DETAILED ACTION
1. The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA . This Office action is in response to Applicant’s communication filed on May 8, 2026. Amendments to claims 1, and 3 and addition of new claims 16-21 have been entered. Claims 1-4, 9, 10, and 12-21 are pending and have been examined. The Claim interpretation and claim objections are withdrawn in view of the claim amendments. The statement of reasons for the indication of allowable subject matter over prior art was already discussed in the Office action mailed on June 18, 2024 and hence not repeated here. The rejections, response to the Affidavits and response to the arguments are stated below.
Claim Rejections - 35 USC § 101
2. 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.
3. Claims 1-4, 9-10 and 12-21 are rejected under 35 U.S.C. § 101 because the claimed invention is directed to an abstract idea without significantly more.
The claim(s) recite(s) a computer-implemented method for extracting future performance indication and potential loss indication from historical investment results of an identified investment asset, which is considered a judicial exception because it falls under the category of “Certain Methods of organizing human activity” such as fundamental economic practice as well as commercial or legal interactions including agreements as discussed below. This judicial exception is not integrated into a practical application as discussed below. The claim(s) does/do not include additional elements that are sufficient to amount to significantly more than the judicial exception as discussed below.
Analysis
Step 1: In the instant case, exemplary claim 1 is directed to a method.
Step 2A – Prong One: The limitations of “A computer-implemented method for extracting future performance indication and potential loss indication from historical investment results of an identified investment asset, where the underlying probabilities of said historical investment results are unknowable and cannot be determined, yet probability-weighted analysis of the investment results requires knowledge of said underlying probabilities, the method addressing this technical impossibility by using a time-averaging technique over said historical investment results,
the method comprising:
a) identifying, by a computer processor, said investment asset traded according to an identified investment strategy compared to a predetermined benchmark strategy;
b) organizing, by said computer processor, the original trading results of both said investment strategy and said benchmark strategy by dividing and/or combining the original trading results into a dataset of sufficiently large sample size to satisfy the principle of large numbers in probability and statistics, and categorizing each organized result as either a gain or a loss;
c) determining, by said computer processor, historical performance from said organized results for both said investment strategy and said benchmark strategy, comprising all individual gains and all individual losses;
d) substituting, by said computer processor, time averages computed over said historical investment results for the probability-weighted averages that would require the unknowable underlying probabilities, thereby enabling probability-weighted analysis of investment performance without determining or estimating said underlying probabilities, and without requiring the underlying probability estimation by simulation and thus solving said technical impossibility, said substituting comprising:
(i) computing probability-weighted gain by calculating arithmetic average gain, as defined by dividing the sum of all organized individual gains by the total number of the organized returns, for both said investment strategy and said benchmark strategy;
(ii) computing probability-weighted loss by calculating arithmetic average loss, as defined by dividing the sum of all organized individual losses by the total number of the organized returns, for both said investment strategy and said benchmark strategy;
(iii) computing arithmetic average net profit by subtracting said arithmetic average loss from said arithmetic average gain, for both said investment strategy and said benchmark strategy; and
(iv) computing probability-weighted net-profit-to-loss ratio by calculating the ratio of said arithmetic average net profit to said arithmetic average loss for both said investment strategy and said benchmark strategy, and thereby obtaining an investment strategy average-net-profit-to-average-loss ratio and a benchmark average-net-profit-to-average-loss ratio, respectively, wherein said substituting enables computation of said probability-weighted metrics directly from said historical investment results without requiring estimation of said unknowable underlying probabilities;
e) extracting, by said computer processor, future performance indication from the calculated investment-strategy average-net-profit-to-average-loss ratio and the calculated benchmark ratio;
f) extracting, by said computer processor, potential loss indication from the calculated probability-weighted loss, for both said investment strategy and said benchmark strategy; and
g) evaluating, by said computer processor, said investment strategy by determining it to be superior to said benchmark strategy when said investment-strategy average-net-profit-to-average-loss ratio is statistically significantly greater than said benchmark average-net-profit-to-average-loss ratio based on the sufficiently large sample size;
whereby the method bypasses the technical impossibility of determining the unknowable underlying probabilities of the investment results by computing time averages directly from the observed results, thereby enabling extraction of probability-weighted future performance indication and potential loss indication that are unattainable through conventional probability-weighted methods that require knowledge of the underlying probabilities, and further enabling said extraction to be performed in real-time directly from the observed results without requiring any estimation of said unknowable underlying probabilities without requiring any estimation of said unknowable underlying probabilities, wherein the method reduces computational complexity by computing said probability-weighted metrics directly from said historical investment results without requiring probability estimation by simulation, and thereby enabling real-time processing of said historical investment results” as drafted, when considered collectively as an ordered combination is a process that, under the broadest reasonable interpretation, covers methods of organizing human activity such as a fundamental economic practice as well as commercial or legal interactions including agreements.
Extracting future performance indication and potential loss indication from historical investment results of an identified investment asset is a fundamental economic practice such as forecasting future performance of an investment based on criteria and rules. The steps of “e) extracting, by said computer processor, future performance indication from the calculated investment-strategy average-net-profit-to-average-loss ratio and the calculated benchmark ratio; f) extracting, by said computer processor, potential loss indication from the calculated probability-weighted loss, for both said investment strategy and said benchmark strategy; g) evaluating, by said computer processor, said investment strategy by determining it to be superior to said benchmark strategy when said investment-strategy average-net-profit-to-average-loss ratio is statistically significantly greater than said benchmark average-net-profit-to-average-loss ratio based on the sufficiently large sample size” considered collectively as an ordered combination, is a fundamental economic practice such as forecasting future performance of an investment. Also, these steps e-g, considered collectively as an ordered combination is a form of commercial/legal interaction such as fulfilling agreements between the party making the prediction and the other parties that rely on the prediction. Hence, the steps of the claim, considered collectively as an ordered combination, covers the abstract category of “Certain Methods of organizing human activity”. Similar interpretation and analysis apply to independent claims 3 and 16 also.
The computer processor, in the claims, is broadly interpreted to correspond to a generic computer processor suitably programmed to perform the associated functions. If the claim limitations, under the broadest reasonable interpretation, covers methods of organizing human activity but for the recitation of generic computer components, then it falls within the “Certain methods of organizing human activity” grouping of abstract ideas. Accordingly, the claims 1, 3, and 16 recite an abstract idea.
Step 2A – Prong Two: The judicial exception is not integrated into a practical application. The claims only recite the additional elements of a computer processor to perform most of the functions recited in the claims. A plain reading of the Specification of at least paragraphs [0023] – [0056] reveals that the computer-based system comprises a generic processor suitably programmed to execute the claimed steps. Hence, the additional elements in the claims are all generic components suitably programmed to perform their respective functions. The additional elements in all the steps are recited at a high-level of generality (i.e., as generic computer components performing generic computer functions) such that it amounts no more than mere instructions to apply the exception using generic computer components. 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. Hence, the claims 1, 3 and 16 are directed to an abstract idea.
Step 2B: The claims 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, using the additional elements (identified above) to perform the claimed steps amounts to no more than mere instructions to apply the exception using a generic computer component. The additional elements of the instant underlying process, when taken in combination, together do not offer substantially more than the sum of the functions of the elements when each is taken alone. Mere instructions to apply an exception using a generic computer component cannot provide an inventive concept. Hence, independent claims 1, 3 and 16 are not patent eligible.
Dependent claims 2, 4, 9-10, 12-15, and 17-21 when analyzed as a whole are held to be patent ineligible under 35 U.S.C. 101 because the additional recited limitations only refine the abstract idea further.
For instance, in claim 2, the step “further comprising:
h) evaluating, by said computer processor, said investment strategy by determining it to be able to statistically generate positive net profit when said investment-strategy ratio is statistically significantly greater than zero based on the sufficiently large sample size, wherein zero serves as said predetermined benchmark” under the broadest reasonable interpretation, is a further refinement of methods of organizing human activity because this step describes the intermediate/final step of the underlying process.
In claim 4, the steps “further comprising:
h) evaluating, by said computer processor, said investment strategy by determining it to be able to statistically generate positive net profit when said investment-strategy total-net-profit-to-total-losses ratio is statistically significantly greater than zero based on the sufficiently large sample size, wherein zero serves as said predetermined benchmark” under the broadest reasonable interpretation, is a further refinement of methods of organizing human activity because this step describes the intermediate/final step of the underlying process.
In claims 9, 10 and 20, the steps “further comprising trading said identified investment asset according to said investment strategy based on the future performance indication extracted in step e), the potential loss indication extracted in step f), and the evaluation in step g)” under the broadest reasonable interpretation, are further refinements of methods of organizing human activity because these steps describe the intermediate step of the underlying process.
In claims 12, 14 and 18, the steps “wherein the organizing in step b) comprises dividing the original trading results into organized returns at minute-level or second-level time intervals, thereby increasing the sufficiently large sample size proportionally and enabling said time averages in step d) to be computed over a correspondingly larger dataset directly from the observed results” under the broadest reasonable interpretation, are further refinements of methods of organizing human activity because these steps describe the intermediate/final step of the underlying process.
In claims 13, 15 and 19, the step “further comprising optimizing said investment strategy based on the future performance indication extracted in step e) and the potential loss indication extracted in step f), wherein said optimizing comprises adjusting said investment strategy to achieve improved net profit with reduced risk as indicated by said extracted indications” are further refinements of methods of organizing human activity because these steps describe the intermediate/final step of the underlying process.
In claim 17, the step “wherein said operations are performed continuously as new trading results are received” under the broadest reasonable interpretation, is a further refinement of methods of organizing human activity because this step describes the intermediate step of the underlying process.
In claim 21, the steps “further comprising:
h) evaluating, by said computer processor, said investment strategy by determining it to be able to statistically generate positive net profit when said investment-strategy total-net-profit-to-average-loss ratio is statistically significantly greater than zero based on the sufficiently large sample size, wherein zero serves as said predetermined benchmark” under the broadest reasonable interpretation, is a further refinement of methods of organizing human activity because this step describes the intermediate/final step of the underlying process.
In the dependent claims, the judicial exception is not integrated into a practical application because the limitations are recited at a high-level of generality such that it amounts no more than mere instructions to apply the exception using generic computer components. Also, the claims do not affect an improvement to another technology or technical field; the claims do not amount to an improvement to the functioning of a computer system itself; the claims do not affect a transformation or reduction of a particular article to a different state or thing; and the claims do not move beyond a general link of the use of an abstract idea to a particular technological environment. In addition, the dependent claims do not include additional elements that are sufficient to amount to significantly more than the judicial exception. The additional elements of the instant underlying process, when taken in combination, together do not offer substantially more than the sum of the functions of the elements when each is taken alone. The claims as a whole, do not amount to significantly more than the abstract idea itself. For these reasons, the dependent claims also are not patent eligible.
Response to the Affidavits (“Declaration” filed on March 30, 2026)
4. The fact that the claims are Patent-Ineligible when considered under the MPEP 2106 has already been addressed in the rejection and hence not all the details of the rejection are repeated here.
In response to the Applicant’s assertion in pages 1-17 of the Declaration that “this declaration explains how the claimed invention represents a new use of an established scientific knowledge and technique - applying the well-established principle of time-averaging (rooted in ergodicity theory from Statistical Physics and Statistical Thermodynamics) to a new domain: financial investment analysis where the underlying probabilities are unknowable and cannot be determined” , the Examiner would like note that applying the well-established principle of time-averaging (rooted in ergodicity theory from Statistical Physics and Statistical Thermodynamics) to a new domain: financial investment analysis where the underlying probabilities are unknowable and cannot be determined, belongs to the realm of improvement in the abstract idea of Mathematical relationships and concepts. The Applicant’s assertion (on Page 3 of the Declaration) that “The claimed invention represents a new use of this established scientific knowledge and technique - specifically, applying the ergodicity-based substitution of time averages for ensemble averages to the domain of financial investment analysis, where ensemble averages (probability-weighted expected values) cannot be determined because only one market realization exists at each point in time” that the invention represents an improvement in the abstract idea of Mathematical relationships and concepts. Efficient computer programming and using the appropriate model assumptions fall in the category of improvements in mathematical computations. Improvements in the mathematical computations fall in the realm of abstract idea.
The Applicants are confusing the concept of improvements in the mathematical computations with the improvements in Technology as defined by the guidelines provided by the USPTO (to evaluate patentability of inventions). The claimed features such as “computing probability-weighted gain by calculating arithmetic average gain, as defined by dividing the sum of all organized individual gains by the total number of the organized returns, for both said investment strategy and said benchmark strategy; (ii) computing probability-weighted loss by calculating arithmetic average loss, as defined by dividing the sum of all organized individual losses by the total number of the organized returns, for both said investment strategy and said benchmark strategy; (iii) computing arithmetic average net profit by subtracting said arithmetic average loss from said arithmetic average gain, for both said investment strategy and said benchmark strategy; and (iv) computing probability-weighted net-profit-to-loss ratio by calculating the ratio of said arithmetic average net profit to said arithmetic average loss for both said investment strategy and said benchmark strategy, and thereby obtaining an investment strategy average-net-profit-to-average-loss ratio and a benchmark average-net-profit-to-average-loss ratio, respectively, wherein said substituting enables computation of said probability-weighted metrics directly from said historical investment results without requiring estimation of said unknowable underlying probabilities is an improvement in the abstract idea of extracting future performance indication and potential loss indication from historical investment results of an identified investment asset. It does not involve any improvements to another technology, technical field, or improvements to the functioning of the computer itself. The Applicant’s other arguments presented on pages 2-17 have been fully considered by the Examiner, but are no persuasive for the reasons above and also for the reasons discussed in the response to the past Affidavits and arguments presented by the Applicants.
The alleged advantages such as “The method can be executed in sub-second on standard computing equipment, enabling real-time evaluation of both strategy performance and risk exposure during trading hours, which allows timely investment decisions that were impossible with Monte Carlo simulation. b. Large-Scale Data Analysis: The method makes practical the analysis of much larger datasets, providing better statistical reliability for both performance metrics and risk assessments, enabling more informed and timely investment decisions. C. Multiple Strategy Monitoring: The computational efficiency enables simultaneous evaluation of dozens or hundreds of strategies, facilitating portfolio management, strategy comparison, and aggregate risk assessment, allowing timely investment decisions across the entire portfolio. d. High-Frequency Updates: Both performance metrics and risk assessments can be recalculated whenever new data arrives, providing up-to-date information enabling timely investment decisions about position sizing, risk limits, and trading adjustments. e. Accessibility: The reduced computational requirements make sophisticated probability-weighted performance and risk analysis accessible to smaller firms and individual traders who may not have access to high-performance computing resources, enabling them to make timely investment decisions based on probability-weighted analysis. f. High-Frequency Data Analysis: In real-world practice, financial professionals use high-frequency data (1-minute intervals providing 390 observations per trading day) to achieve large sample sizes over short, recent periods. The claimed invention makes this practical - direct arithmetic mean calculation scales efficiently to any data frequency, while Monte Carlo simulation becomes prohibitively time-consuming (billions of instructions per analysis, performed multiple times daily)” are due to improvements in the abstract idea of a method for predicting future performance from historical investment results of an identified investment asset traded according to an identified investment strategy compared to a predetermined benchmark strategy, using the computer as a tool its ordinary capacity. Similarly, the other advantages listed in paragraphs 34 – 57 of the Declaration are due to improvements in the abstract idea of a method for extracting future performance indication and potential loss indication from historical investment results of an identified investment asset, using the computer as a tool its ordinary capacity. By relying on a computer to perform routine tasks more quickly or more accurately is insufficient to render a claim patent eligible (See Alice, 134 S. Ct. at 2359 (use of a computer to create electronic records, track multiple transactions, and issue simultaneous instructions” is not an inventive concept). Hence, the Applicant’s Declaration is not persuasive.
Response to Arguments
II: The Examiner disagrees with the Applicant’s assertion that “The Claims Are Not Directed to an Abstract Idea”.
A. The claims recite a computer-implemented method for extracting future performance indication and potential loss indication from historical investment results of an identified investment asset, which is considered a judicial exception because it falls under the category of “Certain Methods of organizing human activity” such as fundamental economic practice as well as commercial or legal interactions including agreements as discussed in the rejection.
The so called improvements touted by the Applicants are not in the technical field but in the abstract idea of extracting future performance indication and potential loss indication from historical investment results of an identified investment asset, using improvements in the mathematical relationships governing the underlying process. In response to Applicant’s characterization that “The claimed invention represents a technological improvement in the technical fields of decision-making under uncertainty and applied statistics”, the Examiner respectfully disagrees. “Substituting time averages for unknowable probability-weighted averages” is not an improvement in technology. It may, at best, be characterized as an improvement in the mathematical relationship and mathematical estimation, which falls in the category of an improvement in the abstract idea. The claimed invention is an improvement in the abstract idea of a method for predicting future performance from historical investment results of an identified investment asset traded according to an identified investment strategy compared to a predetermined benchmark strategy using mathematical computations and a suitably programmed generic computer as tools in their ordinary capacity. The Applicants are confusing the concept of improvements in the mathematical computations/relationships with the improvements in Technology as defined by the guidelines provided by the USPTO (to evaluate patentability of inventions). The alleged advantages such as “solving a specific computational impossibility that prevents conventional probability-weighted prediction from being performed at all” are due to improvements in the abstract idea.
B. Similar to SAP America v. InvestPic, the Applicant’s claims lie entirely in the realm of abstract ideas, with no plausibly alleged innovation in the non-abstract application realm. Using the time-averaging technique (ergodicity), represents an improvement in the abstract idea of a method for predicting future performance from historical investment results of an identified investment asset traded according to an identified investment strategy compared to a predetermined benchmark strategy. It does not involve any improvements to another technology, technical field, or improvements to the functioning of the computer itself.
C. The Examiner disagrees with the Applicant’s assertion the “The Computational Improvement Is to Data-Processing Technology, Not Merely to Mathematics”. “Substituting time averages for unknowable probability-weighted averages” is an improvement in the mathematical relationship and mathematical estimation, which falls in the category of an improvement in the abstract idea. It is not an improvement in technology, as defined by the guidelines provided by the USPTO (to evaluate patentability of inventions). The Examiner does not see the parallel between the Applicant’s claims and those in Amdocs (Israel), Ltd. v. Openet Telecom, Inc., 841 F.3d 1288, 1300-01 (Fed. Cir. 2016); DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245, 1257 (Fed. Cir. 2014); and SiRF Technology, Inc. v. International Trade Commission, 601 F.3d 1319 (Fed. Cir. 2010). Therefore, the Applicant’s arguments are not persuasive.
D. The Examiner disagrees with the Applicant’s assertion the “New Use of Established Science" Framework Supports Eligibility”. Only improvements in technology as defined, for example, by the guidelines provided by the USPTO (to evaluate patentability of inventions) would qualify Patent eligible. Improvements in the mathematical relationship and mathematical estimation, which falls in the category of an improvement in the abstract idea would not qualify an invention as Patent eligible. The Examiner does not see the parallel between the Applicant’s claims and the inventions in Weather forecasting and/or Medical diagnostic imaging. Therefore, the Applicant’s arguments are not persuasive.
E. The examiner disagrees with the Applicant’s assertion the “The System Claims Further Demonstrate Practical Application”. As discussed in the rejection, “a system comprising specific hardware (one or more computer processors and non-transitory computer-readable memory)” in claim 16 and “the system performing operations continuously as new trading results are received” have already been addressed in the rejection. The additional elements (in these claims) in all the steps are recited at a high-level of generality (i.e., as generic computer components performing generic computer functions) such that it amounts no more than mere instructions to apply the exception using generic computer components. 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. Therefore, the Applicant’s arguments are not persuasive.
III: The Examiner disagrees with the Applicant’s assertion that the Amended Claims Satisfy the Alice Framework. These arguments have been addressed in the rejection, response to affidavits (Declaration) and the response to arguments above and for the sake of brevity, all these are not repeated here.
In summary, “Time-Average substitution” is an improvement in the mathematical relationships. What the Applicants characterize as an improvement in technology is in reality an improvement in the abstract idea of a method for predicting future performance from historical investment results of an identified investment asset traded according to an identified investment strategy compared to a predetermined benchmark strategy. It does not involve any improvements to another technology, technical field, or improvements to the functioning of the computer itself. It is not an improvement in Technology as defined by the guidelines provided by the USPTO (to evaluate patentability of inventions). Similar to SAP America v. InvestPic, the Applicant’s claims lie entirely in the realm of abstract ideas, with no plausibly alleged innovation in the non-abstract application realm. Using the time-averaging technique (ergodicity), represents an improvement in the abstract idea of a method for predicting future performance from historical investment results of an identified investment asset traded according to an identified investment strategy compared to a predetermined benchmark strategy. An improvement in the abstract idea is still abstract. It does not involve any improvements to another technology, technical field, or improvements to the functioning of the computer itself. Hence, the claims are directed to an abstract idea. Therefore, the Applicants’ arguments are not persuasive. For these reasons and those discussed in the rejection, the rejections under 35 USC § 101 are maintained.
Conclusion
5. The prior art made of record and not relied upon is considered pertinent to applicant's disclosure:
(a) Hermann, Jr.; William J. (US Patent 8364576 B2) discloses a tradable investment unit is an inseparable combination of a predetermined quantity of a tradable security together with a put option contract for the predetermined quantity of the tradable security. The combination will specify the minimum price and thereby the maximum potential loss of the tradable investment unit to purchasers. The profit potential will be unlimited as the price of the tradable security increases above the cost of the tradable investment unit.
(b) Agarwal; Brijesh et al. (US Patent 7526443 B2) discloses a computer-implemented method and system for trading of debt securities (bonds), where multiple dealers participate and compete on a single platform (100). Dealers and investors have respective interfaces (250, 230) for communicating. In one aspect, dealers announce new debt security issues (400), the investors communicate an indication of interest (IOI) (500) in purchasing the new debt security issues, and the issues are allocated to the investors. In another aspect, issues from multiple dealers are made available to investors on a secondary trading market in a searchable format (1000). In response to price inquiries sent by the investors (1200), the dealers provide offers (1300) which are briefly held and released to the investor concurrently to allow the investor to consider all offers together.
6. Applicant's amendment necessitated the new ground(s) of rejection presented in this Office action. Accordingly, THIS ACTION IS MADE FINAL. See MPEP § 706.07(a). 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 extension fee 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 date of this final action.
Any inquiry concerning this communication or earlier communications from the Examiner should be directed to Narayanswamy Subramanian whose telephone number is (571) 272-6751. The examiner can normally be reached Monday-Friday from 9:00 AM to 5:00 PM. If attempts to reach the examiner by telephone are unsuccessful, the examiner's supervisor, Abhishek Vyas can be reached at (571) 270-1836. The fax number for Formal or Official faxes and Draft to the Patent Office is (571) 273-8300.
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/Narayanswamy Subramanian/
Primary Examiner
Art Unit 3691
May 21, 2026
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