United States: UPDATE: Subject Matter Eligibility Under 35 U.S.C. § 101 – Abstract Ideas

Last Updated: May 24 2016
Article by Michael D. Van Loy, PhD, Lily Zhang and Yogesh G. Patel

All patent applications submitted to the United States Patent And Trademark Office (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).

The USPTO issued a memorandum on May 4, 2016 ("May 2016 Memo") to the Patent Examining Corps to provide further Examiner instructions relating to subject matter eligibility under 35 U.S.C. § 101. The memorandum addresses (1) how Examiners should formulate rejections under 35 U.S.C. § 101 and (2) how Examiners should evaluate applicant responses to rejections under 35 U.S.C. § 101. The May 2016 Memo provides additional instructions from the Interim Eligibility Guidance (2014) and the July 2015 Update. We previously posted a synopsis of the Interim Eligibility Guidance ( linked here) and the July 2015 Update ( linked here). This update is expected to affect how Examiners review the threshold question of patent eligibility for claims that are allegedly directed to abstract ideas, natural phenomena, and/or laws of nature, all of which are judicially created exceptions to the general rule, stated in § 101 that patent eligible subject matter includes "new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof." This update addresses new developments regarding examination of subject matter that allegedly falls into the abstract ideas exception.

The May 2016 Memo generally reinforces the Interim Eligibility Guidance and July 2015 Update. Specifically, based on the Alice/Mayo1 framework,2 it 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 the judicial exceptions. 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.

In addition to reinforcing the previous guidelines and providing examiners with examples of formulating rejections under 35 U.S.C. § 101, the May 2016 Memo enlightens practitioners on how an Examiner will evaluate applicant responses to rejections under 35 U.S.C. § 101. Specifically, the May 2016 Memo provides examiners additional guidance on how to formulate a rejection as well as a template for rebutting an applicant's response to rejections under 35 U.S.C. § 101. In essence, the May 2016 Memo has provided practitioners an insight on how to anticipate, avoid, and overcome Alice rejections.

The USPTO published a set of examples relating to subject matter eligibility analyses for claims directed to potentially abstract ideas in conjunction with the Interim Eligibility Guidance in July 2015. While some of the examples are based on cases decided by the USPTO's Patent Trial and Appeal Board (PTAB) or the Court of Appeals for the Federal Circuit (CAFC), others are hypothetical fact patterns designed to illustrate to examiners how the USPTO believes they should undertake a subject matter eligibility analysis under 35 U.S.C. §101. However, the May 2016 Memo explicitly notes that the examples do not carry the weight of court decisions and should therefore not be relied upon as a basis for a rejection.

Regarding the proper approach for formulating a rejection under 35 U.S.C. §101, the May 2016 Memo instructs examiners to point to one or more specific claim limitation reciting the judicial exception. If an examiner believes that the claim recites an abstract idea, the rejection should identify the abstract idea as it is recited and explain why it corresponds to a concept that the Courts (e.g. the CAFC and/or the PTAB) have previously identified as an abstract idea. The memo further instructs examiners to avoid going beyond the court-identified abstract ideas. As an example, the May 2016 Memo provides language for use by examiners in formulating an appropriate rejection:

Sample explanation: The claim recites the steps of sorting information by X, which is an abstract idea similar to the concepts that have been identified as abstract by the courts, such as organizing information through mathematical correlations in Digitech or data recognition and storage in Content Extraction.

For many applicants confronted with subject matter ineligibility under the current Alice regime, the significantly more prong of the two-part Mayo test may present the most effective route for challenging such findings. For instance, a claim directed to an abstract idea can nevertheless be considered patent eligible when the claim contains additional elements such that the claim, as a whole, amounts to significantly more than the abstract idea.3

The July 2015 Update, however, tended to afford Examiners considerable latitude with respect to the significantly more inquiry.4 Consequently, post-Alice §101 rejections generally gloss over the significantly more prong of the Mayo test, leaving applicants to grapple with few effective ways to respond. By contrast, the May 2016 Memo signifies an effort to improve the examination environment in this regard. Notably, the May 2016 Memo indicates intent by the USPTO to promote dialogue to resolve questions of subject matter eligibility. Thus, when rejecting a claim for falling short of the significantly more requirement, Examiners are encouraged to do more than merely articulate the underlying rationale but to do so in a manner that would enable an applicant to effectively respond.5 Moreover, the May 2016 Memo explicitly require Examiners to reassess and withdraw a rejection when an applicant's rebuttal persuasively establishes that a claim is directed to significantly more than an abstract idea.

Specifically, the May 2016 Memo provides further guidance to examiners regarding how to evaluate and respond to an applicant's response to rejections under 35 U.S.C. § 101. Typical approaches taken by applicants can include amending the rejected claim(s) and/or presenting arguments as to why the rejection is incorrect. In the scenario in which the applicant's claim amendments and/or presented arguments establish the claim is not directed to a judicial exception or is significantly more than a judicial exception, the Examiner should withdraw the rejection.

An applicant may argue that a claim is eligible because the claim as a whole amounts to significantly more than the judicial exception when an additional element is considered individually and in combination with other new elements and/or elements previously included in the claim. An additional element, either individually or as part of an "ordered combination" may qualify as "significantly more" if it meaningfully limits the judicial exception. An element or combination of elements can qualify as significantly more if it results in improvements in another technology or technical field, improves the function of a computer itself, or adds a specific limitation not considered well-understood, routine, and/or conventional. In the event that an element is not considered to satisfy the "significantly more" requirement taken individually, the examiner may nonetheless consider it "significantly more" when considered in combination with the other elements of the claim. For example, the May 2016 Memo cautions examiners that generic computer components may, in certain combinations, perform functions that are not generic computer functions and may therefore amount to significantly more than an abstract idea (thereby rendering the claim patent eligible under 35 US.C. §101).

The May 2016 Memo also sheds some additional insight on the notion of an element or activity that is well-understood, routine, and conventional in a relevant field. The "significantly more" inquiry generally turn on whether a claim recites additional elements (i.e., besides the abstract idea) that transcend what is well-understood, routine, and conventional in the corresponding field,6 and as such is quite fact-specific. The July 2015 Update asked examiners to look to the courts and to persons having ordinary skill in the art when making this decision. Interestingly, the May 2016 Update indicates that an applicant's own disclosures should also be considered when deciding whether a claim element is well-understood, routine, and conventional. Specifically, May 2016 Memo instructs examiners to reevaluate an initial assessment that the claim lacks "significantly more" when neither a) the specification of a patent application discusses the additional elements as being generic functions/components/activities nor b) the courts have treated such additional elements as well-understood, routine, and conventional. This requirement could provide relief for applicants struggling to find an effective basis for rebuttal of an Examiner's position that the claims lack "significantly more." However, the added scrutiny on the specification recommended in the May 2016 Memo is also a word of warning to prospective applicants regarding the need for strategic drafting of patent applications.

Furthermore, the May 2016 Memo attempts to clarify the nuance between novelty (or lack thereof) and well-understood, conventional, and routine. According to the May 2016 Memo, a lack of novelty can be established by finding an element in the prior art. However, the May 2016 Memo also asserts that establishing a lack of novelty is not dispositive of whether an element is well-understood, conventional, and routine.7 This is because prior art evidences mere knowledge or use of a certain element, which is not sufficient to establish the element as well-understood, routine, and conventional. Here, the May 2016 Memo appears to suggest that to establish an element as well-understood, routine, and conventional would require something more than just its mere existence in the prior art. But the question remains whether an element can be considered well-understood, routine, and conventional when no prior art exists to indicate knowledge or use. Indeed, it would seem counterintuitive for an element that is neither known nor used in a particular field to be considered well-understood, routine, and conventional. To the extent that the May 2016 Memo does not explicitly address this logical gap, it certainly seems to militate against a conclusion that an element can be both novel and well-understood, routine, and conventional at the same time. Thus, an applicant who successfully overcomes all prior art rejections (e.g., anticipation under 35 U.S.C. §102 and obviousness under 35 U.S.C. §103), it would seem natural to argue that the established novelty of the claimed subject matter means that at least some claim elements are not well-understood, routine, and conventional, and that the claim must therefore logically amount to significantly more than an abstract idea. 

Despite the hurdles to patentability that remain in the wake of Alice, early fears for the survival of software patents within the U.S. patent landscape have proven to be unfounded. Indeed, the May 2016 Memo appears to further level the playing field with regard to subject matter eligibility of claims alleged to be directed to abstract ideas. At the same time, examiners are better equipped to handle these rejections beyond the initial formulation stage. Crucially, the May 2016 Memo stipulates when Examiners should consider reassessing and withdrawing an issued rejection. Although the actual effects of these measures remain to be seen, the May 2016 Memo is likely to herald a more applicant-friendly examination environment. In particular, applicants should look forward to more substantive and productive communication with Examiners in matters regarding subject matter eligibility.

Footnotes

1 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.

2 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 U.S. law, the Supreme Court did not provide clear guidance regarding the proper inquiries or criteria to be considered in applying the Alice/May framework.

3 In Diamond v. Diehr, decide by the Supreme Court in 1981, the otherwise patent ineligible Arrhenius mathematical equation is deemed patent eligible when used to control a rubber molding process. Here, the application of the abstract idea satisfies the significantly more inquiry by improving an existing technological process (i.e., by solving technological problems in the conventional practice for rubber molding). Diamond v. Diehr, 450 U.S. 175, 188 (1981)

4 The July 2015 Update allows Examiners to rely on their own expertise in making the significantly more inquiry. Combined with a less emphatic requirement for providing a reasoned explanation, Examiners are effectively able to take Official Notice when alleging that the additional elements of a claim do not amount to significantly more than an abstract idea. 

5 According to the May 2016 Memo, "it is important for the examiner to explain the rationale underlying his or her conclusion so that an applicant can effectively respond." In addition, the May 2016 Memo also indicates that "when appropriate, the examiner should explain why the additional elements provide an inventive concept by adding meaningful limitation to the claimed exception."

6 The Interim Eligibility Guidance enumerates several categories of claim limitations that qualify as "significantly more" according to the Supreme Court. One such limitation is "adding a specific limitation other than what is well-understood, routine, and conventional in the field, or adding unconventional steps that confine the claim to a particular useful application."

7 The May 2016 Memo insists that "[a] prior art search should not be necessary to resolve whether the additional element is a well-understood, routine, conventional activity because lack of novelty (i.e., finding the element in the prior art) does not necessarily show that an element is well-understood, routine, conventional activity previously engaged in by those in the relevant field."

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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Michael D. Van Loy, PhD
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