PTAB

CBM2018-00031

Miami Intl Holdings Inc v. Nasdaq ISE LLC

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Key Events
Petition
petition

1. Case Identification

2. Patent Overview

  • Title: Automated Exchange for Trading Derivative Securities
  • Brief Description: The ’093 patent discloses an automated exchange for trading financial instruments, such as securities and option contracts. The system is designed to execute large orders (e.g., block orders) by transmitting a selected subset of order information to market participants and then allocating and executing the trade based on responses received within a predetermined time period.

3. Grounds for Unpatentability

Ground 1: Patent-Ineligibility under 35 U.S.C. §101 - Claims 1-9 are directed to an abstract idea.

  • Prior Art Relied Upon: Petitioner did not assert grounds under 35 U.S.C. §102 or §103. Instead, it cited historical and academic references to demonstrate that the concepts claimed were longstanding, fundamental economic practices. Key references included Domowitz (“A Taxonomy of Automated Trade Execution Systems,” 1993), Wallace (“Pullback at Block Trading Desks,” N.Y. Times, Dec. 24, 1987), and Harris II (“Order Exposure and Parasitic Traders,” a 1997 symposium paper).
  • Core Argument: Petitioner argued that the challenged claims are patent-ineligible under the two-step framework from Alice Corp. v. CLS Bank Int’l.
    • Step 1 (Abstract Idea): Petitioner contended that all challenged claims are directed to the abstract idea of “allocating and executing an order based on selected information and responses that are received within a predetermined time period.” The petition asserted this is a fundamental economic practice long prevalent in commerce and a building block of the modern economy. It argued that the claimed functional steps—such as receiving an order, transmitting selected information to solicit interest, receiving responses, allocating the order, and executing a trade—were traditionally performed mentally and manually by human agents like brokers and specialists in floor-based, "open outcry" trading systems long before the patent's critical date. The core inventive concept purported by the patent owner during prosecution—selecting which information to disclose to maintain anonymity or manage market impact—was argued to be a longstanding, purely business-based trading strategy, not a technological solution.
    • Step 2 (Lack of Inventive Concept): Petitioner argued the claims fail to provide an inventive concept sufficient to transform the abstract idea into a patent-eligible application. The claims merely recited the automation of the abstract trading practice using generic and conventional computer components. The petition highlighted that the patent specification itself describes the invention as being implementable on a “general purpose computer under the control of a software program” using “known data processing machines” and software that “can be designed and constructed by computer programmers of ordinary skill.” The recitation of elements like a “computer interface,” “processor,” “terminals,” and “memory” to perform their basic functions did not add anything inventive. Automating a manual business process for speed and efficiency, without improving computer technology itself, was argued to be insufficient to confer patent eligibility. The dependent claims were also argued to add only conventional or functional steps, such as specifying market participants or using a book memory, that do not supply an inventive concept.

4. Relief Requested

  • Petitioner requests institution of a Covered Business Method (CBM) patent review and cancellation of claims 1-9 of the ’093 patent as unpatentable under 35 U.S.C. §101.