Trading Technologies International, Inc

IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Trading Technologies International, Inc [2017] APO 13

Patent Application: 2015202113

Title:ELECTRONIC SPREAD TRADING TOOL

Patent Applicant:  Trading Technologies International, Inc
Delegate:  Isaac Tan
Decision Date:  21 March 2017
Hearing Date:  Patentee elected not to file submissions. The application was set for hearing on 30 Jan 2017 based on comments already on file.

Catchwords: PATENTS –– examiner objections – spread trading tool – electronic trading of commodities – computer implemented method – business method – manner of manufacture – section 18 - clarity – claims are not for a manner of manufacture – no patentable subject matter disclosed – application refused

Representation: Fisher Adams Kelly Callinans

IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Patent Application: 2015202113

Title:ELECTRONIC SPREAD TRADING TOOL

Patent Applicant: Trading Technologies International, Inc
Date of Decision: 21 March 2017
DECISION
None of the claims are for a manner of manufacture. There is no patentable subject matter within the specification that could be made the subject of a claim to overcome manner of manufacture.
I refuse Patent Application 2015202113.
REASONS FOR DECISION
Background

Patent Application 2015202113 (the “present application”) was filed on 24 April 2015 by Trading Technologies International, Inc (the “patentee”).
The present application is a one of a number of divisional patent applications consisting of (in chronological order) – 2002310180 (now granted), 2008200204 (now granted), 2010202692 (now granted) and 2012201194 (now lapsed). The patent application ultimately claims priority from PCT/US02/16865 and has a priority date of 14 June 2001.
On 29 August 2012, the Patentee requested examination of patent application 2012201194 (the “parent application”). A first examination report was issued on 24 July 2013, a second examination report on 14 February 2014, a third examination report on 20 January 2015, a fourth examination report on 18 March 2015 and a fifth examination report on 21 April 2015. In all five reports, the examiner’s sole objection was that the claims do not define a manner of manufacture. Consequently, on 24 April 2015, patent application 2012201194 lapsed and the patentee filed the present application as a divisional.
The patentee requested examination for the present application on 3 July 2015. On 1 September 2016 a first examination report (the “first examination report”) was issued maintaining the manner of manufacture objection raised in the fifth examination report for the parent application.
On 21 December 2016, the patentee filed a response (the “patentee’s response”) amending the claims with supporting arguments. On 9 January 2017, a second examination report (the “second examination report”) was issued. In the second examination report, the examiner considered that the patentee’s submission of 21 December 2016 to be not persuasive and maintained the manner of manufacture objection. The opening paragraph of the second examination report also stated:
“My report below includes objections that are equivalent to objections raised in previous examination reports (including the parent application 2012201194). As there have now been several adverse reports in relation to this subject matter, the application will be referred to a Hearing Officer to consider whether to accept or refuse the application under s49 or to direct amendment under s107. If you wish to be heard on this matter, you have 1 month from the date of this report to request a hearing. Fee item 230 applies. If you request a hearing you will be contacted regarding the relevant deadlines in due course. Hearings in relation to examination objections are normally by way of written submissions. If you disagree with the Hearing Officer’s decision you may appeal the decision to the Federal Court of Australia.”
On 27 January 2017 the patentee responded:
“The client has elected not to request a hearing in this matter by the indicated one month deadline. However, the client is considering whether to file a divisional application with amended claims. We respectively request that the client be afforded the ability to file such a divisional application until the final acceptance deadline of 1 September 2017, and based on whether there are any significant changes before that date in Australian law concerning patentable subject matter.”
On 30 January 2017, a Delegate of the Commissioner responded:
“In line with the process set out in the second examination report dated 9 January 2017, this matter has been referred to a hearing officer to consider whether to accept or refuse the application (as a consequence of the failure to request a hearing). The hearing officer will have regard to the comments already on file. A written decision will issue once the hearing officer has completed their consideration. It follows that I cannot agree to defer issuing the decision until 1 September 2017.”
In order to decide this matter, I will have regard to the submissions already provided by the patentee in the present application and also in the related applications listed above.
The specification
According to the specification[1]:
“The present invention is generally directed to the electronic trading of commodities, where a commodity includes anything that can be traded with quantities and/or prices. Specifically, the invention provides a trader with a versatile and efficient electronic spread trading tool to be used when buying and selling commodities of the same or similar class either simultaneously or in conjunction with one another.”
[1] Paragraph [0001] of AU 2015202113 as filed
One manner in which commodities can be traded is via spread trading[2]:
“A spread is simply the simultaneous buying of one commodity and the selling of another. To be a true spread, however, there must be some reason to believe that the conditions that will cause price movement in one contract will also cause price movement in the other. Spread trading is the process of protecting a position where an investment is made by taking an offsetting position in a related product in order to reduce the risk of adverse price movements. For example, a trader might simultaneously buy and sell two options of the same class at different strike prices and/or expiration dates. Typically, spread trading is used to describe a "short" position taken to offset a "long" position in the market. A long position is one where a trader has purchased a commodity at a specific price with the intent of selling that commodity at a higher price. A short position is one where the trader has effectively sold the commodity first with the intent of buying it later at a lower price. When trading stocks, the trader would take a short position by borrowing the stocks and selling them first. Later he would buy the same stocks back (hopefully at a lower price) to replace the ones he sold earlier. If trading futures, the short position could effectively entail a promise to sell a commodity (e.g. corn, soy beans, futures contracts themselves, etc.) at a certain (high) price and buying the same or comparable commodity at a given (lower) price.”
[2] Ibid at [0003]
Specifically, the present invention is summarised as follows[3]:
“The present invention can be summarized as a method of displaying, on an electronic display device, the market depth of a plurality of commodities including an anchor commodity and a non-anchor commodity, where the method includes dynamically displaying a plurality of bids and asks in the market for the commodities, statically displaying prices corresponding to those plurality of bids and asks, where the bids and asks are displayed in alignment with the prices corresponding thereto, displaying an anchor visual indicator corresponding to and in alignment with a desired price level of the anchor commodity, displaying a price level indicator corresponding to and in alignment with a price level of the non-anchor commodity. The price level for the price level indicator in the non-anchor commodity is determined based upon said desired price level of the anchor commodity.”
[3] Ibid at [0005]
Outstanding objections
In the second examination report, the only objections outstanding are that the claims are not for a manner of manufacture and that claims 2 – 17 lack clarity.
I note that the manner of manufacture objection is a continuation of the objections raised during prosecution of the parent application and is summarised in objection 2 of the second examination report where the examiner stated[4]:
“In your response you have argued that the claimed invention is "directed to an improvement in computer technology" and "the improvement in the computer lies in the improvement to an interface of the computer technology" (page 3 of your response). However, I do not see this argument valid based on the fact that claimed invention does not reflect any such improvement. There is no improved interface described or claimed and what the claims are defining is simply trading data subject to a set of calculations followed by display of the result of these calculations. All of these steps are capable of being executed by a generic computer and hence the substance of the invention is simply a scheme for display of information (online trading information in this instance) which is not patentable subject matter.”
[4] The second examination report at objection 2
The patentee elected not to request to be heard and thus did not file written submissions. However the patentee submitted[5]:
“In particular, the problem within the computer exists with an ability to effectively display traded spread quantities for a plurality of spread prices, and the improvement in the computer lies in the improvement to an interface of the computer technology.
The claims are directed to a graphical tool that improves the computer by granting it functionality that it previously did not have. Indeed, the claims provide an improved user environment through an improved interface, which clearly has a practical and useful result in accordance with the principles set out in Commissioner of Patents v RPL Central Pty Ltd for determining whether an invention defines a manner of manufacture.”
[5] The patentee’s response dated 21 December 2016
Although the patentee did submit comments during prosecution of the parent application, I note that the specification was proposed to be amended after the first examination report and therefore the claims in their present form is only addressed by the patentee’s response in the present application.
With regard to clarity, the examiner stated[6]:
“Claims 2-17 are not entirely clear as they depend from an apparatus claim 1 but make reference to a method claim.”
[6] The second examination report at objection 3
The patentee’s response does not address the clarity issue as this is a new objection that was only raised in the second examination report.
The law for Manner of Manufacture
According to section 18 of the Patent Act 1990;
(1) Subject to subsection (2), an invention is a patentable invention for the purpose of a standard patent if the invention, so far as claimed in any claim:
(a)is a manner of manufacture within the meaning of section 6 of the Statute of Monopolies.
Section 6 of the Statue of Monopolies provides as follows:
“Provided also and be it declared and enacted that any declaration before mentioned shall not extend to any letters patent and grants of privilege, for the term of 14 years or under hereafter to be made of the sole working or making of any manner of new manufacture within this realm to the true and first inventor and inventors of such manufactures which others, at the time of making such letters or grant, shall not use, so as also they be not contrary to the law, nor mischievous to the state, by raising prices of commodities at home or hurt of trade or generally inconvenient.”
In National Research Development Corp v Commissioner of Patents [1959] HCA 67; 102 CLR 252, the high court provided a definitive statement that[7]:
"The point is that a process, to fall within the limits of patentability which the context of the Statute of Monopolies has supplied, must be one that offers some advantage which is material, in the sense that the process belongs to a useful art as distinct from a fine art ... that its value to the country is in the field of economic endeavour."
[7] National Research Development Corp v Commissioner of Patents [1959] HCA 67 at [22]
Following on from this decision, there have been a number of cases concerning computer related invention. For example, in International Business Machines Corporation v Commissioner of Patents [1991] 22 IPR 417 the application was directed towards use of a mathematical formula in a computer to produce an improved curve image. In CCOM Pty Ltd v Jiejing Pty Ltd [1994] 28 IPR 481, a computer processing apparatus was used for assembling text in Chinese language characters. In both instances, the claimed subject matter was held to be patentable.
In Grant v Commissioner of Patents [2006] FCAFC 120, the Full Court stated[8]:
[8] Grant v Commissioner of Patents [2006] FCAFC 120 at [16]
“Patents have also been refused for methods of calculation, theoretical schemes, including business schemes and abstract plans, such as:
·systems for arrangement of known things, such as a plan relating to the layout of houses in a row or terrace so as to prevent overlooking (Re ESP’s Application (1944) 62 RP 87);
·an arrangement of buoys for navigational purposes (Re W’s Application (1914) 31 RPC 141);
·a system of business even though its implementation involved the use of a printed envelope with a particular arrangement of words (Re Johnson’s Application for a Patent (1901) 19 RPC 56 at 56); and
·a method of preventing the fraudulent re-use of sale book dockets and books used in that connection (Re Brown (1899) 5 ALR 81).”
and[9]
“It has long been accepted that "intellectual information", a mathematical algorithm, mere working directions and a scheme without effect are not patentable.”
[9] Ibid at [47]
There have been two recent decisions of the Full Court of the Federal Court on the patentability of computer implemented inventions. There are Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150 (“Research Affiliates”) and Commissioner of Patents v RPL Central Pty Ltd [2015] FCAC 177 (“RPL Central”).
In Research Affiliates, the Full Federal Court considered a computer implemented method for generating a financial index and identified a distinction “between the employment of an abstract idea or law of nature and the idea or law itself” and “between technological innovation which is patentable and a business innovation which is not”.
The Full Court stated[10]
“The determination whether the claimed invention is truly “an artificially created state of affairs” in satisfaction of NRDC is made not by some mechanistic application of the criterion of artificiality or physical effect, but by an understanding of the claimed invention itself. The invention is to be understood as a matter of substance and not merely as a matter of form.”
and[11]:
“In the context of the claim, the significance lies in the content of the data rather than any specific effect generated by the computer. The computer-implementation is an essential integer of the claimed process. That is, of course, important. It is of particular importance in the assessment of, for example, novelty and infringement. However, in examining whether a claimed invention is properly the subject of letters patent, it is necessary to look not only at the integers of that claimed invention but also at the substance of that invention.”
[10] Research Affiliates LLC v Commissioner of Patents at [106]
[11] Ibid at [117]
More recently in RPL Central, the Full Federal Court considered a computer implemented method and system for automatic collection of evidence of skills and knowledge and concluded that the claimed invention was to a scheme or a business method that is not properly the subject of letters patent. In the above case the Full Court made several important observations which are pertinent in the present matter. It was stated[12]
“A claimed invention must be examined to ascertain whether it is in substance a scheme or plan or whether it can broadly be described as an improvement in computer technology. The basis for the analysis starts with the fact that a business method, or mere scheme, is not, per se, patentable. The fact that it is a scheme or business method does not exclude it from properly being the subject of letters patent, but it must be more than that. There must be more than an abstract idea; it must involve the creation of an artificial state of affairs where the computer is integral to the invention, rather than a mere tool in which the invention is performed. Where the claimed invention is to a computerised business method, the invention must lie in that computerisation. It is not a patentable invention simply to “put” a business method “into” a computer to implement the business method using the computer for its well- known and understood functions.”
[12] Commissioner of Patents v RPL Central Pty Ltd [2015] FCAC 177 at [96]
In determining whether an invention contains patentable subject matter, I note what the delegate in Aristocrat Technologies Australia Pty Limited [2016] APO 49 (“Aristocrat”) stated[13]:
[13] Aristocrat Technologies Australia Pty Limited [2016] APO 49 at [35]
“I conclude that it is relevant to consider a range of matters. Without seeking to be exhaustive, these include:
·there must be more than an abstract idea, mere scheme or mere intellectual information;
·is the contribution of the claimed invention technical in nature;
·does the invention solve a technical problem within the computer or outside the computer;
·does the invention result in improvement in the functioning of the computer, irrespective of the data being processed;
·does the application of the method produce a practical and useful result;
·can it be broadly described as an improvement in computer technology;
·does the method merely require generic computer implementation;
·is the computer merely an intermediary or tool for performing the method while adding nothing of substance to the idea;
·is there ingenuity in the way in which the computer is utilised;
·does the invention involve steps that are foreign to the normal use of computers; and
·does the invention lie in the generation, presentation or arrangement of intellectual information.”
It is clear from the above decisions that in order for an invention to define patentable subject matter, what is claimed as a matter of substance needs to meet the requirements for manner of manufacture and in particular is not a mere scheme, abstract idea or mere information.
The claims
The specification contains one (1) independent claim and sixteen (16) dependent claims. Independent claim 1 is reproduced below:
“A spread trading tool comprising a display generated by a method including data associated with a trading strategy involving at least two commodities being traded electronically on at least one electronic exchange, the method comprising:
receiving at a computing device a first market data feed corresponding to a first commodity from at least one electronic exchange, wherein the first market data feed comprises price and quantity information for the first commodity;
receiving at the computing device a second market data feed corresponding to a second commodity from at least one electronic exchange, wherein the second market data feed comprises price and quantity information for the second commodity;
calculating at the computing device a plurality of spread prices for the spread, wherein the spread price is a difference between the price of the first commodity and the price of the second commodity;
           calculating at the computing device, traded spread quantities based on last traded quantities of the first commodity or the second commodity at the corresponding last traded prices and the corresponding quantities of the second commodity or the first commodity at one or more available prices;
           adding the traded spread quantities to the previous traded spread quantities, respectively, to generate cumulated traded spread quantities;
           displaying at the client device the plurality of spread prices; and
           dynamically displaying at the client device cumulated traded spread quantities corresponding to the plurality of spread prices.”
Are the claims patentable

According to RPL Central and Research Affiliates in order to determine the substance of the invention, one must consider the alleged contribution to the art. This determination must be based on the specification as a whole and involve an understanding of what is common general knowledge in the art. Some of these matters which must be determined were covered by the delegate in the Aristocrat decision[14]. For example, does the claimed invention merely involve “generic computer implementation” or does it contain subject matter that would be “foreign to the normal use of computers”.
[14] Aristocrat Technologies Australia Pty Limited [2016] APO 49 at [35]
The Patentee submits[15]:
“The claims are directed to a graphical tool that improves the computer by granting it functionality that it previously did not have. Indeed, the claims provide an improved user environment through an improved interface, which clearly has a practical and useful result in accordance with the principles set out in Commissioner of Patents v RPL Central Pty Ltd for determining whether an invention defines a manner of manufacture.”
[15] The patentee’s response dated 21 December 2016
The difficulty I have with this statement is that if I proceed on the basis that a computer system is automatically patentable if provided with functionality it previously did not have, then this would thereby extend to any computer system that is programmed in some manner regardless of how rudimentary said functionality may be. In order to utilise a computer system, said system would need to be initially programmed with software.
The invention is directed towards a method of calculating and displaying data associated with a trading strategy. It is known that the generation, presentation or arrangement of data is a common function of a computer system. I am not convinced that the physical components of the present claims can be broadly described as an improvement in computer technology as the specification clearly states[16]:
“It is envisioned that the system of the present invention can be implemented on any existing or future terminal or device with the processing capability to perform the functions described herein.”
[16] Paragraph [0029] of AU2015202113 as filed
From the examples provided in the present application, it appears that the user interface is a visual representation of:
a)raw data retrieved from a feed or external database, or
b)data that has been calculated from applying a formula, or
c)a combination of both a) and b).
Overall, the specification is lacking in technical detail on exactly what these physical components are or how they make up the claimed computer system. It would therefore be reasonable for me to conclude that where the computer implementation is left to the skilled addressee, it is unlikely that the system involves some ingenuity or advance in computer technology, or involves steps foreign to the normal use of a computer. Therefore the invention merely resides in generic computer implementation and each component is operated in their normal way.
In this respect, I do not see how the presently claimed method of presenting or rearranging information on an electronic display can be said to improve the user environment or interface in a manner that would be considered patentable. In fact, I note that the displaying steps of claim 1 simply recite displaying information without elaborating exactly how said information is presented, or suggest how the display itself is improved.
I struggle to see how the computer is anything more than a mere tool for performing the claimed method. I do not agree that the invention can be said to provide an improved user environment through an improved interface.
The substance of the invention must reside somewhere in how the data associated with a trading strategy is calculated and presented. According to the specification[17]:
“The settings that are used in the calculation of a spread within the preset invention include: Ratio, Anchor, Price Points On, Multiplier, Settlement, and Spread Price Point values (2 Buy and 2 Sell).”
[17] Paragraph [0026] of AU2015202113 as filed
By applying an appropriate formula[18], a trader can then calculate when to trade (buy or sell). Depending on the nature of the trade, relevant information may be displayed via a “Spread Market Display” feature which[19]:
“provides a trader with a window display that illustrates where the current spread is trading, while also showing the market depth as related to that spread”
or via a “Traded Spread Display” which[20]:
“serves to provide a trader with historical data illustrating specifically where a spread could have traded.”
[18] Paragraph [0039 – 0056] of AU2015202113 as filed
[19] Paragraph [0081] of AU2015202113 as filed
[20] Paragraph [0098] of AU2015202113 as filed
While this particular manner of calculating the data may be new within the context of commodity trading as indicated by the absence of an objection in relation to novelty or inventive step, the requirement for a claim to be novel and inventive is independent from the requirement for the claimed invention to be a manner of manufacture.
It is clear that the manner in which the data is calculated is merely a business or financial scheme and is not patentable.
The dependent claims
Turning now to dependent claims 2 – 17, I note that only claim 13 elaborates further on the displaying step and is worth a brief consideration. Claim 13 is reproduced below:
“The method of claim 1, further comprising:
displaying at the client device a price axis comprising the plurality of prices;
dynamically displaying at the client device a first indicator at a first area in relation to a first price level on the price axis, the first indicator being associated with the highest bid price currently available to buy according to the trading strategy; and
dynamically displaying at the client device a second indicator at a second area in relation to a second price level on the price axis, the second indicator being associated with a lowest ask price currently available to sell according to the trading strategy;
wherein the first indicator moves relative to the price axis to a location in relation to another price level on the price axis when the highest big price changes and the second indicator moves relative to the price axis to a location in relation to another price level on the price axis when the lowest ask price changes.”
However in line with my reasoning above, claim 13 merely stipulates the information to be displayed. In particular, the information appears to consist only of raw data that is received by the client device as a first market feed and a second market feed.
None of dependent claims 2 – 12 or 14 – 17 define features which would overcome the patentability issues I have identified above.
Clarity
With regard to clarity, the examiner stated[21]:
Claims 2-17 are not entirely clear as they depend from an apparatus claim 1 but make reference to a method claim.
[21] The second examination report at objection 3
The preamble of claim 1 states:
“A spread trading tool comprising a display generated by a method including data associated with a trading strategy involving at least two commodities being traded electronically on at least one electronic exchange, the method comprising”
It is clear that the dependent claims 2 - 17 further define the method that is performed by the apparatus of claim 1.
Conclusion
From the above, I have determined that while the claims are clear, none of the claims are for a manner of manufacture. Additionally I see no patentable subject matter within the present application that could be made the subject of a claim so as to result in that claim being for a manner or manufacture.
Consequently I refuse to accept the application.
Isaac Tan
Delegate of the Commissioner of Patents

[2017] APO 13

21 March 2017

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