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.
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
Like the odd aunt whose holiday gifts can range from the wonderful to the recyclable, in 2016 Alice brought both good and bad tidings. Let’s start with the nice ones. The numbers here are through December 22, 2016. The big picture is that the overall rate of district court ineligibility decisions* has declined each year since Alice, while the total number of decisions has increased each year. This may be an indication of several factors. First, plaintiffs are being more careful in selecting which patents to assert. Thus, clear losers do not get picked for litigation. On the other hand, defendants continue to push the envelope on what they can challenge under Section 101, and in doing so, have overreached. As a result, the overall invalidity rate has fallen. Continue Reading Alice Brings a Mix of Gifts For 2016 Holidays
Editor’s Introduction: The following post is by Wayne Sobon, and is based on the remarks he made at the USPTO’s Patent Subject Matter Eligibility Roundtable on December 5, 2016. Mr. Sobon has over thirty years of experience as a patent attorney. He has served as chief IP counsel in several major corporations, as well as being an entrepreneur. He is a past president of AIPLA and recently served on the Patent Public Advisory Committee of the USPTO.
I’d like to go back to some first principles and history.
Article 1, Section 8 of the Constitution neatly divided the promotion of, on the one hand:
- Science, the fields of knowledge and ideas, by securing exclusive rights to Authors of their Writings. Things like books and maps and charts.
- And the Useful Arts, where science and ideas are transformed into tools and actions in the world, by securing exclusive rights to Inventors of their Discoveries.
Basic ideas and science would remain free for all.
One of the first Congressional acts was the Patent Act of 1790, which granted patents to any persons that “have invented or discovered any useful Art, Manufacture, Engine, Machine or Device, or any improvement therein, not before known or used”, provided that the invention or discovery was deemed “sufficiently useful and important”.
I am a solo entrepreneur. After twenty plus years in industry, I decided to take the risk and start my own business using my own capital. In the parlance of the law I am considered, almost affectionately, a micro-entity.
I knew I needed intellectual property protection and one of the first things I did was file for a trademark application. With my micro-entity status, I successfully prosecuted my own trademark application, without objection from the examiner. I also wanted to protect my underlying business process, and I assumed that my experience going through the patent prosecution process would go just as smoothly. I have come to learn otherwise.
As a micro-entity, getting my invention patented has proven to be a long and difficult road. With no political connections and very limited resources, it is painfully obvious that this system of multiple office actions, RCEs, and then perhaps appeals to PTAB and the Federal Circuit, was not designed for solo entrepreneurs. The complexity of the system put me at a particular disadvantage to the larger corporations who are clearly benefiting from my, now published, patent application.
On December 5, 2016 the USPTO will hold its second Patent Subject Matter Eligibility Roundtable to discuss issues in patent eligibility. The USPTO published a list of eighteen questions in anticipation of the event, dealing with various issues in eligibility theory, legislative changes and so forth, and requesting comments in response. Here are the answers I will be submitting to the Office.
Impact of Judicial Interpretation of Section 101
The Supreme Court’s current definition of a law of nature is scientifically incorrect. The analysis of this issue is quite complex, but I will attempt to summarize the issue. The Court’s definition in the Mayo case came down to: “the relation itself exists in principle apart from any human action. The relation is a consequence of the ways in which thiopurine compounds are metabolized by the body—entirely natural processes. And so a patent that simply describes that relation sets forth a natural law.”
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.”  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:
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
The press is all abuzz with reactions to Judge Mayer’s concurring opinion bluntly stating that “claims directed to software implemented on a generic computer are categorically not eligible for patent.” Intellectual Ventures I LLC v. Symantec Corp. et al., 2015-1769, -1770, -1771 (Fed. Cir. Sept. 30, 2016).
Here, I’ll just explore one aspect of this remarkable opinion—the reasons that judicially created exceptions are dangerous. As we have previously detailed on this blog, the precipitous drop-off in PTO allowances and Article III court confirmations of validity are not driven by the literal text of Section 101 or other portions of the patent statute, but instead by judicial interpretations of exceptions that the courts deem must be read into the Patent Act. Many commentators have observed that such judicially created exceptions may be an extremely convenient way to sidestep “bad” patents but are not needed, given that the provisions of sections 102, 103 and 112 would be just as effective in addressing vague or overbroad patent claims. Single-paragraph district court explanations of why particular patents claim nothing more than an abstract idea now regularly invalidate patents at the pleadings stage. Judge Mayer’s concurrence adds fuel to this fire. A few examples from his concurrence are illustrative.
Given the volume of district court decisions regarding Section 101, I typically don’t find ones that stand out enough to warrant discussion. But last week’s decision by Judge Stark in MAZ Encryption Technologies LLC v. Blackberry Corporation is an exception. The opinion demonstrates a rigorous application of the requirements of a Rule 12(c) motion for judgment on the pleadings, as well as an integrated approach to the Mayo test. The opinion is noteworthy as well because Judge Stark is no pushover on Section 101: Before MAZ he granted six of nine Section 101 motions (including two 12(b) motions) invalidating over a dozen patents. Judge Stark also wrote the opinion invalidating the patents in the Federal Circuit’s Mortgage Grader case. Continue Reading MAZ Encryption Technologies: The Proper Way to Decide a Rule 12(c) Motion for Ineligible Subject Matter