On December 16, 2014 the USPTO issued its 2014 Interim Guidance on Subject Matter Eligibility. In the introduction, the Guidance states that it “is responsive to the public comments received pertaining to the March 2014 Procedure and the June 2014 Preliminary Instructions.”  The Office received comments from forty seven submitters in response to the Preliminary Instructions.[1]

To its credit, the Office responded to a number of the concerns raised by the submitters. Most importantly, as noted at the January 21, 2015 Patent Eligibility Forum, the Interim Guidance altered the explanation of the Mayo test from the Preliminary instructions to state that “the application of the overall analysis is based on claims directed to judicial exceptions (defined as claims reciting the exception, i.e., set forth or described), rather than claims merely “involving” an exception.”  The Office also provided succinct explanations of some of the Supreme Court and Federal Circuit eligibility cases, and most importantly, included a treatment of DDR Holdings, LLC v. Hotels.com, L.P., the first post-Alice Federal Circuit case to find patent eligible subject matter in computer-implemented inventions.

In Parts 1 and 2, I will focus on the analyses and recommendations that were raised by a significant number of submitters and that the Interim Guidance did not adequately address. In Part 3, I will analyze the various ones of the patent eligibility case summaries and examples provided by the USPTO, and offer some overall observations about the Office’s approach to guiding the examiners through the “murky morass” of Section 101.[2]

Requiring Factual Evidence in Support of § 101 Rejection for Abstract Ideas

A significant number of the submitters recommended that examiners provide factual evidence and clear reasoning in support of the § 101 rejections.  Eighteen (41%) of the submitters, including organizations such as ABA, AIPLA, BSA, IEEE and IPO, as well as companies as Microsoft, SAS and Trading Technologies, pointed out that examiners have the burden of making the prima facie case of patent ineligibility and that to do so they must rely on factual evidence explained by clear and logical reasoning—not merely their personal opinion that something was “fundamental” or “abstract.”

It was noted that under the Administrative Procedures Act and controlling federal case law, examiners must provide “substantial evidence” in support of all rejections, and that personal opinion does not meet this requirement. See, Administrative Procedure Act 5 U.S.C. 500 et seq.  In re Gartside, 203 F.3d 1305, 1315 (Fed. Cir. 2000); In re Dembiczak, 175 F.3d 994, 999–1000, 50 USPQ2d 1614, 1617 (Fed. Cir. 1999) (broad conclusory statements about the teaching of references are not “substantial evidence”); Donohue v. Barnhart, 279 F.3d 441, 446 (7th Cir. 2002) (“Evidence is not ‘substantial’ if vital testimony has been conjured out of whole cloth”).

Most significantly submitters on both sides of the issue—those supporting a broad scope of patent eligibility and those supporting a narrow scope—made this same recommendation; when opponents agree on such an important issue, it means that they are probably right.  For example, IEEE, which supports a broad scope of patent eligibility, noted that the Guidance:

[S]hould make clear that any showing of “old” or “conventional” must cite “substantial evidence” (in an Administrative Procedure Act sense), and should expressly remind examiners of the basic principle that examiner opinion or explanation is not “evidence” at all, let alone substantial evidence.5 § 101 rejections must cite “substantial evidence,” just as any § 102 or § 103 (and many § 112(a)) rejection must.

and

[S]hould make clear that an examiner’s personal assertion that something is “well known” under MPEP § 2144.03 is not relevant to the evidentiary showings required for § 101.[3]

The CCIA on the other hand supports a more narrow scope, but likewise stated:

[I]t is critical for both the examiner and the patent applicant to create a clear prosecution history. In the context of § 101 rejections, the examiner should provide more than a conclusory rejection.[4]

Requiring the examiners to provide substantial evidence and reasoning is necessary to allow applicants to have sufficient opportunity to rebut the examiner’s conclusions.  As explained by BGC-Cantor “Examiner opinion and explanation are not tangible evidence, let alone substantial evidence. Tangible evidence allows applicants to enter into a meaningful dialog with examiners and to rebut the assertion.[5] IEEE provided a list of five specific ways that applicants may use to rebut the examiner’s argument, and which the Office should expressly acknowledge as being acceptable.[6] Further, by providing substantial evidence and reasoning, rather the “form paragraph rejections,” examiners will reduce the number of appeals to the Board (and likely reversals), and thereby not negatively impact the improvements in pendency that the Office has recently achieved.[7]

Unfortunately, the Interim Guidance was completely silent on this point.  No direct mention was made of the evidentiary requirements for supporting a § 101 rejection.  At best, the Interim Guidance made oblique references to MPEP 2106(III). But this citation only indicates that Examiner has the burden to make the prima facie case, not that the Examiner must rely on substantial evidence

Establishing That an Abstract Idea is a Fundamental Building Block

The first step of the Mayo test requires determining whether the claim is “directed to” an ineligible concept, and in the software context that typically devolves into a question of whether the claim is directed to an abstract idea.  Many submitters noted that the Preliminary Instructions did not adequately explain to examiners the requirements for supporting the assertion that the claim is directed to an abstract idea.  The IEEE along with BGC-Cantor, Trading Technologies, Public Knowledge and four law firms and individuals addressed this specific issue.  Here too the Interim Guidance was entirely silent and did not respond to analyses and recommendations made by the submitters.

These submitters noted that the Supreme Court case law demonstrates that not any generalization or abstraction is an “abstract idea” that may be ineligible.  The Supreme Court in Alice stated “as we have used that term” abstract ideas are those ideas that are “building blocks” and “fundamental” to culture or the “modern economy,” are “the basic tools of scientific and technological work.”  134 S. Ct. 2347 (2014) at 2354,  2357.  The Court realizes that every patent preempts and blocks in some degree, because that is what patent claims do.  Only when claims are directed to “building blocks of human ingenuity” do they “risk disproportionately tying up” the use of foundational concepts, and thereby implicate the core concern of preemption.

To establish that an idea is a fundamental building block in this sense, the Supreme Court made clear in Bilski v. Kappos and Alice, that specific references must be cited to support a finding that an alleged abstract idea is “long prevalent” in the field.  “Long prevalent” has two requirements:  1) long known, rather than of recent origin; and 2) prevalent, that is widely used. In both cases, the Court cited three references in the field, including in Alice one reference that was over 100 years old, to meet these requirements. Certainly, if the Supreme Court believed it was necessary to cite numerous references to support its findings, it is incumbent upon examiners to do so.  Again, submitters on both sides of the issue supported the view that the examiner must provide citation to evidence to establish that an alleged abstract idea is “fundamental.”

For example, the following comments were from broad eligibility supporters:

IEEE:  Alice requires that an “abstract idea” must have been “prevalent,” “fundamental,” “taught in any introductory finance class,” and/or “a building block of the modern economy.” A known-but-rarely-used concept is not “abstract” under the reasoning of Alice. Even if an idea is logical and correct, an idea is not “abstract” unless it is “prevalent.”  Note that the latter two characteristics are far more stringent than mere novelty under § 102 with respect to time of knowledge and breadth of use. Each of the latter two showings must be supported by “substantial evidence” in the sense of the Administrative Procedure Act. The Action must cite to either a statement in the applicant’s specification or in a third-party reference, to support both “long” standing and prevalent. (emphasis in original).[8]

Schwegman Lundberg & Woessner: Accordingly, a determination that a claim includes a fundamental economic practice should require more than merely identifying an economic component to the claim. Instead, it should require authoritative documentation that the identified economic component is long prevalent in our system of commerce. Mere prior publication, if that publication were either recent or obscure, would not suffice to convert a non-fundamental economic practice into a fundamental one.[9]

Howard IP Law Group:  The Supreme Court in Bilski accordingly established that, in order to qualify as a fundamental economic practice, a practice must have been in use in the economy for a long period of time, and, furthermore, must have been prevalent in the economy for a long period of time. A practice that has been known or in use for a long period of time, but has not been so widely used for a long period of time as to qualify as prevalent, is not a fundamental economic practice. A practice that is now prevalent in the economy, but has not been prevalent for a long period of time, fails to qualify as a fundamental economic practice.[10]

On the other hand, Public Knowledge, which supports a narrow scope of eligibility, made very similar recommendations:

The Court consulted and cited several texts describing the area of practice in which the idea is used, including a history article on economics, an academic article, and an economics textbook. These references gave the Court support for concluding that the concepts identified in the previous step, such as “intermediated settlement,” were drawn to an abstract idea. Following the Court’s example, the PTO should instruct examiners to also consult foundational texts to establish whether an idea is fundamental to an area. If the idea is “taught in any introductory finance class,” a “building block” of a field of study or practice, or one of “long-standing” use, then the idea is most likely fundamental and thus abstract.”

A related aspect of this question is whether methods of organizing human activities are “abstract ideas.”  Several commentators made the exact same argument–that Alice Court did not say that all methods of organizing human activities were abstract ideas.[11] Rather, the Court made mention  of “methods of organizing human activities” to defeat Alice’s argument that abstract ideas must be “pre-existing, fundamental truths” that exist independently of human action: “Although hedging is a longstanding commercial practice, it is a method of organizing human activity, not a ‘truth’ about the natural world . . . the Court [in Bilski] grounded its conclusion that all of the claims at issue were abstract ideas in the understanding that risk hedging was a ‘fundamental economic practice.’” Alice, at 2357 (internal citations omitted).

The Interim Guidance made a slight change from the Preliminary Instructions to address this issue, by stating that “certain methods of organizing human activities” (emphasis added) are abstract ideas, to avoid suggesting that “all” such methods are ineligible.  But that does not fully address the problem, and indeed may exacerbate it.  The use of the adjective “certain” gives no useful instruction to the examiners—it says no more than “some methods” are ineligible, without saying how to identify which methods.  As noted by the commentators, the only instruction from the Court is that it is those methods which are themselves already “fundamental building blocks” as in Bilski.  As an example, a method of making ice cream sundaes by mixing ice cream and toppings on chilled blocks of granite is a method of organizing human activities that is not “fundamental” or “abstract.”

The Office should revise the Guidance to specifically address the interpretation of “abstract ideas” as being fundamental, and advise examiners to demonstrate such fundamental status by proper citation to authoritative references.   The Office should explain to examiners precisely how to establish which “certain” methods of organizing human activity are ineligible, and if it cannot, then it should remove the alleged category entirely.

Go to Part II.


[1] Submitted comments are available at http://www.uspto.gov/patents/law/comments/alice_2014_comments.jsp. In the remainder of my comments, I will refer to various submitters by name, and where appropriate the page number of their submission.

[2] MySpace, Inc. v. GraphOn Corp, 672 F. 3d 1250 (Fed. Cir. 2012).

[3] IEEE, p. 7, 3.

[4] CCIA, p. 2.

[5] BCG-Cantor, p. 5.

[6] BIEEE, p. 4.

[7] Hollaar, p 5 (“The use of a form subject matter rejection, with the examiner simply making conclusory remarks with no references or reasoning given as in the language above, will inevitably lead to form appeals…Either the PTAB will reverse and remand to the examiner for the justification that should have been there in the beginning, or the PTAB will have to do the work of the examiner and specify for the first time the justification for the rejection.”)

[8] IEEE, p. 3.

[9] Schwegman Lundberg & Woessner, p. 2.

[10] Howard IP Law Group, 6. Mr. Rosenthal of Howard IP provided the most detailed analysis and recommendations of all of the submitters on this point, including suggestions for specific requirements that a single reference must show that an idea is fundamental, that the reference must be at least 25 years old, and that single prior art reference should be a source of high reliability, such as a textbook or a publication in an academic journal in the relevant field of finance, business or economics. See, Howard IP Law Group, p.3.  The logic of these recommendations is clear: if an idea is indeed “fundamental” then it is entirely reasonable to expect that it is stated in its entirety in at least one, if not many, references—similar to the requirement that an anticipatory references must disclose all elements of the claim.

[11] This analysis was made independently by Schwegman, Trading Technologies, Sachs, Tryzna, and Werking.