Subbu and the complex assets

In Ex Parte Subbu et al, No. 2010-001444 (BPAI Dec. 20, 2011) we saw the General Electric Company appear before the Board.  The appellants had filed United States application 10/781,805 directed to portfolio optimization  and techniques associated with optimization processing of asset portfolios.

General Electric unsuccessfully argued that their invention satisfied the machine-or-transformation test.

Claim 27, for example, read as follows:

27. A method for multi-objective portfolio analysis using Pareto Sorting Evolutionary Algorithms, the method comprising the steps of:
(a) randomly drawing an initial population of individual portfolio allocations that are generated from a portfolio allocations archive by using a combination of linear programming and sequential linear programming algorithms using a computing device;
(b) passing the initial population of portfolio allocations through a dominance filter to identify a non-dominated subset of parent portfolio allocations;
(c) committing the non-dominated subset of parent portfolio allocations to a non-dominated portfolio allocations archive;
(d) randomly combining matched pairs of parent portfolio allocations to create offspring portfolio allocations;
(e) passing the offspring portfolio allocations through the dominance filter to identify a non-dominated subset of offspring portfolio allocations;
(f) combining the non-dominated subset of parent portfolio allocations with the non-dominated subset of offspring portfolio allocations into a larger set of portfolio allocations;
(g) passing the larger set of portfolio allocations through a non-crowding filter to identify a reduced subset of portfolio allocations;
(h) creating a new population of individual portfolio allocations from the reduced subset of portfolio allocations;
(i) updating the non-dominated portfolio allocations archive with the new population of individual portfolio allocations;
(j) repeating steps (a) through (i) for a plurality of generations; and
(k) passing the updated non-dominated portfolio allocations archive through the dominance filter to generate an interim efficient frontier in a portfolio performance space having at least three-dimensions, the interim efficient frontier being used in investment decisions.

The machine-or-transformation test

The Board acknowledged that the law on patent-eligibility for process claims has undergone significant clarification during the time this case has progressed through the system.

However, failing to satisfy the machine-or-transformation test is a factor weighing against the patent eligibility of a process claim.

It's not a machine

The appellants argued unsuccessfully that the process was tied to a particular apparatus.

The first step of claim 27, they said, was directed to randomly drawing an initial population of individual portfolio allocations that are generated from a portfolio allocations archive by using a combination of linear programming and sequential linear programming algorithms using a computing device.

They asserted that it was impossible for the human mind to perform these steps.  It was just too tricky.  A computing device was necessary to perform all these complex steps.

But, said the Board, the computing device only appears in the first step of claim 27.  No other step requires it.

Even so, the computing device is only used for what amounts to a data gathering step.  The appellants conceded that an insignificant step, such as data gathering or outputting, is not sufficient to pass the test.

The appellants did not explain why the use of the computing device was not insignificant.  They didn't submit any evidence that the complex steps were impossible for the human mind to perform.

It's not a transformation

The appellants argued unsuccessfully that the invention of claim 27 transforms the underlying subject matter to a different state or thing.  They said that claim 27 transforms a non-dominated portfolio allocations archive to an updated non-dominated portfolio allocations archive.

The term "archive", according to the appellants, means a storage area or compressed file.  Two of the steps of claim 27 transform the "archive".

The Board was not convinced.  The transformation prong of the test involves transforming a particular article into a different state or thing.  The appellants had not explained in what way an "archive" is a specific article.

Even assuming that an "archive" is an article, reasoned the Board, claim 27 does no more than commit allocations to the archive and update the archive with new allocations.  These steps do not transform the archive into a different state or thing.  The archive was left unchanged, though allocations were committed to it and updated with new ones.

The invention as claimed in claim 27 and dependent claims was found to be directed to non-statutory subject matter.  The examiner's decision rejecting the claims under this ground was affirmed.

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