DETAILED ACTION
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 .
Status of Claims
Claims 1-27 are currently pending and rejected.
Affidavit 132
The Affidavit under 37 CFR 1.132 filed on 11/17/2025 has been considered. Although Applicant argued that Applicant’s invention is different from the cited prior art Lupien (WO 2009/132243), the claims are broader than what applicant described in the Affidavit and the Remarks, such that the present claims still read on Lupien.
Claim Rejection – 35 U.S.C. 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 1-27 are rejected under 35 U.S.C. 101 because the claimed invention is directed to non-statutory subject matter. The rationale for this finding is explained below. In the instant case, the claims are directed towards estimating a Fair Market Value (FMV) of credit default swap (CDS). The concept is clearly related to managing transactions between people, thus the present claims fall within the Certain Method of Organizing Human Activity grouping. Moreover, the process of calculating FMV of CDS involve mathematical calculations, thus the present claims fall within the Mathematical Concepts grouping. Furthermore, the process of calculating FMV of CDS can be performed in the human mind, thus the present claims also fall within the Mental Processes grouping. The claims do not include limitations that are “significantly more” than the abstract idea because the claims do not include an improvement to another technology or technical field, an improvement to the functioning of the computer itself, or meaningful limitations beyond generally linking the use of an abstract idea to a particular technological environment. Note that the limitations, in claims 21-27, are done by the generically recited computer device. The limitations are merely instructions to implement the abstract idea on a computer and require no more than a generic computer to perform generic computer functions that are well-understood, routine and conventional activities previously known to the industry. Therefore, claims 1-27 are rejected under 35 U.S.C. 101 as being directed to non-statutory subject matter.
Step 1: The claims 1-27 are directed to a process, machine, manufacture, or composition matter.
In Alice Corp. Pty. Ltd. v. CLS Bank Intern., 134 S. Ct. 2347 (2014), the Supreme Court applied a two-step test for determining whether a claim recites patentable subject matter. First, we determine whether the claims at issue are directed to one or more patent-ineligible concepts, i.e., laws of nature, natural phenomenon, and abstract ideas. Id. at 2355 (citing Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1296–96 (2012)). If so, we then consider whether the elements of each claim, both individually and as an ordered combination, transform the nature of the claim into a patent-eligible application to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself.
Claims 1-20 are directed to a process, and claims 21-27 are directed to a machine.
Step 2A: The claims are directed to an abstract idea.
Prong One
Claims 1-27 are rejected under 35 U.S.C. 101 because the claimed invention is directed to non-statutory subject matter. The rationale for this finding is explained below. In the instant case, the claims are directed towards estimating a Fair Market Value (FMV) of credit default swap (CDS). The concept comprises deriving scalar values for the FMV using precise knowledge input, generalizing imprecisely known inputs using interval-2 (IT2) membership functions (MF), calculating a set of IT2 MFs, using the IT2 MFs to calculate corresponding IT2 MF of the MF. The concept is related to managing transactions between people, since a credit default swap is a contract between two parties. Thus the present claims fall within the Certain Method of Organizing Human Activity grouping. Moreover, the process of calculating FMV of CDS involve mathematical calculations, thus the present claims fall within the Mathematical Concepts grouping. Furthermore, the process of calculating FMV of CDS can be performed in the human mind, thus the present claims also fall within the Mental Processes grouping. The performance of the limitations using generic computer components (i.e., a processor, a memory, and a storage device) does not preclude the claim limitation from being in the certain methods of organizing human activity grouping or mental processes grouping. Accordingly, this claim recites an abstract idea.
Prong Two
Claims 1-20 recite a computerized processing and data storage means as additional element. The entire method recited in these claims can be performed mentally, and the amended generic computer elements are merely extra-solution. Independent claim 21 recites a processor, a display device, a storage device, and a memory. Independent claim 24 recites a processor, a network, a storage device, and a memory. Dependent claims 22-23 and 25-27 do not recite any other additional element. These additional elements are claimed to perform basic computer functions, such as performing calculation, displaying result, and transmitting data over network. The computer elements are clearly extra-solution. The recitation of the computer elements amounts to mere instruction to implement an abstract concept on computers. The present claims do not solve a problem specifically arising in the realm of computer networks. Rather, the present claims implement an abstract concept using existing computer technology in a networked computer environment. The present claims do not recite limitation that improve the functioning of computer, effect a physical transformation, or apply the abstract concept in some other meaningful way beyond generally linking the use of the abstract concept to a particular technological environment. As such, the present claims fail to integrate into a practical application.
Step 2B: The claims do not recite additional elements that amount to significantly more than the abstract idea.
As discussed earlier, claims 1-20 do not recite any additional element. The entire method recited in these claims can be performed mentally, and the claims do not mention any computer at all. Independent claim 21 recites a processor, a display device, a storage device, and a memory. Independent claim 24 recites a processor, a network, a storage device, and a memory. Dependent claims 22-23 and 25-27 do not recite any other additional element. These additional elements are claimed to perform basic computer functions, such as performing calculation, displaying result, and transmitting data over network. According to MPEP 2106.05(d), “performing repetitive calculations”, “receiving, processing, and storing data”, “electronically scanning or extracting data from a physical document”, “electronic recordkeeping”, “storing and retrieving information in memory”, and “receiving or transmitting data over a network, e.g., using the Internet to gather data” are considered well-understood, routine, and conventional functions of computer. Simply implementing the abstract idea on a generic computer or using a computer as a tool to perform an abstract idea cannot integrate a judicial exception into a practical application at Step 2A or provide an inventive concept in Step 2B. Therefore, the present claims are ineligible for patent.
Claim Rejection – 35 U.S.C. 103
The following is a quotation of 35 U.S.C. 103 which forms the basis for all obviousness rejections set forth in this Office action:
A patent for a claimed invention may not be obtained, notwithstanding that the claimed invention is not identically disclosed as set forth in section 102, if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains. Patentability shall not be negated by the manner in which the invention was made.
Claim(s) 1-27 is/are rejected under 35 U.S.C. 103 as being unpatentable over Lupien et al. (WO 2009/132243 A1), in view of Zhao et al. (Pub. No.: US 2022/0012859) and Lupien’068 (Pub. No.: US 2011/0131068).
As per claim 1, Lupien teaches a computer-implemented method for estimating a fair market value of credit default swap as a financial instrument using a computerized processing and data storage means comprising:
a. deriving scalar values for the fair market value using precise knowledge inputs (see paragraph 0026, “it is desirable to provide investors a guideline for determining the rational fair market value (FMV) of their investment because it promotes the liquidity of the investment in the market”; see paragraph 0035, “Traditional financial analysis such as the above assumes precise knowledge of the parameter values involved in the various formulas”; and paragraph 0067, “the previously described mathematics are applied to these delayed production dividends to calculate an interval Type-2 representation of fair market value, which may then be type-reduced and defuzzified to arrive at a scalar value of the dividend, or alternatively may be used as the basis for negotiating an agreed dividend with the issuer of the financial instrument”);
b. generalizing imprecisely known inputs using Interval Type-2 Membership Functions (see paragraph 0037-0042, “A key feature of interval 2 membership functions is that they are completely specified by their (Type-1) upper and lower membership functions, which are respective upper and lower bounding functions of their footprint of uncertainty”; see paragraph 0047, “The compelling advantage of this further generalization is that the multiple intervals so obtained can then be aggregated into a much richer description of imprecision in the input variables provided by interval Type-2 fuzzy membership functions”; see paragraph 0060, “the approach of the present invention allows the inherent imprecision regarding these probabilities to be factored into the dividend calculations);
c. calculating a set of Interval Type-2 Membership Functions for these various inputs using interval data provided by subject matter experts om a technical field (see paragraph 0045-0046, “multiple interval values may result from polling a plurality of expert panels, each panel comprises of a plurality of experts in the same or related fields, to obtain their collective assessment of interval estimates of the interval estimates of the input variables”; see paragraph 0047, “One can then compute a corresponding interval Type-2 fuzzy membership function”; see paragraph 0058, “The preferred input variable Type-2 membership functions can be extracted by polling multiple experts for simple interval inputs, and then aggregating these intervals into Type-2 membership functions using a variety of techniques”; also see paragraph 0056, 0059-0061, and 0067); and
d. using the Interval Type-2 Membership Functions calculated in c. to illustrate the corresponding Interval Type-2 Membership Functions of the fair market value and store in a computing system in order to generate a result in real-time (see paragraph 0067, “the previously described mathematics are applied to these delayed production dividend to calculate an interval Type-2 representation of fair market value”; generating result of calculation and storing result are implied functions of any off-the-shelf computers),
where this fair market value Interval Type-2 Membership Functions accounts for the uncertainties and imprecise knowledge of all the factors involved in the credit default swap (see paragraph 0035, “One approach to generalizing these formulas is to assume these parameters are random variables, assign each of them an appropriate probability density function to represent the uncertainty in their values”; see paragraph 0040, “a Type-2 membership function is characterized by a ‘footprint of uncertainty’”; also see paragraph 0030 for CDS).
Examiner notes Lupien does not teach training a processing tool to compute a calculation for a set of Interval Type-2 Membership Functions.
Zhao teaches training a processing tool to compute a calculation for a set of Interval Type-2 Membership Functions (see paragraph 0091, For the parallel multi-layer decomposed interval type-2 intuitionistic fuzzy conventional neural network model (parallel classifier)”; see claim 5, “establishing a decider training dataset…denotes a number of samples in the decider training dataset…denotes an output from the ith parallel multi-layer decomposed interval type-2 intuitionistic fuzzy convolutional neural network”; prior art teaches training neural network to compute calculation for a set of Interval Type-2 Membership Functions).
It would have been obvious to one of ordinary skill in the art at the effective filing date of the present application to modify Lupien with teaching from Zhao to include training a processing tool to compute a calculation for a set of Interval Type-2 Membership Functions. The modification would have been obvious, because it is merely applying a known technique (i.e., using trained neural network or machine learning to perform calculation) to a known method (i.e., estimating a fair market value of credit default swap) ready to provide predictable result (i.e., replace human processing to speed up calculation).
Examiner further notes the combination of Lupien and Zhao does not teach illustrative alpha-cut intervals generate the fair market value Interval Type-2 Membership Functions.
Lupien’068 teaches illustrative alpha-cut intervals generate the fair market value Interval Type-2 Membership Functions (see paragraph 0054, “Desirably there are m (the number of alpha-cuts) pairs of intervals for each membership function, and the computation of each alpha-cut interval…of the dividend membership function is preferably carried out using the corresponding set of alpha-cut intervals of the input variables”; also see paragraph 0026, 0057, and 0064-0067 for calculating fair market value).
It would have been obvious to one of ordinary skill in the art at the effective filing date of the present application to modify the combination of Lupien and Zhao with teaching from Lupien’068 to include illustrative alpha-cut intervals generate the fair market value Interval Type-2 Membership Functions. The modification would have been obvious, because it is merely applying a known technique (i.e., using alpha-cut intervals to generate fair market value interval type 2 membership functions) to a known method (i.e., estimating a fair market value of credit default swap) ready to provide predictable result (i.e., use known mathematical technique to generate result).
As per claim 2, Lupien teaches wherein the precise knowledge input is a fundamental parameter based on knowledge of one or more input parameters (see paragraph 0038).
As per claim 3, Lupien teaches wherein the Interval Type-2 Membership Functions capture both primary and secondary imprecision inherent to the inputs (see paragraph 0036-0039).
As per claim 4, Lupien teaches wherein higher-order fuzzy membership functions and their corresponding computations are used in steps b., c. and d. (see paragraph 0039-0042).
As per claim 5, Lupien teaches wherein the fundamental input parameter value incorporates multiple subject matter experts interval estimates (see paragraph 0047).
As per claim 6, Lupien teaches wherein the calculations are based on Interval Type-2 Membership Functions that combine the primary and secondary uncertainty of each parameter value (see paragraph 0035, 0040-0041, 0052, and 0056).
As per claim 7, Lupien teaches wherein interval type-2 fuzzy membership functions are reduced to a corresponding interval range whose midpoint provides a notional scalar value by type-reduction (see paragraph 0057, “the centroid interval can be defuzzified by calculating its midpoint, which results in a scalar value for the dividend”; also see paragraph 0062).
As per claim 8, Lupien teaches wherein the type-reduction of the fair market value Interval Type-2 Membership Functions to an interval range is used in transaction negotiations to arrive at a final valuation for the financial instrument (see paragraph 0057-0058 and 0067).
As per claim 9, Lupien teaches wherein the type-reduction of the fair market value Interval Type-2 Membership Functions to an interval range is used by accountants, appraisers, or bankers for advising and financing the buyers or sellers of credit default swaps (see paragraph 0011 and 0030, Examiner points out that this feature is not a technical feature, thus it does not carry patentable weight).
As per claim 10, Lupien teaches wherein the financial instrument is a credit default swap valuation technique used for bonds and collateralized debt obligations (see paragraph 0011 and 0030).
As per claim 11, Lupien teaches wherein the credit default swap is ascribed a notional value (see paragraph 0033-0034).
As per claim 12, Lupien teaches wherein the credit default swap is based on a contingent stream of payments of buyers or sellers trading over-the-counter by investment banks or insurance companies, institutions such as sovereign wealth funds, state pension funds and other investment funds holding debt portfolios (see paragraph 0031-0034).
As per claim 13, Lupien teaches wherein the credit default swap is ascribed a notional value (see paragraph 0033-0034).
As per claim 14, Lupien teaches wherein the notional value is applied to options pricing (see paragraph 0026 and 0033).
As per claim 15, Lupien teaches wherein the credit default swap further includes a Black-Scholes model for evaluating a contingent stream of payments (see paragraph 0026).
As per claim 16, Lupien teaches wherein the credit default swap further includes extensions of the Black-Scholes model, for example the binomial pricing model (see paragraph 0026).
As per claim 17, Lupien teaches wherein the credit default swap provides a discounted price (see paragraph 0028, 0031, and 0033-0034).
As per claim 18, Lupien teaches wherein the credit default swap provides no discounted price (see paragraph 0028, 0031, and 0033-0034).
As per claim 19, Lupien teaches wherein the credit default swap is specified over a defined lifetime or for a variable period (see paragraph 0018, Examiner points out that this feature is not a technical feature, thus it does not carry patentable weight).
As per claim 20, Lupien teaches the CDS provides a specific upfront payment per unit used as a negotiated value (see paragraph 0030-0034).
As per claim 21, Lupien teaches a computer for assessing a fair market value payment stream for a credit default swap comprising:
a. a processor; b. a display device having a graphical representation; c. a storage device; and d. a memory, the memory comprising software instructions, the software instructions comprising instructions for (see claim 1, “(a) a computerized processing means for computerized processing and storage of data; (b) said computerized processing means including a means to calculate a fair market value of said financial product…output means displays a graphical representation of said present value of said financial product”):
estimating the Interval Type-2 Membership Functions of a fair market value for a contingent payment stream for a credit default swap (see paragraph 0047, “One can then compute a corresponding interval Type-2 fuzzy membership function”; also see paragraph 0056, 0059-0061, and 0067, “to calculate an interval Type-2 representation of fair market value”);
ii. type-reducing the Interval Type-2 Membership Functions to a negotiation interval (see paragraph 0057, “the centroid interval can be defuzzified by calculating its midpoint, which results in a scalar value for the dividend”; also see paragraph 0062 and 0067, “to calculate an interval Type-2 representation of fair market value, which may then be type-reduced and defuzzied to arrive at a scalar value”);
iii. calculating the midpoint of the negotiation interval as a notional scalar fair market value (see paragraph 0067, “to calculate an interval Type-2 representation of fair market value, which may then be type-reduced and defuzzied to arrive at a scalar value”); and
iv. displaying these results on the display device to show the expected fair market value Interval Type-2 Membership Functions and its derived components in ii. and iii (see claim 1, “output means whereby the output means displays a graphical representation of said present value of said financial product”).
where the computer provides the fair market value to account for the uncertainties and imprecise knowledge of all the factors involved in the credit default swap (see paragraph 0035, “One approach to generalizing these formulas is to assume these parameters are random variables, assign each of them an appropriate probability density function to represent the uncertainty in their values”; see paragraph 0040, “a Type-2 membership function is characterized by a ‘footprint of uncertainty’”; also see paragraph 0030 for CDS).
As per claim 22, Lupien teaches where the computer displays the fair market value for a contingent payment stream (see claim 1, “output means whereby the output means displays a graphical representation of said present value of said financial product”).
As per claim 23, Lupien teaches where the computer display for the credit default swap is selected from the group consisting of spread payments, swapping rights, and combinations thereof (see claim 1, “output means whereby the output means displays a graphical representation of said present value of said financial product”).
As per claim 24, Lupien teaches a server for estimating the fair market value payment stream for a credit default swap comprising:
a. a processor; b. a network to which the processor is connected; c. a storage device connected to the processor; and d. a memory, the memory comprising software instructions, the software instructions comprising instructions for (see claim 1, “(a) a computerized processing means for computerized processing and storage of data; (b) said computerized processing means including a means to calculate a fair market value of said financial product…(d) a coupling means for the transmission of said fair market value of said financial product”):
receiving over the network information related to the calculation of the fair market value of a contingent payment stream for the credit default swap having various using interval data provided by subject matter experts (see paragraph 0045-0046, “multiple interval values may result from polling a plurality of expert panels, each panel comprises of a plurality of experts in the same or related fields, to obtain their collective assessment of interval estimates of the interval estimates of the input variables”; see paragraph 0047, “One can then compute a corresponding interval Type-2 fuzzy membership function”; see paragraph 0058, “The preferred input variable Type-2 membership functions can be extracted by polling multiple experts for simple interval inputs, and then aggregating these intervals into Type-2 membership functions using a variety of techniques”; also see paragraph 0056, 0059-0061, and 0067, “the previously described mathematics are applied to these delayed production dividend to calculate an interval Type-2 representation of fair market value”); and
ii. returning the results over the network information related to the calculation of the FMV of a contingent payment stream of claim 1 (see claim 1, “(d) a coupling means for the transmission of said fair market value of said financial product”).
where the server estimates the fair market value to account for the uncertainties and imprecise knowledge of all the factors involved in the credit default swap (see paragraph 0035, “One approach to generalizing these formulas is to assume these parameters are random variables, assign each of them an appropriate probability density function to represent the uncertainty in their values”; see paragraph 0040, “a Type-2 membership function is characterized by a ‘footprint of uncertainty’”; also see paragraph 0030 for CDS).
As per claim 25, Lupien teaches wherein the network is selected from the group consisting of the Internet, intranet, local area networks, wide area networks, and a wireless network (see claim 1, “(d) a coupling means for the transmission of said fair market value of said financial product”; one skilled in the art would immediately recognize the network types recited in the claim are standard well-known network).
As per claim 26, Lupien teaches wherein the network comprises a plurality of interconnected networks (see claim 1, “(d) a coupling means for the transmission of said fair market value of said financial product”).
As per claim 27, Lupien teaches where the credit default swap is selected from the group consisting of royalties, options on royalties, streaming contracts, and combinations thereof (see paragraph 0031 and 0033).
Response to Remarks
Rejection under 35 U.S.C. 101
Applicant's arguments filed on 02/23/2026 have been fully considered but they are not persuasive.
Applicant stated that the claims in the present invention “describe a technical process and architecture for minimizing and more effectively obtaining user inputs in the estimation of fair market value (FMV) of credit default swaps (CDS) based on a set of Interval Type-2 Membership Functions for various inputs using interval data provided by subject matter experts which manage transactions based on user inputs in a process of calculating FMV of CDS involving, in part, novel mathematical calculations in order to facilitate negotiations between buyers and sellers of credit default swaps”. Examiner disagrees that the present claims describe a technical process and architecture. The present claims only recite generic computer elements, such as “a computerized processing and data storage means” (see claim 1), a computer/server comprising a processor, a display, a storage, and a memory (see claim 21 and 24). There is no recitation of any unconventional computer architecture. Examiner also disagrees that the claims obtain user inputs more effectively. The independent claims 1, 21, and 24 do not recite obtaining user inputs, let along improving the process of such. Examiner also points out that the claimed invention’s focus appears to be calculating FMV of CDS using “novel mathematical calculations”. As such, Applicant’s admits the present claims are directed to a mathematical concept, which is an abstract grouping. Examiner also points out that the amended claims still fall under the groupings of “certain method of organizing human activities” and “mental processes”, for reasons explained under the 35 U.S.C. 101 rejection. Computer implementation does not preclude the claims from being in the mental processes grouping and the certain methods of organizing human activity grouping, because computer is merely an extra-solution in the claimed invention.
Applicant argued the claimed “process for estimating a fair market value of credit default swap…improving upon current technology to provide a physical tool in negotiating a price between accountants, appraisers and bankers to assist in advising and financing the buyers and sellers”. Examiner disagrees and points out that the claimed calculation at best improve the calculation of fair market value, which resides entirely in the realm of abstract concept. The independent claims do not recite any feature with regards providing communication tool to allow accounts, appraisers, and bankers to negotiate price. Even if the claim language recites such feature, it is considered a well-understood, routine, and conventional computer function. As such, the claimed process does not improve computer functionality or any “physical tool”.
Applicant also argued the “processing and storage of data generates a fair market value enabling more efficient flow and transfer of capital throughout the financial markets using a computer or machine configured to calculate a fair market value from a set of Interval Type-2 Membership Functions for various inputs obtained from subject matter experts”. Examiner points out that the present claims do not recite any improved transfer of capital. The independent claims, for example, only recite calculating steps for estimating a fair market value. The present claims also do not recite any improvement in data processing and storage.
Applicant further argued that the claimed invention “offers a tool to solve a technical problem by providing a solution found in known software programs unable to provide credit default swaps as a financial instrument, providing insurance protection against defaults events seen in a contingent stream of payments whose fair market value is dependent upon multiple parameters involving varying degrees of uncertain and imprecision as to their values”. Examiner disagrees and points out that problem of estimating a fair market value of CDS is not a technical problem, but a mathematic and business problem. Examiner also points out that the present claims do not provide a technical solution. Rather, the claims recite a mathematical process that can be performed mentally. For these reasons, the present claims are directed to an abstract concept under Step 2A Prong One.
Applicant argued that the claims as amended “integrate an application that requires precise knowledge of each input parameter involved in subsequent generalizations incorporating inputs from multiple human experts and, more important, utilizes different SMEs that will invariably provide different interval range estimate for each attribute, reflecting the inherent imprecision associated with human forecasts needed to generate the FMV of CDS that are vastly less numerically intensive that would be required, for example, in Monte Carlo simulations of the model uncertainties”. Examiner points out that to integrate an abstract concept into practical application, the claims must recite limitation that improve the functioning of computer, effect a physical transformation, or apply the abstract concept in some other meaningful way beyond generally linking the use of the abstract concept to a particular technological environment. As discussed earlier, the focus of the claimed invention is the mathematical process itself, which resides entirely in the realm of abstract concept. A novel abstract concept is still abstract.
Applicant also emphasized the use of Subject Matter Expertise (SMEs) – “human expertise as reflected in the SME is particularly valuable for estimating various attributes of a project in situation where no large database of highly comparable projects exists”. Examiner points out that human knowledge is not part of a computer system. The quality of human expertise does not improve the functionality of a computer. Moreover, allowing human to provide input requires nothing other than off-the-shelf computers. Therefore, the recitation of SME does not improve computer function or render the claims less abstract.
Applicant argued that the claimed embodiments “provide a technical solution to a technical problem of automatically and rapidly completing computation even on a laptop via a user interface as well as interacting with that data, where the computation may be based on continuously updated data” and “provide a practical application which provides a system that can ‘solve’ this equation, automatically and substantially instantaneously”. Examiner disagrees and points out that the present claims do not problem a technical solution to a technical problem. Claim 1, for example, recites a mathematical process that can be performed mentally. Utilizing computer’s general capability to increase calculation speed does not improve computer functionality. For example, the courts have ruled that “accelerating a process of analyzing audit log data when the increased speed comes solely from the capabilities of a general-purpose computer” (FairWarning IP, LLC v. Iatric Sys) and “mere automation of manual processes, such as using a generic computer to process an application for financing a purchase” (Credit Acceptance Corp. v. Westlake Services) are not sufficient to show an improvement in computer functionality. Examiner further points out that the present claims do not recite a user interface, let alone improving GUI technology.
Applicant also argued that instant embodiments do not preempt all method of “obtaining, transforming, and determining”. Preemption is not a standalone test for patent eligibility. Preemption concerns have been addressed by the examiner through the application of the two-step framework. Applicant’s attempt to show alternative uses of the abstract idea outside the scope of the claims does not change the conclusion that the claims are directed to patent ineligible subject matter. Similarly, applicant’s attempt to show that the recited abstract idea is a very narrow and specific one is not persuasive. A specific abstract idea is still an abstract idea and is not eligible for patent protection without significantly more recited in the claim. See the July 2015 Update: Subject Matter Eligibility that explains that questions of preemption are inherent in the two-part framework from Alice Corp and Mayo and are resolved by using this framework to distinguish between preemptive claims, and ‘those that integrate the building blocks into something more…the latter pose no comparable risk of preemption, and therefore remain eligible.” The absence of complete preemption does not guarantee the claim is eligible. Therefore, “[w]here a patent’s claims are deemed only to disclose patent ineligible subject matter under the Mayo framework, as they are in this case, preemption concerns are fully addressed and made moot.” Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015). See also OIP Tech., Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1362-63 (Fed Cir. 2015).
The amended claim 1 has been added with limitation which suggests the calculation is performed by a trained neural network or learning algorithm. Examiner reminds Applicant that recitation machine learning limitation without improvement to the machine learning itself does not render the claims patent eligible. The Federal Circuit court states in the Recentive v. Fox decision that “patents that do no more than claim the application of generic machine learning to new data environments, without disclosing improvements to the machine learning models to be applied, are patent ineligible under 101”.
Applicant argued that “the claims amount to significantly more than the judicial exception and are neither routine nor conventional in the field as the invention offers improvements to the functioning of a computer”. Examiner disagrees for the reasons already explained in Step 2A. Claim 1, for example, recites a series of mathematical steps that can be performed mentally or by a general-purpose computer. The present claims also do not recite any unconventional feature or unconventional arrangement of computer elements that would amount to significantly more than the judicial exception. As discussed earlier, the focus of the claimed invention is the mathematical process itself, which resides entirely in the realm of abstract concept. A novel abstract concept is still abstract.
Examiner maintains the ground of rejection under 35 U.S.C. 101.
Rejection under 35 U.S.C. 102/103
Applicant argued that the Lupien prior art “describes a unique type of security, the in-kind participating preferred security (IPPS)” and the estimation of this security, “while employing IT2 MFs to account for imprecision in its variables, is completely different mathematically from the present invention involving CDS”. Examiner points out that while this may be true, the present claims do not exclude IPPS and do not recite exact formula that distinguishes from Lupien. The claim language which describes the mathematical process is too broad, such that the present claims still read on Lupien. To overcome Lupien, Applicant must recite distinctive details of the mathematical process.
Examiner has also added two new prior arts, Zhao et al. (Pub. No.: US 2022/0012859) and Lupien’068 (Pub. No.: US 2011/0131068), to address the amended features in claim 1. Updated rejection is provided in this Office Action.
Conclusion
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/HAO FU/Primary Examiner, Art Unit 3695
MAR-2026