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

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

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 to leverage that motion as a further reason for the case to be reheard, arguing in their respose that “SHzoom’s Motion requesting that the panel’s decision in this case be made precedential should be denied. Its arguments further illustrate why CQG’s Petition for rehearing en banc should be granted.”

The Federal Circuit did not bite and today denied CQG’s petitions for rehearing.  We’ll likely see their decision on SHzoom’s motion shortly.

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

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

In my June post, The One Year Anniversary: The Aftermath of #AliceStorm, I surveyed the frequency of Section 101 rejections at the USPTO. My analysis was based on approximately 300,000 office action and notices of allowance received from Patent Advisor.

As a reminder, the Section 101 rejection rates from the June post at the level of the USPTO Technology Center (TC) are shown below.  The numbers here are the percentage of all events in the cohort (TC and time period) that had a Section 101 rejection.  An event is either an allowance or a rejection; other events such as restriction requirements, advisory actions, and so forth are not counted.   image from http://s3.amazonaws.com/hires.aviary.com/k/mr6i2hifk4wxt1dp/15101901/2dba4170-2965-456c-87a9-acc1b1f56239.png Continue Reading Update on Section 101 Rejections at the USPTO

In my July post, I noted that Section 101 court decisions were issuing fast and furious, with twelve decisions in just the first ten days.  I predicted that “At this pace, we could see some twenty to thirty decisions this month.” Sadly, I was spot on: there were 21 decisions, with 17 of those (81%) invalidating 36 patents.  With those cases, and the cases through August 26, these are the current #AliceStorm numbers:

DOCS-#3742010-v2-101_Cases_and_Decisions

Compared to the last numbers from July, the invalidity decision rate is up a tick, patent invalidity percentage is essentially unchanged, and claims are down a bit.  No surprise, PTAB continues its 100% kill rate on final CBM decisions. Continue Reading #AliceStorm: The Summertime Blues Continue

NOTE (July 14, 2015): When I wrote this piece on Sunday, there were only 7 decisions announced through July 10. When I came to work on Monday, there were three more, so I revised and published yesterday with the count at ten.  Now today, two more decision from July 10!

All of the tables have been updated accordingly.

Perhaps I should just wait until tomorrow?

Part I: #AliceStorm and Versata

July invokes images of hot days, cool nights, and fireworks.  When it comes to #Alicestorm, the fireworks are happening in the courts, with the Federal Circuit lighting up the sky.

Table1

In just the first ten days of July, there have been ten twelve decisions on patent eligibility—more decisions in first ten days of any month since Alice was decided last year the dawn of time.  At this pace, we could see some twenty to thirty decisions this month.   #AliceStorm is accelerating. 

Continue Reading #AliceStorm: July is Smoking Hot, Hot, Hot…and Versata is Not, Not, Not

The most important thing that happened in June was not the invalidation of yet another pile of patents, but the rather more consequential decision of the Supreme Court to recognize the right of same-sex couples to marry.  Unlike patent law issues, when it comes to constitutional law, the Court can recognize the complexity and depth of the issue and, not surprisingly, the Court is deeply divided.  That the Court is unanimous on equally complex and divisive issues in patent law—such as eligibility—speaks to me that they do not have the same deep understanding of the domain.

Now, let’s do the #AliceStorm numbers.  First, the federal courts:

Table1

Since my May 28 update, there have been 19 § 101 decisions including two Federal Circuit decisions, Internet Patents Corp. v. Active Network, Inc. and Ariosa Diagnostics, Inc. v. Sequenom, Inc., both holding the challenged patents ineligible.  Overall, the Federal Court index is up 3.1% in decisions and an (un?)healthy 6.2% in patents.  The Motions on Pleading index is holding steady; the last five decisions on § 101 motions to dismiss have found the patents in suit invalid.

Continue Reading #AliceStorm In June: A Deeper Dive into Court Trends, and New Data On Alice inside the USPTO