DETAILED ACTION
1. Notice of Pre-AIA or AIA Status
The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA .
2. Status of Application and Claims
Claims 1-18 are pending.
Claims 1, 4, 7, 9, 10, 13, 15 and 16 were amended and/or newly added in the Applicant’s filing on 6/04/2026.
This office action is being issued in response to the Applicant's filing on 6/04/2026.
3. Claim Interpretation
The subject matter of a properly construed claim is defined by the terms that limit its scope when given their broadest reasonable interpretation. see MPEP §2013(I)(C). Specifically, the “broadest reasonable construction ‘in light of the specification as it would be interpreted by one of ordinary skill in the art.’” See MPEP §2111, citing Phillips v. AWH Corp., 75 USPQ2d 1321, 1329 (Fed. Cir. 2005). However, “[t]hough understanding the claim language may be aided by explanations contained in the written description, it is important not to import into claim limitations that are not part of the claim.” See MPEP §2111.01, citing Superguide Corp. v. DirecTV Enterprises, Inc., 69 USPQ2d 1865, 1868 (Fed. Cir. 2004). Construing claims broadly during prosecution is not unfair to the applicant, because the applicant has the opportunity to amend the claims to obtain more precise claim coverage. See MPEP §2111, citing In re Yamamoto, 222 USPQ 934, 936 (Fed. Cir. 1984).
As a general matter, grammar and the plain meaning of terms as understood by one having ordinary skill in the art used in a claim will dictate whether, and to what extent, the language limits the claim scope. See MPEP §2013(I)(C). Language that suggests or makes a feature or step optional but does not require that feature or step does not limit the scope of a claim under the broadest reasonable claim interpretation. See MPEP §2013(I)(C).
As such, claim limitations that contain statement(s) such as “if,” “may,” “might,” “can,” and “could” are treated as containing optional language. See MPEP §2013(I)(C). As matter of linguistic precision, optional claim elements do not narrow claim limitations, since they can always be omitted. See MPEP §2013(I)(C).
Similarly, a method step exercised or triggered upon the satisfaction of a condition, where there remains the possibility that the condition was not satisfied under the broadest reasonable interpretation, is an optional claim limitation. See MPEP §2111.04(II). As the Applicant does not address what happens should the optional claim limitations fail, Examiner assumes that nothing happens (i.e., the method stops). An alternate interpretation is that merely the claim limitations based upon the condition are not triggered or performed.
In addition, when a claim requires selection of an element from a list of alternatives, the prior art teaches the element if one of the alternatives is taught by the prior art. See MPEP §2143.03, citing Fresenius USA, Inc. v. Baxter Int’l, Inc., 582 F.3d 1288, 1298 (Fed. Cir. 2009);
Language in a method or system claim that states only the intended use or intended result, but does not result in a manipulative difference in the steps of the method claim nor a structural difference between the system claim and the prior art, fails to distinguish the claims from the prior art.
The following types of claim language may raise a question as to its limiting effect (this list is not exhaustive):
Statements of intended use or field of use, including statements of purpose or intended use in the preamble. See MPEP §2111.02;
Clauses such as “adapted to”, “adapted for”, “wherein”, and “whereby.” See MPEP §2111.04;
Contingent limitations. See MPEP §2111.04(II);
Printed matter. See MPEP §2111.05; and
Functional language associated with a claim term. See MPEP §2181.
As such, while all claim limitations have been considered and all words in the claims have been considered in judging the patentability of the claimed invention, the following italicized, underlined and/or boldened language is interpreted as not further limiting the scope of the claimed invention.
Additionally, the following italicized, underlined and emboldened language is not necessarily an exhaustive list of claim language that is interpreted as not further limiting the scope of the claimed invention. Applicant should review all claims for additional claim interpretation issues.
Claim 2 recites a method comprising selling a whole number of shares in the pool according to a schedule in response to the pool including at least one share.
The broadest reasonable interpretation of a method (or process) claim having contingent limitations requires only those steps that must be performed and does not include steps that are not required to be performed because the condition(s) precedent is not met. See MPEP §2111.04(II).
Usage of the term and/or phrase “in response to …” in Claim 2 suggests that there remains the possibility that the contingent limitations are not performed as the condition(s) precedent is not met. Therefore, the claim limitations based upon the condition are optional claim limitations. As a matter of linguistic precision, optional claim limitations do not narrow the scope of the invention, since they can always be omitted. See MPEP §2111.04(II).
As the Applicant does not address what happens should the optional claim limitation(s) fail, Examiner assumes that nothing happens (i.e., the method stops). An alternative interpretation is merely the claim limitation(s) based upon the con1dition(s) are not triggered or performed.
Claim 6, due to similar claim language, results in a similar claim interpretation.
Claim 5 recites a method wherein the generating the report includes sending the report to a management team, the report further including at least one of the second threshold corresponding to each of the second set of exchange traded funds, a date, or a time.
Claim elements (i.e., the contents of the report) pertain to nonfunctional descriptive material and are not functionally involved in the steps recited. Thus, this descriptive material will not distinguish the claimed invention from the prior art in terms of patentability. See MPEP §2111.05 (III).
Claims 11 and 17 have similar issues.
4. Claim Rejections - 35 USC § 101
35 U.S.C. 101 reads as follows:
Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.
Claims 1-18 are rejected under 35 U.S.C. § 101 because the claimed invention is directed to an abstract idea without significantly more.
STEP 1
The claimed invention falls within one of the four statutory categories of invention (i.e., process, machine, manufacture and composition of matter). See MPEP §2106.03.
STEP 2A – PRONG ONE
The claim(s) recite(s) a method, a system to perform a method and/or computer-readable medium to cause a system to perform a method comprising:
receiving, from a first of the plurality of retirement plans, …, a first order of the plurality of orders, the first order specifying a first amount that is other than a whole number of shares of a first of the plurality of exchange traded funds;
identifying, …, a second amount that is a whole number of shares nearest to the first amount that complies with an identification rule defining that the second amount is to be a next whole number higher than the first amount;
adding, from the pool, of at least one share of each of the plurality of exchange traded funds to be traded by the plurality of retirement plans, a fractional portion of a share to such that a sum of the fractional portion of the share number and the first amount equals the second amount, the pool being held by a trust for the plurality of retirement plans;
directing an exchange to execute, before an end of a trading day, at least one trade of the first of the plurality of exchange traded funds for the second amount, higher than the first amount, the second amount including a first portion of a share corresponding to the pool;
allocating, …, the first amount to the first of the plurality of retirement plans;
allocating, …, a difference between the first amount and second amount to the pool;
monitoring a number of shares of each of the plurality of exchange traded funds in the pool;
identifying a first set of exchange traded funds in the pool, the first set of exchange traded funds being exchange traded funds in the pool outside of a first threshold;
identifying a second set of exchange traded funds in the pool, the second set of exchange traded funds being exchange traded funds in the pool outside of a second threshold, the second threshold being greater than the first threshold;
generating a report including the second set of exchange traded funds;
… adjusting the number of shares of each of the plurality of exchange traded funds of the first set of exchange traded funds to be within the first threshold; and
… adjusting one or more of the first threshold or the second threshold based on the first set of exchange traded funds and the second set of exchange traded funds.
These limitations, as drafted, recite a method and/or a system configured to perform a method that, under its broadest reasonable interpretation, covers a series of steps instructing how to manage and process financial trades which is a fundamental economic practice, a sub-category of certain method(s) of organizing human activity, an enumerated grouping of abstract ideas. See MPEP §2106.04(a)(2)(II)(A).
Accordingly, the claimed invention recites an abstract idea.
STEP 2A – PRONG TWO
The claimed invention recites additional elements (i.e., computer elements) of a hardware processor coupled a memory (Claim(s) 1, 7 and 13) and performing method steps/functions automatically (Claim(s) 1, 7 and 13).
The claimed invention does not include additional elements that integrate the judicial exception into a practical application of the exception because the claims do not provide improvements to another technology or technical field; improvements to the functioning of the computer itself; are not applying or using a judicial exception to effect a particular treatment or prophylaxis for a disease or medical condition; are not applying the judicial exception with or by use of a particular machine; are not effecting a transformation or reduction of a particular article to a different state or thing; and are not applying the judicial exception in some other meaningful way beyond generally linking the use of the judicial exception to a particular technological environment. See MPEP §2106.04(d).
The additional elements are recited at a high-level of generality such that it amounts no more than mere instructions to apply the exception using a generic computer component. See MPEP §2106.05(f). Alternately, the additional elements amount to no more than generally linking the exception to a particular technological environment or field of use. See MPEP §2106.05(h). Accordingly, these additional element(s), when considered separately and as an ordered combination, do not integrate the abstract idea into a practical application because it does not impose any meaningful limits on practicing the abstract idea.
Accordingly, the claimed invention is directed to an abstract idea without a practical application.
STEP 2B
Upon reconsideration of the indicia noted under Step 2A in concert with the Step 2B considerations, the additional claim element(s) amounts to adding the words “apply it” (or an equivalent) with the judicial exception, or mere instructions to implement an abstract idea on a computer. See MPEP §2106.07(a)(II). The same analysis applies in Step 2B, i.e., mere instructions to apply an exception using a generic computer component cannot integrate a judicial exception into a practical application at Step 2A or provide an inventive concept in Step 2B. The claim does not provide an inventive concept significantly more than the abstract idea.
Accordingly, these additional elements, when considered separately and as an ordered combination, do not integrate the abstract idea into a practical application because they do not impose any meaningful limits on practicing the abstract idea.
additional elements that are sufficient to amount to significantly more than the judicial exception.
DEPENDENT CLAIMS
Dependent Claim(s) 2-6, 8-12 and 14-18 recite claim limitations that further define the abstract idea recited in respective independent Claim(s) 1, 7 and 13. As such, the dependent claims are also grouped an abstract idea utilizing the same rationale as previously asserted against the independent claims.
No additional computer components other than those found in the respective independent claims is recited, thus it is presumed that the claim is further utilizing the same generically recited computer.
As such, the dependent claims do not include any additional elements that integrate the abstract idea into a practical application of the judicial exception or are sufficient to amount to significantly more than the judicial exception when considered both individually and as an ordered combination.
Accordingly, the dependent claim(s) are also not patent eligible.
Appropriate correction is requested.
5. 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, 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.
The factual inquiries set forth in Graham v. John Deere Co., 383 U.S. 1, 148 USPQ 459 (1966), that are applied for establishing a background for determining obviousness under 35 U.S.C. 103 are summarized as follows:
1. Determining the scope and contents of the prior art.
2. Ascertaining the differences between the prior art and the claims at issue.
3. Resolving the level of ordinary skill in the pertinent art.
4. Considering objective evidence present in the application indicating obviousness or nonobviousness.
Claims 1, 3-7, 9-13 and 15-18 are rejected under 35 U.S.C. 103 as being unpatentable Cody (US PG. Pub. 2010/0017339) in view of Pruitt (US Patent 7,668,773).
Regarding Claim 1, Cody discloses a method comprising:
receiving (gathering), from a first of the plurality of retirement plans (EFT 401K), by a hardware processor coupled to a memory, a first order (trade) of the plurality of orders, the first order specifying a first amount that is other than a whole number of shares of a first of the plurality of exchange traded funds (EFT). (see para. 4 and 10);
identifying, by the hardware processor coupled to the memory, a second amount that is a whole number of shares nearest to the first amount that complies with an identification rule defining that the second amount is to be a next whole number higher than the first amount (rounded up to a whole number). (see para. 4)
adding, from a pool (breakage account) of at least one share of each of the plurality of exchange traded funds to be traded by the plurality of retirement plans, a fractional portion of a share to the first amount such that a sum of the fractional portion of the share and the first amount equals the second amount (rounded up to a whole number), the pool being held by a trust (breakage account located with a trustee) for the plurality of retirement plans. (see para. 13 and 15-25);
directing an exchange to execute (via placing a final order), before an end of a trading day, at least one trade of the first of the plurality of exchange traded funds for the second amount, higher than the first amount, the second amount including a first portion of a share corresponding to the pool (whole number based upon rounding up). (see fig. 2; para. 11);
allocating, by the hardware processor coupled to the memory, the first amount to the first of the plurality of retirement plans (retirement plans). (see para. 25);
allocating, by the hardware processor coupled to the memory, a difference between the first amount and second amount to the pool (breakage account). (see para. 25);
monitoring a number of shares of each of the plurality of exchange traded funds in the pool (to determine breakage account health), (see para. 38);
identifying a first set of exchange traded funds in the pool, the first set of exchange traded funds being exchange traded funds in the pool outside of a first threshold (minimum cash level). (see para. 36-40);
identifying a set of exchange traded funds in the pool, the second set of exchange traded funds being exchange traded funds in the pool outside of a second threshold (minimum cash level using multiplication factor), the second threshold being greater than (a multiple of) the first threshold. (see para. 36-40);
generating a report (record) including the second set of exchange traded funds. (see para 22 and 34); and
automatically adjusting one or more of the first threshold (minimum cash level) or the second threshold (minimum cash level using a multiplication factor) based on the first set of exchange traded funds and the second set of exchange traded funds (via regularly checking the breakage account health balance). (see para. 36-42).
Cody does not explicitly teach a method wherein different thresholds are applied to different sets of exchange traded funds contained within the pool, although Cody discloses a method wherein different thresholds are applied to a pool (breakage accounts) and the pool comprises a plurality of different exchange traded funds. (see para. 36-41).
Cody does not teach a method comprising automatically adjusting the number of shares of each of the plurality of exchange traded funds of the first set of exchange traded funds to be within the first threshold; and automatically adjusting one or more of the first threshold or the second threshold based on the first set of exchange traded funds and the second set of exchange traded funds.
Pruitt discloses a method comprising:
identifying a first set of exchange traded funds in the pool, the first set of exchange funds being exchange traded funds in the pool outside of a first threshold (benchmarks or constraints). (see col. 5, line 56 – col. 6, line 20);
identifying a second set of exchange traded funds in the pool, the first set of exchange funds being exchange traded funds in the pool outside of a second threshold (benchmarks or constraints). (see col. 5, line 56 – col. 6, line 20), the second threshold being greater (maximum) than the first threshold (minimum). (see col. 26, lines 16-50);
generating a report including the second set of exchange traded funds (indicating performance in relation to benchmarks). (see col. 5, line 56 – col. 6, line 20);
automatically adjusting (trimming) the number of shares of each of the plurality of exchange traded funds (outside constraints) of the exchange traded funds to be within the first threshold to be within the first threshold. (see col. 47, lines 20-35);
generating a report (performance report) including the second set of exchange traded funds. (see col. 5, line 56 – col. 6, line 20); and
automatically adjusting one or more of the first threshold (maximum) or the second threshold (minimum) based on the first set of exchange traded funds (portfolios) and the second set of exchange traded funds (portfolios). (see col. 8, lines 30-51).
It would have been obvious to one of ordinary skill in the art before the effective filing date of the invention to have modified Cody by incorporating automatic adjustments to exchange traded funds, as disclosed by Pruitt, thereby ensuring that exchange traded funds stay within predefined thresholds.
Regarding Claims 3 and 4, Cody does not teach a method wherein automatically adjusting the number of shares of each of the plurality of exchange traded funds of the first set of exchange traded funds in the pool includes, for each exchange traded fund of the first set of exchange traded funds that exceeds an upper threshold of the first threshold, selling a number of shares of the exchange traded fund to reduce the number of shares of the exchange traded fund to be equal to a set amount, the set amount being less than the upper threshold of the first threshold; or automatically adjusting the number of shares of each of the plurality of exchange traded funds of the first set of exchange traded funds in the pool includes, for each exchange traded fund of the first set of exchange traded funds that is below a lower threshold of the first threshold, buying a number of shares of the exchange traded fund to increase the number of shares of the exchange traded fund to be greater than the lower threshold of the first threshold
Pruitt discloses a method a method wherein:
automatically adjusting the number of shares of each of the plurality of exchange traded funds of the first set of exchange traded funds in the pool includes, for each exchange traded fund of the first set of exchange traded funds that exceeds an upper threshold of the first threshold, selling (trimming) a number of shares of the exchange traded fund to reduce the number of shares of the exchange traded fund to be equal to a set amount, the set amount being less than the upper threshold of the first threshold (upper bound of the asset class). (see col. 29, lines 25-44; col. 31, lines 13-20; col. 47, lines 20-35); and
automatically adjusting (rebalancing) the number of shares of each of the plurality of exchange traded funds of the first set of exchange traded funds in the pool includes, for each exchange traded fund of the first set of exchange traded funds that is below a lower threshold of the first threshold (below lower bound of asset class), buying a number of shares of the exchange traded fund to increase the number of shares of the exchange traded fund to be greater than the lower threshold of the first threshold. (see col. 31, lines 14-20).
It would have been obvious to one of ordinary skill in the art before the effective filing date of the invention to have modified Cody and Pruitt to incorporate the rebalancing a pool when it falls outside predefined thresholds, as disclosed by Pruitt, thereby ensuring that the pool remains within predefined thresholds.
Regarding Claim 5, Cody does not teach a method wherein the generating the report includes sending the report to a management team, the report further including at least one of the second threshold corresponding to each of the second set of exchange traded funds, a date, or a time.
Pruitt discloses a method wherein the generating the report includes sending the report (performance report) to a management team (advisor), the report further including at least one of the second threshold (benchmarks) corresponding to each of the second set of exchange traded funds, a date, or a time. (see col. 5, line 56 – col. 6, line 20).
It would have been obvious to one of ordinary skill in the art before the effective filing date of the invention to have modified Cody and Pruitt by issuing reports pertaining to the performance of the funds, as disclosed by Pruitt, thereby keeping an investor informed about the performance of their investments.
Regarding Claims 6, 7, 9-13 and 15-18, such claims recite substantially similar limitations as claimed in previously rejected claims and, therefore, would have been obvious based upon previously rejected claims or are otherwise disclosed by the prior art applied in previously rejected claims.
Claim(s) 2, 8 and 14 is/are rejected under 35 U.S.C. 103 as being unpatentable over Cody and Pruitt, as applied to Claims 1, 7 and 13 above, and further in view of Breen (US Patent 6,615,188).
Regarding Claim 2, Cody discloses a method comprising selling a whole number of shares in the pool in response to the pool including at least one share. (see para. 3).
Cody does not teach a method wherein the whole shares are sold according to a schedule.
Breen discloses a method comprising selling a whole number of shares in the pool according to a schedule (regularly scheduled times) in response to the pool including at least one share. (see col. 14, lines 33-43).
It would have been obvious to one of ordinary skill in the art before the effective filing date of the invention to have modified Cody and Pruitt by selling shares according to a schedule, as disclosed by Breen, thereby reducing market timing errors.
Regarding Claims 8 and 14, such claims recite substantially similar limitations as claimed in previously rejected claims and, therefore, would have been obvious based upon previously rejected claims or are otherwise disclosed by the prior art applied in previously rejected claims.
6. Response to Arguments
Applicants’ arguments with respect to the pending claims have been considered. Some arguments have been rendered moot based upon new references utilized in the current rejection. However, some arguments remain relevant, as they apply to a reference and/or rejection still utilized in the current rejection. Such arguments have been fully considered but are not persuasive and are addressed below.
§101 Rejection
Step 2A Prong Two
Applicant argues that the claimed invention recites a practical application, specifically “[a]pplying or using the judicial exception in a meaningful way beyond generally linking the use of the judicial exception to a particular technological environment, such that the claim as a whole is more than a drafting effort designed to monopolize the exception,” and, as such, satisfies Step 2A Prong Two of the §101 Guidelines. See Arguments, pp. 14-15.
The Examiner respectfully disagrees.
MPEP §2106.04(d) recites:
The courts have also identified limitations that did not integrate a judicial exception into a practical application:
Merely reciting the words “apply it” (or an equivalent) with the judicial exception, or merely including instructions to implement an abstract idea on a computer, or merely using a computer as a tool to perform an abstract idea, as discussed in MPEP § 2106.05(f).
Generally linking the use of a judicial exception to a particular technological environment or field of use, as discussed in MPEP § 2106.05(h).
Examiner asserts that the additional elements amount to merely (1) including instructions to implement an abstract idea on a computer or merely using a computer as a tool to perform an abstract idea, or alternatively, (2) linking the use of a judicial exception to a particular technological environment or field of use.
Applicant argues that the claimed invention recites a practical application, specifically “an improved method of processing orders.” See Arguments, p. 15.
Examiner assumes that Applicant is arguing recites a practical application, specifically in the functioning of a computer, or an improvement to other technology or technical field,” and, as such, satisfies Step 2A Prong Two of the §101 Guidelines.
The Examiner respectfully disagrees.
MPEP §2106.05(a) recites:
If it is asserted that the invention improves upon conventional functioning of a computer, or upon conventional technology or technological processes, a technical explanation as to how to implement the invention should be present in the specification. That is, the disclosure must provide sufficient details such that one of ordinary skill in the art would recognize the claimed invention as providing an improvement. The specification need not explicitly set forth the improvement, but it must describe the invention such that the improvement would be apparent to one of ordinary skill in the art. Conversely, if the specification explicitly sets forth an improvement but in a conclusory manner (i.e., a bare assertion of an improvement without the detail necessary to be apparent to a person of ordinary skill in the art), the examiner should not determine the claim improves technology. – emphasis added.
The specification does not provide any evidence that there is a technical problem (i.e., a technology-based problem) to be solved. Stated in an alternative manner, the specification does not provide any evidence that there was a technology-based problem that prevented existing and conventional technology from performing the claimed process.
The specification does not provide any evidence that the claimed invention results in an improvement to the functioning of a computer, or an improvement to conventional technology or technological processes. Stated in an alternative manner, the specification does not provide any evidence that the functionality of a computer or conventional technology has been improved, or their technological capabilities have been expanded beyond their existing capabilities.
Applicant further argues:
Prior to this invention, retirement plans were traded in whole shares at an end of day price. Accumulating and trading only whole shares at an end of day price required collection and storage of each order placed throughout the day which utilized significant processor and memory power. Further, this process excluded many trades from being possible because only whole numbers of trades were capable of being traded. The present claims provide an improved method of trading by virtue of the pool so that fractional shares can be traded by plan participants. Specification, paragraph [0012]. The present claims also enable trading throughout the day at a current market price rather than collecting trades and only being able to trade at an end of day price. Id. This provides a faster and more efficient trading system that is not required to collect and store orders for an entire day and is instead able to process orders as they are received. See Arguments, p. 14 – emphasis added.
In DDR Holdings, LLC v. Hotels.com, the U.S. Court of Appeals stated:
As an initial matter, it is true that the claims here are similar to the claims in the cases discussed above in the sense that the claims involve both a computer and the Internet. But these claims stand apart because they do not merely recite the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet. Instead, the claimed solution is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks. See DDR Holdings, LLC v. Hotels.com, 113 USPQ2d 1097, 1106 (Fed. Cir. 2014) – emphasis added.
In the instant case, the problem that the claimed invention is designed to overcome (i.e., inability to trade fractional shares) is not a problem specifically arising from the realm of computers. The specification provides no evidence or indication that an inability to trade fractional shares is a technology-based problem (i.e., a limitation of existing technology) rather than a standard business problem outside the realm of computers (e.g., a regulatory or market-based problem).
Applicant further argues:
Prior to this invention, retirement plans were traded in whole shares at an end of day price. Accumulating and trading only whole shares at an end of day price required collection and storage of each order placed throughout the day which utilized significant processor and memory power. Further, this process excluded many trades from being possible because only whole numbers of trades were capable of being traded. The present claims provide an improved method of trading by virtue of the pool so that fractional shares can be traded by plan participants. Specification, paragraph [0012]. The present claims also enable trading throughout the day at a current market price rather than collecting trades and only being able to trade at an end of day price. Id. This provides a faster and more efficient trading system that is not required to collect and store orders for an entire day and is instead able to process orders as they are received. See Arguments, p. 14 – emphasis added.
As to the indirect improvements to technology (i.e., reduction in processor or memory power) based upon performance of the claimed invention, any software can be argued to have improved a computer. It can always be argued that the software runs the process more efficiently thereby reducing the demands placed on the computer system.
In the claimed invention, the computer has not been improved. The non-technological process that the software is performing may have been improved but, according to Alice, improving the process without any technological innovation is not statutory. To be “directed to a patent-eligible improvement to computer functionality,” the claim “must be directed to an improvement to the functionality of the computer or network platform itself.” Customedia Techs., LLC v. Dish Network Corp., 951 F.3d 1359, 1365 (Fed. Cir. 2020) (citing Enfish, 822 F.3d at 1336-39).
The computer still operates according to its known and standard capabilities. A reduction of load on the computer does not bring about an improvement to the computer, it merely offers resources to other processes that are running on the computer.
The court in Electric Power Group LLC v. Alstom SA (Fed. Cir. 2016) stated:
The claims here are unlike the claims in Enfish. There, we relied on the distinction made in Alice between, on one hand, computer-functionality improvements and, on the other, uses of existing computers as tools in aid of processes focused on “abstract ideas” (in Alice, as in so many other § 101 cases, the abstract ideas being the creation and manipulation of legal obligations such as contracts involved in fundamental economic practices). Enfish, 822 F.3d at 1335-36; see Alice, 134 S. Ct. at 2358-59. That distinction, the Supreme Court recognized, has common-sense force even if it may present line-drawing challenges because of the programmable nature of ordinary existing computers. In Enfish, we applied the distinction to reject the § 101 challenge at stage one because the claims at issue focused not on asserted advances in uses to which existing computer capabilities could be put, but on a specific improvement—a particular database technique—in how computers could carry out one of their basic functions of storage and retrieval of data. Enfish, 822 F.3d at 1335-36; see Bascom, 2016 U.S. App. LEXIS 11687, 2016 WL 3514158, at *5; cf. Alice, 134 S. Ct. at 2360 (noting basic storage function of generic computer). The present case is different: the focus of the claims is not on such an improvement in computers as tools, but on certain independently abstract ideas that use computers as tools. see Electric Power Group LLC v. Alstom SA, 119 USPQ2d 1739, 1742 (Fed. Cir. 2016) – emphasis added.
The claimed invention is not an improvement to computer technology or computer functionality. Rather, the claimed invention is applying a computer’s existing capabilities to implement a particular abstract idea. As in Electric Power Group, the focus of the claimed invention is not on improving computers as tools but on improving an abstract idea (i.e., trading fractional shares) that uses computers as tools.
Step 2B
Applicant argues that the additional elements amount to “significantly more” than the abstract idea and, as such, satisfies Step 2B of the §101 Guidelines. See Arguments, pp. 14-15.
Specifically, the Applicant argues:
Further, as recited in claim 1, the method includes an automatic adjustment of each of "the number of shares of each of the exchange traded funds of the first set of exchange traded funds" and "one or more of the first threshold or the second threshold based on the first set of exchange traded funds and the second set of exchange traded funds." Thus, "suitable corrective measures" are "implemented automatically" in response to the number of shares in the pool exceeding one or more thresholds. Specification, paragraph [0019]. Automatically performing corrective measures ensures that the pool is maintained with a desired number of shares of each exchange traded fund to facilitate trading by the plurality of retirement accounts. At least by virtue of these corrective steps, claim 1 as a whole is a practical application that amounts to significantly more than any alleged judicial exception at least because claim 1, as a whole, "use[s] the judicial exception in a manner that imposes a meaningful limit on the judicial exception, such that the claim is more than a drafting effort designed to monopolize the judicial exception." October 2019 PEG. See Arguments, pp. 14-15 – emphasis added.
The Examiner respectfully disagrees.
Automatic (i.e., with little or no direct human control) performance of a method step by a computer system does not amount to significantly more. The core concept of a computer (i.e., a programmable machine) is to execute a sequence of instructions without continuous human input.
The claim(s) do not include additional elements that are sufficient to amount to significantly more than the judicial exception.
Upon reconsideration of the indicia noted under Step 2A in concert with the Step 2B considerations, the additional claim element(s) amounts to no more than mere instructions to apply the exception using generic computer components. The same analysis applies in Step 2B, i.e., mere instructions to apply an exception using a generic computer component cannot integrate a judicial exception into a practical application at Step 2A or provide an inventive concept in Step 2B. The claim does not provide an inventive concept significantly more than the abstract idea.
§103 Rejection
As a preliminary matter, the Examiner notes that during examination, claims are to be “given their broadest reasonable construction ‘in light of the specification as it would be interpreted by one of ordinary skill in the art.’” See MPEP §2111, citing Phillips v. AWH Corp., 75 USPQ2d 1321, 1329 (Fed. Cir. 2005). However, “[t]hough understanding the claim language may be aided by explanations contained in the written description, it is important not to import into claim limitations that are not part of the claim.” See MPEP §2111.01, citing Superguide Corp. v. DirecTV Enterprises, Inc., 69 USPQ2d 1865, 1868 (Fed. Cir. 2004).
The §102 and/or §103 Rejection has been rewritten and the prior art remapped to account for the newly amended claim language.
Applicant argues:
The Office Action then additionally notes that Breen in view of Cody does not describe "the first set of exchange traded funds being exchange traded funds in the pool outside of a first threshold" and "the second set of exchange traded funds being exchange traded funds in the pool outside of a second threshold, the second threshold being greater than the first threshold." To remedy this deficiency of Breen, the Office Action cites to Pruitt. Office Action, page 12. Applicants respectfully disagree that Pruitt remedies the above-described deficiencies of Breen and Cody with respect to claim 1. See Arguments, p. 16.
The claimed invention recites a method comprising:
identifying a first set of exchange traded funds in the pool, the first set of exchange traded funds being exchange traded funds in the pool outside of a first threshold; [and]
identifying a second set of exchange traded funds in the pool, the second set of exchange traded funds being exchange traded funds in the pool outside of a second threshold, the second threshold being greater than the first threshold.
Method claims are defined by the method steps being actively performed (i.e., identifying determining a first [or second] set of exchange traded funds in the pool). The fact that the identified sets of exchange traded funds in the pool are “outside a first [or a second] threshold” are not actively involved in the method step of identifying the sets of exchange traded funds. As such, at least as far as the method step of identifying is concerned, the fact that the exchange traded funds are outside of a threshold does not distinguish the claimed invention from the prior art in terms of patentability.
The method comprises identifying determining a first or second set of exchange traded funds in the pool. The first or second set of exchange traded funds also happen to be outside of a threshold.
Similarly, Applicant argues:
In particular, the Office Action cites to column 5, line 56 to column 6, line 20 of Pruitt. This portion of Pruitt describes an advisor platform 20 that is configured to determine an appropriate asset allocation for an individual's investments based on information about the individual. This portion of Pruitt is unrelated to a pool that is managed by a trust for a plurality of retirement accounts and thus is also unrelated to thresholds for various funds of that pool. Thus, Pruitt does not remedy the above- described deficiencies of Breen and Cody with respect to claim 1. See Arguments, p. 17 – emphasis added.
The claimed invention recites a method comprising:
adding, from a pool of at least one share of each of the plurality of exchange traded funds to be traded by the plurality of retirement plans, a fractional portion of a share to the first amount such that a sum of the fractional portion of the share and the first amount equals the second amount, the pool being held by a trust for the plurality of retirement plans;
Method claims are defined by the method steps being actively performed (i.e., adding, from a pool of at least one share of each of the plurality of exchange traded funds to be traded by the plurality of retirement plans, a fractional portion of a share to the first amount such that a sum of the fractional portion of the share and the first amount equals the second amount). The fact that the pool is “being held [or owned] by a trust” is not actively involved in the method step of identifying the sets of exchange traded funds. As such, at least as far as the method step of adding is concerned, the fact that the pools are held by a trust does not distinguish the claimed invention from the prior art in terms of patentability.
The method comprises adding, from a pool of at least one share of each of the plurality of exchange traded funds to be traded by the plurality of retirement plans, a fractional portion of a share to the first amount such that a sum of the fractional portion of the share and the first amount equals the second amount. The pool also happens to be outside of a threshold.
Applicant further argues:
Column 47, lines 20-35 of Pruitt describes constraints for an individual's account to ensure that no more than a specified weight is invested into any one security. The constraints as described in this portion of Pruitt are security dependent and do not describe "automatically adjusting the number of shares of each of the exchange traded funds of the first set of exchange traded funds to be within the first threshold" as recited in claim 1. See Arguments, p. 17.
The Examiner respectfully disagrees.
Pruitt recites:
The individual security weight constraint ensures that no more than a specified amount is invested in any given security. In most instances, there are not many occasions where this constraint is forced to be implemented since the client will more than likely deviate substantially from a benchmark weight and/or model portfolio weight and thus the position will be trimmed versus exceeding some max weight limit. Nonetheless, the system supports setting some maximum weight on a case-by-case basis for each security/manager/distributor/client. Since maximum weights are typically referred to relative to a single manager account (i.e., a manager trims any security that exceeds 8% of the portfolio back to 4%), they must be adjusted for the current allocation the manager account has in the total client portfolio. See col. 47, lines 20-35 – emphasis added.
Pruitt discloses a method comprising automatically adjusting the number of shares of each of the funds of the first set of funds to be within the first threshold (below 8%). See col. 47, lines 20-35. The specified weight is a threshold.
Admittedly, Pruitt does not teach a method wherein the fund is an exchange traded fund. However, Cody discloses a method wherein the fund is an exchange traded fund. (see abstract).
Applicant further argues:
Finally, the Office Action alleges that column 8, lines 30-51 describes "automatically adjusting one or more of the first threshold or the second threshold based on the first set of exchange traded funds and the second set of exchange traded funds" as recited in claim 1. Office Action, page 12. This portion of Pruitt describes an investment style manager that "defines and maintains one or more investment styles." The investment style manager may define a model portfolio and may then define and adjust investment style parameters. The investment style manager is not configured to adjust thresholds based on a first set of exchange traded funds that are outside of a first threshold in the pool and a second set of exchange traded funds that are outside of second threshold in the pool as recited in claim 1. See Arguments, pp. 17-18.
The Examiner respectfully disagrees.
Pruitt recites:
An investment style manager defines and maintains one or more investment styles, such as large cap growth, small cap value, international, and so on. Each investment style includes all of the portfolio construction and management considerations that a money manager would normally develop to manage a mutual fund or similar investment portfolio. The investment style manager, in one embodiment, initially defines a model portfolio and subsequently adjusts it as necessary. The investment style manager further defines and adjusts such investment style parameters as equity screening requirements (e.g., minimum market cap, price to earnings ranges, sector weightings, turnover constraints, maximum/minimum numbers of equities, etc.), risk modeling parameters, and individual equity recommendations or alpha weightings. The investment style manager submits such investment style data (model portfolio and parameters) to portfolio optimization platform 40 to enable calculation of adjustments to individual portfolios some of whose assets have been allocated to that investment style. In one embodiment, investment style managers submit investment style data on a periodic basis (e.g., daily, weekly, monthly) or in response to changing market or other conditions. See col. 8, lines 30-51.
Pruitt discloses a method comprising automatically adjusting one or more of the first threshold or the second threshold based on the first set of funds and the second set of funds. See col. 8, lines 30-51.
Admittedly, Pruitt does not teach a method wherein the fund is an exchange traded fund. However, Cody discloses a method wherein the fund is an exchange traded fund. (see abstract).
7. Conclusion
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 nonprovisional extension fee (37 CFR 1.17(a)) pursuant to 37 CFR 1.136(a) will be calculated from the mailing date of the advisory action. In no event, however, will the statutory period for reply expire later than SIX MONTHS from the mailing date of this final action.
Any inquiry concerning this communication or earlier communications from the examiner should be directed to JASON M. BORLINGHAUS whose telephone number is (571)272-6924. The examiner can normally be reached M-F 9-5.
Examiner interviews are available via telephone, in-person, and video conferencing using a USPTO supplied web-based collaboration tool. To schedule an interview, applicant is encouraged to use the USPTO Automated Interview Request (AIR) at http://www.uspto.gov/interviewpractice.
If attempts to reach the examiner by telephone are unsuccessful, the examiner’s supervisor, RYAN D. DONLON can be reached on (571)270-3602. The fax phone number for the organization where this application or proceeding is assigned is 571-273-8300.
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/Jason M. Borlinghaus/Primary Examiner, Art Unit 3692 October 8, 2026
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