By Michael Borella --
On January 4, the U.S. Patent and Trademark Office published updated examination guidance regarding the subject matter eligibility of inventions involving abstract ideas. The guidance went into effect on January 7, upon its publication in the Federal Register.
In substance, the new guidance falls in line with statements made previously by USPTO Director Andrei Iancu. But at first blush, it does not appear to be a radical departure from substantive USPTO examination practice despite raising a few additional procedural hurdles that examiners are to overcome before rejecting claims under 35 U.S.C. § 101. Further, the guidance is non-binding on examiners and the PTAB.[1]
Will the existence of the guidance result in more consistent examining practices across USPTO technical centers, art units, and examiners? Time will tell. But at the very least, the way in which § 101 rejections are rebutted by applicants is likely to become more nuanced.
Prior USPTO § 101 examination practice was to combine the § 101 statutory language with the exceptions set forth in Alice Corp. v. CLS Bank Int'l. First, in what the USPTO refers to as step 1, the examiner was to determine "whether the claimed subject matter falls within the four statutory categories of patentable subject matter identified by 35 U.S.C. 101: process, machine, manufacture, or composition of matter." If the answer to this question is that it does not, then the claims are to be rejected as non-statutory.
Otherwise, the two-part Alice test is applied. The USPTO refers to these parts as steps 2A and 2B. Step 2A involves determining whether a claim is directed to a judicial exception, such as an abstract idea. If not, then no § 101 rejection can be made. But if the claim involves such an exception, step 2B is applied to determine further whether any element or combination of elements in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exception. If this is the case, the claim is patent-eligible under § 101. If not, it can be rejected. Notably, under step 2B, elements that are well-understood, routine, and conventional, alone and in combination, have no patentable weight.
The January 4 guidance only modifies step 2A, and leaves steps 1 and 2B intact. But in a rather odd and semi-redundant manner, the USPTO is now breaking step 2A into two sub-steps that mirror the language and procedure of steps 2A and 2B.
In particular, these two sub-steps (let's call them 2A(i) and 2A(ii) for purposes of clarity), involve the following:
• In sub-step 2A(i), the examiner is to determine whether the claim recites a judicial exception, such as an abstract idea.
• If so, then in sub-step 2A(ii), the examiner is to determine further "whether the recited judicial exception is integrated into a practical application of that exception."
In an attempt to make sub-step 2A(i) easier to follow, the USPTO has set forth three general classes of abstract ideas. We can think of them as the "three M's" -- math, money, and mental steps. Or, in the words of the USPTO:
a) Mathematical concepts – mathematical relationships, mathematical formulas or equations, mathematical calculations;
b) Certain methods of organizing human activity – fundamental economic principles or practices (including hedging, insurance, mitigating risk); commercial or legal interactions (including agreements in the form of contracts; legal obligations; advertising, marketing or sales activities or behaviors; business relations); managing personal behavior or relationships or interactions between people (including social activities, teaching, and following rules or instructions); and
c) Mental processes – concepts performed in the human mind (including an observation, evaluation, judgment, opinion).
Thus, rather than reviewing the case law and attempting to make an analogy between the claim under examination and a precedential opinion, examiners can consult this list of abstract ideas. But the list is not meant to be exhaustive nor exclusive. The USPTO notes that "[i]n the rare circumstance in which an examiner believes a claim limitation that does not fall within the enumerated groupings of abstract ideas should nonetheless be treated as reciting an abstract idea", the examiner can view the claimed as directed to a "tentative abstract idea." If this categorization would result in a rejection, "the examiner should bring the application to the attention of the Technology Center Director," who then must approve the rejection and "provide a justification for why such claim limitation is being treated as reciting an abstract idea."
The new sub-steps of 2A are worth digging into. The goal of step 2A as revised is to clarify the determination of whether a claim is directed to an abstract idea. Presumably this clarification is needed because the exact scope of the "directed to" language of this step has proven difficult to define.
Sub-step 2A(i) instructs examiners to "identify the specific limitation(s) in the claim under examination (individually or in combination) that the examiner believes recites an abstract idea." But examiners are also asked to "determine whether the identified limitation(s) falls within the subject matter groupings of abstract ideas" listed above. Thus, the examiner's burden under sub-step 2A(i) is two-fold: point out specific claim language reciting an abstract idea, and explain how that language fits into one or more of the three categories of abstract ideas.
If the analysis moves on to sub-step 2A(ii), the examiner determines "whether the claim as a whole integrates the recited judicial exception into a practical application of the exception." Such a claim "will apply, rely on, or use the judicial exception in a manner that imposes a meaningful limit on the judicial exception, such that the claim is more than a drafting effort designed to monopolize the judicial exception."
The examiner carries out this latter inquiry by "(a) identifying whether there are any additional elements recited in the claim beyond the judicial exception(s); and (b) evaluating those additional elements individually and in combination to determine whether they integrate the exception into a practical application, using one or more of the considerations laid out by the [courts]." A successful integration of an abstract idea into a practical application may include:
an additional element reflects an improvement in the functioning of a computer, or an improvement to other technology or technical field;
an additional element that applies or uses a judicial exception to effect a particular treatment or prophylaxis for a disease or medical condition;
an additional element implements a judicial exception with, or uses a judicial exception in conjunction with, a particular machine or manufacture that is integral to the claim;
an additional element effects a transformation or reduction of a particular article to a different state or thing; and
an additional element applies or uses the judicial exception in some other meaningful way beyond generally linking the use of the judicial exception to a particular technological environment, such that the claim as a whole is more than a drafting effort designed to monopolize the exception.
This language should look familiar. It mirrors that of step 2B -- the second prong of the Alice test. But the USPTO clarifies that "revised Step 2A specifically excludes consideration of whether the additional elements represent well-understood, routine, conventional activity." Putting this together, revised 2A appears to require that examiners consider all elements of the claim, dividing the claim into the recitation of the abstract idea and the additional elements. Then examiners are to determine whether the sum of the additional elements results in an integration into a practical application, but do so without any consideration of whether these additional elements are known (i.e., in the prior art). In other words, for computer-implemented inventions, whether a claimed technique is performed by generic processors, memory, and peripherals should be irrelevant to revised step 2A.[2]
But even if the applicant loses on step 2A and the claim is found to be directed to an abstract idea by sub-steps 2A(i) and 2A(ii), step 2B still applies. This guidance does not touch that part of the test. Therefore, a claimed invention that is not well-understood, routine, or conventional should still be patent-eligible under Alice as interpreted in Berkheimer v. HP Inc.
The USPTO provides an example in an attempt to clarify the distinction between sub-step 2A(ii) and step 2B:
For example, when evaluating a claim reciting an abstract idea such as a mathematical equation and a series of data gathering steps that collect a necessary input for the equation, an examiner might consider the data gathering steps to be insignificant extra-solution activity in revised Step 2A, and therefore find that the judicial exception is not integrated into a practical application. However, when the examiner reconsiders the data gathering steps in Step 2B, the examiner could determine that the combination of steps gather data in an unconventional way and therefore include an "inventive concept," rendering the claim eligible at Step 2B.
So why is the USPTO promulgating a potentially confusing two-prong test to replace one prong of another two-prong test? Is this the first step of making the Alice inquiry infinitely recursive? To hazard a guess, it is an attempt to mitigate one of the most controversial and problematic aspects of Alice -- how much of the § 101 analysis should be decided as a matter of law and how much should be a matter of fact. By effectively eliminating prior art from the revised step 2A analysis, examiners can now find claims to be patent-eligible without comparing the claimed invention to what is well-understood, routine, and conventional. But to find claims patent-ineligible, such a comparison should be made and it may incorporate factual questions per Berkheimer.
Despite all of that, revised step 2A opens a new can of worms. What exactly does it mean for "the recited judicial exception [to be] integrated into a practical application of that exception?" How much integration is required? How does one identify a practical application thereof? As noted above, the examples provided by the new guidance mirror the language of the Alice decision itself, which is not a paragon of clarity. Further, how broadly are examiners going to interpret the three categories of abstract ideas? While the "math" and "mental processes" buckets are relatively cut and dry, the "methods of organizing human activity" bucket is fairly expansive.
Current § 101 examination practice in the USPTO can vary dramatically between technical centers, art units, and even examiners within the same art unit.[3] While a handful of examiners appear to have a reasonable, if not above-average, grasp on the nuances of the § 101 case law, others do not. Consider a business method invention that claims a technical improvement. Review by a poorly-trained junior examiner, in an art unit with a § 101 specialist that believes virtually all data processing to be per se abstract, can rapidly devolve into absurdity that would make both Kafka and Monty Python proud.
And will the courts give any deference at all to claims issued under the new guidance? Probably not, as the judiciary's concern is whether a claimed invention complies with the relevant case law rather than whether the USPTO's test is satisfied.
In sum, we will have to wait and see how the new guidance plays out in practice. If anything, the additional procedural requirements introduced and the limiting of abstract ideas to only three categories is likely to favor applicants for at least some types of inventions. It is unlikely that any claims that could be found patent-eligible under previous examination procedures are suddenly going to be viewed as ineligible under the new guidance. Modulo examiner variability, of course.
Applicants will likely have to adjust their § 101 rebuttal strategies to specifically address and argue sub-steps 2A(i) and 2A(ii). But applicants should still argue the case law as well, because it may be helpful to have such arguments on the record should the file history be reviewed.
[1] "All USPTO personnel are, as a matter of internal agency management, expected to follow the guidance. Failure of USPTO personnel to follow the guidance, however, is not, in itself, a proper basis for either an appeal or a petition."
[2] Then again, if reciting "an improvement in the functioning of a computer" renders a claim patent-eligible under step 2A(ii), what is the frame of reference for evaluating this improvement? What does the claim improve upon if not the prior art?
[3] In the new guidance, the USPTO states that "[t]he legal uncertainty surrounding Section 101 poses unique challenges for the USPTO, which must ensure that its more than 8500 patent examiners and administrative patent judges apply the Alice/Mayo test in a manner that produces reasonably consistent and predictable results across applications, art units and technology fields."
There was a lot to digest in the Office Guidance, but at the end of the day I see only a modest pullback and those examiners wanting to use the weapon of 101 will continue to do so (primarily because the Office attempted to include the mess of contradictory cases without taking a stand to actually resolve any of the contradictions.
A couple of examples:
The pull back due to the Berkheimer effect and the plain fact that examine to show “conventional” is far more daunting than the usual requirement to show anticipation or even obviousness (the new Prong One) remains mired with the inclusion in the Prong Two protocol of cases that would simply be overturned with Prong One IF Prong One were actually used and stopped there.
The Prong Two contradiction between maintaining exclusions of “in a particular technical area” AND concomittantly trying to introduce a “particular application is good enough” protocol - these two are mutually exclusive and any attempt to maintain both achieves neither.
The Office flat out stated that the state of Common Law is contradictory.
Flat out states this.
As noble as the attempt is to try to take a step out of the process of making Common Law themselves (as has been noted — by the CAFC itself — application of the “gift” from the Supreme Court’s Alice/Mayo Two Step IS engaging in writing law through the Common Law process); one cannot state that the current state of law is contradictory, and then turn around and try to incorporate both sides of the contradiction into the new protocol.
Posted by: Skeptical | January 11, 2019 at 06:49 AM
On another blog it was noted a recent Supreme Court comment, in a case completely untethered to direct issues of patent law, and made in relation to a potential willingness by the Supreme Court to throw out its own prior precedence.
Justice Cavanaugh in the oral arguments of the Franchise Tax Board of California v. Hyatt case provided (from the write-up at SCOTUSBLOG):
"Kavanaugh was skeptical. In his view, strict adherence to that changed-circumstances principle would have prevented many past overrulings. Instead, Kavanaugh suggested, overruling is proper when a precedent is “egregiously wrong,” has “severe practical consequences,” and generates “no reliance.”
Given that even now with the latest attempt by the Executive branch to put forth protocol to apply the common law as written by the courts (and in small part, by the executive branch itself), these three factors remain on the table, one had to wonder if the Court will extract itself from its own Gordian Knot by simply making the entire knot disappear.
Personally, I am, well, skeptical, that the Court can overcome its addiction to legislating from the bench in the policy area of innovation protection. The addiction to wax nose mashing is simply too powerful.
Posted by: Skeptical | January 12, 2019 at 08:32 AM