Federal Circuit Affirms Eligibility of Financial Services Software Patent

by LeClairRyan


The Federal Circuit, in Trading Technologies Intl., Inc. v. CQG, Inc., affirmed a district court decision holding that two patents related to a method and system for the electronic trading of stocks, bonds, futures, options, and similar products were patent eligible under 35 U.S.C. § 101. Although the disposition is non-precedential, the opinion provides additional guidance on potential arguments and drafting techniques to avoid patent eligibility issues.

Patents at Issue

The patents at issue in Trading Technologies explained specific problems related to electronic trading of stocks, bonds, futures, opinions, and other products. The problems identified in the patents included issues that arise when a trader would attempt to enter an order at a particular price, but miss the price because the market moved before the order was entered and executed, as well as the problem of trades executed at different prices than intended because of rapid market movement.

In order to solve the identified problems in electronic trading, the patents disclose an electronic trading system having a unique graphical user interface. The graphical interface displays the market depth of a commodity, including a dynamic display for a plurality of bids and for a plurality of asks in the market for the commodity, as well as a static display of prices corresponding to the plurality of bids and asks. The system pairs orders for the commodity with the static display of prices and prevents order entry at a changed price.

Patentability Analysis

The district court held that the claims met the patent eligibility standards under both steps of the Supreme Court’s enunciated two-step framework for patent eligibility. Specifically, the district court determined that the claims are not directed to an abstract idea and that they recite an inventive concept. The Federal Circuit found the district court’s rulings on both steps of the framework to be in accordance with its prior patent eligibility precedent, and thus affirmed the district court’s analysis. The Federal Circuit noted that the claimed subject matter is directed to a specific improvement in the way computers operate in the form of a graphic user interface that imparted a specific functionality to the claimed trading system.

The district court determined that the claims did not constitute an abstract idea under the first step of the analysis because the claims do not recite a mathematical algorithm, a fundamental economic or longstanding commercial practice, or a challenge in business. Instead, the district court noted that the patents solve specific problems related to existing graphical user interface devices for computerized trading that have no pre-electronic trading analog. Thus, the claimed specific, structured graphical user interface paired with a prescribed functionality that resolves an identified problem in the prior art did not constitute an abstract idea.

The district court further determined that the claims recite an inventive concept in the form of the static price index that allows traders to more efficiently and accurately place trades using the electronic trading system. Thus, the specific structure and concordant functionality of the graphic user interface provided an inventive concept that removed the claims from the realm of an abstract idea.

Impact of Substantive Patent Eligibility

The Federal Circuit noted that while Section 101 precedent does not consider the substantive criteria of patent eligibility, i.e., novelty, non-obviousness, and enablement, those substantive issues may provide context, based on the patent-based incentive to technologic progress, for the subject matter eligibility issue. Specifically, the Federal Circuit provided that the threshold level of eligibility is often usefully explored by way of the substantive statutory criteria of patentability, and that an invention that is new, useful, and non-obvious is more readily distinguished from the generalized knowledge that characterizes ineligible subject matter. The Federal Circuit further indicated that public interest is best served when close questions of eligibility are considered along with the understanding flowing from review of the patentability criteria.


The Federal Circuit’s affirmance provides guidance regarding the need to demonstrate a specific implementation of a solution to a problem in the software arts in order to establish patent eligibility for computer implemented inventions, particularly in the area of financial services software patents. Going forward, it remains to be seen how Section 101 precedent will evolve in view of the Federal Circuit’s statements regarding the benefits of mixing of the substantive criteria of patent eligibility with the subject matter eligibility issue, a concept the Federal Circuit expressly noted is not present in the prior precedent.

LeClairRyan's patent prosecution attorneys will continue to monitor the district courts, Federal Circuit, and Patent Trial and Appeal Board for application of the Section 101 analysis to software patents. We will also monitor the United States Patent and Trademark Office's approach in view of this new precedent.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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