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.


Continue Reading Seeing a Forest, Not Just Trees: Core Wireless v. LG

I was reminded of this question, often posed by my dad to remind me not to become a slave to statistics, by two dramatic things that happened last week. On the one hand, at the IAM 2017 Patent Law and Policy conference in Washington DC, investors spoke about waning interest in the U.S. market given the increasing frequency of patent invalidations. On the other hand, the Nasdaq composite index (consisting of 86% U.S. companies) hit record closing and intraday highs. Whom are we to believe: those who say weak patent coverage is threatening our economy or those who say that patents are not, in fact, necessary for economic strength?

Or is there a third possibility—that other factors overwhelm the economic importance of patents so we can’t really give too much weight to the statistics?

The speakers at the IAM conference cited PTAB invalidation rates and post-Alice hostility to 21st century technologies as reasons that they are looking more kindly on, for example, European, Chinese, and Canadian portfolio elements. Uncertainty regarding PTO examination norms and PTAB decisions, as well as apparently inconsistent panels of the Federal Circuit, have reportedly made it more difficult to value U.S. patent assets than those of other jurisdictions. The fact that the Supreme Court in the Oil States case is considering whether PTAB review of issued patents is even constitutional gives yet more pause.


Continue Reading Did You Hear About the Statistician Who Drowned in a Lake With an Average Depth of Two Feet?

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:

  1. “Determine whether the claims at issue are directed to a patent-ineligible concept” [3](e.g. abstract idea or fundamental economic practice); and
  2. If the claims are directed to a patent–ineligible concept then “search for an ‘inventive concept’-i.e., an element or combination of elements that is ‘sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself. “[4] (e.g. an improvement to another technology)

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.
Continue Reading Surviving Alice with an Appeal

The Supreme Court’s recent decision on patent venue, TC Heartland LLC v. Kraft Foods Group Brands, may actually turn out to be a good thing for patentees when it comes to Section 101.  But before we get to that, let’s do the AliceStorm numbers: The overall Alicestorm index of percentage of Section 101 ineligibility outcomes in the federal courts is up 0.6% from March, at 67.6%.   The Federal Circuit contributed the most to the increase, issuing eight separate decisions finding patent eligible subject matter, with six of these decisions being Rule 36 affirmances.  The number of motions on the pleadings index are up as well, by 1.2% from March, at 63.3%. Turning to the monthly numbers, after the record number (35) of Section 101 decisions in March 2017 things returned to “normal” with just 15 decisions: The bump in March contributed to a marked increase in the three-month average of ineligible decisions, jacking it up from 62% to 73%.  But beneath that, we can also see that the raw number of ineligible decisions in April (13) is about the same as the high marks since August 2016, and that the raw number of eligible outcomes (2) is at its lowest level since October 2015.  This puts the ratio of ineligible to eligible decisions in April 2017 at 6.5, the highest it’s been since June 2015.  Whether this signals a real uptick in favor of patent defendants or just a temporary blip in the overall downward trend in ineligible outcomes remains to be seen.
Continue Reading #AliceStorm: April Update and the Impact of TC Heartland on Patent Eligibility

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.


Continue Reading Surviving Alice in the e-Commerce Arts

With the close of the first quarter of 2017, there have been some interesting patterns developing in AliceStorm.  Let’s start with the big picture: There was a flurry of activity in March, with a record number of Section 101 decisions.  The Federal Circuit issued 11 decisions alone (its highest monthly output), and the district courts contributed another 24 (third highest month).  However, the overall percentages of invalidity outcomes are stable as compared to last month, which is really more a reflection of the law of large numbers: there have been so many Section 101 decisions that the total percentages are not going to change significantly month to month.
Continue Reading AliceStorm Update for Q1 2017

As many of my readers noticed, I didn’t publish any of my own blogs in January and February.  As it turned out, I suffered from a peculiar form of seasonal affective disorder (SAD), what I would call SMIAD: Subject Matter Ineligible Affective Disorder.  The unrelenting rains here in San Francisco, a similar torrent of Section 101 rejections from the USPTO, and an uptick in the rate of court decisions invalidating patents, converged to put me in a dour and de-inspired mood.  With the return of the sun and some interesting decisions from the Federal Circuit, it’s time to get back to tracking AliceStorm. First, an update on the overall AliceStorm numbers, through the end of February, 2017: Compared to the December numbers, the changes are mixed.  The Federal Circuit ineligibility rate increased 1.9% to 90.9%, while the district court rate declined 1.2% to 61.8%.  There’s been a 1% drop in the overall percentage of patents invalidated as well, down to 59.3%. The success rate on motions on the pleadings (including both motions to dismiss and motions for judgment on the pleadings) is down 0.6% to 62.3%.
Continue Reading AliceStorm Update February 2017

The U.S. Supreme Court’s 2014 decision in Alice Corp. v. CLS Bank (“Alice”)[i] has had a dramatic impact on the allowability of computer implemented inventions, especially in the finance arts (e.g. insurance, banking, etc.).  This series of articles explores the dynamics of that impact in different computer implemented arts as a useful guide to help patent practitioners navigate the new realities of post-Alice prosecution. In Technology Center 3600, art units 3691-3696 within Work Group 3690 examine applications in finance, banking and insurance (“Finance Art Units”).  These art units have been the most heavily impacted by Alice.

Fig. 1

Figure 1 shows the total number of allowances per month, abandons per month and appeals per month for patent applications examined in Work Group 3690, from January 2014 to March 2016.  The data is from the USPTO’s public PAIR[ii] system.  PatentAdvisor™[iii] was used to collect and process the data. There are currently about 80 examiners in this Work Group.  The Work Group produces about 8400 office actions on the merits per year (i.e. nonfinal rejections, final rejections and allowances).  Prior to Alice, about 2100 of the actions per year were allowances (25% of the total actions).  Post Alice, only 220 of the actions per year have been allowances (2.6% of the total actions).
Continue Reading Surviving Alice in the Finance Arts

In June, the Government Accounting Office (GAO) issued a performance audit of the U.S. Patent and Trademark Office (USPTO), “Patent Office Should Define Quality, Reassess Incentives, and Improve Clarity.” [1] The report was prepared at the request of the House Judiciary Committee, which asked the GAO to examine trends in patent litigation and identify opportunities to improve patent quality. To address the latter, the GAO attempted to identify the factors that contributed to “low quality patents.” The GAO’s analysis of these factors was based primarily on a lengthy survey of USPTO patent examiners on various factors that affected the quality of the applications they examined. The GAO report identified Requests for Continued Examination (RCEs) as a key issue impacting patent quality:

Requests for continued examination: Applicants are currently allowed to file an unlimited number of requests for continued examination, which is a request by an applicant to reopen examination of the patent application after the prosecution of the application has been closed. Applicants request continued examination most often after final rejection of an application, according to USPTO officials. Such requests provide applicants with virtually unlimited attempts to secure a patent, which is problematic for patent quality, according to some stakeholders. Some stakeholders also told us that such unlimited requests can wear down examiners, making them more likely to eventually grant the patent. While USPTO has reached out to patent applicants to learn why they were using such continued examinations, the number of requests for continued examination continues to pose a burden for the agency’s examiners. [2]

In its introductory paragraph the GAO report expressly linked “low quality patents” to “an increase in patent infringement suits,” and in the above quotation it links RCEs to “low quality patents,” stating “Such requests provide applicants with virtually unlimited attempts to secure a patent, which is problematic for patent quality, according to some stakeholders.” Other than the “stakeholders” the GAO offers no evidence for this assertion.
Continue Reading Busting the Myth of the Unlimited RCEs

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).
Continue Reading AliceStorm Update for Fall 2016