear financial products. The Examiner is not disputing the improvement. Examiner is just noting that an improved model, while an improvement to financial analysis and financial modeling, is not necessarily “an improvement in the functioning of a computer, or an improvement to other technology or technical field” under Step 2A Prong Two.
In DDR Holdings, LLC v. Hotels.com, the U.S. Court of Appeals stated:
As an initial matter, it is true that the claims here are similar to the claims in the cases discussed above in the sense that the claims involve both a computer and the Internet. But 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. See DDR Holdings, LLC v. Hotels.com, 113 USPQ2d 1097, 1106 (Fed. Cir. 2014) – emphasis added.
In the instant case, the problem that the claimed invention is designed to overcome, combining multiple models pertaining to multiple financial products into a singular model pertaining to multiple financial products, is not a problem specifically arising from the realm of computers. This problem is a standard business problem that exists outside the realm of computers and existed before the age of computers.
MPEP §2106.04(d) recites:
The courts have also identified limitations that did not integrate a judicial exception into a practical application:
Merely reciting the words “apply it” (or an equivalent) with the judicial exception, or merely including instructions to implement an abstract idea on a computer, or merely using a computer as a tool to perform an abstract idea, as discussed in MPEP § 2106.05(f); [and]
Generally linking the use of a judicial exception to a particular technological environment or field of use, as discussed in MPEP § 2106.05(h).
Examiner asserts that the additional elements amount to merely (1) including instructions to implement an abstract idea on a computer, or merely using a computer as a tool to perform an abstract idea, or alternatively, (2) merely links the use of a judicial exception to a particular technological environment or field of use.
Step 2B
Applicant argues that the additional elements amount to “significantly more” than the abstract idea as the additional elements are not “well-understood, routine, conventional activity previously known to the industry” and, as such, satisfies Step 2B of the §101 Guidelines. See Arguments, pp. 16-18.
Specifically, Applicant argues:
As discussed above and in the Specification, typical clearinghouse systems in this art do not perform calculations of linear products and non-linear products using a single model. As such, Applicant's claims indeed include unconventional steps. The claimed method is an alternative (unconventional) and more efficient way of determining an initial margin of a portfolio including both linear products and non-linear products that reduces the hardware and processing burdens on computer systems of the art. See Arguments, p. 17.
The Examiner respectfully disagrees.
The Examiner asserts that the Applicant is conflating novelty and non-obviousness utilized in a §102 or §103 Rejection with unconventional activity utilized in a §101 Rejection, specifically under Step 2B of the §101 Guidelines.
A computer utilizing a single model capable of processing linear and non-linear financial products, wherein the standard computer utilizes two models, one for linear financial products and one for non-linear financial products, may very well be novel and non-obvious under §102 and §103.
However, a finding of novelty and nonobviousness does not necessarily lead to the conclusion that subject matter is patent eligible. “Groundbreaking, innovative, or even brilliant discovery does not by itself satisfy the §101 inquiry.” See Assn for Molecular Pathology v. Myriad Genetics, Inc., 106 USPQ2d 1972, 1979 (2013). Indeed, "[t]he 'novelty' of any element or steps in a process, or even of the process itself, is of no relevance in determining whether the subject matter of a claim falls within the §101 categories of possibly patentable subject matter.” See Diamond v. Diehr, 209 USPQ 1, 9 (1981); See also Mayo Collaborative Services v. Prometheus Laboratories, Inc., 101 USPQ2d 1961, 1973 (2012) (rejecting “the Government’s invitation to substitute §102, 103, and 112 inquiries for the better inquiry under §101.”)
Step 2B of the §101 Guidelines defines conventional activity as “well-understood, routine, [and] conventional activities” previously known in the computer industry. However, the functions performed by the computer system in the claimed invention are well-understood, routine and conventional computer functions.
Claim 1 recites a method comprising:
generating, by the system, an initial margin for the one or more financial portfolios using a single model to simultaneously process linear products and non-linear products within the collected data according to a historical simulation process, the single model configured to scale with a total number of the linear products and the non-linear products.
Performing repetitive calculations (i.e., generating an initial margin) is a court-established well-understood, routine and conventional computerized activity. See MPEP §2106.05(d)(II).
While it may be novel or non-obvious to utilize one model or one hundred models rather than two models, the computer is performing a conventional computer function, performing calculations. The number of models, equations or algorithms utilized by the computer to perform the calculation does not negate the fact that the recited computer is performing a conventional computer function, performing calculations.
The claimed invention may be applying those computer functions in a novel and/or non-obvious way to enable the abstract idea but the computer functions, the underlying computer functions, are well-understood, routine and conventional computer functions. Therefore, the additional claim limitations do not amount to “significantly more” than the abstract idea.
8. 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.
Any inquiry concerning this communication or earlier communications from the examiner should be directed to JASON M. BORLINGHAUS whose telephone number is (571)272-6924. The examiner can normally be reached M-F 9-5.
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If attempts to reach the examiner by telephone are unsuccessful, the examiner’s supervisor, RYAN D. DONLON can be reached on (571)270-3602. The fax phone number for the organization where this application or proceeding is assigned is 571-273-8300.
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/Jason M. Borlinghaus/Primary Examiner, Art Unit 3692 April 18, 2026
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