Chicago Mercantile Exchange, Inc. v. 5th Market, Inc.

The Patent Trial and Appeal Board (PTAB or Board) of the U.S. Patent and Trademark Office affirmed its earlier determination that a patent was a covered business method (CBM) patent that it was subject to review on questions of patentability under 35 U.S.C. § 112 ¶ 2. Accordingly, the PTAB found that challenged claims containing means-plus-function limitations were invalid under § 112 ¶ 2 for lack of sufficient corresponding structure.  Chicago Mercantile Exchange, Inc. v. 5th Market, Inc., CBM2013-00027 (PTAB, Dec. 17, 2014) (Zecher, APJ).

The patent at issue is directed to conditional trading of securities via electronic networks.  According to the patent, virtually every convertible security transaction at the time was made through verbal private negotiations and transmitted only to the participants involved.  The patent purports to “creat[e] an anonymous auction market, instead of a negotiated market, that displays prices to all participants and saves the trade information for later use.”

Finding that the patentee did not adequately explain how the patent included “novel software tools and graphical user interfaces” such that it fell within the technological invention exclusion of § 118 of the America Invents Act (AIA), the PTAB affirmed its earlier finding that the patent is a covered business method patent and as such was subject to patentability challenge under § 112 ¶ 2.

In summarizing its construction of means-plus-function claim terms, including the claimed “means for comparing,” the PTAB found no specific algorithm that turned an otherwise general-purpose computer into a special-purpose computer programmed to perform the step of “comparing.”  Accordingly, the PTAB concluded the challenged claims were indefinite under § 112 ¶ 2.

The PTAB also denied patent owner’s motion to substitute new claims that removed the means-plus-function language that the PTAB had found to be indefinite.  The PTAB first noted the patent owner’s failure to demonstrate the patentability of substitute claims over the prior art of record, but ultimately concluded that the motion was defective under § 42.6(a)(3) which prohibits incorporating arguments by reference.  The PTAB explained that the patent owner’s incorporation of arguments regarding patentability from its Patent Owner Response into its Motion to Amend would circumvent the rule limiting the number of pages in a motion to amend.  Accordingly, the PTAB concluded that such arguments were not entitled to consideration.