Guest Post: Was the Deck Stacked? Federal Circuit Refuses to Rule on Scope of USPTO Patent Guidance

By Anthony D. Sabatelli* --

In an interesting case decided last month, the Federal Circuit ruled that it cannot address whether the U.S. Patent and Trademark Office's 2014 Interim Guidance on Patent Subject Matter Eligibility exceeds the scope of the Supreme Court's decisions in this area.

This case was an appeal from a final decision of the PTO's Patent Trial and Appeal Board denying a patent application directed to a card game variant of blackjack.  The Board ruled that the patent application was nothing more than an attempt to cover patent ineligible subject matter.  The Circuit Court agreed, reasoning that "the claims cover only the abstract idea of rules for playing a wagering game and use conventional steps of shuffling and dealing a standard deck of cards" (see In re: Ray Smith, Amanda Tears Smith).

Whether the Section 101 patent eligibility question was properly decided is almost irrelevant -- although, from my read of the case I do agree with the holding.  The much more interesting aspect of the case is the question not addressed by the Court, namely whether the USPTO's 2014 Guidance exceeds the scope of Section 101 and the Supreme Court's controversial 2014 Alice Corp. decision.  In refusing to address this important question, was the deck unfairly stacked against the patent Applicants?

The Court bluntly stated that "Applicants' challenge to the Guidelines is not properly before us in this appeal."  The Court also referred to language in the Guidance itself stating that it "is not intended to create any right or benefit, substantive or procedural, enforceable by any party against the [Patent] Office.  Rejections will continue to be based upon the substantive law, and it is these rejections that are appealable" (emphasis added by Court).  However, this reasoning seems a bit circular -- almost like a card game of clock solitaire.  The Court then went on to reveal its final trump card by concluding that "even if the Applicants had properly challenged the Guidance, we have previously determined that such Guidance is 'not binding on this Court'."  Is the Court telling the unlucky inventors to "Go fish?"

Although the decision does not bode well for future appellants attempting to challenge the Guidance, at least the Court did indicate that not all inventions in the gaming arts would be foreclosed from patent protection under Section 101.

In re Smith (Fed. Cir. 2016)
Panel: Circuit Judges Moore, Hughes, and Stoll
Opinion by Circuit Judge Stoll

* Dr. Sabatelli is a Partner with Dilworth IP

Comments

[Atari Man]

The "Guidance" document may not be binding on the court, but it sure is binding on applicants trying to get their applications allowed. It's deplorable that these judges punted on this one.

[Paul F. Morgan]

An Article III court does not have legal jurisdiction to give "advisory opinions," and apparently the Fed. Cir. concluded that is what was being asked for here.
This is an appeal of a PTAB decision, and PTAB decision are not normally based on internal PTO MPEP or other examiner guidelines for examination.
[A suit under the APA by a company harmed by lots of costly applications stuck in improper 101 examination rejections might have jurisdiction?]

[A Rational Person]

Why is Claim 1, provided below, from the patent application at issue "abstract"?

1. A method of conducting a wagering game comprising:

[a]) a dealer providing at least one deck of . . . physical playing cards and shuffling the physical playing cards to form a random set of physical playing cards;

[b]) the dealer accepting at least one first wager from each participating player on a player game hand against a banker’s/dealer’s hand;

[c]) the dealer dealing only two cards from the random set of physical playing cards to each designated player and two cards to the banker/dealer such that the designated player and the banker/dealer receive the same number of exactly two random physical playing cards;

[d]) the dealer examining respective hands to determine in any hand has a Natural 0 count from totaling count from cards, defined as the first two random physical playing cards in a hand being a pair of 5’s, 10’s, jacks, queens or kings;

[e]) the dealer resolving any player versus dealer wagers between each individual player hand that has a Natural 0 count and between the dealer hand and all player hands where a Natural 0 is present in the dealer hand, while the dealer exposes only a single card to the players;

[f]) as between each player and the dealer where neither hand has a Natural 0, the dealer allowing each player to elect to take a maximum of one additional card or standing pat on the initial two card player hand, while still having seen only one dealer card;

[g]) the dealer/banker remaining pat within a first certain predetermined total counts and being required to take a single hit within a second predetermined total counts, where the first total counts range does not overlap the second total counts range;

[h]) after all possible additional random physical playing cards have been dealt, the dealer comparing a value of each designated player’s hand to a final value of the banker’s/dealer’s hand wherein said value of the designated player’s hand and the banker’s/dealer’s hand is in a range of zero to nine points based on a pre-established scoring system wherein aces count as one point, tens and face cards count as zero points and all other cards count as their face value and wherein a two-digit hand total is deemed to have a value corresponding to the one’s digit of the two-digit total;

[i]) the dealer resolving the wagers based on whether the designated player’s hand or the banker’s/dealer’s hand is nearest to a value of 0.

[skeptical]

Is (one) way forward to take Paul F. Morgan's post and couple it with Atari Man's post?

To wit: force the Office to NOT use it's "guidance" by replying that the Office guidance is not binding and that the Office must make its rejection based on binding law instead?

What if the Office were faced with EVERY applicant replying the same way to EVERY instance of an examine using non-binding guidance?

Would that not force the hand of the Office to ABANDON the guidance?

Does that not then draw a critical question RIGHT NOW: of what value is guidance if that guidance is not - and cannot be - binding?

Or put a different way, is the executive branch agency acting in an arbitrary and capricious manner by even having "guidance" that is not - and apparently cannot be - binding? Is the Office even allowed under law to present something that makes an applicant act in a certain way when that certain way is not controlling law, and the item controlled by the "guidance" is dealing NOT with mere protocols within the Office , but instead is dealing with substantive matters?