New USPTO Patent-Eligibility Guidance Is a Material Change

Effective January 7, 2019, United States Patent and Trademark Office patent examiners and PTAB judges will be operating under new guidance for evaluating subject matter eligibility. Specifically, the USPTO is changing its interpretation and application of the first step of the two-part Alice/Mayo test. (Step one is whether claims are directed to a judicial exception such as an abstract idea, and step two is whether, if so, the claims recite a significant additional innovation.) Under the new guidance, the USPTO is expanding the analysis under step one to determine whether a claimed judicial exception that is an abstract idea “is integrated into a practical application of that exception.” If so, then “a claim is not ‘directed to’ a judicial exception.”

The new guidance is clearly aimed at computer-implemented inventions. The new procedure, the USPTO explicitly says, applies only to judicial exceptions that are abstract ideas, but not to laws of nature and natural phenomena. Abstract ideas, of course, are very often implicated with respect to computer-implemented inventions. In short, this is all about software patent claims.

Laudably, the USPTO is acknowledging and addressing the need for greater clarity and reliability in patent-eligibility determinations. In the four-and-a-half years since Alice, the courts and the PTAB, including the Federal’s circuit in precedential decisions, have issued patent-eligibility determinations in numerous fact-specific cases. The USPTO perhaps understates the situation by stating that “[t]he growing body of precedent has become increasingly more difficult for examiners to apply in a predictable manner, and concerns have been raised that different examiners within and between technology centers may reach inconsistent results.”

The USPTO’s answer to the present conundrum is to modify Alice step one to include not merely identifying “a judicial exception,” i.e., “a law of nature, a natural phenomenon, or an abstract idea,” but further to include analyzing a judicial exception recited in a patent claim to determine whether it “is integrated into a practical application of that exception.” One might question whether this new analysis really does lend more clarity, at least initially, because the USPTO’s examples of what is a “practical application” are simply the familiar generic flags, such as whether there is a technical improvement, whether operation of a machine is integral to the claim, whether the claim element simply recites “apply it” to the judicial exception, etc. In fact, the USPTO acknowledges that much of the “new” analysis in Alicestep one has previously been applied in Alicestep two.

Nonetheless, the new patent-eligibility guidance is a material change. First, the purpose of the new guidance appears to be to reduce rejections under 35 U.S.C. § 101 for patent-eligible subject matter, and to make such rejections easier to overcome. Moreover, moving significant portions of the patent-eligibility analysis from Alicestep two to Alice step one has the very material effect of removing from the § 101 analysis the factual requirement that claim elements are non-routine, not fundamental, or unconventional. In other words, the new guidance could be seen as effectively removing factual requirements for patent-eligibility that examiners had previously been told to consider.

Back to the practical question: how to apply the new guidance in preparation and prosecution of patent applications for computer-related inventions? The answer, I think, is that the practitioner is advised to make only subtle changes in practice. As the USPTO notes, it’s guidance does not have the force of law and cannot be the basis for an appeal. But the USPTO’s guidance may nonetheless be considered when shaping claims and arguments for patent-eligibility. For example, consider arguments that a claim recitation is not abstract because, even though it recites an abstract manipulation of data, the manipulation of data is integrated into and is claimed as a practical application.

So keep making the patent-eligibility arguments based on Federal Circuit precedent that you have been making. Just bear in mind that the patent examiner has been given an additional hurdle for making a § 101 rejection. Still, for now at least, the practitioner’s best Federal Circuit precedent, and best arguments, may be the 2018 decision in Berkheimer v. HP, Inc.which sets forth the examiner’s fact-finding obligations under part two of the Alice test.

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