DETAILED ACTION
Notice of Pre-AIA or AIA Status
The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA .
Status of Claims
The following is Office Action on the merits in response to the communication received on 12/15/25.
Claim status:
Amended claims: 1, 2, and 16
Canceled claims: none
Added New claims: None
Pending claims: 1-16
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 1-16 are rejected under 35 U.S.C. § 101 because the claimed invention is not directed to statutory subject matter. Specifically, the invention of claims 1-16 is directed to an abstract idea without significantly more.
Independent claims 1 and 16 are directed to a method (claim 1), and a system, (claim 16). Therefore on its face, each of claims 1 and 16 is directed to a statutory category of invention under Step 1 of the 2019 PEG. However each of claims 1 and 16 is also directed to an abstract idea without significantly more, under Step 2A (Prong One and Prong Two) and Step 2B of the 2019 PEG, which is a judicial exception to 35 U.S.C. 101, as detailed below. Using the language of independent claim 16 to illustrate the claim recites the limitations of, (i) storing; (ii) implementing a loan system having a loan generation module and a loan repayment module; and a linked account accessible by the loan system, (iii) generate, at the loan generation module, a loan contract specifying payment terms, the payment terms comprising a payment amount and at least one due date for a payment in the payment amount; (iv) define, at the loan generation module, an association with the linked account, the linked account containing non-cash assets to be used for loan repayment; (v) determine, at the loan repayment module, that payment in the payment amount is due under the loan contract; (vi) define, at the loan repayment module, a threshold required total asset value for the linked account; (vii) after determining that that the payment in the amount is due, confirm, by the loan repayment module, that an actual total asset value for the linked account is greater than the threshold required asset value; (viii) upon confirming that the actual total asset value for the linked account is greater than the threshold required asset value, initiate payment by the loan repayment module of the payment amount under the loan contract, thereby creating a negative cash balance associated with the linked account, and (ix) following the creation of the negative cash balance, initiate, by the loan repayment module, a sale of non-cash assets in the linked account, thereby eliminating the negative cash balance under the broadest reasonable interpretation (BRI) covers methods of organizing human activity – fundamental economic principles or practices - mitigating risk but for the recitation of generic computers and generic computer components. (Independent claim 1 recites similar limitations and the analysis is the same).
That is, other than reciting a memory, a plurality of instructions and processing circuitry nothing in the claim precludes the steps from being directed to organizing human activity – fundamental economic principles or practices - mitigating risk. If a claim limitation under its BRI, covers methods of organizing human activity but for the recitation of generic computers, then the limitations fall within the “methods of organizing human activity” grouping of abstract ideas. Therefore, claim 16 recites an abstract idea under Step 2A Prong One of the Revised Patent Subject Matter Eligibility Guidance 84 Fed.Reg 50 (“2019 PEG”).
This “methods of organizing human activity” is not integrated into a practical application under Step 2A prong Two of the 2019 PEG. In particular claim 16 recites the following additional elements of, a memory, a plurality of instructions and processing circuitry. This judicial exception is not integrated into a practical application. In particular, the claim only recites the additional elements – a memory, a plurality of instructions and processing circuitry.
The memory, plurality of instructions and processing circuitry are recited at a high-level or generality (i.e. as a generic computer performing generic computer functions) such that, it amounts to no more than instructions to apply the abstract idea with a computer (see MPEP 2106.05(h). Accordingly these additional elements do not integrate the abstract idea into a practical application because they do not impose any meaningful limits on practicing the abstract idea. The claims are directed to an abstract idea.
Under Step 2B of the 2019 PEG independent claim 16 does not include additional elements that are sufficient to amount to significantly more than the abstract idea. The claim(s) do not include additional elements that are sufficient to amount to significantly more than the judicial exception. As discussed above with respect to integration of the abstract idea into a practical application, the additional elements of using a memory, a plurality of instructions and processing circuitry, storing; implementing a loan system having a loan generation module and a loan repayment module; and a linked account accessible by the loan system, generate, at the loan generation module, a loan contract specifying payment terms, the payment terms comprising a payment amount and at least one due date for a payment in the payment amount; define, at the loan generation module, an association with the linked account, the linked account containing non-cash assets to be used for loan repayment; determine, at the loan repayment module, that payment in the payment amount is due under the loan contract; define, at the loan repayment module, a threshold required total asset value for the linked account; after determining that that the payment in the amount is due, confirm, by the loan repayment module, that an actual total asset value for the linked account is greater than the threshold required asset value; upon confirming that the actual total asset value for the linked account is greater than the threshold required asset value, initiate payment by the loan repayment module of the payment amount under the loan contract, thereby creating a negative cash balance associated with the linked account, and following the creation of the negative cash balance, initiate, by the loan repayment module, a sale of non-cash assets in the linked account, thereby eliminating the negative cash balance, amount to instructions to apply the abstract idea with a computer. The claims are not patent eligible.
The dependent claims have been given the full two part analysis including analyzing the additional limitations both individually and in combination. The Dependent claim(s) when analyzed individually are also held to be patent ineligible under 35 U.S.C. 101 because for the same reasoning as above and the additional recited limitation(s) fail to establish that the claim(s) are not directed to an abstract idea. The additional limitations of the dependent claim(s) when considered individually do not amount to significantly more than the abstract idea. Claims 2-15 merely further explain the abstract idea.
When viewed individually the additional limitations do not amount to a claim as a whole that is significantly more than the abstract idea. Accordingly claims 1-16 are ineligible.
Claim Rejections - 35 USC § 102
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 (i.e., changing from AIA to pre-AIA ) 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.
The following is a quotation of the appropriate paragraphs of 35 U.S.C. 102 that form the basis for the rejections under this section made in this Office action:
A person shall be entitled to a patent unless –
(a)(2) the claimed invention was described in a patent issued under section 151, or in an application for patent published or deemed published under section 122(b), in which the patent or application, as the case may be, names another inventor and was effectively filed before the effective filing date of the claimed invention.
Claim(s) 1-8 and 11-16 is/are rejected under 35 U.S.C. 102(a)(2) as being anticipated by Cassidy (U.S. Pub. No. 10,127,610).
With respect to claim 1:
Cassidy teaches:
A method for loan management, the method comprising: generating a loan contract specifying payment terms, the payment terms comprising a payment amount and at least one due date for a payment in the payment amount (“In addition, the guarantor generally ensures that these payments are made to the securities investor at the originally scheduled time, so that the investor does not bear the risk or expense of delays inherent in the loan workout or foreclosure/liquidation process. The existence of insurance for a mortgage loan, or of a guarantee for a mortgage-backed security, is generally established at the beginning of the life of the loan or security in question. A contract between the insurer/guarantor and the investor or trustee sets the terms of the arrangement. A feature of this contract is that the payment obligation of the insurer or guarantor always runs to the owner of the insured or guaranteed asset so that the asset and the insurance cannot be decoupled, even if the value of the arrangement to the owner changes. This feature makes the arrangement illiquid and potentially less valuable” Cassidy Column 2 Lines 16-31);
providing a linked account, the linked account containing non-cash assets to be used for loan repayment (“Payment component 240 may determine to which party the payment is due, and whether to generate an invoice or a payment form, such as a check or a request for an electronic transfer of funds (stage 845). For example, if the performance of the Reference Pool is inferior to the performance of the Subject Pool, payment component 240 may generate a check on behalf of the buyer for payment to the seller in the amount of the payment due (stage 860). However, if the performance of the Subject Pool is inferior to the performance of the Reference Pool, payment component 240 may generate an invoice instructing the seller to make payment to the buyer in the amount of the payment due (stage 850)” Cassidy Column 21 Line 60 to Column 22 Line 4);
determining that payment in the payment amount is due under the loan contract (“In another embodiment of the present invention, systems and methods are disclosed for using Reference Pools as credit enhancements for hedging risk of loss on loan investments. Such systems and methods use criteria established by the parties for hedging risk of loss on the purchase and sale of loan investments. Such systems and methods may monitor the performance of a Reference Pool and a Subject Pool of loans. The Subject Pool of loans may include loans that are the subject of the investment transaction. The Reference Pool may include loans having similar characteristics to loans in the Subject Pool. Further, such systems and methods may compare the monitored performances of loans in the Reference Pool and the Subject Pool. At the end of a payment cycle, such as the end of a fiscal year, such systems and methods may calculate a payment due to the buyer or seller based on the comparison of the monitored performances of loans in the Reference Pool and the Subject Pool, and an established payment formula. Thereafter, such systems and methods may generate an invoice or a payment form, such as a check payable to one of the parties based on the calculated payment due. The effect of such systems and methods is to hedge against the loss resulting from the difference in performance between the loans in the Reference Pool and the Subject Pool. In addition, such systems and methods may generate and/or adjust the composition of the Reference Pool of loans based on comparable attributes of the Subject Pool of loans” Cassidy Column 6 Lines 32-59);
defining a threshold required total asset value for the linked account (“In one embodiment consistent with the invention, an institution's capital reserve requirements are reduced further if it arranges with another party, such as a guarantor, to share the risk of loss associated with the assets in a pool. FIG. 14 is a table illustrating an exemplary risk-sharing arrangement and the resultant capital reserve requirements consistent with one embodiment of the invention. As shown, in table 1410, columns 1412 and 1435 enumerate the rating categories unrated (UR, most risky) through AAA (least risky). Column 1415 shows the loss coverage levels in basis points for a rated subject pool and column 1420 shows the size, in bps, of each category of the subject pool. Similarly, columns 1425 and 1430 show the loss coverage levels and tranche size in each ratings category for a rated reference pool to which the performance of the subject pool is compared. Column 1440 shows the delta, or difference, between the reference pool category size and the subject pool category size for each ratings category. For example, in the BB category, the subject pool has 24 bps of BB-rated assets and the reference pool has 15 bps of BB-rated assets making a difference of 9 bps for this category. Column 1445 shows the capital charge for each asset category under the risk-based ratio capital reserve requirements, and column 1450 shows the risk-based capital reserve requirement for a bank or other capital-regulated institution, which, in this exemplary risk-sharing arrangement, is based on the deltas 1440 in each category. The capital charge 1145 is an exemplary representation of the capital charges set by regulators. The capital charge 1145 may vary depending on state and federal capital reserve regulations. In one embodiment consistent with the invention, to determine the bank's risk-based capital reserve requirement, the parties apply the provisions of the bank capital standards, (such as 12 C.F.R. Chapter 1, Table B, p. 59633), for externally rated assets. In the example shown in FIG. 14, the total risk-based reserve capital required for the bank is 20.8 bps (1460). The risk-sharing arrangement shown may be generated by a software application program using as input the pool ratings, the bank capital standards, and risk limits and other parameters provided by the parties” Cassidy Column 28 Line 43 to Column 29 Line 16);
after determining that the payment in the payment amount is due, confirming that an actual total asset value for the linked account is greater than the threshold required asset value (“Column 945 shows the Capital Reserve Requirements for a capital-regulated institution holding the assets shown in column 920. The capital reserve requirements 945 for each of the assets 920 in each of the rating categories 910 is obtained by multiplying the amount of assets 920 by the risk-based ratio 930 and the base capital charge 940. For example, the $100 worth of AAA/AA/MBS category assets (row 960, column 920) is multiplied by the 20% risk-based ratio (row 960, column 930) and the 8% base capital charge (row 960, column 940) to yield a capital reserve requirement of $1.60 for these assets (row 960, column 945). The total reserve capital required for the $400 worth of total assets 995 is the sum of the capital reserve requirements for each category 910, which is $13.60 (998) in this example” (Cassidy Column 5 Lines 18-31) and “In addition, the guarantor generally ensures that these payments are made to the securities investor at the originally scheduled time, so that the investor does not bear the risk or expense of delays inherent in the loan workout or foreclosure/liquidation process” Cassidy Column 2 Lines 16-20).
initiating payment of the payment amount under the loan contract, thereby creating a negative cash balance associated with the linked account; following the creation of the negative cash balance, initiating a sale of non-cash assets in the linked account, thereby eliminating the negative cash balance (“In the case of loans that have been securitized, i.e., turned into a security, mortgage-backed security investors may turn to bond insurers or government-sponsored enterprises to mitigate losses arising from default of the underlying mortgage loans. These parties typically guarantee the timely payment of loan principal, interest or both. In exchange for a fee, these guarantors absorb all or a portion of the losses that would otherwise be associated with the guaranteed securities. When a securitized mortgage loan experiences a payment default, the guarantor typically compensates the security holder for the difference between scheduled principal and interest payments and the aggregate net amount which is actually realized from a workout or liquidation. As is the case with payments from mortgage insurers, this “make-whole” payment is passed along to a security holder undistinguished from the payment of interest and return of loan principal through normal means, such as amortization or prepayment” Cassidy Column 1 Line 65 to Column 2 Line 16) (The Examiner interprets the “losses” taught in Cassidy as the claimed “negative cash balance, which the guarantor compensates the security holder for (i.e., the guarantor provides a “makes-whole” payment to the security holder as part of a workout or liquidation after a loan default.)
With respect to claim 2:
Cassidy teaches:
wherein following the elimination of the negative cash balance, the method continues to monitor payment due dates under the loan contract, and upon determining that payment in the payment amount is due under the loan contract, defines a threshold required asset value for the linked account, confirms that an actual asset value for the linked account is greater than the threshold required asset value, initiates payment of the payment amount under the loan contract, thereby creating a new negative cash balance associated with the lined account and initiates a further sale of assets in the linked account to eliminate any resulting negative cash balance (“FIG. 6 further illustrates one way in which cash flows from existing guarantee arrangements, such as insured loans, can be restructured to issue Guarantee Certificates in accordance with one aspect of the present invention. As shown in FIG. 6, security 610 represents a set of investments, for example, a Reference Pool of loans. Associated with security 610 is a traditional financial instrument 620 and a Guarantee Certificate 630. In exchange for the purchase price, the holder of financial instrument 620, which may be a bond or other instrument evidencing a guarantee obligation, receives all cash flows traditionally associated with the guarantee obligation. For example, in the case illustrated of a mortgage loan, the holder of financial instrument 620 receives payments in the forms of: all regular interest payments (shown as coupon payments), amortization benefits, voluntary prepayments, and the actual liquidation proceeds if the collateral underlying security 610 is sold. The holder of Guarantee Certificate 630, on the other hand, receives a cash flow in the form of a make-whole payment only if the collateral underlying security 610 is liquidated. A make-whole payment is the difference between the full value of security 610 and the actual liquidation proceeds. Thus, the full (100%) value of security 610 is equal to the combination of the make-whole payment and the actual liquidation proceeds. By dividing the cash flows of an existing security 610 as described, an issuer can create, issue, and manage a Guarantee Certificate 630” (Cassidy Column 16 Lines 6-32) and “Typically, real estate is liquidated only when a mortgage loan is in default. Thus, the holder of Guarantee Certificate 630 receives a make-whole payment only if the mortgage loan borrower defaults and the mortgage holder liquidates the underlying real estate. The make-whole payment also could be triggered by an event other than a real estate liquidation, such as, for example, a 30-day delinquency or foreclosure” Cassidy Column 16 Lines 38-45).
With respect to claim 3:
Cassidy teaches:
wherein the total asset value for the linked account is a total value of assets nominated for use in securitization (“In the case of loans that have been securitized, i.e., turned into a security, mortgage-backed security investors may turn to bond insurers or government-sponsored enterprises to mitigate losses arising from default of the underlying mortgage loans. These parties typically guarantee the timely payment of loan principal, interest or both. In exchange for a fee, these guarantors absorb all or a portion of the losses that would otherwise be associated with the guaranteed securities. When a securitized mortgage loan experiences a payment default, the guarantor typically compensates the security holder for the difference between scheduled principal and interest payments and the aggregate net amount which is actually realized from a workout or liquidation. As is the case with payments from mortgage insurers, this “make-whole” payment is passed along to a security holder undistinguished from the payment of interest and return of loan principal through normal means, such as amortization or prepayment” Cassidy Column 1 Line 65 to Column 2 Line 16).
With respect to claim 4:
Cassidy teaches:
wherein the threshold required asset value for the linked account is defined based on a desired loan to value ratio (“Investors who purchase pools of mortgage loans typically collect a great deal of information about the loans in order to assess the risk associated with the investment. For example, an investor might want to know the borrower's income, credit score and other financial obligations, as well as the assessed value of the property and the loan to value ratio. Based on this information, the investor can statistically evaluate the probability that the loans in the pool will default and thereby determine the price he or she is willing to pay for the pool of loans. However, if some or all of the desired information is unavailable, the pool is an undesirable investment. In particular, an investor may be reluctant to purchase such a pool or may be willing only to pay a low price for it. And although an investor may attempt to hedge the risk of loss on such a pool, available hedging techniques do not accurately reflect the probability that the loans in the pool will default” Cassidy Column 2 Lines 31-47).
With respect to claim 5:
Cassidy teaches:
wherein the desired loan to value ratio is 50% (“Risks that are unknown, new, or uncommon are difficult to hedge against because they are not understood well enough for the market to offer hedging products at a reasonable price. For example, lenders, such as banks, typically originate loans according to industry guidelines, which are often set out by the entities that subsequently take an interest in the loans from the originators, such as a subsequent purchaser, insurer, guarantor, or securitizer. Freddie Mac, Fannie Mae, and mortgage insurance companies are examples of such entities in the case of home mortgage loans. For any given class of loan, the guidelines typically specify, among other things, the minimum borrower credit ratings and Fair, Isaac and Company (FICO) scores, borrower income, borrower assets, the amount and type of documentation required to verify the information supplied by the borrower, the type of collateral required, the minimum loan to value ratio, etc. If a lender originates a loan using a process or parameters that vary from the guidelines, then an entity that normally would take an interest in the loan, such as a loan guarantor, may balk at doing so because it is uncomfortable with, does not understand, and does not know how to price the unknown risk associated with the lender's variance from the guidelines” Cassidy Column 2 Line 60 to Column 3 Line 15).
With respect to claim 6:
Cassidy teaches:
further comprising receiving a request from a user for increased credit, determining that assets in the linked account are sufficient to support the increased credit, issuing the increased credit, and generating an updated loan contract specifying updated payment terms, such that the payment terms for the method are redefined as the updated payment terms (“In forming the Reference Pool, the issuer may choose loans or securities based upon the perceived risk associated with each, the potential make-whole payment associated with each, or other factors. Pooling involves forming the loans and/or securities into an identified group. The Reference Pool may be static or dynamic. With static Reference Pools, the loans are identified when the Reference Pool is created and cannot be changed. With dynamic pools, loans can be added or removed according to a pre-specified eligibility rule. For example, an eligibility rule might be loans purchased by a specified entity having specific characteristics such as loan size or type. Dynamic pools can be used to hedge an active portfolio by reducing the need to continually adjust the hedge as new loans are added to the portfolio” Cassidy Column 15 Lines 39-53).
With respect to claim 7:
Cassidy teaches:
receiving a request for a loan prior to generating the loan contract, the request for a loan comprising a desired loan amount, defining a threshold required total asset value for the linked account based on the desired loan amount; confirming that an actual total asset value for the linked account is greater than the threshold required asset value; and generating the loan contract based on the request for the loan (“Column 945 shows the Capital Reserve Requirements for a capital-regulated institution holding the assets shown in column 920. The capital reserve requirements 945 for each of the assets 920 in each of the rating categories 910 is obtained by multiplying the amount of assets 920 by the risk-based ratio 930 and the base capital charge 940. For example, the $100 worth of AAA/AA/MBS category assets (row 960, column 920) is multiplied by the 20% risk-based ratio (row 960, column 930) and the 8% base capital charge (row 960, column 940) to yield a capital reserve requirement of $1.60 for these assets (row 960, column 945). The total reserve capital required for the $400 worth of total assets 995 is the sum of the capital reserve requirements for each category 910, which is $13.60 (998) in this example” Cassidy Column 5 Lines 18-31).
With respect to claim 8:
Cassidy teaches:
wherein the request for a loan is automatically generated based on a purchase (“When an element's current status information is received in response to the query, monitoring component 220 records the information in database 210 (step 330). For a non-electronic response, such as a letter from a person, recording the current status information in database 210 typically involves manually entering the information using input device 114. For an automated response, such as the electronic results of a query to a remote database, recording typically involves automatically saving the information in database 210” Cassidy Column 13 Lines 47-57).
With respect to claim 11:
Cassidy teaches:
determining that a user has attempted to purchase non-cash assets to be deposited in the linked account; receiving a request for a loan prior to generating the loan contract, the request for a loan generated based on the attempted purchase of non-cash assets, and the request for a loan comprising a desired loan amount for purchasing the non-cash assets, defining a threshold required total asset value for the linked account based on the desired loan amount; confirming that a hypothetical total asset value for the linked account is greater than the threshold required asset value, the hypothetical total asset value comprising a sum of an actual total asset value for the linked account and the non-cash assets associated with the attempted purchase; and generating the loan contract based on the request for the loan (“Column 945 shows the Capital Reserve Requirements for a capital-regulated institution holding the assets shown in column 920. The capital reserve requirements 945 for each of the assets 920 in each of the rating categories 910 is obtained by multiplying the amount of assets 920 by the risk-based ratio 930 and the base capital charge 940. For example, the $100 worth of AAA/AA/MBS category assets (row 960, column 920) is multiplied by the 20% risk-based ratio (row 960, column 930) and the 8% base capital charge (row 960, column 940) to yield a capital reserve requirement of $1.60 for these assets (row 960, column 945). The total reserve capital required for the $400 worth of total assets 995 is the sum of the capital reserve requirements for each category 910, which is $13.60 (998) in this example” Cassidy Column 5 Lines 18-31).
With respect to claim 12:
Cassidy teaches:
wherein the hypothetical total asset value for the linked account is a hypothetical value of the non-cash assets the user has attempted to purchase, and wherein the desired loan amount is less than the value of the non-cash assets being purchased (“The present invention includes the use of a financial instrument (referred to herein as a “Guarantee Certificate”) that takes the payment obligations of the mortgage insurers and securities guarantors and places them into a separate, transferable financial instrument. Guarantee Certificates of the present invention pay an investor(s) based on specified triggering events associated with a loan pool. Triggering events can be defined by loan delinquency, foreclosure on a property backing an insured or guaranteed mortgage, acquisition of a deed in lieu of foreclosure of the collateral, or liquidation of a property formerly backing an insured or guaranteed mortgage. The Guarantee Certificate may offer payment based on a fixed percentage of the defaulted loan principal, payment of actual or estimated losses, or a formula that combines these or other elements or a multiple of the same. The loan pool for a given Guarantee Certificate could include one or more loans of any type or origin” Cassidy Column 5 Line 65 to Column 6 Line 14).
With respect to claim 13:
Cassidy teaches:
wherein the hypothetical total asset value for the linked account is a hypothetical value of the non-cash assets the user has attempted to purchase added to a value of assets already in the linked account nominated for securitization (“In forming the Reference Pool, the issuer may choose loans or securities based upon the perceived risk associated with each, the potential make-whole payment associated with each, or other factors. Pooling involves forming the loans and/or securities into an identified group. The Reference Pool may be static or dynamic. With static Reference Pools, the loans are identified when the Reference Pool is created and cannot be changed. With dynamic pools, loans can be added or removed according to a pre-specified eligibility rule. For example, an eligibility rule might be loans purchased by a specified entity having specific characteristics such as loan size or type. Dynamic pools can be used to hedge an active portfolio by reducing the need to continually adjust the hedge as new loans are added to the portfolio” Cassidy Column 15 Lines 39-53).
With respect to claim 14:
Cassidy teaches:
wherein the non-cash assets are stocks and wherein the linked account is a brokerage account (“Insurance and hedges are generally available for the typical, well-understood risks associated with common assets and investments. For example, the common stock of a company has associated market risk, i.e., the risk that the stock price will drop due to an overall drop in the stock market, independent of the actions of the company or its prospects. One way an investor in common stock can hedge against market risk is by acquiring positions in a market-index-based security that will increase in value if the market index drops in value, such as puts (i.e., a short sale) on a SPYDER (a security that is designed to perform in the same way as the Standard & Poor's 500 index)” Cassidy Column 2 Lines 48-59).
With respect to claim 15:
Cassidy teaches:
wherein the initiation of the sale of non-cash assets in the linked account is on the next available trading day (Second, Guarantee Certificates help increase the potential number of entities willing to provide mortgage insurance or guarantees. Many insurance or guarantee providers limit their activities only to providing protection for types of loans that they understand well. When a mortgage originator desires to market a new type of loan, typically it will first seek confirmation that mortgage insurance and security guarantees will be available for the loan to ensure that it will be successful. For new types of loans, the expense of this insurance and guarantee coverage can be high and the availability low. Through a Guarantee Certificate, however, an issuer can offer protection on a Reference Pool that resembles the new type of loan. The issuer can search the existing universe of insured or guaranteed loans for ones that resemble the pool of loans held by the originator seeking service or for loans for which the issuer understands the relationship between the two separate loan pools such that the Guarantee Certificate can be structured to serve as effective protection for the originator. These selected loans would become the Reference Pool for a new Guarantee Certificate. The issuer has consequently priced a security based on loans that the issuer understands well, and the originator has obtained service more easily and inexpensively than it could have by negotiating a contract for the specific pool of new loans” Cassidy Column 17 Line 47 to Column 18 Line 4).
With respect to claim 16:
Cassidy teaches:
A system for loan management, the system comprising: a memory for storing a plurality of instructions; processing circuitry implementing a loan system having a loan generation module and a loan repayment module; and a linked account accessible by the loan system, wherein the processing circuitry couples with the memory and is configured to execute the instructions to: generate, at the loan generation module, a loan contract specifying payment terms, the payment terms comprising a payment amount and at least one due date for a payment in the payment amount (“In addition, the guarantor generally ensures that these payments are made to the securities investor at the originally scheduled time, so that the investor does not bear the risk or expense of delays inherent in the loan workout or foreclosure/liquidation process. The existence of insurance for a mortgage loan, or of a guarantee for a mortgage-backed security, is generally established at the beginning of the life of the loan or security in question. A contract between the insurer/guarantor and the investor or trustee sets the terms of the arrangement. A feature of this contract is that the payment obligation of the insurer or guarantor always runs to the owner of the insured or guaranteed asset so that the asset and the insurance cannot be decoupled, even if the value of the arrangement to the owner changes. This feature makes the arrangement illiquid and potentially less valuable” Cassidy Column 2 Lines 16-31);
define, at the loan generation module, an association with the linked account, the linked account containing non-cash assets to be used for loan repayment (“Payment component 240 may determine to which party the payment is due, and whether to generate an invoice or a payment form, such as a check or a request for an electronic transfer of funds (stage 845). For example, if the performance of the Reference Pool is inferior to the performance of the Subject Pool, payment component 240 may generate a check on behalf of the buyer for payment to the seller in the amount of the payment due (stage 860). However, if the performance of the Subject Pool is inferior to the performance of the Reference Pool, payment component 240 may generate an invoice instructing the seller to make payment to the buyer in the amount of the payment due (stage 850)” Cassidy Column 21 Line 60 to Column 22 Line 4);
determine, at the loan repayment module, that payment in the payment amount is due under the loan contract (“In another embodiment of the present invention, systems and methods are disclosed for using Reference Pools as credit enhancements for hedging risk of loss on loan investments. Such systems and methods use criteria established by the parties for hedging risk of loss on the purchase and sale of loan investments. Such systems and methods may monitor the performance of a Reference Pool and a Subject Pool of loans. The Subject Pool of loans may include loans that are the subject of the investment transaction. The Reference Pool may include loans having similar characteristics to loans in the Subject Pool. Further, such systems and methods may compare the monitored performances of loans in the Reference Pool and the Subject Pool. At the end of a payment cycle, such as the end of a fiscal year, such systems and methods may calculate a payment due to the buyer or seller based on the comparison of the monitored performances of loans in the Reference Pool and the Subject Pool, and an established payment formula. Thereafter, such systems and methods may generate an invoice or a payment form, such as a check payable to one of the parties based on the calculated payment due. The effect of such systems and methods is to hedge against the loss resulting from the difference in performance between the loans in the Reference Pool and the Subject Pool. In addition, such systems and methods may generate and/or adjust the composition of the Reference Pool of loans based on comparable attributes of the Subject Pool of loans” Cassidy Column 6 Lines 32-59);
define, at the loan repayment module, a threshold required total asset value for the linked account (“In one embodiment consistent with the invention, an institution's capital reserve requirements are reduced further if it arranges with another party, such as a guarantor, to share the risk of loss associated with the assets in a pool. FIG. 14 is a table illustrating an exemplary risk-sharing arrangement and the resultant capital reserve requirements consistent with one embodiment of the invention. As shown, in table 1410, columns 1412 and 1435 enumerate the rating categories unrated (UR, most risky) through AAA (least risky). Column 1415 shows the loss coverage levels in basis points for a rated subject pool and column 1420 shows the size, in bps, of each category of the subject pool. Similarly, columns 1425 and 1430 show the loss coverage levels and tranche size in each ratings category for a rated reference pool to which the performance of the subject pool is compared. Column 1440 shows the delta, or difference, between the reference pool category size and the subject pool category size for each ratings category. For example, in the BB category, the subject pool has 24 bps of BB-rated assets and the reference pool has 15 bps of BB-rated assets making a difference of 9 bps for this category. Column 1445 shows the capital charge for each asset category under the risk-based ratio capital reserve requirements, and column 1450 shows the risk-based capital reserve requirement for a bank or other capital-regulated institution, which, in this exemplary risk-sharing arrangement, is based on the deltas 1440 in each category. The capital charge 1145 is an exemplary representation of the capital charges set by regulators. The capital charge 1145 may vary depending on state and federal capital reserve regulations. In one embodiment consistent with the invention, to determine the bank's risk-based capital reserve requirement, the parties apply the provisions of the bank capital standards, (such as 12 C.F.R. Chapter 1, Table B, p. 59633), for externally rated assets. In the example shown in FIG. 14, the total risk-based reserve capital required for the bank is 20.8 bps (1460). The risk-sharing arrangement shown may be generated by a software application program using as input the pool ratings, the bank capital standards, and risk limits and other parameters provided by the parties” Cassidy Column 28 Line 43 to Column 29 Line 16);
after determining that that the payment in the amount is due, confirm, by the loan repayment module, that an actual total asset value for the linked account is greater than the threshold required asset value (“Column 945 shows the Capital Reserve Requirements for a capital-regulated institution holding the assets shown in column 920. The capital reserve requirements 945 for each of the assets 920 in each of the rating categories 910 is obtained by multiplying the amount of assets 920 by the risk-based ratio 930 and the base capital charge 940. For example, the $100 worth of AAA/AA/MBS category assets (row 960, column 920) is multiplied by the 20% risk-based ratio (row 960, column 930) and the 8% base capital charge (row 960, column 940) to yield a capital reserve requirement of $1.60 for these assets (row 960, column 945). The total reserve capital required for the $400 worth of total assets 995 is the sum of the capital reserve requirements for each category 910, which is $13.60 (998) in this example” Cassidy Column 5 Lines 18-31) and “In addition, the guarantor generally ensures that these payments are made to the securities investor at the originally scheduled time, so that the investor does not bear the risk or expense of delays inherent in the loan workout or foreclosure/liquidation process” Cassidy Column 2 Lines 16-20);
upon confirming that the actual total asset value for the linked account is greater than the threshold required asset value, initiate payment by the loan repayment module of the payment amount under the loan contract, thereby creating a negative cash balance associated with the linked account, and following the creation of the negative cash balance, initiate, by the loan repayment module, a sale of non-cash assets in the linked account, thereby eliminating the negative cash balance (“In the case of loans that have been securitized, i.e., turned into a security, mortgage-backed security investors may turn to bond insurers or government-sponsored enterprises to mitigate losses arising from default of the underlying mortgage loans. These parties typically guarantee the timely payment of loan principal, interest or both. In exchange for a fee, these guarantors absorb all or a portion of the losses that would otherwise be associated with the guaranteed securities. When a securitized mortgage loan experiences a payment default, the guarantor typically compensates the security holder for the difference between scheduled principal and interest payments and the aggregate net amount which is actually realized from a workout or liquidation. As is the case with payments from mortgage insurers, this “make-whole” payment is passed along to a security holder undistinguished from the payment of interest and return of loan principal through normal means, such as amortization or prepayment” Cassidy Column 1 Line 65 to Column 2 Line 16). (The Examiner interprets the “losses” taught in Cassidy as the claimed “negative cash balance, which the guarantor compensates the security holder for (i.e., the guarantor provides a “makes-whole” payment to the security holder as part of a workout or liquidation after a loan default.)
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 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.
Claim(s) 9 is/are rejected under 35 U.S.C. 103 as being unpatentable over Cassidy (U.S. Pub. No. 10,127,610) in view of Bent (U.S. Pub. No. 2006/0224480).
With respect to claim 9:
Cassidy does not teach; however Bent teaches:
wherein the method for loan management is associated with a credit or debit card, and wherein usage of the credit or debit card to execute a purchase automatically generates the request for a loan (“Embodiments of the present invention include data processing systems that are programmed to access or store credit histories of applicants and participants, and to store evidence including image data for perfected security interests (such as, security documents, e.g., mortgages) as part of establishing and administering credit accounts with determined LOC amounts for participants to use in credit based transactions. The data processing systems may be programmed to establish and administer a plurality of credit accounts for a plurality of participants. In one embodiment, for each participant account, the systems determine an LOC amount from the participant's credit criteria and credit history according to credit models or rules established by issuing financial institutions (such as, banks, credit unions, etc.). In a further embodiment, the value of any security, its class, and the status of other liens against the security may also be considered in setting the LOC amount. The systems monitor and determine financing criteria (e.g., interest rates) for each plan participant account depending on the determined LOC and on collateral the participant has made available to secure the account. The systems are further programmed to interface to appropriate programs in other financial systems, in one embodiment in a manner similar to the existing Mastercard/VISA settlement network, so that the LOC amount may be accessed by a wide variety of payment vehicles (check, credit card, debit card, wire transfer, ACH, sweeps, etc.) for use in participant loans, consumer transactions, cash advances, and the like. Such systems and networks are known to those skilled in the art” Bent Pgh. [0036]).
It would have been obvious to one of ordinary skill of the art to have modified Cassidy’s teachings to incorporate Bent’s teachings in order “to maintain a plurality of collateral assets as collateral for the credit-granting account” Bent Abstract.
Claim(s) 10 is/are rejected under 35 U.S.C. 103 as being unpatentable over Cassidy (U.S. Pub. No. 10,127,610) in view of Schlesinger (U.S. Pub. No. 2023/0010678).
With respect to claim 10:
Cassidy does not teach; however Schlesinger teaches:
wherein the request for a loan is generated in a buy now pay later platform (“Within this context, a transaction is considered “settled” when all parties involved in the transaction have received any payments or funds that may be owed to them. Thus, if cash is paid to the vendor by the customer, the transaction is immediately settled. For a credit card purchase, the transaction may be settled when the vendor has received funds from a bank associated with the credit card, and the customer has paid the bank accordingly so that the bank has also received the funds it advanced on behalf of the customer to the vendor. Similarly, for a loan, the transaction may be settled when the seller has received funds from a lender, and the borrower has paid the lender accordingly so that the lender has also received the funds it advanced on behalf of the borrower to the seller. Example embodiments may allow a transaction to proceed as any normal credit purchase, debit purchase, or loan backed purchase as far as the vendor or seller is concerned. However, the customer or borrower is utilizing crypto assets to contribute to determining how much credit the customer or borrower can receive from the bank or lender, and also utilizing the crypto assets to contribute in selected ways agreed to between the customer/borrower and the bank/lender to deciding how to settle the transaction and handle any rewards or incentives to individual or additional transactions. In some examples, the credit extended by the bank or lender may be in the form of a loan (e.g., a buy now, pay later loan). In this context, a buy now, pay later loan should be considered to be an installment loan, or a loan that has a fixed payment amount and term for making such payments. In other words, the buy now, pay later or installment loan does not have a conventional interest rate that applies over whatever indeterminate period of time the customer chooses to keep the loan by not paying off the entire principal” Schlesinger Pgh. [0017]).
It would have been obvious to one of ordinary skill of the art to have modified Cassidy’s teachings to incorporate Schlesinger’s teachings in order “to enable customers to ultimately have access to goods and services provided by vendors” Schlesinger Pgh. [0002].
Response to Arguments
Applicant's arguments filed 12/15/25 have been fully considered but they are not persuasive.
35 USC § 101
The Applicant “disagrees that the claim recites the judicial exception of certain methods of organizing human activity.” (page 8) and that the Claims are “clearly not "directed to" such a judicial exception under Prong 2” (page 8). The Examiner disagrees with these sentences because the claims are an improvement of the abstract idea only. It is a business solution to the business problem of managing loans. The applicant has not shown how the claims improve a computer or other technology, invoke a particular machine, transform matter, or provide more than a general link between the abstraction and the technology, MPEP 2106.05(a)-(c) & (e). The Claims do not provide an improvement over prior systems and only add details to the abstract idea (i.e., they add specificity to the cause and effect of financial manipulations). They do not address a problem particular to computer networks and merely apply the abstract idea on general computer components. The amended claims make the abstract idea more specific, and managing loans is not an unconventional activity. Applicant’s remarks about why these limitations provide a practical application fail to surface any technical improvement identified in the spec, therefore this is not an inventive concept and significantly more.
35 USC § 102 & 103
The amended claim language is taught in the references of record as indicated above in
the Office action.
Conclusion
THIS ACTION IS MADE FINAL. Applicant is reminded of the extension of time policy as set forth in 37 CFR 1.136(a).
A shortened statutory period for reply to this final action is set to expire THREE MONTHS from the mailing date of this action. In the event a first reply is filed within TWO MONTHS of the mailing date of this final action and the advisory action is not mailed until after the end of the THREE-MONTH shortened statutory period, then the shortened statutory period will expire on the date the advisory action is mailed, and any nonprovisional extension fee (37 CFR 1.17(a)) pursuant to 37 CFR 1.136(a) will be calculated from the mailing date of the advisory action. In no event, however, will the statutory period for reply expire later than SIX MONTHS from the mailing date of this final action.
Any inquiry concerning this communication or earlier communications from the examiner should be directed to MARLA HUDSON whose telephone number is (571)272-1063. The examiner can normally be reached M-F 9:30 a.m. - 5:30 p.m. ET.
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If attempts to reach the examiner by telephone are unsuccessful, the examiner’s supervisor, Bennett Sigmond can be reached at (303) 297-4411. The fax phone number for the organization where this application or proceeding is assigned is 571-273-8300.
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/M.H./Examiner, Art Unit 3694
/BENNETT M SIGMOND/Supervisory Patent Examiner, Art Unit 3694