Recent comments from Representative Hank Johnson of Georgia offer a counterpoint to my last post on the state of patent eligibility reform, in which I noted that Senator Tillis had recently expressed that modifications to the existing legal framework were unlikely to take place in the near future.
Speaking to Law360, Rep. Johnson,
In April, Senators Coons and Tillis proposed a draft framework for legislation reformulating the standards for determining patent eligibility under § 101 of the Patent Act. The framework largely codified the Patent Office’s latest internal eligibility standards that went into place in January 2019, formulating a closed list of categories excluded from patent eligibility and creating a “practical exception” test to ensure that such categories are construed narrowly.
On May 22, Senators Coons and Tillis were joined by Representatives Collins, Johnson and Stivers in proposing a bicameral draft bill containing—among other things—new text for § 101, as well as new supporting definitions in § 100.
It should be noted that the draft bill is still very much open to discussion, with hearings of the Senate Judiciary Subcommittee on Intellectual Property to be held on June 4, 5 and 11. That said, I’ve summarized some of the draft language’s key points below:
In January, the USPTO announced it would seek comments on the new Guidance it had published on patent subject matter eligibility. We have previously discussed this Guidance and won’t repeat ourselves here. Instead, this post will highlight the wide range of views expressed by the thousands of comments that the USPTO received. Although the comment period ended on March 8, the USPTO cautioned that its web page posting the comments might not be complete for a couple of weeks thereafter. By now, all the submitted comments likely have been posted so it’s time to take a look at them.
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If the focus on fact finding in Aatrix, Berkheimer, and Exergen from earlier this year helped provide additional clarity on the analysis of “something more,” the SAP America decision, at least to my mind, failed to clarify, and possibly further muddied, the analysis.
Reaching This Result Could Have Been Easy
First, a representative claim:
1. A method for calculating, analyzing and displaying investment data comprising the steps of:
(a) selecting a sample space, wherein the sample space includes at least one investment data sample;
(b) generating a distribution function using a re-sampled statistical method and a bias parameter, wherein the bias parameter determines a degree of randomness in a resampling process; and,
(c) generating a plot of the distribution function.
The other independent claims differ a bit from claim 1, but like claim 1 recite “resampling” of the data set and, in claim 11, doing so with a “bias parameter.” According to the patent, this resampling of investment data permits analysis that doesn’t assume a normal distribution of the data.
On a judgment on the pleadings, the district court found all claims ineligible and the Federal Circuit affirmed.
Do you remember obviousness before KSR v. Teleflex? To invalidate, the rule went, one must find an express rationale for combining references (a teaching, suggestion or motivation). The KSR ruling reminded us that the TSM test was too rigid—the proper analysis should more flexibly evaluate obviousness with the skilled artisan in mind, without rigid requirements for these rationales in the references themselves.
If we knew how to more flexibly identify rationales for obviousness post-KSR, it was not clear how to more flexibly apply patent eligibility without the machine or transformation test after Bilski and Alice. A machine, apparently, was now just a clue. But identifying how to apply the more general principles from Alice and Bilski was not as easy to apply as a flexible obviousness test. The recent Core Wireless decision may show us a more useful theme for applying a more general approach to obviousness.
This third article in the “Surviving Alice” series[1] examines how the USPTO’s Patent Trial and Appeal Board has responded to the U.S. Supreme Court’s June 2014 Alice decision[2]. It also shows how applicants can use the PTAB’s recent decisions to substantially increase their chances of success before the board. We look at appeals coming out of the USPTO’s business method work groups 3620, 3680 and 3690. Applicants have had a difficult time getting business method patents allowed since Alice. The Alice decision firmly established the two part “Alice/Mayo test” as the standard for determining whether a patent’s claims were statutory under 35 U.S.C. 101. The two steps in the Alice/Mayo test are:
The business method work groups[5] at the USPTO implemented the Alice/Mayo test right after the Alice decision. Allowances in some work groups (e.g. 3690 finance) plunged by a factor of 10 within a month of the decision. Even three years later, there is still over a 90% chance that an office action on a business method patent application will have a 101 rejection[6]. In response to these repeated § 101 rejections by the examiners, many applicants have appealed their rejections to the PTAB. We are just now seeing these appeals being decided by the board, and overall the results have not been good for applicants. Only about 20% of the 101 rejections are being reversed. Nonetheless, we are gaining a significant and rapidly growing body of PTAB decisions which we can learn from. These decisions[7] are discussed below.
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As has been well documented, the Supreme Court’s decision in Alice Corp. v. CLS Bank has had a dramatic impact on the allowability of computer implemented inventions. This second article in our series explores the dynamics of that impact on the e-commerce arts. Our first article[1] showed that in the finance arts (e.g. banking and insurance) Alice had an immediate and substantial impact reducing allowances per month by a factor of 10. A similar but more complicated impact was felt in e-commerce. Allowances per month immediately dropped but then recovered only to drop again. We will present an analysis of what is being allowed today as a guide to practitioners filing applications in this field.
Art Unit Organization by Subclasses
E-Commerce patents fall under the general category of business methods and are examined in work groups 3620 and 3680. Table 1 below shows the technologies they encompass as well as the associated “old” US patent classifications[2] and the examining art units[3]. The old US patent classifications are referenced because they are still used to assign applications to art units. The primary class of e-commerce and business method patents is class 705. The “e-Commerce subclasses” in the table below is based on the majority subclasses being examined in each art unit. The subclass designations generally account for at least 80% of the applications being examined in a given art unit. Interestingly, a significant minority of applications in these art units are not classified as 705 applications. According to conversations I’ve had with examiners, these are cases that were originally assigned to other work groups but were later referred into these work groups because the classifications done by the contractor were not correct. Apparently even after reassignment into these work groups, the original class/subclass designations stayed in the PAIR records for the applications.
The most significant Federal Circuit decision in March was Thales Visionix, Inc. v. United States, another case finding eligible subject matter. What distinguishes this case—and demonstrates the inherently subjective I-know-it-when-I-see-it nature of the Alice test—is the extraordinary breadth of the claims. Consider claim 22, a single-step method claim:
The court held that this claim was patent eligible, because it was not directed to an abstract idea in Step 1 of the Alice test:
As many of you know, the Federal Circuit’s decision in Trading Technologies was the first time a graphical user interface had been found patent eligible by the Federal Circuit. The defendant CQG moved for both panel rehearing and enbanc rehearing.
My client SHzoom filed a request to make the Trading Technologies decision precedential. CQG attempted
The Federal Circuit’s recent decision in McRO has been interpreted by many in the patent community as a further signal that the so-called “pendulum” is swinging back to a more favorable position for patentees. There is some superficial evidence of this possibility. Let’s look at the numbers. 
September 2016 was the first time since Alice that the number of federal court decisions finding eligible subject matter (16) exceeded those finding ineligible subject matter (13). Those sixteen decisions also mark the highest number of eligibility decisions in a single month. The most significant contribution to the switchover is that only two motions to dismiss under § 101 were granted in September, compared to nine that were denied, the largest gap since March 2016 (6 granted, 10 denied).
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