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In re Varma

United States Court of Appeals, Federal Circuit

March 10, 2016

IN RE: SAMIR VARMA, Appellant;
v.
INTERNATIONAL BUSINESS MACHINES CORPORATION, SAS INSTITUTE INC., Appellees INVESTPIC LLC, Appellant

Appeal from the United States Patent and Trademark Office, Patent Trial and Appeal Board in No. 90/012,366.

Appeal from the United States Patent and Trademark Office, Patent Trial and Appeal Board in No. 95/001,939.

JAY P. KESAN, DiMuroGinsberg PC, McLean, VA, argued for appellants. Also represented by CECIL E. KEY, DGKeyIP Group, Tysons Corner, VA; TERESA MARIE SUMMERS, DiMuroGinsberg PC -- DGKeyIP Group, Tysons Corner, VA.

FARHEENA YASMEEN RASHEED, Office of the Solicitor, United States Patent and Trademark Office, Alexandria, VA, argued for appellee Michelle K. Lee in 2015-1502. Also represented by ROBERT MCBRIDE, THOMAS W. KRAUSE.

JOHN MARLOTT, Jones Day, Chicago, IL, argued for both appellees in 2015-1667. SAS Institute Inc. also represented by DAVID B. COCHRAN, Cleveland, OH.

KENNETH R. ADAMO, Kirkland & Ellis LLP, Chicago, IL, for appellee International Business Machines. Also represented by BRENT P. RAY; ARCHIT P. SHAH, Palo Alto, CA.

Before WALLACH, CLEVENGER, and TARANTO, Circuit Judges.

OPINION

Taranto, Circuit Judge.

[118 U.S.P.Q.2d 1344] These two appeals involve U.S. Patent No. 6,349,291, which names Samir Varma as the inventor and is owned by InvestPic LLC (collectively, Varma). The patent describes and claims methods and systems for performing statistical analyses of investment data. The Patent Trial and Appeal Board of the Patent and Trademark Office cancelled certain claims of the '291 patent in two related reexamination proceedings--one initiated by International Business Machines Corp. and SAS Institute Inc., the other by SAS alone. IBM v. InvestPic LLC, No. 2015-1450, 2015 WL 1456097, at *6 (PTAB Mar. 27, 2015); Ex parte Varma, No. 2014-7760, 2014 WL 7186800, at *7 (PTAB Dec. 16, 2014). Varma's appeals center on two claim phrases: (1) a " bias parameter" that " determines a degree of randomness in sample selection in a resampling process" ; and (2) " a statistical analysis request corresponding to two or more selected investments." We agree with Varma that the Board erred regarding both claim phrases. Correcting the first error, we reverse the cancellation of claims 1-5, 8-16, 19-21, and 24. Correcting the second error, we vacate the cancellation of claims 22, 23, 25, and 29-31 and remand for further proceedings on those claims.

Background

A

The '291 patent states that many " conventional financial information sites" on the World Wide Web furnish information derived from " rudimentary statistical functions [that] are not useful to investors in forecasting the behavior of financial markets because they rely upon assumptions that the underlying [118 U.S.P.Q.2d 1345]probability distribution function ('PDF') for the financial data follows a normal or Gaussian distribution, which is generally false." '291 patent, col. 1, lines 24-37. It adds that " the PDF for financial market data is heavy tailed (i.e., the histograms of financial market data typically involve many outliers containing important information)" and that " statistical measures such as the standard deviation provide no meaningful insight into the distribution of financial data." Id., col. 1, lines 41-47. Conventional " analyses understate the true risk and overstate potential rewards for an investment or trading strategy." Id., col. 1, line 53-54.

After those descriptions of deficiencies of conventional methods, the '291 patent's Summary of the Invention states that " [t]he present invention utilizes resampled statistical methods for the analysis of financial data," which does not necessarily follow a normal probability distribution. Id., col. 1, line 65, through col. 2, line 3. One particular resampling method described in the '291 patent is the bootstrap method, which estimates the distribution of data in a pool (sample space) by repeated sampling from the pool. Id., col. 10, lines 20-38. In a bootstrap analysis, one way to define a sample space, id., col. 11, lines 16-17, is by identifying a specific investment or particular time period, id., col. 12, lines 62-66. The " bootstrap" samples of data are then drawn " with replacement" : samples are repeatedly drawn from that sample space, and after each drawing, the drawn data returns to the pool for the drawing of the next sample. Id., col. 10, lines 60-62; id., col. 11, lines 18-20. Although samples may be drawn at random, id., col. 10, lines 60-62, the '291 patent also describes using a " 'bias' parameter" that " specifies the degree of randomness in the resampling process," id., col. 11, lines 55-58. See id., col. 15, lines 52-62; id., col. 16, lines 9-21. The '291 patent states that, " [i]n order to perform a resampled statistical analysis, a query is received from a client," who " may specify a number of parameters including an investment or investments (e.g., a portfolio) to be analyzed, a financial function, a sample size, a period, a type of plot and a bias parameter, which controls the randomness of the resampling process." Id., col. 2, lines 50-56 (emphasis added).

Claim 1, amended during reexamination, is representative, for present purposes, of the claims that include the " bias parameter" limitation:

1. A method for calculating, analyzing and displaying investment data comprising the steps of:
(a) selecting a sample space, wherein the sample space includes at least one investment data sample;
(b) generating a distribution function using a re-sampled statistical method and a bias parameter, wherein the bias parameter determines a degree of randomness in sample selection in a resampling process; and,
(c) generating a plot of the distribution function.

InvestPic J.A. 735 (amendment underlined).

Claim 22, also amended during reexamination, involves a request concerning two or more investments:

22. A system for providing statistical analysis of investment information over an information network comprising:
[118 U.S.P.Q.2d 1346]a financial data database for storing investment data;
a client database;
a plurality of processors collectively arranged to perform a parallel processing computation, wherein the ...

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