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 .
DETAILED ACTION
This Office Action is in response to Applicant’s communication filed on November 27, 2024 for the patent application 18/961,931. Claims 1 – 20 are pending in the application.
Claim Rejections - 35 USC § 101
35 U.S.C. 101 reads as follows:
Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.
2. Claim(s) 1 – 20 are rejected under 35 U.S.C. § 101 because the claimed invention is directed to an abstract idea without significantly more.
Claims 1 - 20 are either directed to a method or system or computer readable medium, which are statutory categories of invention. (Step 1: YES).
The Examiner has identified method claim 16 as the claim that represents the claimed invention for analysis and is similar to system claim 1 and computer readable claim 20. Claim 16 recites the limitations of:
( A ) managing perpetual trading of user accounts by detecting permissions for derivative trading that govern operations for a respective user account, a risk engine automatically computing margin and margin requirements for the user account and estimates of expected liquidity cost for unwinding derivative positions, wherein the risk engine triggers automatic unwinding of derivative positions based on an acceptable level of risk or overrides, wherein computed margin and liquidation cost reflects a quality of assets in the user account based on determining, for each type of assets in the user account, a quality rating for a respective type of the asset in the user account as an assessment of volatility or market risk of the asset in the user account and an ability to liquidate the asset in the user account;
( B ) recomputing, for each of the perpetual positions, margin and margin requirements for the user account and the estimated expected cost of liquidation which are by a processing system at intervals or as necessary, wherein code automatically controls trading activities for the user accounts operating in a trading mode using continuously computed estimates of margin and margin requirements for the user account and the estimated expected liquidation cost for the user accounts;
( C ) receiving input from an interface for an order request for trading a perpetual market to buy or sell a desired quantity of perpetual contracts on an appropriate market, wherein a long position is denoted with a positive number of contracts and a short position is denoted with a negative number of contracts, wherein closing a position is synonymous with holding no perpetual contracts;
( D ) executing code controlling operations for derivative transactions comprising one or more derivative or perpetual positions, wherein code defines a derivative as a smart contract for futures without an expiry date that references an underlying source of numeric value; and
( E ) generating output for an account interface of one or more visual elements relating to the perpetual positions of the user accounts for transmission to respective interfaces of user devices and displays the visual elements relating to the perpetual positions at the interfaces of the user devices;
( F ) wherein the margin requirements comprise an initial margin requirement, a warning margin requirement, a liquidation margin requirement, a full liquidation margin requirement, a defaulted margin requirement.
These limitations without the bolded limitations above, cover performance of the limitations as certain methods of organizing human activity under their broadest reasonable interpretation.
More specifically, these limitations cover performance of the limitations as a fundamental economic practice.
In summary, if claim 16 limitations, under its broadest reasonable interpretation, covers performance of the limitation as a fundamental economic practice, then it falls within the “Certain Methods of Organizing Human Activity” grouping of abstract ideas. Accordingly, the claim recites an abstract idea. Claims 1 and 20 are also abstract for similar reasons. (Step 2A-Prong 1: YES. The claims are abstract).
The use of a processing system and interface or any of the bolded limitations in claim 1 are just applying generic computer components to the recited abstract limitations. Similar arguments apply to claims 1 and 20.
Therefore, the above mentioned judicial exception is not integrated into a practical application by merely applying generic computer components (bolded elements).
Furthermore, the “managing” and “receiving” steps are recited at a high level of generality and amounts to mere data gathering/transmitting, which are forms of insignificant extra-solution activity (See MPEP 2106.05(g): CyberSource v. Retail Decisions, Inc., 654 F.3d 1366, 1375 (Fed. Cir. 2011); and OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1363 (Fed. Cir. 2015)).
In addition, supported by specification, the computer hardware are recited at a high-level of generality (i.e., as a generic processor performing a generic computer function) such that it amounts no more than mere instructions to apply the exception using a generic computer component., see MPEP 2106.05(f), where applying a computer or using a computer is not indicative of a practical application).
Claim 16, limitation ( A ) above in Applicant’s specification para [0030], which discloses “In some embodiments, one or more memories store instructions for a risk engine for managing perpetual trading of the user accounts by tracking collateral value and automatically liquidating collateral based on an acceptable level of risk. The system has a matching engine having a hybrid order book integrating a central limit order book and an automated market maker. The processing system has a perpetual package of a perpetual processor, data, and the perpetual positions of the user accounts. Each of the perpetual positions are backed by collateral recomputed by the processing system at intervals or as necessary. The processing system has an index manager to compute a numeric value for each underlying that is referenced by a perpetuals contract. The processing system receives input from the interface for an order request for trading a perpetual market to buy or sell a desired quantity of perpetual contracts on the appropriate market. A long position is denoted with a positive number of contracts and a short position is denoted with a negative number of contracts. Closing a position is synonymous with holding no perpetual contracts. The processing system generates output relating to the perpetual positions of the user accounts for transmission to interfaces of the user devices and displays visual elements relating to the perpetual positions at the interfaces of the user devices. A communication bus with a sequencer routes data and commands to the risk engine.“.
Also, claim 16, limitation ( B ) above in Applicant’s specification para [0039], which discloses “In accordance with an aspect, there is provided a non-transitory machine readable medium having stored thereon a plurality of instructions that, when executed by at least one computing device, cause the at least one computing device to perform the method for perpetual futures. The method includes providing a processing system with an engine for managing perpetual trading of user accounts by tracking collateral value and automatically liquidating collateral based on an acceptable level of risk, computing, by the processing system, collateral for the perpetual positions of the user accounts, computing a numeric value for each underlying that is referenced by a perpetuals contract, receiving input from an interface for an order request for trading a perpetual market to buy or sell a desired quantity of perpetual contracts on the appropriate market, and generating output relating to the perpetual positions of the user accounts for transmission to interfaces of the user devices and display of visual elements relating to the perpetual positions at the interfaces of the user devices. The risk engine has a matching engine having a central limit order book and an automated market maker. Each user account has one or more perpetual positions. A perpetual is a contract for futures without an expiry date that references an underlying source of numeric value. Each of the perpetual positions are backed by the collateral, and recomputing, by the processing system, the collateral at intervals or as necessary. A long position is denoted with a positive number of contracts and a short position is denoted with a negative number of contracts. A closing a position is synonymous with holding perpetual contracts.“.
Also, claim 16, limitation ( C ) and ( E ) above in Applicant’s specification para [0038], which discloses “In accordance with an aspect, there is provided a computer implemented method for derivative transactions such as dated futures, options, perpetual futures, and so on. For example, the method includes providing a processing system with an engine for managing perpetual trading of user accounts by tracking collateral value and automatically liquidating collateral based on an acceptable level of risk, computing, by the processing system, collateral for the perpetual positions of the user accounts, computing a numeric value for each underlying that is referenced by a perpetuals contract, receiving input from an interface for an order request for trading a perpetual market to buy or sell a desired quantity of perpetual contracts on the appropriate market, and generating output relating to the perpetual positions of the user accounts for transmission to interfaces of the user devices and display of visual elements relating to the perpetual positions at the interfaces of the user devices. Each user account has one or more perpetual positions. A perpetual is a contract for futures without an expiry date that references an underlying source of numeric value. The risk engine has a matching engine having a central limit order book and an automated market maker. Each of the perpetual positions are backed by the collateral, and recomputing, by the processing system, the collateral at intervals or as necessary. A long position is denoted with a positive number of contracts and a short position is denoted with a negative number of contracts. A closing a position is synonymous with holding no perpetual contracts.“.
Also, claim 16, limitation ( E ) above in Applicant’s specification para [0068], which discloses “Exchange platform 100 for perpetual futures connects to plurality of user devices having an interface for the platform 100. The user devices are associated with user accounts that are unified trading accounts. Each user trading account has code enabling derivative transactions. The code controls operations for the derivative transactions with one or more derivative or perpetual positions. The code defines a derivative as a smart contract for futures without an expiry date that references an underlying source of numeric value.“. Similar arguments apply to claims 1 and 20.
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.
Therefore, claims 1, 16 and 20 are directed to an abstract idea without a practical application. (Step 2A-Prong 2: NO. The additional claimed elements are not integrated into a practical application).
The claims 1, 16 and 20 do not include additional elements that are sufficient to amount to significantly more than the judicial exception because, when considered separately and as an ordered combination, they do not add significantly more (also known as an “inventive concept”) to the exception. As discussed above with respect to integration of the abstract idea into a practical application, the additional elements (bolded elements above) amount to no more than mere instructions to apply the abstract idea using generic computer components. In conclusion, merely "applying" the exception using generic computer components cannot provide an inventive concept. Therefore, the claims 1, 16, and 20are not patent eligible under 35 USC 101. (Step 2B: NO. The claims do not provide significantly more).
Dependent Claims
Dependent claims 2 – 15 and 17 - 19 are also rejected under 35 U.S.C. 101. Dependent claims 2 – 15 and 17 - 19 are further define the abstract idea or further define the extra-solution activities that are present in independent claim 16 thus abstract idea correspond to certain methods of organizing human activity as presented above. Claims 2 – 15 and 17 - 19 clearly further define the abstract idea as stated above and further define extra-solution activities such as presenting data and transmitting/receiving data.
Furthermore, dependent claims 2 – 15 and 17 - 19 do not include any additional elements that integrate the abstract idea into a practical application or are sufficient to amount to significantly more than the judicial exception when considered both individually and as an ordered combination.
Regarding claims 2 and 17, these claims merely recite additional steps that amount to no more than insignificant extra-solution activity. Specifically, claim 2 states “wherein the processor sets one or more margin requirements for the user accounts, and continuously compares margin values for the user accounts to the margin requirements and expected liquidation cost to automatically evaluate risk for the user accounts, wherein the processor controls the trading activities for the user accounts operating in the trading mode using the one or more margin requirements.”. These steps amount to no more than mere data gathering/analysis, which is a form of insignificant extra- solution activity (See M PEP 2016.05(g): CyberSource v. Retail Decisions, Inc., 654 F.3d 1366, 1375 (Fed. Cir. 2011); and GIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1363 (Fed. Cir. 2015)). Such limitations do not integrate the abstract idea into a practical application, or amount to significantly than the abstract idea, because the courts have found the concept of data gathering to be well-understood, routine, and conventional activity (See MPEP 2106.05(d): GIP Techs., Inc., v. Amazon.com, Inc., 788 F.3d 1359, 1363 (Fed. Cir. 2015); and buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1355, (Fed. Cir. 2014)). Similar arguments can be made for claim 17.
Regarding claims 3 and 18, these claims merely recite, "wherein the processor computes a health indicator for a respective user account based on the margin, the margin requirements, and the expected liquidation cost, the health indicator corresponding to one or more permitted actions for the user account, wherein the computer system executes code to control activities for the user account using the one or more permitted actions corresponding to the health indicator for the user account.“. These limitation merely recites storing data in a server which amounts to no more than gathering/storing data which is a form of insignificant extra-solution activity (See MPEP 2106.0S(g)(3)(iii): GIP Technologies, 788 F.3d at 1363). This does not integrate the abstract idea into a practical application because it has been determined, by the courts, that the concept of storing data is well-understood, routine, and conventional activity (See MPEP 2106.0S(d)(II): Versata Dev. Group, Inc. v. SAP Am., Inc., 793 F.3d 1306, 1334 (Fed. Cir. 2015)). Similar arguments can be made for claim 18.
Regarding claims 4 and 19, these claims merely provide further detail regarding, recited in claim 1. Merely stating, “wherein upon determining that the margin values for the user account do not meet the margin requirements for the user account, the processor updates the one or more permitted actions for the user account, wherein upon receiving a request for an activity for a user account, the system verifies the one or more permitted actions corresponding to the health indicator for the user account before implementing the requested activity, wherein upon determining that the requested activity is not include in the one or more permitted actions corresponding to the health indicator for the user account, the computer system rejects the request for the activity for the user account.”. This does not integrate the abstract idea into a practical application because it does not impose any meaningful limitation on practicing the abstract idea. Similar arguments can be made for claim 19.
Regarding claim 5, this claim merely recite, "wherein the margin requirements comprise an initial margin requirement, a warning margin requirement, a liquidation margin requirement, a full liquidation margin requirement, a defaulted margin requirement.“. These limitation merely recites storing data in a server which amounts to no more than gathering/storing data which is a form of insignificant extra-solution activity (See MPEP 2106.0S(g)(3)(iii): GIP Technologies, 788 F.3d at 1363). This does not integrate the abstract idea into a practical application because it has been determined, by the courts, that the concept of storing data is well-understood, routine, and conventional activity (See MPEP 2106.0S(d)(II): Versata Dev. Group, Inc. v. SAP Am., Inc., 793 F.3d 1306, 1334 (Fed. Cir. 2015)).
Regarding claim 6, this claim merely provide further detail regarding the processing the margin values of the assets, recited in claim 1. Merely stating “wherein the processor computes margin values for the assets in the user account used as collateral for the trading activities by discounting a normalized value of all types of assets in the user account by a haircut reflective of a quality measure of the assets in the user account, wherein a higher quality asset will have a higher rating and lower haircut, and a lower quality asset will have a lower rating and higher haircut.". This does not integrate the abstract idea into a practical application because it does not impose any meaningful limitation on practicing the abstract idea.
Regarding claim 7, this claim merely add further description to the process of “wherein the processor computes margin values for the assets in the user account as collateral value – haircut, wherein the collateral value is a normalized value of the assets in the user account and a haircut reflects a quality measure of the assets in the user account, wherein a higher rating reflects a lower haircut, and a lower rating reflects a higher haircut.”. This amount to no more than mere data gathering/outputting as described in reference to claims 1, 10 and 16 (see analysis above). Merely describing the comparing the new claim information does not integrate the abstract idea into a practical application, or amount to significantly more than the judicial exception, because it does not impose any meaningful limitations on practicing the abstract idea.
Regarding claim 8, this claim merely add further description to the process of “wherein the processor computes the margin for the user account as: (collateral value – haircut) + futures pnl – debt.”, which amounts to no more than gathering/storing data which is a form of insignificant extra-solution activity (See MPEP 2106.0S(g)(3)(iii): GIP Technologies, 788 F.3d at 1363). This does not integrate the abstract idea into a practical application because it has been determined, by the courts, that the concept of storing data is well-understood, routine, and conventional activity (See MPEP 2106.0S(d)(II): Versata Dev. Group, Inc. v. SAP Am., Inc., 793 F.3d 1306, 1334 (Fed. Cir. 2015)).
Regarding claim 9, this claim merely recite, "wherein the index manager creates new indices, edits parameters of the indices, new indices, and the indices.“. These limitation merely recites storing data in a server which amounts to no more than gathering/storing data which is a form of insignificant extra-solution activity (See MPEP 2106.0S(g)(3)(iii): GIP Technologies, 788 F.3d at 1363). This does not integrate the abstract idea into a practical application because it has been determined, by the courts, that the concept of storing data is well-understood, routine, and conventional activity (See MPEP 2106.0S(d)(II): Versata Dev. Group, Inc. v. SAP Am., Inc., 793 F.3d 1306, 1334 (Fed. Cir. 2015)).
Regarding claim 10, this claim merely provide further detail regarding the processing the user account, recited in claim 1. Merely stating, “wherein the interface has a user interface to display visual elements for the user accounts and the perpetual positions, wherein the user interface has a perpetual position blotter, portfolio pages, and historical pages.”. This does not integrate the abstract idea into a practical application because it does not impose any meaningful limitation on practicing the abstract idea.
Regarding claim 11, this claim merely recite, " wherein the interface has an application programming interface for the perpetual positions of the user accounts, wherein the application programming interface has a perpetual position API managing data about the perpetual positions for the user accounts, trading account configurations, and a ticker.“. These limitation merely recites storing data in a server which amounts to no more than gathering/storing data which is a form of insignificant extra-solution activity (See MPEP 2106.0S(g)(3)(iii): GIP Technologies, 788 F.3d at 1363). This does not integrate the abstract idea into a practical application because it has been determined, by the courts, that the concept of storing data is well-understood, routine, and conventional activity (See MPEP 2106.0S(d)(II): Versata Dev. Group, Inc. v. SAP Am., Inc., 793 F.3d 1306, 1334 (Fed. Cir. 2015)).
Regarding claim 12, this claim merely provide further detail regarding the processing the user account, recited in claim 1. Merely stating “wherein the processing system nets out each of the perpetual positions for each of the user accounts.". This does not integrate the abstract idea into a practical application because it does not impose any meaningful limitation on practicing the abstract idea.
Regarding claim 13, this claim merely add further description to the process of “wherein the processor system has a liquidation component to automatically unwind the derivative positions in the trading account.”. This amount to no more than mere data gathering/outputting as described in reference to claims 1, 10 and 16 (see analysis above). Merely describing the comparing the new claim information does not integrate the abstract idea into a practical application, or amount to significantly more than the judicial exception, because it does not impose any meaningful limitations on practicing the abstract idea.
Regarding claim 14, this claim merely add further description to the process of “wherein the underlying is an underlying asset.”, which amounts to no more than gathering/storing data which is a form of insignificant extra-solution activity (See MPEP 2106.0S(g)(3)(iii): GIP Technologies, 788 F.3d at 1363). This does not integrate the abstract idea into a practical application because it has been determined, by the courts, that the concept of storing data is well-understood, routine, and conventional activity (See MPEP 2106.0S(d)(II): Versata Dev. Group, Inc. v. SAP Am., Inc., 793 F.3d 1306, 1334 (Fed. Cir. 2015)).
Regarding claim 15, this claim merely recite, "the automated market maker is configured to discretize long and short positions; hold consolidated perpetual positions; and distribute the perpetual positions to components of the system.“. These limitation merely recites storing data in a server which amounts to no more than gathering/storing data which is a form of insignificant extra-solution activity (See MPEP 2106.0S(g)(3)(iii): GIP Technologies, 788 F.3d at 1363). This does not integrate the abstract idea into a practical application because it has been determined, by the courts, that the concept of storing data is well-understood, routine, and conventional activity (See MPEP 2106.0S(d)(II): Versata Dev. Group, Inc. v. SAP Am., Inc., 793 F.3d 1306, 1334 (Fed. Cir. 2015)).
As a result, such limitations do not overcome the requirements as described above. Therefore, claims 2 – 15 and 17 - 19 are directed to an abstract idea. Thus, claims 1 - 20 are not patent eligible.
Claim Rejections – 35 USC §103
3. In the event the determination of the status of the application as subject to AIA 35 U.S.C. 102 and 103 (or as subject to pre-AIA 35 U.S.C. 102 and 103) is incorrect, any correction of the statutory basis for the rejection will not be considered a new ground of rejection if the prior art relied upon, and the rationale supporting the rejection, would be the same under either status.
4. The following is a quotation of 35 U.S.C. 103 which forms the basis for all obviousness rejections set forth in this Office action:
A patent for a claimed invention may not be obtained, notwithstanding that the claimed invention is not identically disclosed as set forth in section 102 of this title, if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains. Patentability shall not be negated by the manner in which the invention was made.
5. Claims 16 – 19, 1 – 15 and 20 are rejected under 35 U.S.C. 103 as being obvious over Dmitriy Glinberg et al. (Pub. # US 2015/0058258 A1 – herein referred to as Glinberg) in view of Ryan Garner et al. (Pub. # US 2023/0267456 A1 – herein referred to as Garner).
Re: Claim 16, Glinberg discloses a computer implemented method for perpetual futures comprising:
managing perpetual trading of user accounts by detecting permissions for derivative trading that govern operations for a respective user account, a risk engine automatically computing margin and margin requirements for the user account and estimates of expected liquidity cost for unwinding derivative positions, wherein the risk engine triggers automatic unwinding of derivative positions based on an acceptable level of risk or overrides, wherein computed margin and liquidation cost reflects a quality of assets in the user account based on determining, for each type of assets in the user account, a quality rating for a respective type of the asset in the user account as an assessment of volatility or market risk of the asset in the user account and an ability to liquidate the asset in the user account (Glinberg, [0034] - Risk management and financial surveillance are the two primary functions of CME's financial safeguard system. The system is designed to provide the highest level of safety and the early detection of unsound financial practices on the part of any clearing member. Its purpose is to protect all clearing members and their customers from the consequences of a default by a participant in the clearing process. The system is constantly being updated to reflect the most advanced risk management and financial surveillance techniques.);
recomputing, for each of the perpetual positions, margin and margin requirements for the user account and the estimated expected cost of liquidation which are by a processing system at intervals or as necessary, wherein code automatically controls trading activities for the user accounts operating in a trading mode using continuously computed estimates of margin and margin requirements for the user account and the estimated expected liquidation cost for the user accounts (Glinberg, [0997] - The margin information panel 220 is further subdivided into sub-portions, including a what-if panel 204, an actuals panel 206 and an asset/collateral valuation panel 212. The actuals panel 206 is operative to display actual data representative actual margin requirements. The what-if panel 204 is operative to display hypothetical data representative of possible margin requirements for at least one possible trading scenario. The asset/collateral valuation panel 212 is operative to display data representative of the user's assets/collateral that is being used or is proposed to be used to satisfy the margin requirement.);
receiving input from an interface for an order request for trading a perpetual market to buy or sell a desired quantity of perpetual contracts on an appropriate market, wherein a long position is denoted with a positive number of contracts and a short position is denoted with a negative number of contracts, wherein closing a position is synonymous with holding no perpetual contracts (Glinberg, [0285] - For example, a call option on 100 shares of stock. If you hold one long position in this call, and you exercise it, you receive (purchase) 100 shares of stock. Hence the underlying ratio is +100. On the other hand, if you own a put option on 100 shares of stock, and you exercise it, you deliver (sell) 100 shares of stock. Hence the underlying ratio for this put option is-100.); and
generating output for an account interface of one or more visual elements relating to the perpetual positions of the user accounts for transmission to respective interfaces of user devices and displays the visual elements relating to the perpetual positions at the interfaces of the user devices (Glinberg, [0987] - In operation, as described above, the portfolio 104 and parameter set 108, and possibly the market data 106, are input into the engine 102. The engine 102 processes the data and generates the assessment 110. The engine 102 may operate in batch to process multiple portfolios, using the same or different parameter sets 1OS/market data 106, or may process one portfolio at a time. As was described above, the engine 102 may be operated by a clearing house of an exchange to assess actual required performance bonds, or changes thereto. The engine 102 may also be operated by entities which are subject to such performance bonds in order to anticipate the requirements of the clearing house. Further, engine 102, as described below, provides accurate determinations as to the risk in the portfolio 104 to ensure that the clearing house is adequately protected and that those subject to the bond requirements are not unduly burdened with unnecessary requirements.);
wherein the margin requirements comprise an initial margin requirement, a warning margin requirement, a liquidation margin requirement, a full liquidation margin requirement, a defaulted margin requirement (Glinberg, [0006] - The performance bond helps to ensure the financial integrity of brokers, clearing members and the Exchange as a whole. The Performance Bond to Clearing House refers to the minimum dollar deposit which is required by the Clearing House from clearing members in accordance with their positions. Maintenance, or maintenance margin, refers to a sum, usually smaller than the initial performance bond, which must remain on deposit in the customer's account for any position at all times. The initial margin is the total amount of margin per contract required by the broker when a futures position is opened. A drop in funds below this level requires a deposit back to the initial margin levels, i.e. a performance bond call. If a customer's equity in any futures position drops to or under the maintenance level because of adverse price action, the broker must issue a performance bond/margin call to restore the customer's equity. A performance bond call, also referred to as a margin call, is a demand for additional funds to bring the customer's account back up to the initial performance bond level whenever adverse price movements cause the account to go below the maintenance.).
However, Glinberg does not expressly disclose:
executing code controlling operations for derivative transactions comprising one or more derivative or perpetual positions, wherein code defines a derivative as a smart contract for futures without an expiry date that references an underlying source of numeric value.
In a similar field of endeavor, Garner discloses:
executing code controlling operations for derivative transactions comprising one or more derivative or perpetual positions, wherein code defines a derivative as a smart contract for futures without an expiry date that references an underlying source of numeric value (Garner, [0138] - Advantageously, the systems and methods disclosed herein provide various benefits over the prior art. The blockchain system 100 enables smart contract code templates to be used to generate instances of smart con-tracts, which lowers the cost of participating in financial markets, using blockchain technology to enforce property rights and settle financial contracts without the need for a trusted third party.).
Therefore, in light of the teachings of Garner, it would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to modify the method of Glinberg, motivation according to one KSR Exemplary Rationale where a known technique is used to improve similar methods and systems in the same way by providing a blockchain system 100 enables smart contract code templates to be used to generate instances of smart contracts, which lowers the cost of participating in financial markets, using blockchain technology to enforce property rights and settle financial contracts with-out the need for a trusted third party. This reduces the reliance on and risks associated with use of a trusted third party, such as unexpected downtime.
Re: Claim 17, Glinberg discloses the method of claim 16 further comprising
setting one or more margin requirements for the user accounts, and continuously comparing, using the processing system, margin values for the user accounts to the margin requirements and expected liquidation cost to automatically evaluate risk for the user accounts, wherein a processor controlling the trading activities for the user accounts operating in the trading mode using the one or more margin requirements (Glinberg, [0095] - "What-If' Margining-Allows an organization to view and compare hypothetical margins under multivariant "What-if' scenarios;).
Re: Claim 18, Glinberg discloses the method of claim 17, further comprising
computing a health indicator for generating visual elements at an interface corresponding to a respective user account based on the margin, the margin requirements, and the expected liquidation cost, the health indicator corresponding to one or more permitted actions for the user account, wherein the computer executes code to control activities for the user account using the one or more permitted actions corresponding to the health indicator for the user account (Glinberg, [0990] - FIGS. 2A-2K show an exemplary graphic user interface ("GUI") 200 in accordance with the disclosed embodiments. It will be appreciated that the GUI 200 may include known GUI elements for receiving and communicating data. Such elements include scroll bars, buttons, menus, such as pop up or pull down menus, mouse-over text, radio dials or gauges, or other interactive GUI elements as are known, and which are not shown in the figure for clarity purposes. Further, it will be appreciated that the GUI 200 may be utilized on any device capable of displaying a graphic user interface, such as a personal computer, personal digital assistant, hand-held computer, laptop computer, mobile telephone, etc. Such devices may be wired or wireless, such as devices compliant with cellular communications protocols, 802.1 la, b or g protocols or Bluetooth. Depending upon the implementation, the GUI 200 may be adapted for display according to the limitations of the display device of the system, such as the display size, display resolution, display color depth, or display refresh rate. In alternate embodiments, the GUI 200 may be capable being displayed on a text-based display utilizing text-characters to implement the GUI elements, or on a 3-di-mensional display device, or a device which presents the perception of a 3-dimensional presentation. In addition, the GUI 200 is capable of interaction with a user using various input devices, such as a touch screen, mouse, track-ball, pointer stick, joy-stick, eye tracking device, etc. In another embodiment, the GUI 200 is capable of interacting via audible interaction, such as via audible prompts, alerts or messages, or via voice recognition.).
Re: Claim 19, Glinberg discloses the method of claim 18, further comprising,
upon determining that the margin values for the user account do not meet the margin requirements for the user account, updating the one or more permitted actions for the user account, wherein upon receiving a request for an activity for a user account, the computer verifies the one or more permitted actions corresponding to the health indicator for the user account before implementing the requested activity, wherein upon determining that the requested activity is not included in the one or more permitted actions corresponding to the health indicator for the user account, rejecting the request for the activity for the user account (Glinberg, [0977] - In an alternate embodiment, the display may also show the account level of collateral on deposit, ledger balance, and open trade equity and show updated information of margin in excess or deficit, or subsets thereof. The account's "Actual" and "What-if' gain/loss may also be displayed on the same screen. In one embodiment, the Margin window can display the data graphically.).
Re: Claim 1, Glinberg discloses a computer system for perpetual futures comprising:
a processing system that includes one or more processors and one or more memories coupled with the one or more processors, the one or more memories storing instructions for a trading engine, a risk engine and a matching engine, the trading engine for managing perpetual trading of the user accounts by detecting permissions for derivative trading that govern operations for a respective user account, the risk engine automatically computing margin and margin requirements for the user account and estimates of expected liquidity cost for unwinding derivative positions, wherein the risk engine triggers automatic unwinding of derivative positions based on an acceptable level of risk or overrides, the matching engine having a hybrid order book integrated with an automated market maker, wherein computed margin and liquidation cost reflects a quality of assets in the user account based on determining, for each type of the assets in the user account, a quality rating for a respective type of the asset in the user account as an assessment of volatility or market risk of the asset in the user account and an ability to liquidate the asset in the user account, wherein the computed margin and liquidation cost are adapted to change proportionally with a value of the assets in the user account (Glinberg, [0008] - The Clearing House does not look to non-member customers for performance or attempt to evaluate their creditworthiness or market qualifications. The Clearing House does monitor clearing members for the adequacy of credit monitoring and risk management of their customers. In addition, although the Exchange has established character and financial standards for its individual members, the Clearing House looks solely to the clearing member carrying and guaranteeing the account to secure all payments and performance bond obligations. Further, when an individual member executes orders for a clearing member, his or her guarantor clearing member is held accountable as principal for the brokered transaction until the transaction has been matched and recorded by the Clearing House as a transaction of the clearing member for whom the individual member had acted.);
wherein the processing system has a perpetual package of a perpetual processor, data, the perpetual positions of the user accounts, wherein each of the perpetual positions are associated with margin and margin requirements for the user account and the estimated expected cost of liquidation which are recomputed by the processing system at intervals or as necessary, wherein code automatically controls trading activities for the user accounts operating in a trading mode using continuously computed estimates of margin and margin requirements for the user account and the estimated expected liquidation cost for the user accounts (Glinberg, [0028] - In recognition of the growing linkages among the markets for exchange-traded equity derivative products, as well as the need to promote efficient clearing procedures and to focus on the true intermarket risk exposure of clearing members, CME, in conjunction with the Options Clearing Corporation (OCC) and the New York Clearing Corporation (NYCC), has developed a cross-margining system with respect to market professionals and proprietary accounts. By combining the positions of joint or affiliated clearing members in certain broad-based equity index futures and options into a single portfolio, and utilizing the sophisticated risk-based systems of each clearing organization, a single performance bond requirement across both markets is determined. The clearing organizations jointly hold a first lien on and security interest in the positions in cross-margined accounts. All performance bond deposits associated with these accounts are jointly held. The cross-margining system significantly enhances both the efficiency and financial integrity of the clearing system by treating all positions as being held in the same account, which allows gains accruing to futures or options positions to be immediately available to meet the requirements for funds from losing positions. In the event that a clearing organization suspends a cross-margining member, the positions in the cross-margin accounts would be liquidated and all performance bond collateral would be converted to cash and applied toward each clearing organization's costs of liquidating the cross-margin accounts. CME, the OCC and the NYCC are each entitled to proportional shares of any surplus to apply toward other obligations of the clearing member; if one clearing organization did not need its entire share of the surplus, the excess would be made available to the other clearing organizations.);
wherein the processing system has an index manager to compute a numeric value for each underlying that is referenced by a perpetuals contract (Glinberg, [0028] - In recognition of the growing linkages among the markets for exchange-traded equity derivative products, as well as the need to promote efficient clearing procedures and to focus on the true intermarket risk exposure of clearing members, CME, in conjunction with the Options Clearing Corporation (OCC) and the New York Clearing Corporation (NYCC), has developed a cross-margining system with respect to market professionals and proprietary accounts. By combining the positions of joint or affiliated clearing members in certain broad-based equity index futures and options into a single portfolio, and utilizing the sophisticated risk-based systems of each clearing organization, a single performance bond requirement across both markets is determined. The clearing organizations jointly hold a first lien on and security interest in the positions in cross-margined accounts. All performance bond deposits associated with these accounts are jointly held. The cross-margining system significantly enhances both the efficiency and financial integrity of the clearing system by treating all positions as being held in the same account, which allows gains accruing to futures or options positions to be immediately available to meet the requirements for funds from losing positions. In the event that a clearing organization suspends a cross-margining member, the positions in the cross-margin accounts would be liquidated and all performance bond collateral would be converted to cash and applied toward each clearing organization's costs of liquidating the cross-margin accounts. CME, the OCC and the NYCC are each entitled to proportional shares of any surplus to apply toward other obligations of the clearing member; if one clearing organization did not need its entire share of the surplus, the excess would be made available to the other clearing organizations.); and
wherein the processing system receives input from the interface for an order request for trading a perpetual market to buy or sell a desired quantity of perpetual contracts on an appropriate market, wherein a long position is denoted with a positive number of contracts and a short position is denoted with a negative number of contracts, wherein closing a position is synonymous with holding no perpetual contracts (Glinberg, [0285] - For example, a call option on 100 shares of stock. If you hold one long position in this call, and you exercise it, you receive (purchase) 100 shares of stock. Hence the underlying ratio is +100. On the other hand, if you own a put option on 100 shares of stock, and you exercise it, you deliver (sell) 100 shares of stock. Hence the underlying ratio for this put option is-100.));
wherein the processing system generates output for an account interface of one or more visual elements relating to the perpetual positions of the user accounts for transmission to respective interfaces of the user devices and displays the visual elements relating to the perpetual positions at the interfaces of the user devices (Glinberg, [0987] - In operation, as described above, the portfolio 104 and parameter set 108, and possibly the market data 106, are input into the engine 102. The engine 102 processes the data and generates the assessment 110. The engine 102 may operate in batch to process multiple portfolios, using the same or different parameter sets 1OS/market data 106, or may process one portfolio at a time. As was described above, the engine 102 may be operated by a clearing house of an exchange to assess actual required performance bonds, or changes thereto. The engine 102 may also be operated by entities which are subject to such performance bonds in order to anticipate the requirements of the clearing house. Further, engine 102, as described below, provides accurate determinations as to the risk in the portfolio 104 to ensure that the clearing house is adequately protected and that those subject to the bond requirements are not unduly burdened with unnecessary requirements.); and
wherein a communication bus with a sequencer routes data and commands to the risk engine (Glinberg, [0993] - The GUI 200 may be integrated with the disclosed risk management software or the GUI 200 may be implemented as a separate client software program coupled with the risk management software via a network or other communications medium. In one embodiment, the GUI 200 is implemented as a web site, static or dynamic, using known web programming languages and protocols, such as HTTP, HTML, ActiveX, ASP, etc. In an alternate embodiment, the GUI 200 may be implemented on a system using the UNIX or LINUX operating system using the X-windows protocol. Further, the GUI 200 may implemented to operate under the Microsoft Windows operating system, such as the Windows XP operating system, published by Microsoft Corporation, located in Redmond, Wash.).
However, Glinberg does not expressly disclose:
a plurality of user devices having an interface for the system, the user devices associated with user accounts that are unified trading accounts, each user trading account having code enabling derivative transactions, the code controlling operations for the derivative transactions comprising one or more derivative or perpetual positions, wherein code defines a derivative as a smart contract for futures without an expiry date that references an underlying source of numeric value.
In a similar field of endeavor, Garner discloses:
a plurality of user devices having an interface for the system, the user devices associated with user accounts that are unified trading accounts, each user trading account having code enabling derivative transactions, the code controlling operations for the derivative transactions comprising one or more derivative or perpetual positions, wherein code defines a derivative as a smart contract for futures without an expiry date that references an underlying source of numeric value (Garner, [0138] - Advantageously, the systems and methods disclosed herein provide various benefits over the prior art. The blockchain system 100 enables smart contract code templates to be used to generate instances of smart con-tracts, which lowers the cost of participating in financial markets, using blockchain technology to enforce property rights and settle financial contracts without the need for a trusted third party.).
Therefore, in light of the teachings of Garner, it would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to modify the method of Glinberg, motivation according to one KSR Exemplary Rationale where a known technique is used to improve similar methods and systems in the same way by providing a blockchain system 100 enables smart contract code templates to be used to generate instances of smart contracts, which lowers the cost of participating in financial markets, using blockchain technology to enforce property rights and settle financial contracts with-out the need for a trusted third party. This reduces the reliance on and risks associated with use of a trusted third party, such as unexpected downtime.
Re: Claim 2, Claim 2 is a system claim corresponding to method claim 17. Therefore, claim 2 is analyzed and rejected as previously discussed with respect to claim 17.
Re: Claim 3, Claim 3 is a system claim corresponding to method claim 18. Therefore, claim 3 is analyzed and rejected as previously discussed with respect to claim 18.
Re: Claim 4, Claim 4 is a system claim corresponding to method claim 19. Therefore, claim 4 is analyzed and rejected as previously discussed with respect to claim 19.
Re: Claim 5, Glinberg discloses the computer system of claim 1
wherein the margin requirements comprise an initial margin requirement, a warning margin requirement, a liquidation margin requirement, a full liquidation margin requirement, a defaulted margin requirement (Glinberg, [0997] - The margin information panel 220 is further subdivided into sub-portions, including a what-if panel 204, an actuals panel 206 and an asset/collateral valuation panel 212. The actuals panel 206 is operative to display actual data representative actual margin requirements. The what-if panel 204 is operative to display hypothetical data representative of possible margin requirements for at least one possible trading scenario. The asset/collateral valuation panel 212 is operative to display data representative of the user's assets/collateral that is being used or is proposed to be used to satisfy the margin requirement.).
Re: Claim 6, Glinberg discloses the computer system of claim 1,
wherein the processor computes margin values for the assets in the user account used as collateral for the trading activities by discounting a normalized value of all types of assets in the user account by a haircut reflective of a quality measure of the assets in the user account, wherein a higher quality asset will have a higher rating and lower haircut, and a lower quality asset will have a lower rating and higher haircut (Glinberg, [0155] - Any number of performance bond classes can be defined, and for any purpose. The most common purpose is to recognize different requirement levels that may be met by different classes of collateral assets. Typically the core requirement must be met by the highest-quality assets. The difference between the core requirement and the higher reserve requirement-the so-called reserve additional requirement-may be met by certain lesser-quality assets.).
Re: Claim 7, Glinberg discloses the computer system of claim 1,
wherein the processor computes margin values for the assets in the user account as collateral value – haircut, wherein the collateral value is a normalized value of the assets in the user account and a haircut reflects a quality measure of the assets in the user account, wherein a higher rating reflects a lower haircut, and a lower rating reflects a higher haircut (Glinberg, [0958] - Comparison of collateral to requirements and determination of whether an excess or a deficiency exists: The SPAN algorithm determines the SPAN requirements and available net option value for the different requirement levels for each combined commodity within the portfolio, and aggregates of these values to the report group, exchange complex and total portfolio levels, both by performance bond currency represented and as equivalent values in the portfolio currency.).
Re: Claim 8, Glinberg discloses the computer system of claim 1,
wherein the processor computes the margin for the user account as:
(collateral value – haircut) + futures pnl – debt (Glinberg, [0026] - Securities are revalued every day and are subject to prudent haircuts. Additionally, foreign cash is subject to hair-cuts in selected circumstances. Various forms of collateral are also subject to limits.).
Re: Claim 9, Glinberg discloses the computer system of claim 1,
wherein the index manager creates new indices, edits parameters of the indices, new indices, and the indices (Glinberg, [0028] - In recognition of the growing linkages among the markets for exchange-traded equity derivative products, as well as the need to promote efficient clearing procedures and to focus on the true intermarket risk exposure of clearing members, CME, in conjunction with the Options Clearing Corporation (OCC) and the New York Clearing Corporation (NYCC), has developed a cross-margining system with respect to market professionals and proprietary accounts. By combining the positions of joint or affiliated clearing members in certain broad-based equity index futures and options into a single portfolio, and utilizing the sophisticated risk-based systems of each clearing organization, a single performance bond requirement across both markets is determined. The clearing organizations jointly hold a first lien on and security interest in the positions in cross-margined accounts.).
Re: Claim 10, Glinberg discloses the computer system of claim 1,
wherein the interface has a user interface to display visual elements for the user accounts and the perpetual positions, wherein the user interface has a perpetual position blotter, portfolio pages, and historical pages (Glinberg, [0990] - FIGS. 2A-2K show an exemplary graphic user interface ("GUI") 200 in accordance with the disclosed embodiments. It will be appreciated that the GUI 200 may include known GUI elements for receiving and communicating data. Such elements include scroll bars, buttons, menus, such as pop up or pull down menus, mouse-over text, radio dials or gauges, or other interactive GUI elements as are known, and which are not shown in the figure for clarity purposes. Further, it will be appreciated that the GUI 200 may be utilized on any device capable of displaying a graphic user interface, such as a personal computer, personal digital assistant, hand-held computer, laptop computer, mobile telephone, etc. Such devices may be wired or wireless, such as devices compliant with cellular communications protocols, 802.1 la, b or g protocols or Bluetooth. Depending upon the implementation, the GUI 200 may be adapted for display according to the limitations of the display device of the system, such as the display size, display resolution, display color depth, or display refresh rate. In alternate embodiments, the GUI 200 may be capable being displayed on a text-based display utilizing text-characters to implement the GUI elements, or on a 3-di-mensional display device, or a device which presents the perception of a 3-dimensional presentation.).
Re: Claim 11, Glinberg discloses the computer system of claim 1,
wherein the interface has an application programming interface for the perpetual positions of the user accounts, wherein the application programming interface has a perpetual position API managing data about the perpetual positions for the user accounts, trading account configurations, and a ticker (Glinberg, [0993] - The GUI 200 may be integrated with the disclosed risk management software or the GUI 200 may be implemented as a separate client software program coupled with the risk management software via a network or other communications medium. In one embodiment, the GUI 200 is implemented as a web site, static or dynamic, using known web programming languages and protocols, such as HTTP, HTML, ActiveX, ASP, etc. In an alternate embodiment, the GUI 200 may be implemented on a system using the UNIX or LINUX operating system using the X-windows protocol. Further, the GUI 200 may implemented to operate under the Microsoft Windows operating system, such as the Windows XP operating system, published by Microsoft Corporation, located in Redmond, Wash.).
Re: Claim 12, Glinberg discloses the computer system of claim 1,
wherein the processing system nets out each of the perpetual positions for each of the user accounts (Glinberg, [0879] - [0879] The SPAN Calculation for Gross-Margined Clearing-Level Accounts: Specification of gross clearing-level position.).
Re: Claim 13, Glinberg discloses the computer system of claim 1,
wherein the processor system has a liquidation component to automatically unwind the derivative positions in the trading account (Glinberg, [0134] - The SPAN algorithm has always been viewed as being applicable to an unlimited range of product types, but the original focus in its implementation has been on standardized futures, options on futures and options on physicals. Portfolios today, however, can contain the widest range of derivative and non-derivative instruments. SPAN 4 supports the ultimate in product flexibility using an advanced, object-oriented model. In particular, SPAN 4 adds support for equity securities and debt securities (stocks, bonds, etc.), and options thereon.).
Re: Claim 14, Glinberg discloses the e computer system of claim 1,
wherein the underlying is an underlying asset (Glinberg, [0101] - In particular, TIMS uses pricing models to project the liquidation value of each portfolio given changes in the price of each underlying product. These models generate a set of theoretical values based on various factors including current prices, historical prices and market volatility. Based on flexible criteria established by a clearinghouse, statistically significant hedges receive appropriate margin offsets. TIMS also is used to predict a member's potential intra-day risk under varying sets of assumptions regarding market behavior.).
Re: Claim 15, Glinberg discloses the computer system of claim 1,
the automated market maker is configured to discretize long and short positions (Glinberg, [0031] - CME also conducts stress testing of clearing member positions on a daily basis. Numerous stress scenarios have been modeled to reflect a diverse universe of possible market events. Stress results are evaluated against performance bond on deposit and also with clearing member adjusted net capital. Results of stress tests may lead the Clearing House to request that the clearing member provide additional information about its customer accounts such as whether there are non-CME offsetting positions in other markets. In some cases stress test results may cause the Clearing House to increase a clearing member's performance bond requirement, or reduce or transfer positions.);
hold consolidated perpetual positions (Glinberg, [0285] - For example, a call option on 100 shares of stock. If you hold one long position in this call, and you exercise it, you receive (purchase) 100 shares of stock. Hence the underlying ratio is +100. On the other hand, if you own a put option on 100 shares of stock, and you exercise it, you deliver (sell) 100 shares of stock. Hence the underlying ratio for this put option is-100.); and
distribute the perpetual positions to components (Glinberg, [0102] - TIMS organizes all classes of options and futures relating to the same underlying asset into class groups and all class groups whose underlying assets exhibit close price correlation into product groups. The daily margin requirement for a clearing member is calculated based on its entire position within a class group and various product groups. The margin requirement consists of two components, a mark to market component and an additional margin component.).
Re: Claim 20, Claim 20 is an apparatus claim corresponding to method claim 16. Therefore, claim 20 is analyzed and rejected as previously discussed with respect to claim 16.
Conclusion
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/John H. Holly/Primary Examiner, Art Unit 3696