United States: USPTO Issues Newly Updated Guidance On Subject Matter Eligibility That Further Clarifies Examination Standards Under 35 U.S.C. §101 In Light Of Alice V. CLS Bank

Last Updated: August 5 2015
Article by Michael D. Van Loy, PhD, Robert T.S. Latta and Matthew D. Show

Over the past few years, the Supreme Court's decisions in Alice (Alice Corp. v. CLS Bank Int'l, 134 S.Ct. 2347 (2014)) and Mayo (Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012)), and other cases relating to subject matter eligibility under 35 U.S.C. § 101 have resulted in significant changes in how the United States Patent and Trademark Office ("USPTO") examines patent applications. These changes present a new and important barrier to patentability of innovations that had long been considered patent-eligible, including many in the fields of software and other computer-implemented technologies, business methods, diagnostic approaches, and the like. All patent applications submitted to the USPTO are examined subject to the requirements set forth in 35 U.S.C. §§101, 102, 103, 112, which respectively address patent eligibility, novelty, inventiveness (e.g., non-obviousness), and disclosure and other formal requirements (e.g., enablement, written description, and clarity/definiteness). While Alice and Mayo set forth a basic framework ("the Alice/Mayo framework") for determining whether claimed subject matter is or is not eligible for patenting under US law, the Supreme Court did not provide clear guidance regarding the proper inquiries or criteria to be considered in applying the Alice/Mayo framework.  

In brief, the Alice/Mayo framework directs an examiner to first determine whether a claim is directed to one of the statutory categories of patent-eligible subject matter (e.g., process, machine, manufacture, or composition of matter). If a claim passes this initial test, the examiner then applies a two-part test first set forth in Mayo and held by the Supreme Court in Alice to be applicable to claims directed to any type of subject matter. The two-part test involves first determining (Step 2A) whether the claim, as a whole, is directed to at least one of several judicial exceptions, which include laws of nature, natural phenomena, and abstract ideas. Non-limiting examples of abstract ideas include fundamental economic practices, certain methods of organizing human activities, an "idea of itself," and mathematical relationships or formulas. If the claim is determined to be directed to one of the judicial exceptions, the second part (Step 2B) of the two-part test requires analysis of whether any element, or combination of elements, in the claim is sufficient to ensure that the claim, as a whole, amounts to significantly more than the judicial exception.

While lower courts, including the Court of Appeals for the Federal Circuit ("the Federal Circuit") and the USPTO's Patent and Trademark Appeal Board ("the PTAB"), have provided some further guidance in applying the framework to several additional cases, a great deal of uncertainty and confusion remains. In an effort to provide improved guidance and training for its examiners relating to this important issue, the USPTO has published "examination guidance" three times — in June and December [1] of 2014 and most recently on July 30, 2015 ("the July Guidance"[2]) — since Alice was decided.

The USPTO July Guidance provides additional examples of subject matter eligible claims in various technologies as well as sample analyses applying the Supreme Court and Federal Circuit's considerations for determining whether a claim is subject matter eligible.[3]

An improvement to the current examination environment at the USPTO should result from the explicit requirement in the July Guidance that examiners must present a prima facie case that claims to be rejected under 35 U.S.C. §101 are subject matter ineligible. The July Guidance notes that this requirement is intended "to guide examiners in satisfying their burden and ensuring that they reject on eligibility grounds only where appropriate" and further notes an emphasis on "performing a thorough analysis and writing a clear rejection" as "a critical part of satisfying the examiner's burden."  Additionally, the July Guidance advises examiners to "stay within the confines of the judicial precedent" and "ensure that a claimed concept is not identified as an abstract idea unless it is similar to at least one concept that the courts have identified as an abstract idea." We expect these clarifications to the examination framework to benefit both examiners and applicants. In particular, applicants facing a rejection under 35 U.S.C. §101 will benefit from being provided with clear and explicit explanations of the grounds for a rejection and from being able to argue that the USPTO has not properly met its burden rather than immediately being forced into arguing a negative based on a relatively conclusory assertion that a claim is directed to a judicial exception and does not include anything amounting to the required "significantly more" noted in the second part (Step 2B) of the two-part test laid out in the Alice/Mayo framework.   

Unfortunately, the July Guidance lacks clarity regarding the requirements for establishing a sufficient prima facie case of subject matter ineligibility. While stating that the issue of subject matter eligibility is a question of law, which is consistent with court precedent[4], the July Guidance further notes that the Supreme Court resorted to consulting modern day textbooks to determine that the claimed subject matter was directed to a judicial exception[5], but then states that the textbooks could not possibly be evidence because the Supreme Court is an appellate court limited to review of the record created below it.[6] It is unclear how this confusing explanation of the appropriate process will be applied in practice. Are examiners instructed to cite to modern day textbooks or the like as part of the "reasoned rationale that identifies the judicial exception recited in the claim and why it is considered an exception" identified by the July Guidance as a requirement for establishing a prima facie case? Or are applicants advised that an examiner need not provide evidence in support of a proffered prima facie case for patent ineligibility?  

The July Guidance appears to indicate that an examiner can take official notice as to whether additional elements in the claim amount to significantly more than the judicial exception (i.e., at Step 2B of the Alice/Mayo framework) by noting that "a rejection should only be made if an examiner relying on his or her expertise in the art can readily conclude in the Step 2B inquiry that the additional elements do not amount to significantly more." However, this instruction is somewhat contradicted by the inclusion of a listing of computer functions that have been found by the courts to be well-understood, routine, and conventional functions when they are claimed in a merely generic manner. These functions include performing repetitive calculations; receiving, processing, and storing data; electronically scanning or extracting data from a physical document; electronic record keeping; automating mental tasks; and receiving or transmitting data over a network (e.g., using the Internet to gather data). It remains to be seen whether this list will assist applicants in overcoming assertions that claim features do not amount to significantly more than a judicial exception. However, any guidance on this important issue should provide an improvement over the existing examination environment. 

Interestingly, the July Guidance downplays the importance of preemption by stating that preemption is inherent in Step 2A and 2B of the Alice/Mayo framework and that a finding that claims are not preempted shall not be a way to streamline the issue of subject matter eligibility. This is likely a push back on practitioners relying on the Supreme Court's discussion of preemption in Alice and the USPTO's Interim Guidance. However, given the apparent importance assigned in Alice to the concern that a claim directed to a judicial exception without "significantly more" would unfairly provide a broad monopoly that hindered rather than encouraged innovation, this advice to examiners seems incongruous.  

Examples of Eligible Claims to Computer-Implemented Inventions

As noted above, several thoroughly explained example fact patterns accompanied the July Guidance in Appendix 1. The following is a brief review of these examples with emphasis on claims indicated as likely to be subject matter eligible. While these new examples are helpful, they are based largely on USPTO precedent, hypothetical situations, or pre-Mayo and pre-Alice decisions rather than on actual precedent from the Federal Circuit or the Supreme Court. There has only been one recent Federal Circuit opinion finding an abstract-idea based claim eligible, that being DDR Holdings v. Hotels.com. The summaries below refer to the examples as they are numbered in Appendix 1 to the July Guidance.

Transmission of Stock Quote Data (Example 21)

The invention in this example is directed to a stock quote alert subscription service. Subscribers receive customizable stock quotes on their local computers from a remote data source. There are two hypothetical independent claims, one found to be subject matter ineligible and one found to be subject matter eligible based on the claim reciting significantly more than the abstract idea. Both claims were described as directed toward an abstract idea: the organization and comparison of data. The ineligible claim included generic computer elements and an alleged field-of-use limitation (the Internet). The eligible claim, however, included a transmission server that stored subscriber preferences; transmitting a stock quote alert from the transmission server over a data channel to a wireless device; and, providing a stock viewer application that causes the stock quote alert to display on the subscriber computer and enables a connection from the subscriber computer to the data source over the Internet when the subscriber computer comes online. Interestingly, the guidance states that while some of the limitations viewed individually do not amount to significantly more than the abstract idea, it is the "ordered combination of the elements," the invention as a whole, that amounts to significantly more than the abstract idea. We expect this line of reasoning to be helpful in overcoming rejections in which an examiner effectively dismantles a claim piece by piece while arguing that each element taken individually does not amount to the required "significantly more."

Graphical User Interface for Relocating Obscured Textual Information (Example 23)

This example includes two claims described as subject matter eligible and two claims described as subject matter ineligible. A claim directed to dynamically relocating textual information within a window displayed in a GUI based upon a detected overlap condition was described as not toward an abstract idea (i.e., Step 2A: No) because "the claim does not recite a basic concept that is similar to any abstract idea previously identified by the courts" as evidenced by the claim not reciting "any mathematical concept or a mental process such as comparing or categorizing information that can be performed in the human mind, or by a human using a pen and paper."

Two claims directed toward calculating first and second areas and using those areas to calculate a scaling factor were found to be similar to claims found subject matter ineligible by the courts; particularly those claims directed toward mathematical algorithms (Step 2A: YES). When determining whether the claims amount to significantly more than the abstract idea, the analysis essentially concludes that the limitations amount to merely applying the abstract idea on a general purpose computer. Consequently, these claims do not amount to significantly more than the abstract idea.  (Step 2B: NO).

The final claim is also directed toward calculating first and second areas and using those areas to calculate a scaling factor. Consequently, the claim is directed to a judicial exception. (Step 2A: YES). The determination of whether the claims amounted to significantly more than the abstract idea includes some interesting analysis. Initially, the explanation notes that the recitation of a computer screen and a processor are not enough by themselves to transform the exception into a patentable invention because those elements are merely a generic computer. However, the explanation further notes that when viewing the computer limitations as an ordered combination with the remaining limitations, the claim amounts to significantly more than the abstract idea. The analysis concludes that the remaining limitations amount to a specific application of the mathematical algorithm that improves the functioning of the basic display function of the computer itself. (Step 2B: YES).

System Software – BIOS (Example 27)

The claim in this example is considered as amenable to examination under the "streamlined analysis" described in the USPTO's Interim Guidance issued in December 2014. The claim recites a series of steps for loading BIOS on a local computer system from a remote storage location. The analysis notes that upon mere inspection of the claim it is obvious that the claim does not attempt to tie up any judicial exception so that others cannot practice it. In particular, the claim's description of initializing a local computer system using BIOS code stored at a remote memory location, by triggering the processor to transfer BIOS code between two memory locations upon a powering up of the computer and transferring control of the processor operations to that BIOS code, makes it clear that the claim as a whole would clearly amount to significantly more than any potential recited exception. Consequently, the USPTO would find the eligibility of such a claim self-evident, and, in the streamlined analysis, would require no further analysis. Interestingly, this example relies on a preemption-based argument, which, as noted above, was described in the July Guidance as being disfavored. We recommend continuing to make such arguments on the record even if an examiner assigns them no persuasive weight. In light of the ever-shifting examination landscape, such arguments could very well become relevant again, particularly if an application spends a few years waiting for an appeal before the PTAB to play out.

Subject Matter Eligibility in Life Sciences and Biological Fields

Rejections based on claiming abstract ideas are typically observed in claims directed to some form of diagnostic method where the presence or absence of a biological molecule can signify a certain disease state or a susceptibility to disease. Natural product issues come up while attempting to claim compositions of matter derived from a natural source.

The July Guidance provides additional clarification to the markedly different characteristics ("MDC") analysis required when determining if natural products meet subject matter eligibility. Rather than move the MDC analysis to Step 2B of the Alice framework, as some public commenters to the December 2014 Interim Guidance suggested, the USPTO has decided to have it remain a part of the Step 2A inquiry of the Alice/Mayo framework. The reasons given were due to (1) early eligibility (i.e., the MDC analysis in Step 2A means claims are considered eligible once it is shown that no product of nature is recited); (2) it provides an additional pathway to eligibility in step 2B of the Alice framework, even for claims directed to natural products, if applicants can demonstrate the recited subject matter amounts to something "significantly more" than the recited judicial exception; and (3) placing the MDC analysis in Step 2A means that all claims are analyzed consistently, regardless of the judicial exception or the statutory category.

The July Guidance also provided further explanation regarding identifying the existence of abstract ideas in the Step 2A analysis, which is pertinent to the field of medical diagnostics and personalized medicine. Specifically, the July Guidance used the phrase "an idea 'of itself'" to characterize a patent-ineligible abstract idea "standing alone such as an uninstantiated concept, plan, or scheme, as well as a mental process (thinking) that 'can be performed in the human mind, or by a human using pen and paper.'" To illustrate, the July Guidance suggested "concepts relating to comparing information regarding a sample or a test subject to a control or target data" (as was the case in Myriad) or "diagnosing an abnormal condition by performing clinical tests and thinking about the results." 

The new examples provided with the July Guidance do not offer any additional illustrations for law of nature or natural product claims with respect to meeting the subject matter eligibility hurdle. However, examples of these types of claims were included with the December 2014 Interim Guidance. These previously presented examples are also included the "comprehensive" list of examples appended to the July Guidance as "Appendix 2."

Conclusion

The July Guidance provides further clarity regarding criteria to be used by USPTO examiners in determining subject matter eligibility. More importantly, it provides some balance to the examination process by requiring that an examiner clearly articulate a prima facie basis for a rejection under 35 U.S.C. §101. We expect applicants to benefit from having concrete explanations of the reasons for rejection rather than being relegated to arguing against conclusory assertions that a claim is directed to a judicial exception and fails to provide significantly more when responding to post-Alice rejections under 35 U.S.C. § 101. Particularly in a post-Alice environment in which court decisions have provided far more examples of patent ineligible subject matter than of patent eligible subject matter, we agree with the logic of placing the onus on examiners to show how the subject matter of a claim under examination resembles one of the courts' judicial exceptions rather than requiring an applicant to argue that it does not.  

Footnotes

1 See the Mintz Levin Intellectual Property Alert dated December 17, 2014 (available at http://www.mintz.com/newsletter/2014/Advisories/4510-1214-NAT-IP/

2 July 2015 Update: Subject Matter Eligibility, USPTO (available at: http://www.uspto.gov/sites/default/files/documents/ieg-july-2015-update.pdf

3 July 2015 Update Appendix 1: Examples, USPTO (available at: http://www.uspto.gov/sites/default/files/documents/ieg-july-2015-app1.pdf July 2015 Update Appendix 2: Index of Eligibility Examples (available at: http://www.uspto.gov/sites/default/files/documents/ieg-july-2015-app2.pdf

4 In re Roslin Inst. Of Edinburgh, Scotland, 750 F.3d 1333, 1335 (2014); Accenture Global Services, GmbH v. Guidewire Software, 728 F.3d 1336, 1340‐41 (Fed. Cir. 2013); Fort Properties, Inc. v. American Master Lease LLC, 671 F.3d 1317, 1320 (Fed. Cir. 2012); Cybersource, 654 F.3d at 1369; SiRF Tech. Inc. v. Int'l Trade Commission, 601 F.3d 1319, 1331 (Fed. Cir. 2010); In re Ferguson, 558 F.3d 1359, 1363 (Fed. Cir. 2009); In re Bilski, 545 F.3d 943, 951 (Fed. Cir. 2008) (en banc), affirmed by Bilski v. Kappos, 561 U.S. 593 (2010).

5 See, Bilski, 561 U.S. at 611; Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 573 U.S. __, 134 S. Ct. 2347, 2356 (2014).

6 It is a fundamental principle of law that an appellate court does not act on evidence that was not before the lower court(s). See, e.g., Rosewell v La Salle Nat'l Bank, 450 U.S. 503, 518 n.22 (1981). See also VirtualAgility Inc. v. Salesforce.com, 759 F.3d 1307, 1312 (Fed. Cir. 2014); Sky Techs. LLC v. SAP AG, 576 F.3d 1374, 1377 n.4 (Fed. Cir. 2009); In re Watts, 354 F.3d 1362, 1367 (Fed. Cir. 2004).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Authors
Michael D. Van Loy, PhD
Robert T.S. Latta
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