DETAILED ACTION
Notice of Pre-AIA or AIA Status
The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA .
Priority
CONTINUATION
This application is a continuation application of U.S. application no. 18/519,613 filed on November 27, 2023, now U.S. Patent 12,223,496 (“Parent Application”), which is a continuation application of U.S. application no. 17/546,446 filed on December 9, 2021, now U.S. Patent 11,829,997, which is a continuation application of U.S. application no. 16/536,940 filed on August 9, 2019, now U.S. Patent 11,216,802. See MPEP §201.07. In accordance with MPEP §609.02 A. 2 and MPEP §2001.06(b) (last paragraph), the Examiner has reviewed and considered the prior art cited in the Parent Application. Also in accordance with MPEP §2001.06(b) (last paragraph), all documents cited or considered ‘of record’ in the Parent Application are now considered cited or ‘of record’ in this application. Additionally, Applicant(s) are reminded that a listing of the information cited or ‘of record’ in the Parent Application need not be resubmitted in this application unless Applicants desire the information to be printed on a patent issuing from this application. See MPEP §609.02 A. 2. Finally, Applicants are reminded that the prosecution history of the Parent Application is relevant in this application. See e.g., Microsoft Corp. v. Multi-Tech Sys., Inc., 357 F.3d 1340, 1350, 69 USPQ2d 1815, 1823 (Fed. Cir. 2004) (holding that statements made in prosecution of one patent are relevant to the scope of all sibling patents).
Applicant’s claim for the benefit of U.S. provisional patent application 62/717,575 filed August 10, 2018, U.S. provisional patent application 62/875,543 filed July 8, 2019 and U.S. provisional patent application 62/881,121 filed July 31, 2019 under 35 U.S.C. 119(e) is acknowledged.
The later-filed application must be an application for a patent for an invention which is also disclosed in the prior application (the parent or original nonprovisional application or provisional application). The disclosure of the invention in the parent application and in the later-filed application must be sufficient to comply with the requirements of 35 U.S.C. 112(a) or the first paragraph of pre-AIA 35 U.S.C. 112, except for the best mode requirement. See Transco Products, Inc. v. Performance Contracting, Inc., 38 F.3d 551, 32 USPQ2d 1077 (Fed. Cir. 1994).
The disclosure of the prior-filed application, Application No. 62/717,575 fails to provide adequate support or enablement in the manner provided by 35 U.S.C. 112(a) or pre-AIA 35 U.S.C. 112, first paragraph for one or more claims of this application.
Claims 12 and 24 recite the determining of a split ratio for a new split of security tokens and determining a split-updated token balance. This subject matter was not present in Application No. 62/717,575 and only appears in the subject matter disclosed in the U.S. provisional application 62/875,543 filed on July 8, 2019. Therefore priority for claims 12 and 24 will only be extended to July 8, 2019.
Information Disclosure Statement
The information disclosure statement (IDS) were submitted on January 29, 2025 (2) and August 5, 2025. The submissions are in compliance with the provisions of 37 CFR 1.97. Accordingly, the information disclosure statements are being considered by the examiner.
Double Patenting
The nonstatutory double patenting rejection is based on a judicially created doctrine grounded in public policy (a policy reflected in the statute) so as to prevent the unjustified or improper timewise extension of the “right to exclude” granted by a patent and to prevent possible harassment by multiple assignees. A nonstatutory double patenting rejection is appropriate where the conflicting claims are not identical, but at least one examined application claim is not patentably distinct from the reference claim(s) because the examined application claim is either anticipated by, or would have been obvious over, the reference claim(s). See, e.g., In re Berg, 140 F.3d 1428, 46 USPQ2d 1226 (Fed. Cir. 1998); In re Goodman, 11 F.3d 1046, 29 USPQ2d 2010 (Fed. Cir. 1993); In re Longi, 759 F.2d 887, 225 USPQ 645 (Fed. Cir. 1985); In re Van Ornum, 686 F.2d 937, 214 USPQ 761 (CCPA 1982); In re Vogel, 422 F.2d 438, 164 USPQ 619 (CCPA 1970); In re Thorington, 418 F.2d 528, 163 USPQ 644 (CCPA 1969).
A timely filed terminal disclaimer in compliance with 37 CFR 1.321(c) or 1.321(d) may be used to overcome an actual or provisional rejection based on nonstatutory double patenting provided the reference application or patent either is shown to be commonly owned with the examined application, or claims an invention made as a result of activities undertaken within the scope of a joint research agreement. See MPEP § 717.02 for applications subject to examination under the first inventor to file provisions of the AIA as explained in MPEP § 2159. See MPEP § 2146 et seq. for applications not subject to examination under the first inventor to file provisions of the AIA . A terminal disclaimer must be signed in compliance with 37 CFR 1.321(b).
The filing of a terminal disclaimer by itself is not a complete reply to a nonstatutory double patenting (NSDP) rejection. A complete reply requires that the terminal disclaimer be accompanied by a reply requesting reconsideration of the prior Office action. Even where the NSDP rejection is provisional the reply must be complete. See MPEP § 804, subsection I.B.1. For a reply to a non-final Office action, see 37 CFR 1.111(a). For a reply to final Office action, see 37 CFR 1.113(c). A request for reconsideration while not provided for in 37 CFR 1.113(c) may be filed after final for consideration. See MPEP §§ 706.07(e) and 714.13.
The USPTO Internet website contains terminal disclaimer forms which may be used. Please visit www.uspto.gov/patent/patents-forms. The actual filing date of the application in which the form is filed determines what form (e.g., PTO/SB/25, PTO/SB/26, PTO/AIA /25, or PTO/AIA /26) should be used. A web-based eTerminal Disclaimer may be filled out completely online using web-screens. An eTerminal Disclaimer that meets all requirements is auto-processed and approved immediately upon submission. For more information about eTerminal Disclaimers, refer to www.uspto.gov/patents/apply/applying-online/eterminal-disclaimer.
Claims 1-20 are rejected on the ground of nonstatutory double patenting as being unpatentable over claims 1-21 of U.S. Patent No. 11,961,067.
Although the claims at issue are not identical, they are not patentably distinct from each other because instant claims 1-20 merely remove limitations present in claims 1-21 of the issued patent and are therefore broader in scope than the issued claims. Therefore the issued claims anticipate the claims of the instant application as performing the operations of the issued claims will necessarily infringe the operations claimed in the instant application.
Claim Rejections - 35 USC § 101
35 U.S.C. 101 reads as follows:
Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.
Claims 1-20 are rejected under 35 U.S.C. 101 because the claimed invention is directed to an abstract idea without significantly more.
Claim 1 recites a network node comprising at least one processor, at least one memory communicatively coupled to the at least one process and at least one network interface communicatively couple[[d]] to the at least one processor and therefore meets Step 1 of the Patent Subject Matter Eligibility Guidelines as the claim recites an apparatus and therefore is directed towards one of the four statutory categories of subject matter and is therefore deemed as being eligible subject matter under Step 1 (MPEP § 2106.03(I) and (II)).
The analysis then proceeds to Step 2A in which the claim is evaluated in order to determine whether the claim is directed towards a judicial exception under Prong One of Step 2A (MPEP § 2106.04 (a)) and if so whether the claim recites elements that would form a practical application under Prong Two of Step 2A (MPEP § 2106.04 (d) and MPEP § 2106.05 (a-c) and (e-h)). The claim recites “determine a split ratio of the security tokens held in at least one address of the distributed ledger; and store an indication of the split ratio without updating token balances for all of the at least one address in a list of the at least one address in a list of addresses holding at least one of the security tokens”. Stock split accounting and deferred entry ledger techniques have been practiced for centuries as a basic accounting practice which is fundamental economic practice, one of certain methods of organizing human activity that falls under the Patent Subject Matter Eligibility Guidelines as being an abstract idea (MPEP § 2106.04(a)(2)(II)(A)).
In addition the claimed steps mimic human thought processes of selecting certain information over others, i.e., evaluation and creating perhaps with paper and pencil, graphic data interpretation perceptible only in the human mind (MPEP § 2106.04(a)(2)(III)(B) and (C)). Therefore the claims also recite a mental process and as there are two categories of abstract ideas encompassed by the claim under Prong One of Step 2A claim 1 is deemed as being directed towards ineligible subject matter.
The analysis then proceeds to Prong Two of Step 2A where the claim is evaluated in order to determine whether the claim contains additional elements sufficient to form a practical application of the abstract idea. The claim recites at least one processor, at least one memory communicatively connected to the at least one processor, at least one network interface communicatively couple[[d]] to the at least one processor, wherein the network node is configured to be within a plurality of network nodes communicatively coupled in a peer-to-peer network of network nodes implementing a distributed ledger that cryptographically secures security tokens and wherein the network node is configured to be communicatively coupled to at least one remotely located computing device through the at least one network interface. No technological improvement is being made to either the processor, the memory or the network interface (MPEP § 2106.04(d) and (d)(1), MPEP § 2106.05 (a)(I) and (a)(II)) nor is there any other technology or technical field that is being improved as the claim limitations require nothing more than a general purpose computer. The claim does nothing more than invoke a computer as a tool to perform an existing process (MPEP § 2106.05(f)). The recitations regarding a plurality of network nodes communicatively coupled in a peer-to-peer network of network nodes implementing a distributed ledger that cryptographically secures security tokens and wherein the network node is configured to be communicatively coupled to at least one remotely located computing device through the at least one network interface are directed towards mere extra-solution activity for performing necessary data gathering and outputting (MPEP § 2106.05(g)) and the claim as a whole does nothing more than limit the performing of the abstract idea to a particular technological environment (MPEP § 2106.05(h)). Therefore under Prong Two of Step 2A claim 1 is deemed as being directed towards ineligible subject matter.
The analysis then proceeds to Step 2B where the claim is evaluated in order to determine whether additional elements are present that amount to significantly more than the abstract idea itself which is sometimes referred to as an inventive concept (MPEP § 2106.05(I) and (II)). The claim recites at least one processor, at least one memory communicatively connected to the at least one processor, at least one network interface communicatively couple[[d]] to the at least one processor, wherein the network node is configured to be within a plurality of network nodes communicatively coupled in a peer-to-peer network of network nodes implementing a distributed ledger that cryptographically secures security tokens and wherein the network node is configured to be communicatively coupled to at least one remotely located computing device through the at least one network interface. No technological improvement is being made to either the processor, the memory or the network interface (MPEP § 2106.04(d) and (d)(1), MPEP § 2106.05 (a)(I) and (a)(II)) nor is there any other technology or technical field that is being improved as the claim limitations require nothing more than a general purpose computer. The claim does nothing more than invoke a computer as a tool to perform an existing process (MPEP § 2106.05(f)). The recitations regarding a plurality of network nodes communicatively coupled in a peer-to-peer network of network nodes implementing a distributed ledger that cryptographically secures security tokens and wherein the network node is configured to be communicatively coupled to at least one remotely located computing device through the at least one network interface are directed towards mere extra-solution activity for performing necessary data gathering and outputting (MPEP § 2106.05(g)) and the claim as a whole does nothing more than limit the performing of the abstract idea to a particular technological environment (MPEP § 2106.05(h)). Therefore under Step 2B claim 1 is deemed as being directed towards ineligible subject matter.
Claim 2 recites “…determine that a new transfer of a quantity of the security tokens, from a first address to a second address, has been requested; determine a respective split-updated token balance for each of the first address and the second address based on at least the indication of the split ratio that was stored; and update the token balances for the first address and the second address based on the respective split-updated token balance for the first address and the second address”. The claim combines the data gathering necessary for updating the balance with the performing of the mathematical calculation necessary to determine the update balance based on the split ratio described in claim 1 and therefore adds an additional layer of abstraction to claim 1 in the form of a mathematical calculation (MPEP § 2106.04(a)(2)(I)(C)). Therefore claim 2 is also deemed as being ineligible as it implicitly describes a mathematical calculation without adding additional elements to form either a practical application of the abstract idea or amount to significantly more than the abstract idea.
Claims 3-5 also describe operations that can be considered as being part of the abstract idea (a second indication that all splits have been accounted for in the token balances i.e. a form of receipt that can be viewed as a fundamental economic practice, determining a payout that relies on a mathematical calculation and updating the number of outstanding security tokens which relies on a mathematical calculation) and as claims 3-5 do not introduce any additional elements claims 3-5 are also held as being directed towards ineligible subject matter.
Claim 6 adds the element of a smart contract but does nothing more than tie the abstract idea to a particular technological environment (MPEP § 2106.05(h)) without providing any technological improvement to the computer or to any other technology or technical field (MPEP § 2106.05 (a)(I) and (a)(II)). Therefore claim 6 is also deemed as being directed towards ineligible subject matter.
Claim 7 is directed towards the time at which blockchain related fees are incurred where no fees are charges for determining a split-updated token balance but are charged when the token balances are updated on the blockchain i.e. a fee for recordation. Charging a fee for recordation is a fundamental economic practice and therefore claim 7 only adds to the abstract idea without introducing any new elements and therefore claim 7 is also deemed as being directed towards ineligible subject matter.
Claims 8-10 introduce an element of a multi-object data structure for storing split ratios of previous splits. Claim 9 further recites an address-specific index to the multi-object data structure wherein each address-specific index indicates a respective split ratio that was most recently applied to a token balance associated with the respective balance associated with the respective address holding at least one of the security tokens. Claim 10 recites maintaining a current index to the multi-object data structure indicating a most recent split for the security tokens. The additional elements of the multi-object data structure and index do not encompass any technological improvement to the computer or to any other technology or technical field (MPEP § 2106.05 (a)(I) and (a)(II)). Therefore claims 8-10 are also deemed as being directed towards ineligible subject matter.
Claim 11 recites receiving a request to transfer a second quantity of security tokens, executing a plurality of compliance rules associated with the security tokens and transferring the second quantity of the security tokens based on execution of the plurality of compliance rules. Transferring securities and ensuring that the transfers are compliant with rules is a fundamental economic practice and is one of certain methods of organizing human activity that falls under the Patent Subject Matter Eligibility Guidelines as being an abstract idea (MPEP § 2106.04(a)(2)(II)(A)).
In addition the claimed steps mimic human thought processes of evaluating information in order to determine whether certain criteria are met in the form of compliance regulations (MPEP § 2106.04(a)(2)(III)(B) and (C)). Therefore claim 11 also recites a mental process and as there are two categories of abstract ideas encompassed by the claim under Prong One of Step 2A claim 11 is deemed as being directed towards ineligible subject matter.
The analysis then proceeds to Prong Two of Step 2A where the claim is evaluated in order to determine whether the claim contains additional elements sufficient to form a practical application of the abstract idea. The claim recites a smart contract and a global registry where the global registry per Figures 1A and 1B constitute the location where the smart contracts are stored. No technological improvement is being made to the computer (MPEP § 2106.04(d) and (d)(1), MPEP § 2106.05 (a)(I) and (a)(II)) nor is there any other technology or technical field that is being improved as the claim limitations require nothing more than a general purpose computer. The claim does nothing more than invoke a computer as a tool to perform an existing process (MPEP § 2106.05(f)). The claim as a whole does nothing more than limit the performing of the abstract idea to a particular technological environment (MPEP § 2106.05(h)). Therefore under Prong Two of Step 2A claim 11 is deemed as being directed towards ineligible subject matter.
The analysis then proceeds to Step 2B where the claim is evaluated in order to determine whether additional elements are present that amount to significantly more than the abstract idea itself which is sometimes referred to as an inventive concept (MPEP § 2106.05(I) and (II)). The claim recites a smart contract and a global registry where the global registry per Figures 1A and 1B constitute the location where the smart contracts are stored. No technological improvement is being made to the computer (MPEP § 2106.04(d) and (d)(1), MPEP § 2106.05 (a)(I) and (a)(II)) nor is there any other technology or technical field that is being improved as the claim limitations require nothing more than a general purpose computer. The claim does nothing more than invoke a computer as a tool to perform an existing process (MPEP § 2106.05(f)). The claim as a whole does nothing more than limit the performing of the abstract idea to a particular technological environment (MPEP § 2106.05(h)). Therefore under Step 2B claim 11 is deemed as being directed towards ineligible subject matter.
Claims 12-20 recite the method performed by the node of claim 1 and merely repeat the subject matter claimed in claims 1-5 and 7-10. No additional elements are introduced that would alter the analysis performed with respect to claims 1-5 and 7-10. Therefore claims 12-20 are also deemed as being directed towards ineligible subject matter.
Claim Rejections - 35 USC § 103
In the event the determination of the status of the application as subject to AIA 35 U.S.C. 102 and 103 (or as subject to pre-AIA 35 U.S.C. 102 and 103) is incorrect, any correction of the statutory basis (i.e., changing from AIA to pre-AIA ) for the rejection will not be considered a new ground of rejection if the prior art relied upon, and the rationale supporting the rejection, would be the same under either status.
The following is a quotation of 35 U.S.C. 103 which forms the basis for all obviousness rejections set forth in this Office action:
A patent for a claimed invention may not be obtained, notwithstanding that the claimed invention is not identically disclosed as set forth in section 102, if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains. Patentability shall not be negated by the manner in which the invention was made.
Claims 1-4, 7-8, 12-15 and 17-18 are rejected under 35 U.S.C. 103 as being unpatentable over Castinado et al. (U.S. Patent Publication 2020/0213082, hereinafter referred to as Castinado) in view of Eby et al. (U.S. Patent Publication 2020/0042971, hereinafter referred to as Eby).
As per claims 1 and 12
Castinado discloses a network node comprising: at least one processor (0122 “Referring to FIG. 7, at step 705, a computing platform having at least one processor, a communication interface, and memory may receive an element generation input”)
Castinado discloses at least one memory communicatively coupled to the at least one processor (0122 “Referring to FIG. 7, at step 705, a computing platform having at least one processor, a communication interface, and memory may receive an element generation input”)
Castinado discloses at least one network interface communicatively couple[[d]] to the at least one processor (0122 “Referring to FIG. 7, at step 705, a computing platform having at least one processor, a communication interface, and memory may receive an element generation input”)
Castinado discloses wherein the network node is configured to be within a plurality of network nodes communicatively coupled in a peer-to-peer network of network nodes implementing a distributed ledger that cryptographically secures security tokens (0040 “As illustrated in greater detail below, blockchain management platform 102 may be a computer system that includes one or more computing devices and/or other computer components (e.g., processors, memories, communication interfaces). In addition, blockchain management platform 102 may be configured to generate and store blockchains, delegate permissions for other computing platforms to modify the blockchains, and/or perform one or more other functions. In one or more instances, the blockchain management platform 102 may modify the blockchains based on client requests (e.g., client requests to sell stock and/or execute other securities trading activities, or the like)”, 0114 “Referring to FIG. 4B, at step 405, the blockchain management platform 102 may send digital signature information to the quorum approver database 104. In one or more instances, the blockchain management platform 102 may also send one or more commands directing the quorum approver database 104 to store the digital signature information along with other digital signature information corresponding to other quorum approvers associated with the sub-element in question”)
Castinado discloses wherein the network node is configured to be communicatively coupled to at least one remotely located computing device through the at least one network interface (0006 “In one or more instances, the computing platform may generate an indication of the generation of the one or more sub-elements. The computing platform may send, to a client device, the indication of the generation of the one or more sub-elements, which may cause the client device to display an element split interface indicating the generation of the one or more sub-elements”)
Castinado, discloses determining a split ratio for a new split of the security tokens held in at least one address of the distributed ledger (0052 “At step 203, the blockchain management platform 102 may determine to split the parent element into one or more sub-element as part of the blockchain. In one or more instances, the blockchain management platform 102 may determine that the parent element should be split based on new and/or changing conditions (e.g., an asset purchase, a stock split, a stock trade, a transaction, an acquisition, or the like). For example, the blockchain management platform 102 may determine that particular stock, owned by the customer and represented by the parent element of the blockchain, may have split. In this example, the blockchain management platform may determine that a parent element, representative of the original stock, should be split into two sub-elements to reflect the stock split”, 0053 “At step 204, the blockchain management platform 102 may generate the sub-elements based on the determination at step 204 that the parent element should be split. To follow the example of the stock split described above at step 203, the blockchain management platform 102 may generate a first sub-element and a second sub-element, each linked to the parent element, where the first sub-element and the second sub-element each represent a share of the original stock (which may have been split into two shares). This may allow the blockchain management platform 102 to individually track characteristics and transactions related to each of the two new shares resulting from the stock split”) and also discloses determining a split ratio for a new split of the security tokens held in at least one address of the distributed ledger (0052, 0053 as above Castinado does not explicitly disclose wherein the at least one processor is configured to: store an indication of the split ratio without updating token balances for all of the at least one address in a list of addresses holding at least one of the security tokens. While no prior art explicitly discloses storing an indication of the split ratio without updating token balances for all of the at least one address in a list of addresses holding at least one of the security tokens the operation is described at paragraph 0086 as a means of collecting each stock split as received to form a group of historic stock splits and waiting to adjust the balance until a transfer occurs in order to minimize gas fees. Per paragraph 0086 an actual token transfer necessitates the payment of a gas fee on the Ethereum network therefore batching the splits (while not adjusting the token balance at the time of split arrival) and only processing the splits at the time of the actual token transfer is being used as a means for eliminating the intermediate fees (i.e. costs) that would have been incurred if each individual split (i.e. small transactions) had been processed at the time it was received in order to lower overall costs. Eby teaches batching transactions as a means of eliminating costs that would be incurred on processing small transactions and only processing a batch of transactions in order to lower overall costs (0018 “In response to the transaction clearance event, the issuer system may aggregate the plurality of micro-payment transaction debits into a single consolidated debit balance internal to the issuer system and may clear the corresponding plurality of micro-payment transaction debits by recording a micro-payment transaction credit corresponding to the cleared consolidated debit balance. In this regard, the transaction costs associated with micro-payment transactions may be reduced by ‘batch’ execution of micro-payment transactions on traditional payment networks”). Therefore while Eby is not explicitly directed towards stock split ratios Eby is using the same known technique as the claimed invention by batching transactions for the purpose of reducing fees/costs and when combined with Castinado would simply require substituting the micro-payment transaction variables of Eby with the split ratios of Castinado with predictable results (MPEP § 2143 (B) and (C). A person of ordinary skill in the art could have applied the known technique of batching transactions as taught by Eby to the blockchain management platform for performing asset adjustment of Castinado with results that would have been predictable to one of ordinary skill in the art for the purpose of reducing overall transaction costs (Eby at 0018).
As per claims 2 and 13
Castinado discloses determining that a new transfer of a quantity of the security tokens, from a first address to a second address, has been requested (0059 “At step 209, the blockchain management platform 102 may determine a change in the variable parameter for one of the sub-elements. This process is described further below with regard to steps 301-318, but for simplicity and as an example, the blockchain management platform 102 may coordinate a sale of a share represented by the sub-element”, 0090 “Referring to FIG. 3C, at step 310, the client device 107 may receive an input requesting performance of an event (e.g., a sale, a trade, a purchase, asset transfer, or the like)”)
Castinado discloses updating the token balances for the first address and the second address based on the respective split-updated token balance for the first address and the second address (0097 “At step 317, once the external event processor 103 performs the event, it may generate and send a request for the blockchain management platform 102 to modify the variable parameter of the sub-element based on the actual value of the event performed at step 316… In one or more instances, the external event processor 103 may send the request to modify the variable parameter of the sub-element based on the actual value of the event performed while the second wireless data connection is established”, 0103 “At step 323, the blockchain management platform 102 may generate and send one or more commands directing the external resource management platform 105 to cause a change in assets based on the variable parameter. For example, in sending the one or more commands directing the external resource management platform 105 to cause the change in assets based on the variable parameter, the blockchain management platform 102 may direct the external resource management platform 105 to transfer funds, stock certificates, or the like corresponding to the event approved at step 321”)
Castinado does not explicitly disclose determining a respective split-updated token balance for each of the first address and the second address based on at least the indication of the split ratio that was stored. However as in claims 1 and 11 Castinado when combined with Eby would only require the actual processing of batched transactions as taught by Eby (0018 “In response to the transaction clearance event, the issuer system may aggregate the plurality of micro-payment transaction debits into a single consolidated debit balance internal to the issuer system and may clear the corresponding plurality of micro-payment transaction debits by recording a micro-payment transaction credit corresponding to the cleared consolidated debit balance. In this regard, the transaction costs associated with micro-payment transactions may be reduced by ‘batch’ execution of micro-payment transactions on traditional payment networks”). Therefore while Eby is not explicitly directed towards stock split ratios Eby is using the same known technique as the claimed invention by batching transactions for the purpose of reducing fees/costs and when combined with Castinado would simply require substituting the micro-payment transaction variables of Eby with the split ratios of Castinado with predictable results (MPEP § 2143 (B) and (C). A person of ordinary skill in the art could have applied the known technique of batching transactions as taught by Eby to the blockchain management platform for performing asset adjustment of Castinado with results that would have been predictable to one of ordinary skill in the art for the purpose of reducing overall transaction costs (Eby at 0018).
As per claims 3 and 14
Castinado discloses store a second indication that all splits have been accounted for in the token balances for the first address and the second address (Figure 2A steps 201-204 regarding using the split notification to generate a parent element and sub-element, Figure 2B at steps 0206-0209 and description of paragraphs 0056-0059 regarding sending indication of split and later determination of a parameter change value, 0108 “At step 328, in response to receiving the request for the blockchain management platform 102 to modify a variable parameter of the parent node based on the modified total value of the account, the blockchain management platform 102 may modify and store the variable parameter of the parent element based on the modified total value of the account. In doing so, the blockchain management platform 102 may effectively grant the external resource management platform 105 the ability to write to the stored blockchain”, 0117 “At step 409, the blockchain management platform 102 may prompt for quorum approval of the change to the sub element. In one or more instances, the blockchain management platform 102 may approve change to the sub-element by performing actions similar to those described above with regard to steps 212-224”, 0120 “At step 411, after determining that the quorum approval satisfies the predetermined quorum threshold, the blockchain management platform may generate permission data indicating that the blockchain management platform 102 may modify the sub-element. At step 412, the blockchain management platform 102 may store the permission data generated at step 411”)
As per claims 4 and 15
Castinado discloses determine a number of the security tokens that will be paid out in response to the new split (0052 “At step 203, the blockchain management platform 102 may determine to split the parent element into one or more sub-element as part of the blockchain. In one or more instances, the blockchain management platform 102 may determine that the parent element should be split based on new and/or changing conditions (e.g., an asset purchase, a stock split, a stock trade, a transaction, an acquisition, or the like). For example, the blockchain management platform 102 may determine that particular stock, owned by the customer and represented by the parent element of the blockchain, may have split. In this example, the blockchain management platform may determine that a parent element, representative of the original stock, should be split into two sub-elements to reflect the stock split”)
Castinado discloses initiate at least one transaction to compensate each security token holder associated with an address, which will possess a fractional security token following the new split, for their respective fractional security token (0053 “At step 204, the blockchain management platform 102 may generate the sub-elements based on the determination at step 204 that the parent element should be split. To follow the example of the stock split described above at step 203, the blockchain management platform 102 may generate a first sub-element and a second sub-element, each linked to the parent element, where the first sub-element and the second sub-element each represent a share of the original stock (which may have been split into two shares). This may allow the blockchain management platform 102 to individually track characteristics and transactions related to each of the two new shares resulting from the stock split”, 0056 “At step 206, the blockchain management platform 102 may generate and send an indication of the element split described at step 204. In one or more instances, in generating the indication of the element split, the blockchain management platform 102 may generate one or more commands directing the client device 107 to display an element split interface based on the indication of the element split”)
As per claims 7 and 17
Neither Castinado nor Eby explicitly disclose wherein determining the respective split-updated token balance for each of the first address and the second address incurs no blockchain-related fees; and wherein updating the token balances for the first address and the second address incurs block-chain related fees. However as Castinado teaches the splitting of the parent element into sub-elements and tracking the characteristics of the sub-elements (0053 “At step 204, the blockchain management platform 102 may generate the sub-elements based on the determination at step 204 that the parent element should be split. To follow the example of the stock split described above at step 203, the blockchain management platform 102 may generate a first sub-element and a second sub-element, each linked to the parent element, where the first sub-element and the second sub-element each represent a share of the original stock (which may have been split into two shares). This may allow the blockchain management platform 102 to individually track characteristics and transactions related to each of the two new shares resulting from the stock split”) and Eby teaches batching transactions as a means of eliminating costs that would be incurred on processing small transactions and only processing a batch of transactions in order to lower overall costs (0018 “In response to the transaction clearance event, the issuer system may aggregate the plurality of micro-payment transaction debits into a single consolidated debit balance internal to the issuer system and may clear the corresponding plurality of micro-payment transaction debits by recording a micro-payment transaction credit corresponding to the cleared consolidated debit balance. In this regard, the transaction costs associated with micro-payment transactions may be reduced by ‘batch’ execution of micro-payment transactions on traditional payment networks”) where once the batch is submitted transaction costs occur for processing the batch. Therefore while Eby is not explicitly directed towards stock split ratios Eby is using the same known technique as the claimed invention by batching transactions for the purpose of reducing fees/costs and when combined with Castinado would simply require substituting the micro-payment transaction variables of Eby with the split ratios of Castinado (MPEP § 2143 (B) and (C)) with predictable results. A person of ordinary skill in the art could have applied the known technique of batching transactions as taught by Eby to the blockchain management platform for performing asset adjustment of Castinado with results that would have been predictable to one of ordinary skill in the art for the purpose of reducing overall transaction costs (Eby at 0018).
As per claims 8 and 18
Castinado in view of Eby disclose the limitations of claims 1 and 12. Castinado discloses storing split ratios for all previous splits of the security tokens in a multi-object data structure (0005 “In response to receiving the element generation input, the computing platform may generate the stored element chain including the parent element”, 0125 “At step 825, the computing platform may add a sub-element to the element chain corresponding to the event”)
Claims 5 and 16 are rejected under 35 U.S.C. 103 as being unpatentable over Castinado in view of Eby as applied to claim 4 and 15 above, and further in view of Mischell et al. (U.S. Patent Publication 2013/0332324, hereinafter referred to as Mischell).
As per claims 5 and 16
Castinado and Eby, while disclosing the limitations of claims 4 and 15, do not explicitly disclose update a total number of outstanding security tokens following the new split; and remove each of the at least one address, which will possess less than one security token following the new split, from the list of addresses holding at least one of the security tokens. Mischell teaches update a total number of outstanding security tokens following the new split; and remove each of the at least one address, which will possess less than one security token following the new split, from the list of addresses holding at least one of the security tokens (0231 “10. Cash in Lieu of Fractional Share -- Cash income received in lieu of a fractional share resulting from a Capital Change (e.g. a Stock Split or Spin-Off))
It would have been obvious to one of ordinary skill in the art at the time of the invention to combine the blockchain management platform for performing asset adjustment of Castinado with the known technique of batching transactions as taught by Eby further with the investment, trading and accounting management system of Mischell for the purpose of reconciling each cash reconciliation entry under all applicable accounting methods for a portfolio, including GAAP, SAP, and Tax (0217).
Claim 6 is rejected under 35 U.S.C. 103 as being unpatentable over Castinado in view of Eby as applied to claim 1 above, and further in view of Kita et al. (U.S. Patent Publication 2021/0272144, hereinafter referred to as Kita).
As per claim 6
Castinado in view of Eby disclose the limitations of claim 1, but do not explicitly disclose wherein the security tokens are implemented using an originating smart contract. Kita teaches wherein the security tokens are implemented using an originating smart contract (0021 “For example, an issuing party can stipulate the defined rule set in order to enforce laws or regulations governing the ownership or trading of securities or other transactions between parties on a smart contract, such as a token contract”, 0025 “As mentioned herein, smart contracts, which can each be identified by a unique address on the BVM, can be implemented by, and represented by, ordered sets of machine-readable instructions associated with data stored on the blockchain and accessible to the smart contracts. These smart contracts, whether enacted on their own or working together with one another, can be used to perform one or more operations on the blockchain, including the enforcement of certain provisions as stipulated by set of rules, including, for example, the terms of a non-digital contract. As such, smart contracts can in principle be used to effectively control the ownership or transfer between parties of digital currencies or assets, including security tokens issued by an issuing party. In other blockchain environments, the smart contract may be embedded in the virtual machine environment through special blockchain transactions. After embedding the smart contract in the virtual machine environment, nodes operating as part of the blockchain network can evaluate blockchain transactions which reference the smart contract or directly invoke a portion of the smart contract in the form of one or more code functions calls. The smart contract processing might take in digital information as input, digitally process the information according to the rules of the smart contract, and digitally execute any actions as required by the terms and conditions of the smart contract”)
It would have been obvious to one of ordinary skill in the art at the time of the invention to combine the blockchain management platform for performing asset adjustment of Castinado with the known technique of batching transactions as taught by Eby further with the securitized token contracts of Kita for the purpose of incorporating a defined rule set in order to enforce laws or regulations governing the ownership or trading of securities or other transactions between parties (0021).
Claims 9-10 and 19-20 are rejected under 35 U.S.C. 103 as being unpatentable over Castinado in view of Eby as applied to claim 1 above, and further in view of Array Indexing – MATLAB and Simulink, retrieved from https://web.archive.org/web/20190411031919/https://www.mathworks.com/help/matlab/learn_matlab/array-indexing.html, April 11, 2019, 4 pages, hereinafter referred to as Indexing) in view of Jiang et al. (U.S. Patent Publication 2014/0258109, hereinafter referred to as Jiang).
As per claim 9 and 19
Castinado in view of Eby disclose the limitations of claims 8 and 18. Castinado discloses storing split ratios in a multi-object data structure (0005 “In response to receiving the element generation input, the computing platform may generate the stored element chain including the parent element”, 0125 “At step 825, the computing platform may add a sub-element to the element chain corresponding to the event”) however neither Castinado nor Eby explicitly disclose maintaining an address-specific index to the multi-object data structure, for each respective address holding at least one of the security tokens, wherein each address-specific index indicates a respective split ratio that was most recently applied to a token balance associated with the respective address. Indexing teaches the maintaining of an address-specific index to a multi-object data structure (A = magic (4) array shown on page 1):
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Such an array can be manipulated to store a most recently applied value by utilizing linear indexing, initially starting with the first cell and maintaining a most recent value by using a monotonic counter that is incremented to the next cell when a new value is received for storage (such as described by Jiang et al. at paragraph 0044 “An example counter is monotonic and thus, only allows for the values to be increased or incremented, not decreased” and paragraph 0045 “a monotonic counter 117 is increased during each withdrawal transaction”) and storing the most recent split such that the first received split is accessed by the array (1), the second received split is accessed by array (2), etc. and where the counter reflects the last received split.
It would have been obvious to one of ordinary skill in the art at the time of the invention to combine the blockchain management platform for performing asset adjustment of Castinado with the known technique of batching transactions as taught by Eby further with the array arithmetic of Indexing for the purpose of assembling a collection of related objects that can be easily accessed and that can be easily replicated for multiple users.
It would have been obvious to one of ordinary skill in the art at the time of the invention to combine the blockchain management platform for performing asset adjustment of Castinado with the known technique of batching transactions as taught by Eby with the array arithmetic of Indexing further with the pending deposit for payment processing system of Jiang for the purpose of providing a detection mechanism that can be used to detect when a roll back event has occurred (0044).
As per claims 10 and 20
Indexing teaches maintaining a current index to the multi-object data structure indicating a most recent split for the security tokens (as noted in claims 9 and 19 using an indexed array in conjunction with a counter pointing to the last stored value and only incrementing the counter when a new object is received, the counter serves as the index and will always point to the most recent split).
It would have been obvious to one of ordinary skill in the art at the time of the invention to combine the blockchain management platform for performing asset adjustment of Castinado with the known technique of batching transactions as taught by Eby further with the array arithmetic of Indexing for the purpose of assembling a collection of related objects that can be easily accessed and that can be easily replicated for multiple users.
Jiang further teaches a monotonic counter that can only be incremented and is useful for event tracking as each event is associated with a particular counter value (0044 “An example counter is monotonic and thus, only allows for the values to be increased or incremented, not decreased”, 0045 “a monotonic counter 117 is increased during each withdrawal transaction”)
It would have been obvious to one of ordinary skill in the art at the time of the invention to combine the blockchain management platform for performing asset adjustment of Castinado with the known technique of batching transactions as taught by Eby with the array arithmetic of Indexing further with the pending deposit for payment processing system of Jiang for the purpose of providing a detection mechanism that can be used to detect when a roll back event has occurred (0044).
Claim 11 is rejected under 35 U.S.C. 103 as being unpatentable over Castinado in view of Eby as applied to claim 1 above, and further in view of Molinari et al. (U.S. Patent Publication 2019/0080407, hereinafter referred to as Molinari).
As per claim 11
Castinado discloses receive, from a remotely located computing device, a request to transfer a second quantity of the security tokens (0042 “External event processor 103 may be a computer system that includes one or more computing devices (e.g., desktop computers, laptop computers, tablet computers, servers, server blades, or the like) and/or other computer components (e.g., processors, memories, communication interfaces) configured to receive event processing commands and process events (e.g., stock trades, or the like) accordingly. In processing the events, the external event processor 103 may be configured to transfer funds to and/or from one or more financial accounts maintained by a financial institution operating the external event processor 103 based on the events”)
Neither Castinado nor Eby explicitly disclose execute a plurality of compliance rules associated with the security tokens. Molinari teaches execute a plurality of compliance rules associated with the security tokens (0093 “In another aspect of this disclosure, anti-money laundering (AML) processes may also be built into the issuance of tokens. Such a structure can include AML procedures to identify purchasers and sellers such as through the user of identifiers as disclosed herein. Know your client (KYC) requirements may also relate to being accredited or qualified purchasers, which is another important feature by way of investor protections. In a regulation D 506(c) offering under general solicitation, for example, the issuer can advertise to anyone and any inbound investor has to be accredited. A retail investor may not be allowed to make the purchase of a token offering under regulation D. These types of identification requirements and data associated with being a qualified investor can be embedded within one or more of the tokens or the smart contract. A verification and validation process for investors may be executed to confirm that an investor meets all regulatory requirements”)
Molinari teaches wherein at least one of the plurality of compliance rules is implemented using at least one smart contract, (0093 “In another aspect of this disclosure, anti-money laundering (AML) processes may also be built into the issuance of tokens. Such a structure can include AML procedures to identify purchasers and sellers such as through the user of identifiers as disclosed herein. Know your client (KYC) requirements may also relate to being accredited or qualified purchasers, which is another important feature by way of investor protections. In a regulation D 506(c) offering under general solicitation, for example, the issuer can advertise to anyone and any inbound investor has to be accredited. A retail investor may not be allowed to make the purchase of a token offering under regulation D. These types of identification requirements and data associated with being a qualified investor can be embedded within one or more of the tokens or the smart contract. A verification and validation process for investors may be executed to confirm that an investor meets all regulatory requirements”)
Molinari teaches wherein the at least one smart contract references a global registry (0048 “Ethereum runs smart contract code when a user or another contract sends it a message with enough transaction fees. The Ethereum Virtual Machine then executes smart contracts in “bytecode”, or a series of ones and zeroes that can be read and interpreted by the network. While Ethereum is mentioned, any blockchain-based platform can be used to host the smart contracts disclosed herein”)
Molinari teaches transfer the second quantity of the security tokens based on execution of the plurality of compliance rules (0093 “For example, a service (such as a transfer agent) could provide personalized verification data associated with a potential investor to a token issuer or to a smart contract such that a particular token holder can be identified and qualified properly (e.g., does the inventors have enough income, net assets, experience, etc., to purchase the tokens?), and so forth. The purchaser may provide access to a service or to their financial data such that an automatic access could be provided through an application programming interface (API), for instance, for analyzing their capabilities”, 0097 “The discussion above provides a number of examples of how different offerings with different regulatory structures can be baked into tokens to identify the type of offering associated with the token, which information can then be communicated to or also provided to a smart contract that is carrying out the lifecycle of the tokens and their return on investment provisions”)
It would have been obvious to one of ordinary skill in the art at the time of the invention to combine the blockchain management platform for performing asset adjustment of Castinado with the known technique of batching transactions as taught by Eby further with the blockchain-based tokens of Molinari for the purpose of eliminating the nefarious and anonymous activity that can occur in ICOs and trading blockchain-based tokens (0009).
Conclusion
The prior art made of record and not relied upon is considered pertinent to applicant's disclosure.
Santo et al., Applicability of Distributed Ledger Technology to Capital Market Infrastructure, August 30, 2016, 27 pages provides an evaluation of the use of distributed ledger technology in the capital markets and at section 2 subsection (b) describes a process for processing dividend and stock splits. An administrator invokes the corporate action process on the DLT upon request from the issuer outside of the DLT and the amount of money tokens as dividend or security as a result of a stock split is calculated based on the ownership registry at the specified date and time, and then the DLT record is updated.
Reverse Stock Split 8-K, United States Securities and Exchange Commission, filed October 1, 2001, 3 pages shows the required announcement made in a public filing by Iomega Corporation for a one-for-five reverse stock split along with a statement that a new CUSIP number will be assigned to the stock following the split.
Publication 550, Investment Income and Expenses (Including Capital Gains and Losses) for use in preparing 2018 returns, Internal Revenue Service, March 28, 2019, 77 pages on page 42 in column 1 explains that stock dividends are not taxable and provides in example 1 a method for calculating adjusted basis when a stock distribution event occurs which later becomes the basis for determining a capital gain or loss when the stock is sold.
Form 8-K, Securities and Exchange Commission filed April 13, 2000, 2 pages announces in a public filing a 3-for-2 stock split of Paychex, Inc. along with the payment of a quarterly dividend.
Chen “Transfer Agent”, March 6, 2018, 6 pages, retrieved from https://web.archive.org/web/20181230184923/https://www.investopedia.com/terms/t/transferagent.asp, describes the function of a transfer agent which includes maintaining records of investors and account balances. The transfer agent records transactions, cancels and issues certificates, processes investor mailings and deals with investor problems. As explained by Chen a transfer agent works closely with a registrar to ensure that investors receive interest payments and dividends when they are due and to send monthly investment statements to mutual fund shareholders. As Chen recites on page 3 “The transfer agent also sends shares to investors due to a stock split or when a stock dividend is paid to shareholders of record. If the company has a 3-for-1 stock split, for example, each shareholder receives two additional shares for every share they already own. On the other hand, when a 10% stock dividend is paid, a shareholder who owns 100 shares would receive another 10 shares from the transfer agent”.
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/JAMES D NIGH/Senior Examiner, Art Unit 3699