The European Patent Office considered tracking SWAP derivatives transaction positions non-technical. Here are the practical takeaways from the decision T 2491/12 (Tracking derivative positions / TRADEWEB) of 13.11.2018 of Technical Board of Appeal 3.5.01:
According to the application underlying the present decision, a derivative is a financial contract whose value is based on, or “derived” from, a traditional security (such as a stock or bond), an asset (such as a commodity), or a market index. A SWAP agreement is a type of derivative transaction where two streams of cash flows are exchanged. As such, it is allegedly unresolved in the art to provide a method that facilitates the unwinding and assignment of derivatives positions, but also allows counterparts to monitor such positions substantially in real time.
Claim 1 (main request)
1. A system for monitoring derivatives transactions, comprising:
a trading engine (10) capable of communication with a plurality of counterpart computers (50, 55) and enabling the execution of the derivatives transactions;
a trade history database (20) communicatively connected to the trading engine and capable of communication with the plurality of counterpart computers, the trade history database configured to store a set of records of at least a portion of the derivatives transactions executed on the trading engine; and
wherein the trading engine is configured to enable an unwinding of a derivatives transaction, initiate a record of the unwinding to be stored in the trade history database, and send a notification of the unwinding of the derivatives transaction.
Is it patentable?
During first instance prosecution, the appellant essentially argued that the contribution of the invention was a real-time operation:
VII. The appellant essentially argued that the contribution of the invention was a real-time operation (see point 220.127.116.11 of the statement setting out the grounds of appeal). The “configuration” of using a trading engine and a trade history database communicatively connected to each other and to counterpart computers enabled a real-time operation. The objective problem was therefore how to allow parties to monitor derivatives transactions in real time. Further details regarding the appellant’s arguments are dealt with in the reasons for the decision.
However, the examining division did not follow this line of argumentation and rejected the application due to lack of inventive step.
During appeal, the Board in charge outlined that the claimed subject-matter, despite the presence of non-technical features, is an invention in the sense of Article 52(1) EPC:
2.1 The claim is directed to a mix of technical and non-technical features. The Board does not dispute that the system according to claim 1 appears in a technical context. The system for monitoring derivatives transaction can be considered to be performed by technical means, because it involves a computer with means for storing data, means for processing data and means for transmitting and receiving data, and, therefore, has technical character. Accordingly, the claimed subject-matter is an invention in the sense of Article 52(1) EPC (see T 258/03 “Auction method/HITACHI“).
Then, the Board further argued that the COMVIK approach has to be used for assessing inventive step. Hence, it must be determined whether the invention povides a technical contribution:
2.2 However, the question of inventive step requires an assessment of whether the invention makes a technical contribution over the prior art. Features which do not make such a contribution cannot support the presence of an inventive step (see T 641/00 “Two identities/COMVIK“, Headnote I).
However, according to the Board’s findings, unwinding derivate transactions is only a business related administrative method and thus not technial:
2.3 In the Board’s view the unwinding of derivative transactions within the system for monitoring derivatives transactions pertains to a business related administrative method, i.e. to the non-technical part of claim 1.
More importantly, the Board in charge did not see the real-time aspect as argued by the appelant:
2.4 Furthermore, the Board does not consider that the “configuration” of using a trading engine and a trade history database communicatively connected to each other and to counterpart computers provide for a real-time operation as argued by the appellant (see point 18.104.22.168 of the statement setting out the grounds of appeal).
Moreover, the Board argued that the only technical features of claim 1 are those of a client-server system:
2.6 The only technical features of claim 1 which the Board can identify are those of a networked client-server system labeled with the underlying functions (trading engine, trade history database, counterpart computers etc.), which merely map the business related administrative concept of derivative transactions.
The Board therefore agreed with the decision under appeal that the closest prior art can be considered a general purpose networked computer system. Hence, the Board confirmed the first instance decision that the claimed subject-matter lacks an inventive step and thus dismissed the appeal:
2.7 […] The person skilled in the art within the meaning of Article 56 EPC, a computer expert provided with the complete description of the non-technical abstract administrative concept, would have considered the claimed implementation obvious in view of the normal skills and the general knowledge of computer programming.
2.8 Furthermore, the use of a centralised server system and the need for real-time operation were known in the art.
8.2 The claimed invention, in the Board’s view, is not directed to a real-time problem in the sense of improving a technical process, but rather to automation in the sense of making (non-technical) financial information available quickly. This automation is achieved by mapping the business related administrative concept of derivative transactions on a client-server computer system, which the Board regards as obvious for the reasons given above (see point 2).
You can read the whole decision here: T 2491/12 (Tracking derivative positions / TRADEWEB) of 13.11.2018.