DETAILED ACTION
Status of the Application
Claims 1-30 have been examined in this application. This communication is the first action on the merits. The information disclosure statement (IDS) submitted on 06/10/2024; was filed with this application. The submission is in compliance with the provisions of 37 CFR 1.97. Accordingly, the information disclosure statement is being considered by the examiner
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 .
In the event the determination of the status of the application as subject to AIA 35 U.S.C. 102 and 103 (or as subject to pre-AIA 35 U.S.C. 102 and 103) is incorrect, any correction of the statutory basis for the rejection will not be considered a new ground of rejection if the prior art relied upon, and the rationale supporting the rejection, would be the same under either status
This action is a Non-Final Action on the merits in response to the application filed on 06/10/2024.
Claims 1-30 remain pending in this application.
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 1-23 are directed towards a method, claims 24-26 are directed towards a computer. and claims 27-30 are directed towards a server, all of which are among the statutory categories of invention.
Step 1: This part of the eligibility analysis evaluates whether the claim falls within any statutory category. See MPEP 2106.03. The claim recites at least one step or act. Thus, the claim is to a process, which is one of the statutory categories of invention. (Step 1: YES).
Step 2A, Prong One: This part of the eligibility analysis evaluates whether the claim recites a judicial exception. As explained in MPEP 2106.04, subsection II, a claim “recites” a judicial exception when the judicial exception is “set forth” or “described” in the claim.
With respect to claims 1-30, the independent claims (claims 1, 24, and 27) are directed to managing market data, In independent claim 1, the bolded limitations emphasized below correspond to the abstract ideas of the claimed invention:
Claim 1, A method for estimating a FMV of contingent payment streams for a financial instrument comprising:
a. deriving scalar values for the FMV using precise knowledge inputs;
b. generalizing imprecisely known inputs using IT2 MFs;
c. calculating a set of IT2 MFs for these various inputs using interval data provided by SMEs;
these steps fall within and recite an abstract ideas because they are directed to a method of organizing human activity which includes fundamental economic principles or practices such as hedging and mitigating risk. (See MPEP 2106.04(a)(2), subsection II).
If a claim limitation, under its broadest reasonable interpretation, covers fundamental economic principles or practices, then it falls within the “method of organizing human activity” grouping of abstract ideas. Therefore, If the identified limitation(s) falls within any of the groupings of abstract ideas enumerated in the MPEP 2106, the analysis should proceed to Prong Two. (Step 2A, Prong One: YES).
Step 2A, Prong Two: This part of the eligibility analysis evaluates whether the claim as a whole integrates the recited judicial exception into a practical application of the exception or whether the claim is “directed to” the judicial exception. This evaluation is performed by (1) identifying whether there are any additional elements recited in the claim beyond the judicial exception, and (2) evaluating those additional elements individually and in combination to determine whether the claim as a whole integrates the exception into a practical application. See MPEP 2106.04(d). The 1 does not claim recite additional elements (Claim 24 computer, processor, device, memory, software; Claim 27 processor, network, device, memory, software, server).
The limitations of
d. using the IT2 MFs calculated in c. to calculate the corresponding IT2 MF of the FMV, where this FMV IT2 MF accounts for the uncertainties and imprecise knowledge of all the factors involved in the contingent payment stream.
are mere data processing recited at a high level of generality, and thus are insignificant extra-solution activity. See MPEP 2106.05(g) (“whether the limitation is significant”). In addition, all uses of the recited judicial exceptions require such data gathering and output, and, as such, these limitations do not impose any meaningful limits on the claim. These limitations amount to necessary data gathering and outputting. See MPEP 2106.05.
Further, the limitations are recited as being performed by Claim 24 computer, processor, device, memory, software; Claim 27 processor, network, device, memory, software, server. Claim 24 computer, processor, device, memory, software; Claim 27 processor, network, device, memory, software, server are recited at a high level of generality. In limitation (a), Claim 24 computer, processor, device, memory, software; Claim 27 processor, network, device, memory, software, server are used as a tool to perform the generic computer function of receiving data. See MPEP 2106.05(f). Claim 24 computer, processor, device, memory, software; Claim 27 processor, network, device, memory, software, server are used to perform an abstract idea, as discussed above in Step 2A, Prong One, such that it amounts to no more than mere instructions to apply the exception using a generic computer. See MPEP 2106.05(f).
Even when viewed in combination, these additional elements do not integrate the recited judicial exception into a practical application (Step 2A, Prong Two: NO), and the claim is directed to the judicial exception. (Step 2A: YES).
Step 2B: This part of the eligibility analysis evaluates whether the claim as a whole amounts to significantly more than the recited exception i.e., whether any additional element, or combination of additional elements, adds an inventive concept to the claim. See MPEP 2106.05. As explained with respect to Step 2A, Prong Two, the additional elements are the Claim 24 computer, processor, device, memory, software; Claim 27 processor, network, device, memory, software, server. The additional elements were found to be insignificant extra-solution activity in Step 2A, Prong Two, because they were determined to be insignificant limitations as necessary data d processing.
However, a conclusion that an additional element is insignificant extra solution activity in Step 2A, Prong Two should be re-evaluated in Step 2B. See MPEP 2106.05, subsection I.A. At Step 2B, the evaluation of the insignificant extra-solution activity consideration takes into account whether or not the extra-solution activity is well understood, routine, and conventional in the field. See MPEP 2106.05(g). As discussed in Step 2A, Prong Two above, the recitations of
d. using the IT2 MFs calculated in c. to calculate the corresponding IT2 MF of the FMV, where this FMV IT2 MF accounts for the uncertainties and imprecise knowledge of all the factors involved in the contingent payment stream.
are recited at a high level of generality. These elements amount to processing of data are well understood, routine, conventional activity. See MPEP 2106.05(d), subsection II. 10 As discussed in Step 2A, Prong Two above, the recitation of a Claim 24 computer, processor, device, memory, software; Claim 27 processor, network, device, memory, software, server to perform limitations amounts to no more than mere instructions to apply the exception using a generic computer component. Even when considered in combination, these additional elements represent mere instructions to implement an abstract idea or other exception on a computer and insignificant extra-solution activity, which do not provide an inventive concept. (Step 2B: NO).
Dependent claims 2-23, 25-26, and 28-30 do not contain any new additional elements. Rather, these claims offer further descriptive limitations of elements found in the independent claims. In this case, the claims are rejected for the same reasons at step 2a, prong one; step 2a, prong 2; and step 2b. Thus, the claim is not patent eligible.
Regarding the dependent claims, dependent claims 17, 18 recite model; claims 25 and 26 recites displays; claims 28-30 recite server. The dependent claims 2-23, 25-26, and 28-30 recite limitations that are not technological in nature and merely limits the abstract idea to a particular environment. 2-23, 25-26, and 28-30 recites processor, device, memory, software, server which are considered an insignificant extra-solution activities of processing and analyzing data; see MPEP 2106.05(g). Claims 2-23, 25-26, and 28-30 recites processor, device, memory, software, server, which merely recites an instruction to apply the abstract idea using a generic computer component; MPEP 2106.05(f). Additionally, claims 2-23, 25-26, and 28-30 recite steps that further narrow the abstract idea. No additional elements are disclosed in the dependent claims that were not considered in independent claims 1, 24, and 27. Therefore claims 2-23, 25-26, and 28-30 do not provide meaningful limitations to transform the abstract idea into a patent eligible application of the abstract idea such that the claims amount to significantly more than the abstract idea itself.
Claim Rejections - 35 USC § 112
The following is a quotation of 35 U.S.C. 112(b):
(b) CONCLUSION.—The specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the inventor or a joint inventor regards as the invention.
The following is a quotation of 35 U.S.C. 112 (pre-AIA ), second paragraph:
The specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention.
Claims 1-30 are rejected under 35 U.S.C. 112(b) or 35 U.S.C. 112 (pre-AIA ), second paragraph, as being indefinite for failing to particularly point out and distinctly claim the subject matter which the inventor or a joint inventor, or for pre-AIA the applicant regards as the invention.
Claims 1-30 have indefinite language with the limitations FMV, IT2, MF, SME, FMV IT2 MF. These terms FMV, IT2, MF, SME, FMV IT2 MF are acronyms that are not clearly defined by the claim(s). It is unclear what Applicant intends to cover by the recitation of FMV, IT2, MF, SME, FMV IT2 MF. For the purpose of examination, Examiner's is interpreting :
FMV to be Fair Market ValueIT2 to be interval type-2MF to be fuzzy membership functions
SME to be subject matter expertsFMV IT2 MF to be Fair Market Value interval type-2 fuzzy membership functions.
Claim Rejections - 35 USC § 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 of this title, 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.
Claims 1-30 are rejected under 35 U.S.C. 103 as being unpatentable over United States Patent Publication US 20110131068, Lupien, et al. to hereinafter Lupien in view of United States Patent Publication US 20230162284, Pandey, et al.
Referring to Claim 1, Lupien teaches a method for estimating a FMV of contingent payment streams for a financial instrument comprising:
a. deriving scalar values for the FMV using precise knowledge inputs (
Lupien teaches deriving scalar FMV-related values from precise point-valued inputs. Lupien explains that “the initial analysis of the FMV of the IPPS dividend assumed point values of all input parameters in the formula of equation 17,” and computes scalar values using discount factors, appreciation factors, survival probabilities, and recovery rate.[Lupien: at 0044]);
b. generalizing imprecisely known inputs using IT2 MFs (
Lupien teaches replacing precise inputs with fuzzy variables and specifically interval Type-2 fuzzy membership functions. Lupien states that “the most general type of fuzzy membership functions currently in use admit additional imprecision… and are known as Type-2 fuzzy membership functions,” and explains that multiple interval estimates may be aggregated into “interval Type-2 fuzzy membership functions.”[Lupien: at 0039]);
c. calculating a set of IT2 MFs for these various inputs using interval data provided by SMEs (
Lupien teaches obtaining interval estimates from experts and expert panels and using those interval estimates to build IT2 MFs for multiple variables. Lupien states that interval values “might result from polling a single expert,” and more broadly that “multiple interval values may result from polling a plurality of expert panels,” which are then aggregated into interval Type-2 membership functions for the input variables.[Lupien: at 0044, 0046]);
and
d. using the IT2 MFs calculated in c. to calculate the corresponding IT2 MF of the FMV, where this FMV IT2 MF (
Lupien teaches using the input IT2 membership functions to compute a corresponding IT2 membership function for the dividend/FMV output. Lupien states that “the corresponding interval Type-2 membership function for the total dividend… is shown in FIG. 5,” and explains that the approach “allows the inherent imprecision regarding these probabilities to be factored into the dividend calculations.”[Lupien: at 0060, 0062])
Lupien does not explicitly teach accounts for the uncertainties and imprecise knowledge of all the factors involved in the contingent payment stream.
However, Pandey teaches accounts for the uncertainties and imprecise knowledge of all the factors involved in the contingent payment stream (
Pandey teaches a general computer-implemented valuation framework for “financial instruments” where valuation data includes “a value assigned to each respective financial instrument” based on pricing attributes.[ Pandey: at 0054] Pandey further teaches receiving financial instrument data, generating valuation data, modifying valuation data, and providing valuation outputs to a user interface, thereby supplying the broader financial-instrument.).
Therefore, it would have been obvious to a person of ordinary skill in the art before the effective filing date of the claimed invention to include Lupien’s interval Type-2 fuzzy valuation methodology within Pandey’s broader financial-instrument valuation framework in order to improve valuation determinations by explicitly modeling imprecise and uncertain inputs while still producing usable FMV outputs for financial instruments[Lupien: at 0055, Pandey: at 0009-0011]
Referring to Claim 2, Lupien teaches the method according to claim 1 wherein the precise knowledge input is a fundamental parameter based on knowledge of one or more input parameters (
Lupien computes FMV using point (precise) inputs such as the risk-free discount factors di, commodity appreciation factors ai, survival probabilities Pi, and recovery rate R, in equations (1)–(6), (13)–(17). Lupien states that “the initial analysis of the FMV of the IPPS dividend assumed point values of all input parameters in the formula of equation 17.” [ Lupien: at 0044] These point values are fundamental parameters derived from underlying market and credit inputs (yield curves, futures prices, hazard models).).
Referring to Claim 3, Lupien teaches the method according to claim 1 wherein the IT2 MFs capture both primary and secondary imprecision inherent to the inputs (
Lupien explains that Type-2 fuzzy membership functions “admit additional imprecision, in the fuzzy membership values themselves,” [Lupien: at 0039 ]beyond Type-1 fuzzy sets. For interval Type-2 sets, each input variable (e.g., survival probability) has a footprint of uncertainty (FOU) bounded by upper and lower Type-1 membership functions. The primary imprecision is in the underlying variable’s range; the secondary imprecision is in the range of possible membership grades within the FOU. Thus, the interval Type-2 membership functions computed for survival probabilities, discount factors, appreciation factors, and recovery rates inherently capture both levels of imprecision.).
Referring to Claim 4, Lupien teaches the method according to claim 1 wherein higher-order fuzzy membership functions, e.g., general type-2 membership functions and their corresponding computations are used in steps b., c. and d (
Lupien teaches interval Type-2 sets, Lupien states that “an even further generalization will admit Type-1 membership functions to describe the membership degrees… This case is known as a general Type-2 membership function,” and notes that such general Type-2 sets are computationally more demanding but conceptually similar. [Lupien: at 0042]
Lupien’s discloses that general Type-2 membership functions as a further generalization and the references to Mendel’s algorithms [Lupien: at 0043, 0049, 0054], it would have been obvious to implement steps (b)–(d) using general Type-2 membership functions instead of interval Type-2 membership functions, as a routine design choice trading computational complexity for modeling fidelity.).
Referring to Claim 5, Lupien teaches the method according to claim 3 wherein the fundamental input parameter value incorporates multiple SME interval estimates (
Lupien states that “multiple interval values may result from polling a plurality of expert panels, each panel comprised of a plurality of experts… The multiple intervals so obtained can then be aggregated into… interval Type-2 fuzzy membership functions.” These aggregated FOUs define the fundamental fuzzy representation of each input variable. [Lupien: at 0046]. Thus, the “fundamental input parameter value” in the fuzzy framework already incorporates multiple SME interval estimates through the aggregation process that constructs the interval Type-2 membership functions for each parameter. The Examiner is interpreting Lupien as teaching “the fundamental input parameter value incorporates multiple SME interval estimates”[Lupien: at 0035, 0036]).
Referring to Claim 6, Lupien teaches the method according to claim 1 wherein the calculations are based on IT2 MFs that combine the primary and secondary uncertainty of each parameter value (
Lupien’s discloses that its interval Type-2 membership functions for each parameter combine uncertainty in the parameter’s possible values (primary) and uncertainty in membership grades (secondary) into a single FOU. All subsequent dividend and FMV calculations are performed “using the Type-1 results to the upper and lower membership functions of the footprints of uncertainty (FOU), which calculates the corresponding upper and lower membership functions of the FOU of the dividend.” [Lupien: at 0055]. Thus, the claimed method’s calculations are necessarily based on IT2 MFs that combine both levels of uncertainty for each parameter.).
Referring to Claim 7, Lupien teaches the method according to claim 1 wherein the interval type-2 fuzzy membership functions are reduced to a corresponding interval range whose midpoint provides a notional scalar value by type-reduction (
Lupien describes type-reducing the dividend’s interval Type-2 membership function to its centroid interval and then taking the midpoint as a scalar value. He states: “A preferred Type-2 membership function of the dividend can be type-reduced to its corresponding Type-1 membership function which is an interval by calculating its centroid… [and] the centroid interval can be defuzzified by calculating its midpoint, which results in a scalar value for the dividend.” [Lupien: at 0056]).
Referring to Claim 8, Lupien teaches the method according to claim 7 wherein the type-reduction of the FMV IT2 MF to an interval range is used in transaction negotiations to arrive at a final valuation for the financial instrument (
Lupien explicitly states that visualizing the full Type-2 membership function and its type-reduced interval “provides a great deal more insight into the dividend behavior… [and] provides a quantitative basis for negotiating an agreed IPPS dividend with the issuer.” The scalar midpoint is suggested as “the most appropriate dividend value,” but Lupien notes that the negotiated value “may not necessarily correspond exactly to the scalar value,” emphasizing its use in negotiation. [Lupien: at 0056]. Since the IPPS dividend is part of the overall FMV of the instrument, using the type-reduced FMV IT2 interval in negotiation is directly taught in Lupien).
Referring to Claim 9, Lupien teaches the method according to claim 7 wherein the type-reduction of the FMV IT2 MF to an interval range is used for proper accounting, hedging, arbitrage, or trading (
Lupien motivates the FMV analysis by noting that providing a rational FMV guideline “promotes the liquidity of the investment in the market,” and uses no-arbitrage arguments equating in-kind and risk-free instruments. [Lupien: at 0026, .029]).
Lupien does not explicitly teach hedging, arbitrage, or trading.
However, Pandey teaches (
Pandey’s dynamic valuation server generates and adjusts valuations used to bid, purchase, and manage portfolios of financial instruments. Such valuations are standard inputs to accounting (fair-value measurement), hedging, arbitrage, and trading decisions. “financial instrument” may refer to any monetary contract between parties or asset that may be created, traded, modified, and/or settled. Such financial instruments may include cash instruments, debt-based financial instruments (e.g., mortgages, loans, bonds, etc.), equity-based financial instruments (e.g., stocks or the like), derivatives (e.g., futures, financial option swaps, etc.) and/or the like. These financial instruments may be owned by, for example, a financial institution that may collect on the servicing rights of the financial instruments. Furthermore, the financial instruments described herein may be available for purchase, sale, or trade by a respective financial market (e.g., mortgage market, stock exchange, bond market, etc.).” [Pandey: at 0026, 0027]
Therefore, it would have been obvious to a person of ordinary skill in the art before the effective filing date of the claimed invention to include Lupien’s interval Type-2 fuzzy valuation methodology within Pandey’s broader financial-instrument valuation framework in order to improve valuation determinations by explicitly modeling imprecise and uncertain inputs while still producing usable FMV outputs for financial instruments[Lupien: at 0055, Pandey: at 0009-0011]
Referring to Claim 10, Lupien teaches the method according to claim 1 wherein the financial instrument is a royalty (
Lupien’s IPPS entitles the holder to contingent, in-kind periodic payments in the commodity produced by the issuer (e.g., ounces of gold), contingent on production success, over the life of the project. “”, “if the issuer is a gold mining company, then the contingent in-kind dividend payments would be specified in ounces of gold each period over the course of the dividend obligation. However, in this preferred embodiment, if the gold price is less than its price at origination of the IPPS contract, the holder is entitled to receive a higher in-kind dividend equal to the cash equivalent of the dividend obligation (or actual cash).” [Lupien: at 0019] This is economically equivalent to a production royalty contract.).
Referring to Claim 11, Lupien teaches the method according to claim 10 wherein the royalty is ascribed a notional value (
Lupien computes a scalar FMV (basis points) for the IPPS dividend, and suggests the centroid-midpoint scalar as the “the centroid interval can be defuzzified by calculating its midpoint, which results in a scalar value for the dividend. This scalar value could be interpreted as the most “appropriate” dividend value for the IPPS. Note, however, that both the type-reduction operation and the defuzzification operation are successively collapsing the much richer depiction available in the Type-2 dividend membership function.” [Lupien: at 0056]. This scalar value is effectively a notional value assigned to the contingent payment stream (royalty-like IPPS) and is directly analogous to the claimed “notional value” for a royalty.).
Referring to Claim 12, Lupien teaches the method according to claim 10 wherein the royalty payments have a non-zero probability of halting due to production failure (
Lupien explicitly models “production default”: “The IPPS is not a risk-free security, since there is a possibility of default on production.” [Lupien: at 0030] Survival probabilities Pᵢ and hazard rates λᵢ define the probability that production survives to period i or defaults in period i, and upon default the dividend payment stream ceases. Thus, the contingent payment stream (and the equivalent royalty payments) has a non-zero probability of halting due to production failure.).
Referring to Claim 13, Lupien teaches the method according to claim 10 wherein the royalty payments are based on the life of the mine in the mining industry, the life of a well in the oil or gas industry or similar duration estimates for a commodity project (
Lupien’s background focuses on commodity-producing companies, including mining and other resource projects. Hazard rates and survival probabilities over n periods model the probability that production continues through time, which corresponds to the life of the mine/well or project. [Lupien: at 0034, 0050, 0057]. Using life-of-mine or life-of-well estimates as part of the survival/hazard inputs is an obvious application of Lupien’s framework to the specific industries of mining, oil, or gas.
Referring to Claim 14, Lupien teaches the method according to claim 1 wherein the financial instruments are options on royalties (
Lupien explicitly references “the celebrated Black-Scholes option pricing formula” [Lupien: at 0026] and uses a derivative-style reasoning for the risk-dividend portion of the IPPS (equated to premiums on a credit default swap).).
Referring to Claim 15, Lupien teaches the method according to claim 14 wherein the option on royalties is ascribed a notional value (
Once a royalty stream’s FMV is determined (via Lupien’s IT2 approach), standard option-pricing methods (per Lupien’s own Black-Scholes reference) assign a scalar price (premium) to an option on that underlying. This scalar premium is a “notional value” for the option on royalties. Using the type-reduced FMV and scalar midpoint as inputs to such pricing is an obvious combination.).
Referring to Claim 16, Lupien teaches the method according to claim 14 wherein the option on royalties includes a royalty buyback option (
Lupien teaches a royalty buyback option, as a royalty buyback option is a contract term allowing the issuer (or other party) to repurchase the royalty. Structurally, this is just an option on the royalty interest itself. Lupien already contemplates complex hybrid structures combining bonds and CDSs, and discusses contingent in-kind payments and conversion features. “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. A notable illustration of this phenomenon is the celebrated Black-Scholes option pricing formula which, shortly after its publication in the early 1970′s, fostered the founding of the Chicago Board Options Exchange and other options exchanges around the world and greatly increased the market liquidity for options trading.” [Lupien: at 0026]. Given that options on royalties are in Lupien, adding a buyback feature is a straightforward variant of the option structure and does not change the FMV methodology.).
Referring to Claim 17, Lupien teaches the method according to claim 14 wherein the option on royalties further includes a Black- Scholes model for evaluating an option premium (
Lupien explicitly cites the Black–Scholes option pricing formula as an example of a valuation formula that increased market liquidity. Option practitioners routinely use Black–Scholes to price options on underlying assets, including cash-flow-generating contracts. Using Black–Scholes to evaluate the premium of an option on a royalty is a standard application once the royalty’s FMV and volatility are characterized. “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. A notable illustration of this phenomenon is the celebrated Black-Scholes option pricing formula which, shortly after its publication in the early 1970′s, fostered the founding of the Chicago Board Options Exchange and other options exchanges around the world and greatly increased the market liquidity for options trading.” [Lupien: at 0026]. ).
Referring to Claim 18, Lupien teaches the method according to claim 14 wherein the option on royalties further includes extensions of the Black-Scholes model, for example the binomial pricing model (
The binomial pricing model and other extensions of Black–Scholes are standard and often interchangeable alternative models. Lupien’s reference to Black–Scholes invites use of conventional option-pricing tools. Substituting or supplementing Black–Scholes with a binomial model is an obvious modeling variation that does not alter the underlying FMV method. “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. A notable illustration of this phenomenon is the celebrated Black-Scholes option pricing formula which, shortly after its publication in the early 1970′s, fostered the founding of the Chicago Board Options Exchange and other options exchanges around the world and greatly increased the market liquidity for options trading.” [Lupien: at 0026].).
Referring to Claim 19, Lupien teaches the method according to claim 1 wherein the financial instrument is a streaming contract (
As discussed for royalties, the IPPS is structurally a streaming arrangement: the investor provides capital and receives in-kind production-linked payments over time. “ the value of this incremental addition to the IPPS dividend is equal to the expected present value (EPV) of the corresponding in-kind insurance premium payment stream. These payments are discounted both by the assumed risk-free interest rate and the assumed probability that the enterprise is successful in reaching production. However, they may be appreciated by assumed gain in the value of the in-kind commodity in which the dividends are paid. From the IPPS purchaser's perspective, the EPV of the default insurance payment stream must compensate for the expected loss he would suffer upon the default of the dividend payments.” [Lupien: at 0031].).
Referring to Claim 20, Lupien teaches the method according to claim 19 wherein the streaming contract has a discounted price (
Lupien teaches streaming contracts commonly involve a discounted purchase price for future production. In Lupien, the IPPS investor effectively receives an in-kind dividend stream whose risk-adjusted FMV is computed via NPV formulas and hazard-adjusted increments, which can equivalently be interpreted as a discounted purchase of future commodity flows. [Lupien: at 0028, 0029]. Given that Lupien’s FMV framework can value any cash-flow pattern under discounting, specifying that the streaming contract is transacted at a discount is an obvious commercial term.).
Referring to Claim 21, Lupien teaches the method according to claim 19 wherein the streaming contract has no discounted price (
Lupien teaches streaming contracts commonly involve a discounted purchase price for future production. In Lupien, the IPPS investor effectively receives an in-kind dividend stream whose risk-adjusted FMV is computed via NPV formulas and hazard-adjusted increments, which can equivalently be interpreted as a discounted purchase of future commodity flows. [Lupien: at 0028, 0029]. Given that Lupien’s FMV framework can value any cash-flow pattern under discounting, specifying that the streaming contract is transacted at a discount is an obvious commercial term.
Lupien teaches, contracts at par or with no explicit discount as these are well-known; Lupien’s formulas apply regardless of whether the negotiated contract price equals, exceeds, or falls below the computed FMV. [Lupien: at 0031, 0037, 0056, 0057 ]. Setting the contract at “no discount” is a straightforward option within standard negotiation using the FMV interval and scalar.).
Referring to Claim 22, Lupien teaches the method according to claim 19 wherein the streaming contract is specified over a defined lifetime or for a variable period (
Lupien disclose models dividends over n periods, where n represents the planned horizon but delayed-production and variable-start scenarios are explicitly considered; see [Lupien: at 0063–0065], where dividends may start after several years and continue for another set of years. This corresponds to contracts with defined lifetimes and variable periods. Using the same hazard framework for streaming contracts is direct and obvious. ).
Referring to Claim 23, Lupien teaches the method according to claim 19 where the streaming contract provides a specific upfront payment per unit used as a negotiated value (
In a streaming arrangement, the investor often pays a specific upfront amount per unit of expected production. Lupien’s FMV method computes basis-point dividends and scalar FMV measures that serve as quantitative anchors for negotiating such upfront per-unit amounts. Using the computed FMV interval and scalar to negotiate an “upfront payment per unit” in a streaming contract is an obvious application of Lupien’s negotiation guidance. ).
Referring to Claim 24, Lupien teaches a computer for assessing a FMV payment stream for a financial instrument comprising:
a. a processor (
Lupien teaches, “computing, by a processor embodied on the computer,” [Lupien: at Claim 12]);
b. a display device (
Lupien teaches, “ the computer to an output device, the output device being configured to display a graphical representation,” [Lupien: at Claim 1]);
c. a storage device (
Lupien teaches, “a process and store data” [Lupien: at Claim 1]);
i. estimating the IT2 MF of a FMV for a contingent payment stream for a financial instrument of claim 1 (
Lupien teaches computer instructions receive interval data, aggregate them into IT2 MFs for the inputs, and compute an interval Type 2 MF for the dividend FMV of the IPPS security, which is a contingent payment stream for a commodity. “the most general type of fuzzy membership functions currently in use admit additional imprecision… and are known as Type-2 fuzzy membership functions,” and explains that multiple interval estimates may be aggregated into “interval Type-2 fuzzy membership functions.”[Lupien: at 0039]);
ii. type-reducing the IT2 MF to a negotiation interval (
Lupien’s computer instructions receive interval data, aggregate them into IT2 MFs for the inputs, and compute an interval Type 2 MF for the dividend FMV of the IPPS security, which is a contingent payment stream for a commodity “A preferred Type-2 membership function of the dividend can be type-reduced to its corresponding Type-1 membership function which is an interval by calculating its centroid… [and] the centroid interval can be defuzzified by calculating its midpoint, which results in a scalar value for the dividend.” [Lupien: at 0056]);
iii. calculating the midpoint of the negotiation interval as a notional scalar FMV (
Lupien’s computer performs type reduction to compute a centroid interval for the dividend’s Type 2 MF; this interval is explicitly used for negotiation between issuer and investor. Lupien computes a scalar FMV (basis points) for the IPPS dividend, and suggests the centroid-midpoint scalar as the “the centroid interval can be defuzzified by calculating its midpoint, which results in a scalar value for the dividend. This scalar value could be interpreted as the most “appropriate” dividend value for the IPPS. Note, however, that both the type-reduction operation and the defuzzification operation are successively collapsing the much richer depiction available in the Type-2 dividend membership function.” [Lupien: at 0056]. This scalar value is effectively a notional value assigned to the contingent payment stream (royalty-like IPPS) and is directly analogous to the claimed “notional value” for a royalty.).); and
iv. displaying these results on the display device to show the expected FMV IT2 MF and its derived components in ii. and iii (
Lupien displays the FMV graphical representation and discusses the insight provided by visualizing the Type 2 membership functions and their type reduced interval; Lupien’s discloses that its interval Type-2 membership functions for each parameter combine uncertainty in the parameter’s possible values (primary) and uncertainty in membership grades (secondary) into a single FOU. All subsequent dividend and FMV calculations are performed “using the Type-1 results to the upper and lower membership functions of the footprints of uncertainty (FOU), which calculates the corresponding upper and lower membership functions of the FOU of the dividend.” [Lupien: at 0055, Claim 1].).
Lupien does not explicitly teach d. a memory, the memory comprising software instructions, the software instructions comprising instructions.
However, Pandey teaches d. a memory, the memory comprising software instructions, the software instructions comprising instructions (
Pandey teaches, “non-transitory storage device or non-transitory computer system memory that may be accessed by a controller, a microcontroller, a computational system or a module of a computational system to encode thereon computer-executable instructions or software programs. A non-transitory “computer-readable medium” may be accessed by a computational system or a module of a computational system to retrieve and/or execute the computer-executable instructions or software programs encoded on the medium” [Pandey: at 0029]).
Therefore, it would have been obvious to a person of ordinary skill in the art before the effective filing date of the claimed invention to include Lupien’s interval Type-2 fuzzy valuation methodology within Pandey’s broader financial-instrument valuation framework in order to improve valuation determinations by explicitly modeling imprecise and uncertain inputs while still producing usable FMV outputs for financial instruments[Lupien: at 0055, Pandey: at 0009-0011]
Referring to Claim 25, Lupien teaches the computer in claim 24 where the computer displays the FMV for a contingent payment stream (
Lupien’s data-processing system explicitly “display[s] a graphical representation of said fair market value of said financial product” on an output device; the FMV corresponds to the contingent dividend stream. [Lupien: at 0026, 0063, Claim 2]).
Referring to Claim 26, Lupien teaches the computer in claim 24 where the computer display for the financial instrument is selected from the group consisting of royalties, options on royalties, streaming contracts, and combinations thereof (
Lupien teaches IPPS is economically equivalent to a royalty/streaming structure on commodity production, and Lupien explicitly contemplates representing the hybrid instrument with multiple component instruments (bond, CDS, etc.). [Lupien: at 0011, 0027, 0030]As such, using the same display to show valuations for royalties, options on royalties, and streaming contracts is an obvious specialization of the generic valuation and display capabilities.).
Referring to Claim 27, Lupien teaches a server for estimating the FMV payment stream for a financial instrument comprising:
a. a processor (
Lupien teaches, “computing, by a processor embodied on the computer,” [Lupien: at Claim 12]);
c. a storage device connected to the processor (
Lupien teaches, “a process and store data” [Lupien: at Claim 1]);
Lupien does not explicitly teach b. a network to which the processor is connected ();
And d. a memory, the memory comprising software instructions, the software instructions comprising instructions; receiving over the network information related to the calculation of the FMV of a contingent payment stream for a financial instrument of claim 1; and ii. returning the results over the network information related to the calculation of the FMV of a contingent payment stream of claim 1.
However, Pandey teaches these limitations
b. a network to which the processor is connected; and d. a memory, the memory comprising software instructions, the software instructions comprising instructions for: (
Pandey teaches, “non-transitory storage device or non-transitory computer system memory that may be accessed by a controller, a microcontroller, a computational system or a module of a computational system to encode thereon computer-executable instructions or software programs. A non-transitory “computer-readable medium” may be accessed by a computational system or a module of a computational system to retrieve and/or execute the computer-executable instructions or software programs encoded on the medium” [Pandey: at 0029] “The valuation server 200 may include circuitry, networked processors, or the like configured to perform some or all of the apparatus-based (e.g., valuation server-based) processes described herein, and may be any suitable network server and/or other type of processing device. In this regard, valuation server 200 may be embodied by any of a variety of devices” [ Pandey: at 0032]).
receiving over the network information related to the calculation of the FMV of a contingent payment stream for a financial instrument of claim 1 (
Pandey’s valuation server receives “actionable financial instrument data” over a network, including pricing attributes needed for valuation; these are “information related to the calculation of the FMV of a contingent payment stream.” [ Pandey: at 0050-51] );
and ii. returning the results over the network information related to the calculation of the FMV of a contingent payment stream of claim 1 (
Pandey teaches providing augmented valuation data of candidate financial instruments to a user interface over the network. [ Pandey: at 0032, 0063]).
Therefore, it would have been obvious to a person of ordinary skill in the art before the effective filing date of the claimed invention to include Lupien’s interval Type-2 fuzzy valuation methodology within Pandey’s broader financial-instrument valuation framework in order to improve valuation determinations by explicitly modeling imprecise and uncertain inputs while still producing usable FMV outputs for financial instruments[Lupien: at 0055, Pandey: at 0009-0011]
Referring to Claim 28, Lupien teaches the server for estimating the FMV payment stream in claim 27 Lupien does not explicitly teach wherein the network is selected from the group consisting of the Internet, intranet, local area networks (LANS),wide area networks (WANS), and a wireless network.
However, Pandey teaches wherein the network is selected from the group consisting of the Internet, intranet, local area networks (LANS),wide area networks (WANS), and a wireless network (
Pandey’s network 104 in FIG. 1 is expressly described as including “wired and/or wireless communication networks” and examples of LAN, WAN, public Internet, etc. Goh’s system is over the Internet and can use LAN/WAN for trading. ).
Therefore, it would have been obvious to a person of ordinary skill in the art before the effective filing date of the claimed invention to include Lupien’s interval Type-2 fuzzy valuation methodology within Pandey’s broader financial-instrument valuation framework in order to improve valuation determinations by explicitly modeling imprecise and uncertain inputs while still producing usable FMV outputs for financial instruments[Lupien: at 0055, Pandey: at 0009-0011]
Referring to Claim 29, Lupien teaches the server for estimating the FMV payment stream in claim 27 Lupien does not explicitly teach wherein the network comprises a plurality of interconnected networks.
However, Pandey teaches wherein the network comprises a plurality of interconnected networks (
Pandey’s network 104 can be combinations of networks: “a public network, such as the Internet, a private network, such as an intranet, or combinations thereof.” [ Pandey: at 0033]).
Therefore, it would have been obvious to a person of ordinary skill in the art before the effective filing date of the claimed invention to include Lupien’s interval Type-2 fuzzy valuation methodology within Pandey’s broader financial-instrument valuation framework in order to improve valuation determinations by explicitly modeling imprecise and uncertain inputs while still producing usable FMV outputs for financial instruments[Lupien: at 0055, Pandey: at 0009-0011]
Referring to Claim 30, Lupien teaches the server for estimating the FMV payment stream in claim 27 where the financial instrument is selected from the group consisting of royalties, options on royalties, streaming contracts, and combinations thereof (
Lupien teaches IPPS is economically equivalent to a royalty/streaming structure on commodity production, and Lupien explicitly contemplates representing the hybrid instrument with multiple component instruments (bond, CDS, etc.). [Lupien: at 0011, 0027, 0030]As such, using the same display to show valuations for royalties, options on royalties, and streaming contracts is an obvious specialization of the generic valuation and display capabilities.).
Conclusion
The prior art made of record and not relied upon is considered pertinent to applicant's disclosure.
Lupien et al., W.O. Pub. 2009132243, (discussing the managing of market data).
Rostan et al., Options Trading Strategy Based On ARIMA Forecasting, https://www.emerald.com/prr/article/4/2/111/323845, PSU Research Review, 2020 (discussing the use of various tools for trading).
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