Patents & the Financial Services Industry

In Trading Technologies International Inc. v. eSpeed et al. (Fed. Cir. 2010), the CAFC upheld a $2.5 million infringement ruling against eSpeed Inc., a commodities exchange operator, and several of its affiliates.  The suit was brought by Trading Technologies International Inc. (TTI), which asserted U.S. Patent Numbers 6,766,304 and 6,772,132.

The patents-in-suit claim methods for displaying the market data for a commodity traded in an electronic exchange that includes a graphical user interface with “a dynamic display for a plurality of bids and for a plurality of asks in the market for the commodity and a static display of prices corresponding to the plurality of bids and asks.”  The GUI purportedly facilitates more accurate and efficient orders in a trading environment.  The problem solved by the invention relates to market fluctuations and rapid changes in bids and asks prices listed in those grids.  For example, when a trader wishes to place a buy at the inside market he may place the mouse cursor on the grids for the inside market and click the mouse.  However, as traders send bids and offers to the market, the price and quantity of the traded commodity change, which alter the inside market.  With earlier fixed grids, traders who wished to place an order at a particular price would miss that market opportunity if the inside market moved as the trader tried to enter an order, and in a fast moving market, missing an intended price could happen often and have very significant economic consequences.

The invention solved this problem by implementing static price levels, which are describe in more detail in the patents linked above:

(Claim 1 of the ’132 patent)

A method of placing a trade order for a commodity on an electronic exchange having an inside market with a highest bid price and a lowest ask price, using a graphical user interface and a user input device, said method comprising:

setting a preset parameter for the trade order;

displaying market depth of the commodity, through a dynamic display of a plurality of bids and a plurality of asks in the market for the commodity, including at least a portion of the bid and ask quantities of the commodity, the dynamic display being aligned with a static display of prices corresponding thereto, wherein the static display of prices does not move in response to a change in the inside market;

displaying an order entry region aligned with the static display prices comprising a plurality of areas for receiving commands from the user input devices to send trade orders, each area corresponding to a price of the static display of prices; and

selecting a particular area in the order entry region through single action of the user input device with a pointer of the user input device positioned over the particular area to set a plurality of additional parameters for the trade order and send the trade order to the electronic exchange.

 

(Claim 1 of the ’304 patent)

A method for displaying market information relating to and facilitating trading of a commodity being traded in an electronic exchange having an inside market with a highest bid price and a lowest ask price on a graphical user interface, the method comprising:

dynamically displaying a first indicator in one of a plurality of locations in a bid display region, each location in the bid display region corresponding to a price level along a common static price axis, the first indicator representing quantity associated with at least one order to buy the commodity at the highest bid price currently available in the market;

dynamically displaying a second indicator in one of a plurality of locations in an ask display region, each location in the ask

display region corresponding to a price level along the common static price axis, the second indicator representing quantity associated with at least one order to sell the commodity at the lowest ask price currently available in the market;

displaying the bid and ask display regions in relation to fixed price levels positioned along the common static price axis such that when the inside market changes, the price levels along the common static price axis do not move and at least one of the first and second indicators moves in the bid or ask display regions relative to the common static price axis;

displaying an order entry region comprising a plurality of locations for receiving commands to send trade orders, each location corresponding to a price level along the common static price axis; and

in response to a selection of a particular location of the order entry region by a single action of a user input device, setting a plurality of parameters for a trade order relating to the commodity and sending the trade order to the electronic exchange.

The district court ruled that eSpeed, Ecco, Eccoware, and eSpeed International nonwillfully infringed the two TTI patents, and the Federal Circuit affirmed.  One ruling of note related to the issue of priority.  On cross-appeal, eSpeed argued that the patents-in-suit did not deserve priority back to March 2, 2000, the filing date of the provisional application – both patents claimed priority back to a common provisional application – and that they were therefore invalid under the on-sale bar.

The crux of eSpeed’s argument about priority was that every claim of the patents-in-suit recites use of a “single action of a user input device,” but in contrast, the provisional application never used that phrase but instead referred only to “a single click of a computer mouse.”  It is well settled that, in order to enjoy the benefit the filing date of a provisional application, it must describe the invention in such a way that one of ordinary skill in the art “would understand that the genus that is being claimed has been invented, not just the species of a genus.”  eSpeed alleged that the district court erred in finding that one of ordinary skill in the art would understand the provisional application to mean that traders could enter orders through a “single action of a user input device.”

In its opinion, the Federal Circuit found that the patents-in-suit are indeed entitled to claim priority to the provisional application.  The provisional application distinguished between order entries performed in a single action and multiple-step actions, and the court agreed with TTI’s expert that the provisional did not distinguish a single-click from other types of single actions, and therefore one of ordinary skill in the art could read the provisional application to encompass any single actions.  Moreover, the parties’ experts did not dispute that one of ordinary skill in the art would have known about other forms of a “single action” such as a double-click or pressing a key.  The Federal Circuit reasoned that, considering the undisputed knowledge of those skilled in the art, disclosure of a species in this case provides sufficient written description and support for a later filed claim directed to a very similar and understandable genus.

In short, as long as the application did not distinguish a single-click from other types of single actions – such as a double-click or pressing a key – the disclosure of “a single click of a computer mouse” provides those skilled in the art with sufficient written description to support the broader “single action of a user input device.”  Presumably this would apply not just in a provisional/non-provisional context but also in a specification/claim context, where a claim recites a “single action of a user input device” and is sufficiently supported but a disclosure of “a single click of a computer mouse.”  This result makes sense; in the field of computer-based graphical user interfaces, skilled artisans understand a variety of I/O techniques, and this is particularly true in commodity trading interfaces or other financial transaction technologies.

IP Innovation, LLC v. Red Hat, Inc., No. 2009 WL 2460982 (E.D.Tex. Aug. 10, 2009).

Judge Davis of the Eastern District of Texas recently issued an opinion interpreting the requirements for computer-related means-plus function claims articulated in WMS Gaming and its progeny.  Specifically, the court ruled that when a means-plus-function limitation is just a “structure” within a larger executable program, and it does not rely on the external input/output functionality of the computer, WMS Gaming’s requirement for disclosing an algorithm does not apply.  Rather, the corresponding structure is computer code that performs the required function of the means-plus-function limitation within the larger computer program.

The court wrote:

WMS Gaming requires an algorithm “[i]n a means-plus-function claim in which the disclosed structure is a computer, or a microprocessor.” This is because “[a] general purpose computer, or microprocessor, programmed to carry out an algorithm creates a new machine, because a general purpose computer in effect becomes a special purpose computer once it is programmed to perform particular functions pursuant to instructions from program software.” Thus, the term “means for assigning” required an algorithmic structure when “a computer” or “microprocessor” performed the function of “assigning.”

 

WMS Gaming and its progeny are inapplicable to this case. Here, the specified function is not performed through interaction of a programmed computer with external elements using the computer’s input/output functionality (i.e., assigning numbers for rotating reels of a slot machine). Instead, the “control means” interacts with workspace data structures that are part of a program of code that is executable on a computer and performance of the specified function is not carried out through a computer’s input/output functionality. This understanding is reinforced by claim 11, which adds the “input means” limitation and provides for interaction of the executable program with a user, which would involve a computer’s input/output functionality.

 

Thus, the “means” specified in the patents calls for structure within the executable program that interacts with the workspace data structure in essentially switching between first and second workspace displays. Accordingly, IPI is correct that the corresponding structure for the “control means” limitations does not require an algorithmic structure as dictated by WMS Gaming. It is, of course, the user who makes a selection of workspace displays through the use of a pointer control device (such as a mouse). Thus, the “control means” must necessarily be those program components that facilitate the user’s selection of a workspace. The mechanism for user selection of workspaces, via the pointer control device, are the displayed pop-up menus and icons. However, rather than being merely the displayed “pop up menus and icons,” the structure actually interacting with the user-guided pointer control device is the corresponding code creating the interactive menus and icons. Therefore, the structure recited in the specification for the “control means” terms is “executable computer code implementing selectable graphical user interface pop-up menus and icons and equivalents.”

The disputed term defined by the specification was the “display system object”:

When read by one skilled in the art, the specification provides that a “display system object,” an “object” being understood as a tool for data manipulation, creates “display objects,” which have their own specific meaning in the context of the patent. The specification goes on to explain that this tool may include “one or more data structures and a number of procedures, and a data structure and procedure such as an editor or other application could be called on by more than one display system object.” ‘412 Patent at 8:28-32. This language does not connote merely function, but structure. Defendants’ main complaint with this language seems to be that it does not describe particular code for implementing the “generation” function. However, that level of specificity is not required in a means-plus-function limitation in order to save its validity. See Biomedino, 490 F.3d at 950 (“While the specification must contain structure linked to claimed means, this is not a high bar: all one needs to do in order to obtain the benefit of [§ 112, ¶ 6] is to recite some structure corresponding to the means in the specification, as the statute states, so that one can readily ascertain what the claim means and comply with the particularity requirement of [§ 112,] ¶ 2.”) (internal quotation marks omitted).  As with the term “control means,” the “display object means” is not carried out through a computer’s input-output functionality. Rather, the “display object means” is yet another module within the executable code described within entirety of the patent. The function of this code is to generate display objections. Given the understood meaning of “object” within the art, disclosure of a “display system object” provides sufficient structure for the claimed functionality.

It will be interesting to see how broadly this approach will be taken.  By finding that the recited structure for the “control means” is “executable computer code implementing selectable graphical user interface pop-up menus and icons and equivalents,” rather than code or pseudo-code actually found in the specification and its structural equivalents, the opinion leaves open the question whether any executable code will suffice and how that would affect the scope of such claims.

Ex parte Sundel, (Appeal 2008-004541)

Like a good novel, this case seems to have it all: a computer-implemented process facing rejections under 35 U.S.C. §§ 112 ¶ 1, 112 ¶ 2, 101 (utility), 101 (non-statutory subject matter), and 103.  The Board reversed each of these rejections, but it entered a new ground of rejection under 35 U.S.C. § 112 ¶ 2, asserting that the means-plus-function claims are indefinite because the specification failed to disclose any algorithms to adequately describe sufficient corresponding structure.

The application is assigned to WorldPak, Inc., and the claims are directed to a shipping method and system for facilitating shipments and shipment management through one of a multitude of shipping mechanisms.

The Board looked at representative claim 33, which invokes numerous “means” clauses, and applied the standard 2-part test for construing means-plus-function claim language: first, define the particular function of the claim, and second, look to the specification and identify the corresponding structure.  It is the second step where, according to the Board, the claim fails.

In short, the Board reviewed the record and found that the specification fails to disclose algorithms corresponding to the functions recited in claim 33.  However, the Board also acknowledged that an algorithm may be expressed in a variety of ways in a specification to provide the necessary structure to comply with § 112, 6th paragraph; e.g., as a mathematical formula, as a flow chart, even in prose or in any other manner that provides sufficient structure for one of ordinary skill in the art to perform the functions. See Finisar Corp. v. DirecTV Group, Inc., 523 F.3d 1323, 1340-41 (Fed. Cir. 2008).

But here the Board did not find any disclosure expressing algorithms corresponding to the recited functions in claim 33.  Therefore, because the programming necessary for one of ordinary skill in the art to perform the functions recited in claim 33 was not provided, the Board found that claim 33 and its dependents are indefinite under 35 U.S.C. § 112 ¶ 2.

Drafting Tips:  The Board also reviewed the pertinent discussions for computer-enabled means-plus-function language:

For computer-implemented means-plus-function claims where the disclosed structure is a computer programmed to implement an algorithm, “the disclosed structure is not the general purpose computer, but rather the special purpose computer programmed to perform the disclosed algorithm.” WMS Gaming, Inc. v. Int’l Game Tech., 184 F.3d 1339, 1349 (Fed. Cir. 1999).

Simply reciting “software” without providing some detail about the means to accomplish the function is not enough. See Aristocrat Techs. Austl. Pty v. Int’l Game Tech., 521 F.3d 1328, —- (Fed. Cir. 2008) (“For a patentee to claim a means for performing a particular function and then to disclose only a general purpose computer as the structure designed to perform that function amounts to pure functional claiming. Because general purpose computers can be programmed to perform very different tasks in very different ways, simply disclosing a computer as the structure designated to perform a particular function does not limit the scope of the claim to ‘the corresponding structure, material, or acts’ that perform the function, as required by section 112 paragraph 6.”)

Without any corresponding structure, one of skill simply cannot perceive the bounds of the invention. Finisar Corp. v. DirecTV Group, Inc., 523 F.3d 1323, 1340-41 (Fed. Cir. 2008).

When a Specification discloses no algorithm corresponding to a computer-enabled means-plus-function limitation in a claim, an applicant has necessarily failed to particularly point out and distinctly claim the invention as required by the second paragraph of section 112. See Ex parte Catlin, 90 USPQ2d 1603 (BPAI 2009) (precedential) (during prosecution, computer-enabled means-plus-function claims will be held unpatentable under 35 U.S.C. § 112, second paragraph, as being indefinite if a Specification fails to disclose any algorithm corresponding to the function in the claims).

“[A] means-plus-function claim element for which the only disclosed structure is a general purpose computer is invalid if the specification fails to disclose an algorithm for performing the claimed function.” See Net MoneyIN, 545 F.3d at 1367.

See also Blackboard, Inc. v. Desire2Learn Inc., No. 2008-1368, slip op. at 21 (Fed. Cir. July 27, 2009), finding Blackboard’s means-plus-function claims indefinite because the patent describes an undefined component, i.e., a black box, that performs the recited function but does not disclose how the component performs the function.

Blackboard Inc. v. Desire2Learn Inc., Fed. Cir., No. 2008-1368, 7/27/09).

Earlier this week the Federal Circuit invalidated all of the claims in Blackboard Inc.’s patent for conducting online courses, determining that all claims were either anticipated or inadequately disclosed.  This case is particularly relevant for computer-implemented processes as the court again revisited the requirements for reciting means-plus-function language to perform algorithm-based functions in a computer system.

Blackboard and Desire2Learn are competitors in online educational courseware.  Blackboard owns U.S. Patent No. 6,988,138, which covers systems and methods for Internet-based education, and asserted the patent against Desire2Learn in 2006.  Independent Claim 1 invoked 35 U.S.C. §112, ¶6 as follows:

1. A course-based system for providing to an educational community of users access to a plurality of online courses, comprising:

a) a plurality of user computers, with each user computer being associated with a user of the system and with each user being capable of having predefined characteristics indicative of multiple predetermined roles in the system, each role providing a level of access to a plurality of data files associated with a particular course and a level of control over the data files associated with the course with the multiple predetermined user roles comprising at least two user’s predetermined roles selected from the group consisting of a student role in one or more course associated with a student user, an instructor role in one or more courses associated with an instructor user and an administrator role associated with an administrator user, and

b) a server computer in communication with each of the user computers over a network, the server computer comprising:

means for storing a plurality of data files associated with a course,

means for assigning a level of access to and control of each data file based on a user of the system’s predetermined role in a course;

means for determining whether access to a data file associated with the course is authorized;

means for allowing access to and control of the data file associated with the course if authorization is granted based on the access level of the user of the system.

The District Court found, inter alia, that independent claim 1 and dependent claims 2-35, which depend from claim 1, were invalid for indefiniteness.  Specifically, the district court held that the specification contained insufficient structure to support one of the means-plus-function limitations found in claim 1 and, by incorporation, in dependent claims 2-35.

On appeal, the particular “means” clause at issue was the “means for assigning a level of access to and control of each data file based on a user of the system’s predetermined role in a course.”  An “access control manager” is briefly mentioned in the Specification, and according to Blackboard the “access control manager” performs the “assigning” function (“means for assigning”) and could be either software or hardware.  Blackboard argued that the “means for assigning” function is “a server computer with an access control manager and equivalents thereof.” The specification describes the “access control manager” as follows:

Access control manager 151 creates an access control list (ACL) for one or more subsystems in response to a request from a subsystem to have its resources protected through adherence to an ACL. Education support system 100 provides multiple levels of access restrictions to enable different types of users to effectively interact with the system (e.g., access web pages, upload or download files, view grade information) while preserving confidentiality of information.

The Federal Circuit determined that the access control manager “is not a description of structure; what the patent calls the ‘access control manager’ is simply an abstraction that describes the function of controlling access to course materials, which is performed by some undefined component of the system. The ACM is essentially a black box that performs a recited function. But how it does so is left undisclosed.”  The Court held that “The specification contains no description of the structure or the process that the access control manager uses to perform the ‘assigning’ function” and affirmed the lower court’s judgment on indefiniteness.

In making this finding, the relevant cases relied upon by the Federal Circuit were:

Aristocrat Technologies Australia Pty Ltd. v. International Game Technology, 521 F.3d 1328, 1331 (Fed. Cir. 2008): The Blackboard Court noted that in Aristocrat the Federal Circuit “addressed the question whether a general reference to ‘a standard microprocessor-based gaming machine with appropriate programming’ constituted a sufficient disclosure of structure to support a claimed function in a means-plus-function claim. We concluded that it did not. First, we explained that ‘[t]he point of the requirement that the patentee disclose particular structure in the specification and that the scope of the patent claims be limited to that structure and its equivalents is to avoid pure functional claiming.’ Without so limiting a claim, we noted, ‘the patentee has not paid the price but is attempting to claim in functional terms unbounded by any reference to structure in the specification.’ We then applied those teachings to the patentee’s assertion that a reference to a general purpose computer could satisfy that standard. We noted that ‘any general purpose computer must be programmed’ and pointed out that relying on such general structure is equivalent to saying ‘that the function is performed by a computer that is capable of performing the function.’ We also considered and rejected the patentee’s assertion that language describing when the computer would perform the function at issue constituted a sufficient description of the structure for performing the function. Such language, we explained, ‘describes an outcome, not a means for achieving that outcome.’ (citations omitted)

Net MoneyIN, Inc. v. VeriSign, Inc., 545 F.3d 1359 (Fed. Cir. 2008): The Blackboard Court further noted that in Net MoneyIN the Federal Circuit “again addressed a patentee’s argument that reference to a computer provides sufficient structure for a claim drafted in means-plus-function form. In Net MoneyIN, the computer was not a general purpose computer; the patentee contended that the reference to a ‘bank computer’ provided sufficient structure to support the function of ‘generating an authorization indicia in response to queries containing a customer account number and amount.’  The patentee argued that ‘a person skilled in the art would know that such a computer would be programmed to compare account data and amount data to those data structures and generate an authorization indicia if credit were available.’ We rejected that argument and explained that when a computer is referenced as support for a function in a means-plus-function claim, there must be some explanation of how the computer performs the claimed function:

To avoid purely functional claiming in cases involving computer-implemented inventions, we have consistently required that the structure disclosed in the specification be more than simply a general purpose computer or microprocessor. Because general purpose computers can be programmed to perform very different tasks in very different ways, simply disclosing a computer as the structure designated to perform a particular function does not limit the scope of the claim to the corresponding structure, material, or acts that perform the function, as required by section 112 paragraph 6. Thus, in a means-plus-function claim in which the disclosed structure is a computer, or microprocessor, programmed to carry out an algorithm, the disclosed structure is not the general purpose computer, but rather the special purpose computer programmed to perform the disclosed algorithm. Consequently, a means-plus-function claim element for which the only disclosed structure is a general purpose computer is invalid if the specification fails to disclose an algorithm for performing the claimed function.

Because there was no disclosed algorithm in that case, we held that the claims were invalid for lack of a sufficient recitation of structure. (citations omitted)

Drafting Tips: The key to drafting 35 U.S.C. § 112 ¶ 6 claims for computer-related inventions that disclose sufficient structure to perform the claimed functions, requires (a) sufficient detail to transform a general purpose microprocessor to a special purpose computer, while remaining cognizant that (b)  § 112 ¶ 6 means-plus-function claims are limited to the structure, material, or acts disclosed in the specification and their equivalents.  This can end up being a balancing act of including enough detail in the specification to provide sufficient structure for the “means” clause but doing so without unduly narrowing the claim scope of the “means” clause, which may be reduced with additional disclosure of the structure in the specification.

Moreover, it is critical to recognize the distinction between the level of detail that would enable ordinarily skilled artisans to make the invention (which goes to § 112 ¶ 1 enablement) and the level of detail to disclose sufficient structure (which goes to § 112 ¶ 6).  This may appear obvious, but numerous plaintiffs have muddled this distinction in recent years when arguing before the Federal Circuit.  “A patentee cannot avoid providing specificity as to structure simply because someone of ordinary skill in the art would be able to devise a means to perform the claimed function. To allow that form of claiming under section 112, paragraph 6, would allow the patentee to claim all possible means of achieving a function.” Blackboard.

The Federal Circuit has consistently held that claims invoking means-plus-function language for computer-implemented inventions require a specification that discloses a structure more than simply a general purpose computer or microprocessor.  Although not reiterated by the Blackboard Court, in Aristocrat the Federal Circuit explicitly stated that the patentee:

. . . was not required to produce a listing of source code or a highly detailed description of the algorithm to be used to achieve the claimed functions in order to satisfy 35 U.S.C. § 112 ¶ 6.  It was required, however, to at least disclose the algorithm that transforms the general purpose microprocessor to a ‘special purpose computer programmed to perform the disclosed algorithm.

This standard cited WMS Gaming, Inc. v. International Game Technology, 184 F.3d 1339 (Fed.Cir.1999), which held:

A general purpose computer, or microprocessor, programmed to carry out an algorithm creates “a new machine, because a general purpose computer in effect becomes a special purpose computer once it is programmed to perform particular functions pursuant to instructions from program software.”

. . .

In a means-plus-function claim in which the disclosed structure is a computer, or microprocessor, programmed to carry out an algorithm, the disclosed structure is not the general purpose computer, but rather the special purpose computer programmed to perform the disclosed algorithm.

Merely including language in the Specification that the function may be achieved through “any standard microprocessor” machine having “appropriate programming” is insufficient. Aristocrat.