DETAILED ACTION
Status of the Claims
1. This action is in response to the application filed on December 19, 2024.
2. Claims 1-45 are currently pending and have been examined.
Notice of Pre-AIA or AIA Status
3. The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA .
Claim Objections
4. Claim 31 is objected to because of the following informalities: The preamble recites “[a] non-transitory computer-readable medium storing instructions that, when executed by one or more processors, cause the processors to:” There is an issue in the recitation as it is not clear if Applicant is attempting to claim one or more processors or multiple processors as currently recited. It appears that the claim intends to recite that the instructions, when executed by one or more processors, and thus the limitation should more properly continue to read “…cause the one or more processors to:” in order to clearly bound the claim. For purposes of examination, Examiner will interpret the claim in this manner, however appropriate correction is required.
Claim Interpretation – Broadest Reasonable Interpretation
5. In determining patentability of an invention over the prior art, all claim limitations have been considered and interpreted using the “broadest reasonable interpretation consistent with the specification during the examination of a patent application since the applicant may then amend his claims.” See In re Prater and Wei, 162 USPQ 541, 550 (CCPA 1969); MPEP § 2111. Applicant always has the opportunity to amend the claims during prosecution, and broad interpretation by the examiner reduces the possibility that the claim, once issued, will be interpreted more broadly than is justified. See In re Prater, 162 USPQ 541, 550-51 (CCPA 1969); MPEP § 2111. Although the claims are interpreted in light of the specification, limitations from the specification are not read into the claims. See In re Van Geuns, 26 USPQ2d 1057 (Fed. Cir. 1993). See also MPEP 2173.05(q) All claim limitations have been considered. Additionally, all words in the claims have been considered in judging the patentability of the claims against the prior art. See MPEP 2143.03.
Claim limitations that contain statement(s) such as “if, may, might, can, could”, are treated as containing optional language. As matter of linguistic precision, optional claim elements do not narrow claim limitations, since they can always be omitted.
Claim limitations that contain statement(s) such as “wherein, whereby”, that fail to further define the steps or acts to be performed in method claims or the discrete physical structure required of system claims.
Similarly, a method step exercised or triggered upon the satisfaction of a condition, where there remains the possibility that the condition was not satisfied under the broadest reasonable interpretation, is an optional claim limitation. see MPEP § 2103(I)(C); In re Johnson, 77 USPQ2d 1788 (Fed Cir 2006). As the Applicant does not address what happens should the optional claim limitations fail, Examiner assumes that nothing happens (i.e. the method stops). An alternate interpretation is that merely the claim limitations based upon the condition are not triggered or performed.
The subject matter of a properly construed claim is defined by the terms that limit its scope. It is this subject matter that must be examined.
As a general matter, grammar and the plain meaning of terms as understood by one having ordinary skill in the art used in a claim will dictate whether, and to what extent, the language limits the claim scope. see MPEP §2013(I)(C). Language that suggests or makes a feature or step optional but does not require that feature or step does not limit the scope of a claim under the broadest reasonable claim interpretation. see MPEP §2013(I)(C).
Claim scope is not limited by claim language that suggests or makes optional but does not require steps to be performed, or by claim language that does not limit a claim to a particular structure. In addition, when a claim requires selection of an element from a list of alternatives, the prior art teaches the element if one of the alternatives is taught by the prior art. See, e.g., Fresenius USA, Inc. v. Baxter Int’l, Inc., 582 F.3d 1288, 1298 (Fed. Cir. 2009). See MPEP 2111.04, 2143.03.
Language in a method or system claim that states only the intended use or intended result, but does not result in a manipulative difference in the steps of the method claim nor a structural difference between the system claim and the prior art, fails to distinguish the claims from the prior art. In other words, if the prior art structure is capable of performing the intended use, then it meets the claim.
The following types of claim language may raise a question as to its limiting effect (this list is not exhaustive):
Statements of intended use or field of use, including statements of purpose or intended use in the preamble (MPEP 2111.02);
Clauses such as “adapted to”, “adapted for”, “wherein”, and “whereby” (MPEP 2111.04)
Contingent limitations (MPEP 2111.04)
Printed matter (MPEP 2111.05) and
Functional language associated with a claim term (MPEP 2181)
Examiner notes that during examination, “claims … are to be given their broadest reasonable interpretation consistent with the specification, and … claim language should be read in light of the specification as it would be interpreted by one of ordinary skill in the art.” See In re Bond, 15 USPQ 1566, 1568 (Fed. Cir. 1990), citing In re Sneed, 218 USPQ 385, 388 (Fed. Cir. 1983). However, "in examining the specification for proper context, [the examiner] will not at any time import limitations from the specification into the claims". See CollegeNet, Inc. v. ApplyYourself, Inc., 75 USPQ2d 1733, 1738 (Fed. Cir. 2005). Construing claims broadly during prosecution is not unfair to the applicant, because the applicant has the opportunity to amend the claims to obtain more precise claim coverage. See In re Yamamoto, 222 USPQ 934, 936 (Fed. Cir. 1984), citing In re Prater, 162 USPQ 541, 550 (CCPA 1969).
As such, while all claim limitations have been considered and all words in the claims have been considered in judging the patentability of the claimed invention, the following language is interpreted as not further limiting the scope of the claimed invention.
The preamble of the instant claim 1 recites "[a] computer-implemented system for managing a liquidity pool comprising a first asset and a second asset, the system comprising:”
The preamble of the instant claim 16 recites “[a] computer-implemented method for managing a liquidity pool comprising a first asset and a second asset, the method comprising:
In general, a preamble limits the invention if it recites essential structure or steps, or if it is "necessary to give life, meaning, and vitality" to the claims. Pitney Bowes, Inc. v. Hewlett-Packard Co. 51 USPQ2d 1161 (Fed. Cir. 1999), Catalina Marketing International Inc. v. Coolsavings.com Inc., 62 USPQ2d 1781 (Fed. Cir. 2002). Conversely, where a patentee defines a structurally complete invention in the claim body and uses the preamble only to state a purpose or an intended use for the invention, the preamble is not a claim limitation given patentable weight. Rowe v. Dror, 42 USPQ2d 1550 (Fed. Cir. 1997); Catalina Marketing International Inc. v. Coolsavings.com Inc., 62 USPQ2d 1781 (Fed. Cir. 2002); Bell Communications Research, Inc. v. Vitalink Communications Corp., 34 USPQ2d 1816 (Fed. Cir. 1995) If a prior art structure is capable of performing the intended use as recited in the preamble, then it meets the claim. See, e.g., In re Schreiber, 128 F.3d 1473, 1477, 44 USPQ2d 1429, 1431 (Fed. Cir. 1997) See MPEP 2111.02
In the instant case, “for managing a liquidity pool comprising a first asset and a second asset” as recited in the preambles of Claims 1 and 16 only states a purpose and/or the intended use of the invention and accordingly is not being assigned any patentable weight.
Similarly in the instant case, the following italicized limitations are expressing the intended result of a process step positively recited and are not given further weight:
As in Claim 1 (and substantially similarly in Claims 16 and 31):
(b) determine a price ratio by comparing a transaction-derived price of the first asset to the target price parameter, wherein the transaction-derived price is computed based on transaction activity within the liquidity pool;
(c) apply a mathematical distribution function using the price ratio to define at least one threshold that distinguishes a first operational phase from a second operational phase,
(d) adjust quantities of the first and second assets in the liquidity pool according to the current operational phase, wherein external market data through an oracle is optional for operation;
As in Claims 3, 18 and 33:
wherein the at least one threshold is dynamically adjusted based on observed price volatility of the first asset.
As in Claims 4, 19, and 34:
wherein the at least one threshold is dynamically adjusted based on historical trading volume of the liquidity pool.
As in Claims 5, 20, and 35:
wherein the at least one threshold is dynamically adjusted based on market depth metrics derived from transaction data.
As in Claims 6, 21, and 36:
wherein ownership rights in the liquidity pool are represented by fungible tokens recorded in a distributed ledger.
As in Claims 7, 22, and 37:
wherein ownership rights in the liquidity pool are represented by non-fungible tokens recorded in a distributed ledger.
As in Claims 15, 30, and 45:
wherein the mathematical distribution function is configured to optimize trade execution based on liquidity levels in the liquidity pool.
Applicant also uses a number of terms in their claims that are either defined or discussed in the specification as seen below:
Liquidity pool: As disclosed by the specification, Applicant defines a liquidity pool as follows: “[a] liquidity pool, as used herein, refers to a smart contract-managed reserve of paired digital assets that enables automated market making and trading”. (See Applicant Spec page 4, last paragraph)
However, Applicant also recites the following:
“While various embodiments have been described in the context of digital asset liquidity pools, the mathematical position management principles disclosed herein are not limited to such environments. For example, the system may be adapted for use in traditional commodities or futures markets, where tokenized contracts, digital certificates of ownership, or similar mechanisms can represent claims on underlying assets. In these contexts, the same mathematical distribution-based allocation strategies may apply, addressing volatility and liquidity management challenges analogous to those found in digital asset trading.” (See Applicant Spec page 13, first paragraph)
As such, as Applicant has indicated that the system may be adapted for use in traditional commodities or futures markets where tokenized contracts, digital certificates of ownership or similar mechanisms can represent claims on underlying assets and has not recited a smart contract-managed reserve of paired digital assets, a liquidity pool system and its associated components, or automated market making and trading in the claims, Examiner will interpret the liquidity pool broadly as being able to be adapted to traditional commodities or futures markets.
First and Second Operational Phase: The claims use the terms first and second operational phases. In the context of the specification, it appears that the first and second operational phases refer to a Consolidation Phase 210 or a Profit Phase 212 based on initial conditions relative to threshold 208. (See Applicant Spec page 9, first paragraph) The designation of first versus a second operational phase as claimed appears to be either the consolidation or profit phase based on initial conditions from which the system initiates its allocation logic. (Id. at page 8, last paragraph) According to the specification, during the consolidation phase the system may increase its allocation of the unstable asset as the price ratio moves upward, preparing for potential gains if the price continues to rise. (Id. at page 9, paragraph 2) When the price ratio surpasses threshold 208, the system transitions to the profit phase where the system systematically reduces its unstable asset holdings to capture gains as the price approaches the target. (Id.) It appears that there is a [singular] threshold that is defined that is used by both the first and second operational phases.
Mathematical Distribution Function: The independent claims recite applying a mathematical distribution function. While the specification makes no mention of a function, for purposes of examination, as this is a high level recitation, Examiner will interpret this as applying any mathematical distribution function that meets the claimed limitations.
Oracle: Each of the independent claims recite in part “…wherein external market data through an oracle is optional for operation”. Applicant’s specification discloses the following:
“For example, certain blockchain-integrated trading solutions, including those disclosed in U.S. Patent No. 11,436,677, incorporate external pricing feeds or oracle services.” (See Applicant Spec page 2, para 1)
“The external interface module 126 includes a DEX aggregator 128 that optimizes trade execution across venues by finding the most efficient routing and pricing. In some embodiments, the system may optionally utilize external market data through an oracle connector 130, through the core position management functionality operates autonomously using on-chain data and mathematical models. A blockchain interface 132 manages on-chain interactions required for trade execution and state updates.” (See Applicant Spec page 6, para 3)
The wherein clause indicates that external market data through an oracle is optional. The oracle, as noted in the claim, is an optional feature, thus may or may not be involved in the process. The external market data nor an oracle are not further recited in the claim set. Examiner notes that in one part of the disclosure of the specification, external pricing feeds or oracle services are disclosed in reference to a US Patent that is not by the instant inventive entity. The second reference involves systemization where an external interface module includes a DEX aggregator that may optionally utilize external market data through an oracle connector, through the core position management functionality. None of these additional features are recited in the claims.
As the step is optionally recited, with no potential systemization that could effectuate the option, Examiner will treat this particular wherein limitation as not being part of the operation.
Claim Rejections - 35 USC § 112
The following is a quotation of the first paragraph of 35 U.S.C. 112(a):
(a) IN GENERAL.—The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor or joint inventor of carrying out the invention.
The following is a quotation of the first paragraph of pre-AIA 35 U.S.C. 112:
The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention.
6. Claims 2, 6-7, 17, 21-22, 32, and 36-37 are rejected under 35 U.S.C. 112(a) or 35 U.S.C. 112 (pre-AIA ), first paragraph, as failing to comply with the written description requirement. The claim(s) contains subject matter which was not described in the specification in such a way as to reasonably convey to one skilled in the relevant art that the inventor or a joint inventor, or for applications subject to pre-AIA 35 U.S.C. 112, the inventor(s), at the time the application was filed, had possession of the claimed invention.
As in Claims 2, 17, and 32:
wherein the mathematical distribution function comprises a continuous probability distribution that maps the price ratio to target proportions of the first and second assets.
As in Claims 6, 21, and 36:
wherein ownership rights in the liquidity pool are represented by fungible tokens recorded in a distributed ledger.
As in Claims 7, 22, and 37:
wherein ownership rights in the liquidity pool are represented by non-fungible tokens recorded in a distributed ledger.
As to Claims 2, 17 and 32, the specification does not disclose a mathematical distribution function (as noted above), much less a continuous probability distribution that maps the price ratio to target proportions of the first and second assets. There is no support nor any disclosure of a probability distribution. The specification does note the following:
“In various embodiments, the system includes smart contracts that create and manage liquidity pools accepting deposits of cryptocurrency pairs. These contracts implement position management components that execute trades according to mathematically defined threshold and maintain target-relative ratios between paired assets reducing risk while improving returns through automated rebalancing strategies.” (See Applicant Spec page 3, para 3)
“A pool router 102 serves as the primary interface for directing operations between system components, handling all incoming liquidity events and outgoing trade execution requests. The router 102 enforces system protocols and ensures proper sequencing of operations. The system includes a position management module 104 that controls core pool operations through three specialized components. A position manager 106 maintains and adjusts asset allocations based on mathematically determined target ratios derived from configured price targets and distribution parameters. The position manager 106 calculates optimal allocations using mathematical models that define position targets based on price movement relative to predetermined thresholds.” (See Applicant Spec page 5, para 2)
These disclosures (above) are recited as to smart contracts and systemization included within a liquidity pool system – none of which are featured in the claims. Even if the liquidity pool system, smart contract, position management module and position manager were all recited, there still is insufficient support for a continuous probability distribution being used as the mathematical distribution function in the disclosure. Applicant is encouraged to bring the claims within the bounds of the specification.
Each of the above listed claims 6-7, 21-22 and 36-37 recite a “distributed ledger”. Applicant’s specification does not disclose a distributed ledger, rather Applicant’s specification discloses a blockchain. The closest relevant recitation discloses the following:
“The computing devices may operate as nodes in a distributed blockchain network executing smart contracts, or as dedicated hardware devices configured to perform the described position management operations.” (See Applicant Spec page 7, para 2)
This recitation is still disclosing a distributed blockchain network, not a distributed ledger. While a blockchain is a type of distributed ledger technology, a distributed ledger is a broader term that can include blockchains, directed acyclic graphs and other structures.
Applicant is requested to bring the recitations within the bounds of the specification.
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.
7 . Claims 1-45 are rejected under 35 U.S.C. § 101 because the claimed invention is directed to an abstract idea without significantly more.
ANALYSIS:
STEP 1:
Does the claimed invention fall within one of the four statutory categories of invention (process, machine, manufacture or composition matter?
Claim 1 recites a system claim. Claim 16 recites a method claim. Claim 31 recites a non-transitory computer-readable medium claim. Currently, the method claim has a separate rejection as being non-statutory (as shown below), however Examiner assumes that Applicant will rectify the claims to properly claim the invention as within statutory categories.
STEP 2A:
Prong One: Does the Claim Recite A Judicial Exception (An Abstract Idea, Law of Nature or Natural Phenomenon)? (If Yes, Proceed to Prong Two, If No, the claim is not directed to a judicial exception and qualifies as subject matter patent eligible material)
Claim 1 recites the abstract idea of managing a liquidity pool comprising a first asset and a second asset. The idea is described by the following limitations:
store a target price parameter for the first asset relative to the second asset;
determine a price ratio by comparing a transaction-derived price of the first asset to the target price parameter, wherein the transaction-derived price is computed based on transaction activity within the liquidity pool;
apply a mathematical distribution function using the price ratio to define at least one threshold that distinguishes a first operational phase from a second operational phase, wherein:
in the first operational phase, occurring when the price ratio is below the at least one threshold, increases a proportion of the first asset relative to the second asset as the price ratio approaches the at least one threshold, and
in the second operational phase, occurring when the price ratio exceeds the at least one threshold, decreases a proportion of the first asset relative to the second asset as the price ratio moves beyond the at least one threshold;
adjust quantities of the first and second assets in the liquidity pool according to the current operational phase, wherein external market data through a oracle is optional for operation; and
execute trades through the liquidity pool based on the adjusted quantities.
Claim 16 recites the abstract idea of managing of a liquidity pool comprising a first asset and a second asset. The idea is described by the following limitations:
storing a target price parameter for the first asset relative to the second asset;
determining a price ratio by comparing a transaction-derived price of the first asset to the target price parameter, wherein the transaction-derived price is computed based on transaction activity within the liquidity pool;
applying a mathematical distribution function using the price ratio to define at least one threshold that distinguishes a first operational phase from a second operational phase, wherein:
in the first operational phase, occurring when the price ratio is below the at least one threshold, increasing a proportion of the first asset relative to the second asset as the price ratio approaches the at least one threshold; and
in the second operational phase, occurring when the price ratio exceeds the at least one threshold, decreasing the proportion of the first asset relative to the second asset as the price ratio moves beyond the at least one threshold;
adjusting quantities of the first and second assets in the liquidity pool according to the current operational phase, wherein external market data through an oracle is optional for operation; and
executing trades through the liquidity pool based on the adjusted quantities.
Claim 31 recites the abstract idea of managing a liquidity pool comprising a first asset and a second asset. The idea is described by the following limitations:
store a target price parameter for a first asset relative to a second asset in a liquidity pool;
determine a price ratio by comparing a transaction-derived price of the first asset to the target price parameter, wherein the transaction-derived price is computed based on transaction activity within the liquidity pool;
apply a mathematical distribution function using the price ratio to define at least one threshold that distinguishes a first operational phase from a second operational phase, wherein:
in the first operational phase, occurring when the price ratio is below the at least one threshold, increase a proportion of the first asset relative to the second asset as the price ratio approaches the at least one threshold, and
in the second operational phase, occurring when the price ratio exceeds the at least one threshold, decrease the proportion of the first asset relative to the second asset as the price ratio moves beyond the at least one threshold;
adjust quantities of the first and second asset in the liquidity pool according to the current operational phase, wherein external market data through an oracle is optional for operation; and
execute trades through the liquidity pool based on the adjusted quantities.
Under a BRI, the claims reflect no more than an existing approach to managing a liquidity pool between a first and second asset by storing a target price parameter for a first asset relative to a second asset where a threshold price for an asset is established; adjusting quantities based on the price ratio being above or below a threshold and executing trades through the liquidity pool based on the adjusted quantities.
As a result, the abstract ideas describe mental processes and certain methods of organizing human activities.
As to mental processes, the steps describe concepts performed in the human mind including an observation, evaluation, judgment and/or opinion (i.e., store a target price parameter for the first asset relative to the second asset; determine a price ratio by comparing a transaction-derived price of the first asset to the target price parameter, wherein the transaction-derived price is computed based on transaction activity within the liquidity pool; apply a mathematical distribution function using the price ratio to define at least one threshold that distinguishes a first operational phase from a second operational phase, wherein:in the first operational phase, occurring when the price ratio is below the at least one threshold, increases a proportion of the first asset relative to the second asset as the price ratio approaches the at least one threshold, and in the second operational phase, occurring when the price ratio exceeds the at least one threshold, decreases a proportion of the first asset relative to the second asset as the price ratio moves beyond the at least one threshold; adjust quantities of the first and second assets in the liquidity pool according to the current operational phase) These steps are performing a mental process in a computer-implemented environment that recites limitations observing and evaluating information and with the exception of generic computer-implemented steps, there is nothing in the claims themselves that foreclose them from being practically performed by a human mentally.
As to certain methods of organizing human activity, the steps involve fundamental economic practices or principles (hedging, mitigating risk); commercial interactions (sales activities or behaviors; business relations) and managing personal behavior or relationships between people (following rules or instructions) (i.e., store a target price parameter for the first asset relative to the second asset; determine a price ratio by comparing a transaction-derived price of the first asset to the target price parameter, wherein the transaction-derived price is computed based on transaction activity within the liquidity pool; apply a mathematical distribution function using the price ratio to define at least one threshold that distinguishes a first operational phase from a second operational phase, wherein:
in the first operational phase, occurring when the price ratio is below the at least one threshold, increases a proportion of the first asset relative to the second asset as the price ratio approaches the at least one threshold, and in the second operational phase, occurring when the price ratio exceeds the at least one threshold, decreases a proportion of the first asset relative to the second asset as the price ratio moves beyond the at least one threshold; adjust quantities of the first and second assets in the liquidity pool according to the current operational phase, wherein external market data through a oracle is optional for operation; and execute trades through the liquidity pool based on the adjusted quantities.)
In the case of the instant claims, the claims may recite no more than receiving information regarding a target price parameter for a first and second asset from a user; determining a price ratio by comparing a transaction-derived price of the first asset to the target price parameter; applying a mathematical distribution function to define a threshold between a first and second operational phase where the price ratio is above or below the threshold and adjusting a proportion of the first asset relative to the second asset relative to the threshold and adjusting quantities accordingly, then executing trades based on the adjusted quantities. (Step 2A, Prong 1: Yes, the claims are abstract)
Prong Two: Does the Claim Recite Additional Elements That Integrate The Judicial Exception Into A Practical Application of the Exception? (If Yes, the claim is not directed to a judicial exception and qualifies as subject matter patent eligible material. If No, Proceed to Step 2B)
The claims do not include additional elements that integrate the judicial exception into a practical application of the exception because the claims do not provide improvements to another technology or technical field, improvements to the functioning of the computer itself, are not applying or using a judicial exception to effect a particular treatment or prophylaxis for a disease or medical condition, are not applying the judicial exception with, or by use of a particular machine, are not effecting a transformation or reduction of a particular article to a different state or thing, and are not applying the judicial exception in some other meaningful way beyond generally linking the use of the judicial exception to a particular technological environment.
Claim 1 recites one or more processors; a non-transitory computer-readable medium storing instructions.
Claim 16 notes that the method is computer-implemented, however does not recite any particular systemization.
Claim 31 recites a non-transitory computer-readable medium storing instructions and one or more processors
Further, the method outlined in Claim 16 does not sufficiently tie the method steps to a particular machine within the body of the claim. As such, the recitations are further failing to integrate the judicial exception into a practical application on this basis.
In particular, the claims only recite one or more processors and a non-transitory computer-readable medium storing instructions as well as a high level mention of the method being “computer-implemented” in Claim 16 which are recited at a high level of generality (i.e., as a generic processor performing generic computer functions) such that it amounts to no more than mere instructions to apply the exception using a generic computer component. (See MPEP 2106.05(f)) Use of a computer in its ordinary capacity for economic or other tasks (e.g., to receive, store or transmit data) or simply adding a general-purpose computer or computer components after the fact to the abstract idea does not integrate a judicial exception into a practical application or provide significantly more.)
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 31 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)
STEP 2B: If there is an exception, determine if the claim as a whole recites significantly more than the judicial exception itself.
The courts have recognized the following computer functions as well‐understood, routine, and conventional functions when they are claimed in a merely generic manner (e.g., at a high level of generality) or as insignificant extra-solution activity: i) receiving or transmitting data over a network, e.g., using the Internet to gather data, Symantec, 838 F.3d at 1321, 120 USPQ2d at 1362 (utilizing an intermediary computer to forward information); TLI Communications LLC v. AV Auto. LLC, 823 F.3d 607, 610, 118 USPQ2d 1744, 1745 (Fed. Cir. 2016) (using a telephone for image transmission); OIP Techs., Inc., v. Amazon.com, Inc., 788 F.3d 1359, 1363, 115 USPQ2d 1090, 1093 (Fed. Cir. 2015) (sending messages over a network); buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1355, 112 USPQ2d 1093, 1096 (Fed. Cir. 2014) (computer receives and sends information over a network); but see DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245, 1258, 113 USPQ2d 1097, 1106 (Fed. Cir. 2014) ("Unlike the claims in Ultramercial, the claims at issue here specify how interactions with the Internet are manipulated to yield a desired result‐‐a result that overrides the routine and conventional sequence of events ordinarily triggered by the click of a hyperlink." (emphasis added)); ii) performing repetitive calculations, Flook, 437 U.S. at 594, 198 USPQ2d at 199 (recomputing or readjusting alarm limit values); Bancorp Services v. Sun Life, 687 F.3d 1266, 1278, 103 USPQ2d 1425, 1433 (Fed. Cir. 2012) ("The computer required by some of Bancorp’s claims is employed only for its most basic function, the performance of repetitive calculations, and as such does not impose meaningful limits on the scope of those claims."); iii) electronic recordkeeping, Alice Corp., 134 S. Ct. at 2359, 110 USPQ2d at 1984 (creating and maintaining "shadow accounts"); Ultramercial, 772 F.3d at 716, 112 USPQ2d at 1755 (updating an activity log); iv) storing and retrieving information in memory, Versata Dev. Group, Inc. v. SAP Am., Inc., 793 F.3d 1306, 1334, 115 USPQ2d 1681, 1701 (Fed. Cir. 2015); OIP Techs., 788 F.3d at 1363, 115 USPQ2d at 1092-93; v) electronically scanning or extracting data from a physical document, Content Extraction and Transmission, LLC v. Wells Fargo Bank, 776 F.3d 1343, 1348, 113 USPQ2d 1354, 1358 (Fed. Cir. 2014) (optical character recognition); and vi) a web browser’s back and forward button functionality, Internet Patent Corp. v. Active Network, Inc., 790 F.3d 1343, 1348, 115 USPQ2d 1414, 1418 (Fed. Cir. 2015). (MPEP §2106.05(d)(II))
This listing is not meant to imply that all computer functions are well‐understood, routine, conventional activities, or that a claim reciting a generic computer component performing a generic computer function is necessarily ineligible. Courts have held computer‐implemented processes not to be significantly more than an abstract idea (and thus ineligible) where the claim as a whole amounts to nothing more than generic computer functions merely used to implement an abstract idea, such as an idea that could be done by a human analog (i.e., by hand or by merely thinking). On the other hand, courts have held computer-implemented processes to be significantly more than an abstract idea (and thus eligible), where generic computer components are able in combination to perform functions that are not merely generic. (MPEP §2106.05(d)(II) – emphasis added)
Below are examples of other types of activity that the courts have found to be well-understood, routine, conventional activity when they are claimed in a merely generic manner (e.g., at a high level of generality) or as insignificant extra-solution activity: recording a customer’s order, Apple, Inc. v. Ameranth, Inc., 842 F.3d 1229, 1244, 120 USPQ2d 1844, 1856 (Fed. Cir. 2016); shuffling and dealing a standard deck of cards, In re Smith, 815 F.3d 816, 819, 118 USPQ2d 1245, 1247 (Fed. Cir. 2016); restricting public access to media by requiring a consumer to view an advertisement, Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 716-17, 112 USPQ2d 1750, 1755-56 (Fed. Cir. 2014); identifying undeliverable mail items, decoding data on those mail items, and creating output data, Return Mail, Inc. v. U.S. Postal Service, -- F.3d --, -- USPQ2d --, slip op. at 32 (Fed. Cir. August 28, 2017); presenting offers and gathering statistics, OIP Techs., 788 F.3d at 1362-63, 115 USPQ2d at 1092-93; determining an estimated outcome and setting a price, OIP Techs., 788 F.3d at 1362-63, 115 USPQ2d at 1092-93; and arranging a hierarchy of groups, sorting information, eliminating less restrictive pricing information and determining the price, Versata Dev. Group, Inc. v. SAP Am., Inc., 793 F.3d 1306, 1331, 115 USPQ2d 1681, 1699 (Fed. Cir. 2015) (MPEP 2106.05(d))
Here, the steps are receiving or transmitting data over a network; performing repetitive calculations; storing and retrieving information in memory as well as setting or determining a price– all of which have been recognized by the courts as well-understood, routine and conventional functions.
The claims are directed to an abstract idea with additional generic computer elements that do not add meaningful limitations to the abstract idea because they require no more than a generic computer to perform generic computer functions that are well-understood, routine, and conventional activities previously known in the industry.
For the next step of the analysis, it must be determined whether the limitations present in the claims represent a patent-eligible application of the abstract idea. A claim directed to a judicial exception must be analyzed to determine whether the elements of the claim, considered both individually and as an ordered combination are sufficient to ensure that the claim as a whole amounts to significantly more than the exception itself.
For the role of a computer in a computer implemented invention to be deemed meaningful in the context of this analysis, it must involve more than performance of “well-understood, routine, [and] conventional activities previously known to the industry.” Further, “the mere recitation of a generic computer cannot transform a patent ineligible abstract idea into a patent-eligible invention.”
Applicant’s specification discloses the following:
“The modules, components, and operations described herein may be implemented by one or more computing devices, each comprising one or more processors, memory, and non-transitory storage media. Instructions for executing the disclosed methods and operations may be stored in the non-transitory storage media and executed by the processors. The computing devices may operate as nodes in a distributed blockchain network executing smart contracts, or as dedicated hardware devices configured to perform the described position management operations. The specific hardware configuration is not limiting; the described functionality may be implemented across various computing architectures while maintaining the core mathematical relationships and operational phases described herein.” (See Applicant Spec page 7, para 2)
Generic computer components recited as performing generic computer functions that are well-understood, routine and conventional activities amount to no more than implementing the abstract idea with a computerized system.
Looking at the limitations as an ordered combination adds nothing that is not already present when looking at the elements taken individually. There is no indication that the combination of elements improves the functioning of a computer or improves any other technology. The collective functions appear to be implemented using conventional computer systemization.
The claim(s) do not include additional elements that are sufficient to amount to significantly more than the judicial exception. Upon reconsideration of the indicia noted under Step 2A in concert with the Step 2B considerations, the additional claim element(s) amounts to no more than mere instructions to apply the exception using generic computer components. The same analysis applies in Step 2B, i.e., mere instructions to apply an exception using a generic computer component cannot integrate a judicial exception into a practical application at Step 2A or provide an inventive concept in Step 2B. The claim does not provide an inventive concept significantly more than the abstract idea.
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.
The independent claims 1, 16 and 31 are not patent eligible. (Step 2B: NO. The claims do not provide significantly more)
Dependent Claims 2-15, 17-30 and 32-45 further define the abstract idea that is presented in the respective independent Claims 1, 16 and 31 and are further grouped as method processes and certain methods of organizing human activity and are abstract for the same reasons and basis as presented above.
Dependent Claims 2, 17, and 32 provide further details disclosing wherein the mathematical distribution function comprises a continuous probability distribution that maps the price ratio to target proportions of the first and second assets. This still describes mental processes and certain methods of organizing human activity.
Dependent Claims 3, 18, and 33 provide further details disclosing wherein the at least one threshold is dynamically adjusted based on observed price volatility of the first asset. This still describes mental processes and certain methods of organizing human activity.
Dependent Claims 4, 19, and 34 provide further details disclosing wherein the at least one threshold is dynamically adjusted based on historical trading volume of the liquidity pool. This still describes mental processes and certain methods of organizing human activity.
Dependent Claims 5, 20, and 35, provide further details disclosing wherein the at least one threshold is dynamically adjusted based on market depth metrics derived from transaction data. This still describes mental processes and certain methods of organizing human activity.
Dependent Claims 6, 21, and 36, provide further details disclosing wherein ownership rights in the liquidity pool are represented by fungible tokens recorded in a distributed ledger. The claims additionally disclose fungible tokens recorded in a distributed ledger which is recited at a high level of generality (i.e., as a generic processor performing generic computer functions) such that it amounts to mere instructions to apply the exception. This step is receiving data into a generic tool and still describes certain methods of organizing human activity.
Dependent Claims 7, 22, and 37, provide further details disclosing wherein ownership rights in the liquidity pool are represented by non-fungible tokens recorded in a distributed ledger. The claims additionally disclose non-fungible tokens recorded in a distributed ledger which is recited at a high level of generality (i.e., as a generic processor performing generic computer functions) such that it amounts to mere instructions to apply the exception. This step is receiving data into a generic tool and still describes certain methods of organizing human activity.
Dependent Claims 8, 23, and 38 provide further details disclosing wherein the first asset comprises a tokenized representation of a commodity futures contract. This still describes mental processes and certain methods of organizing human activity.
Dependent Claims 9, 24, and 39, provide further details disclosing wherein the first asset comprises a tokenized representation of an equity instrument. This still describes mental processes and certain methods of organizing human activity.
Dependent Claims 10, 25, and 40, provide further details disclosing wherein the first asset comprises a tokenized representation of a fixed-income instrument. This still describes mental processes and certain methods of organizing human activity.
Dependent Claims 11, 26, and 41, provide further details maintaining separate instances of the liquidity pool on different blockchain networks; applying the same target price parameter across all instances; and coordinating asset allocations between the instances. The claims additionally disclose different blockchain networks that maintain different instances of the liquidity pool. The recitations are at a high level of generality (i.e., as a generic processor performing generic computer functions) such that it amounts to mere instructions to apply the exception. This step is receiving and storing data into a generic tool and still describes certain methods of organizing human activity.
Dependent Claims 12, 27, and 42, provide further details disclosing wherein determining the transaction-derived price comprises: analyzing completed transactions involving the first asset; calculating a volume-weighted average price; and updating the price ratio based on the calculated volume-weighted average price. This still describes mental processes and certain methods of organizing human activity.
Dependent Claims 13, 28, and 43, provide further details disclosing maintaining a state database that records historical price ratios and phase transitions. The additional element of a database is recited at a high level of generality such that it amounts to mere instructions to apply the exception. The step is storing data in a generic tool and still describes mental processes and certain methods of organizing human activity.
Dependent Claims 14, 29, and 44, provide further details maintaining a state database that records allocation adjustments and trade executions. The additional element of a database is recited at a high level of generality such that it amounts to mere instructions to apply the exception. The step is storing data in a generic tool and still describes mental processes and certain methods of organizing human activity.
Dependent Claims 15, 30, and 45, provide further details disclosing wherein the mathematical distribution function is configured to optimize trade execution based on liquidity levels in the liquidity pool. This still describes mental processes and certain methods of organizing human activity.
No further additional hardware components other than those found in the independent claims are recited, thus it is presumed that the claims are further utilizing the same generic systemization as presented in the independent claims as presented above. The dependent claims do not include any additional elements that integrate the abstract idea into a practical application of the exception or are sufficient to amount to significantly more than the judicial exception when considered both individually and as an ordered combination.
Therefore, the dependent claims are also directed to an abstract idea.
Thus, Claims 1-45 are rejected under 35 U.S.C. 101 as being directed to non-statutory subject matter.
Regarding Claims 16-30, Examiner notes that the method of Claims 16-30 would also have been rejected under the earlier §101 standards based upon In re Bilski, which have been superseded by the current §101 standards based upon the Alice-Mayo test. Specifically, Claim 16 contains an insufficient recitation of a machine or transformation as the involvement of the machine. As recited, the machine is merely nominally, insignificantly or tangentially related to the performance of the steps. Examiner notes that the only explicit reference to a machine is in the preamble of Independent Claim 16 as being “computer-implemented”. There is no direct tie between a machine and the limitations of the independent claim, nor to the subsequent dependent claims. Examiner is only noting this as §101 under the Alice-Mayo test is considered a substantially higher bar than under In re Bilski. Examiner suggests Applicant incorporate language into the body of the claim reciting the machine elements performing the recited process.
Relevant Prior Art of Record Not Currently Applied
Examiner Note:
Examiner notes that the current claims do not clearly present the elements of AMMs, smart contracts, stablecoins and distributed ledgers used in the specification and that reflect the process of managing a liquidity pool in a plurality of distributed ledgers related to digital assets to address volatility and liquidity management as is attempting to be claimed.
The closest relevant prior art is noted below, however it appears that the additional details that could reflect technological improvements and/or efficiencies are absent in the claims and would require additional search and consideration to assess if added to the claims.
Doney (US PG Pub. 2022/0374990) – discloses an apparatus, computer-readable medium, and computer-implemented method for creating and managing a distributed ledger non-fungible token data structures that represent the liquidity function for any two distinct representations of assets. (See Doney Abstract) The representations may be different assets or a single asset type with different characteristics including ledger, network, jurisdiction, availability, etc. (See Doney Abstract)
Song (US PG. Pub. 2024/0112155) – discloses a method for providing stablecoin services over the blockchain network, includes steps of: (a) issuing n*m second-type stablecoins to thereby supply them to liquidity pool; and (b) instructing stabilizer to withdraw j first-type stablecoins for j*I second-type stablecoins according to exchange ratio I, and burn the j*m second-type stablecoins, or issue k second-type stablecoins to the stabilizer electronic wallet through minter, and exchange the issued k second-type stablecoins for k/I first-type stablecoins according to exchange ratio I, and to stake j* |i-m| second-type stablecoins to the stabilizer electronic wallet, or deposit k/I first-type stablecoins into the treasury electronic wallet, issue k*|l/i-l/m|*m second-type stablecoins to the stabilizer electronic wallet through the minter, stake the issued k*|l/i-l/ml*m second-type stablecoins to the stabilizer electronic wallet. (See Song Abstract)
Falkenstein (US PG Pub. 2024/0144370) – discloses methods, systems, and apparatus, including computer programs encoded on computer storage media, for AMM smart contracts. (See Falkenstein Abstract) One of the methods includes providing a smart contract on a decentralized blockchain network; receiving in a first account maintained within the smart contract for a liquidity provider (LP) entity, an initial deposit amount associated with the digital asset and a second digital asset; receiving a request from the LP to execute to trade of the first digital asset between the first account of the LP entity and a second, margin account of the LP entity; determining that a total amount of the first digital asset in the first account and the second, margin account of the LP entity after accounting for the trade is within a predetermined range of the initial position of the LP entity; and executing, on the smart contract, the trade of the first digital asset between the first account of the LP entity and the second, margin account of the LP entity. (See Falkenstein Abstract)
Conclusion
Any inquiry concerning this communication or earlier communications from the examiner should be directed to AMBREEN A. ALLADIN whose telephone number is (571)270-3533. The examiner can normally be reached Monday - Friday 9-5.
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/AMBREEN A. ALLADIN/ Primary Examiner, Art Unit 3691
March 6, 2026