Earlier today the United States Patent and Trademark Office released its much anticipated 2014 Interim Guidance on Patent Subject Matter Eligibility, which the in the industry has largely been dubbed USPTO 101 guidance. The guidance, which was signed on December 10, 2014, by USPTO Deputy Director Michelle Lee, will officially publish in the Federal Register on December 16, 2014. This eligibility guidance will become effective immediately upon publication in the Federal Register.
The USPTO explains in the Notice that this guidance is “for use by USPTO personnel in determining subject matter eligibility under 35 U.S.C. 101 in view of recent decisions by the U. S. Supreme Court.” This latest interim guidance supplements the guidance given by the office in June 2014 relative to the Supreme Court’s decision in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. __, 134 S. Ct. 2347 (2014). This guidance supersedes the March 4, 2014, eligibility guidance for claims involving laws of nature, natural phenomena and natural products, which was issued relative to the Supreme Court’s decisions in Mayo Collaborative Serv. v. Prometheus Labs., Inc., 566 U.S. __, 132 S. Ct. 1289 (2012) and Association for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. __, 133 S. Ct. 2107 (2013).
The USPTO guidance, which in large part is reminiscent of the KSR Guidelines put out by the Office in 2010, goes through cases one by one. The USPTO explains the facts, provides representative claims and then explains the holding in each case so that patent examiners can understand the teaching point of the case and how to apply the holding to similar situations moving forward. Perhaps most notable, at least on the first review, is that the USPTO incorporated the recent Federal Circuit decision in DDR Holdings, where the Federal Circuit (per Judge Chen) found that the software patent claims at issue in the case were patent eligible.
In a blog post announcing this 101 guidance, Commissioner for Patents Peggy explained that “the guidance reflects a significant change from the examination guidance previously issued in response to Myriad and Mayo. The changes were triggered by the feedback we solicited and received from the public, as well as refinements necessitated by the Alice Corp. decision.”
The guidance begins with the Supreme Court two-part Mayo framework for analyzing whether a patent claim covers patent eligible subject matter. In order to make sense of this two-part Mayo framework the USPTO broke the decision making into three steps. In the first step the USPTO has instructed patent examiners to determine whether the claim is directed to a process, machine, manufacture or composition of matter. If the answer is NO, then the claim is not eligible subject matter. If the claim is directed to a statutory category of invention examiners have been instructed to proceed to the next step, which is the first step of the two-part Mayo framework.
If the claim is directed to a statutory category of invention the first Mayo inquiry requires determination of whether the claim is directed to a law of nature, natural phenomenon, or an abstract idea, which are collectively referred to as “judicial exceptions” to patent eligibility. The USPTO provides these non-limiting examples of claims impermissibly directed to a law of nature or natural phenomenon:
- an isolated DNA (citing Myriad)
- a correlation that is the consequence of how a certain compound is metabolized by the body (citing Mayo)
- electromagnetism to transmit signals (citing O’Reilly v. Morse, 56 U.S. 62 (1853).
- the chemical principle underlying the union between fatty elements and water (citing Tilghman v. Proctor, 102 U.S. 707 (1881).
The USPTO provided these non-limiting examples of claims impermissibly directed to an abstract idea:
- mitigating settlement risk (citing Alice)
- hedging (citing Bilski v. Kappos)
- creating a contractual relationship (citing buySAFE, Inc. v. Google, Inc. (Fed. Cir. 2014))
- using advertising as an exchange or currency (citing Ultramercial, LLC v. Hulu, LLC and WildTangent (Fed. Cir. 2014))
- processing information through a clearinghouse (citing Dealertrack Inc. v. Huber, 674 F.3d 1315 (Fed. Cir. 2012))
- comparing new and stored information and using rules to identify options (citing SmartGene, Inc. v. Advanced Biological Labs., SA, 555 Fed. Appx. 950 (Fed. Cir. 2014))
- using categories to organize, store and transmit information (citing Cyberfone Sys. v. CNN Interactive Grp. (Fed. Cir. 2014))
- organizing information through mathematical correlations (citing Digitech Image Tech., LLC v. Electronics for Imaging, Inc. (Fed. Cir. 2014))
- managing a game of bingo (citing Planet Bingo, LLC v. VKGS LLC (Fed. Cir. 2014))
- the Arrhenius equation for calculating the cure time of rubber (citing Diamond v. Diehr, 450 U.S. 175 (1981)).
- a formula for updating alarm limits (citing Parker v. Flook, 437 U.S. 584 (1978))
- a mathematical formula relating to standing wave phenomena (citing Mackay Radio & Tel. Co. v. Radio Corp. of Am., 306 U.S. 86 (1939))
- a mathematical procedure for converting one form of numerical representation to another (citing Gottschalk v. Benson, 409 U.S. 63, 67 (1972))
Upon reading this list I was taken back initially because the decision in Diehr was that the claim was patent eligible. The Patent Office analysis recognizes that the claim was patent eligible, but it would find the claim to be directed to the Arrhenius equation and patent eligible because of the “significantly more” prong. I would disagree with this characterization because, as the Supreme Court explained, the claim would not preempt the use of the Arrhenius equation, which necessarily means that the claim could not be directed to the Arrhenius equation. Having said that, it is also equally clear that the Supreme Court has fully retreated from Diehr and the preemption analysis of 101.
If the claim is directed to a statutory process and it is not directed to a law of nature, natural phenomenon or an abstract idea the claim qualifies as being patent eligible subject matter. If, however, the claim is directed to a law of nature, natural phenomenon or an abstract idea the second part of the Mayo framework requires inquiry into whether the claim recites additional elements that amount to “significantly more” than a law of nature, natural phenomenon or an abstract idea, whatever the case may be. What is enough to qualify as “significantly more” has been the subject to great debate. The USPTO that limitations that may be enough to qualify as “significantly more” include:
- Improvements to another technology or technical field (citing Alice)
- Improvements to the functioning of the computer itself (citing Alice)
- Applying the judicial exception with, or by use of, a particular machine (citing Bilski)
- Effecting a transformation or reduction of a particular article to a different state or thing (citing Diehr)
- 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 (citing Mayo)
- Other meaningful limitations beyond generally linking the use of the judicial exception to a particular technological environment (citing Alice)
The USPTO also provided examples of limitation that have been found insufficient to qualify as “significantly more,” which include:
- Adding the words “apply it” (or an equivalent) with the judicial exception, or mere instructions to implement an abstract idea on a computer (citing Alice)
- Simply appending well-understood, routine and conventional activities previously known to the industry, specified at a high level of generality, to the judicial exception, e.g., a claim to an abstract idea requiring no more than a generic computer to perform generic computer functions that are well-understood, routine and conventional activities previously known to the industry (citing Alice)
- Adding insignificant extrasolution activity to the judicial exception, e.g., mere data gathering in conjunction with a law of nature or abstract idea (citing Mayo)
- Generally linking the use of the judicial exception to a particular technological environment or field of use (citing Mayo)
- “These guidelines are nuch better than the original guidelines,” according to Bob Stoll, former Commissioner for Patents and current partner at Drinker Biddle. “The guidelines support software as patentable subject matter and include examples directed to both Ultramerical and DDR Holdings. They are also better for our biotech industries.”
In a telephone interview earlier today, Deputy Commissioner for Patent Examination Policy, Drew Hirschfeld, echoed Commissioner Focarino’s comments from the PTO blog, and further recognized that these guidelines are an important step forward and show that the USPTO will remain committed to listening to the industry and working to continually improve the guidance over time. “We recognize that this is an iterative process that will evolve with case law and feedback from the public,” Hirschfeld explained. “We are receptive to making changes in the right way to work with the public to get to the right place where these guidelines should be in long term.”
Toward that end, the USPTO is already requesting comments from the public and will open a 90 comment period. Comments can be provided via e-mail to firstname.lastname@example.org. Further, the USPTO has announced that the agency will hold a public forum in mid-January 2015 in order to discuss the guidance and next steps and to receive additional oral input. The USPTO has also launched a webpage dedicated to this interim guidance, which includes a further series of examples relative to Mayo and Myriad, and which soon will also include more hypotheticals regarding Alice. According to Hirschfeld the reason for greater development on the biotech is because “the USPTO guidance on Mayo/Myriad was further along than the Alice guidance.”
During our call Hirschfeld would also tell me that he recognizes that people have very different opinions on what the guidance should say, different opinions about what the courts have said and different ideas about what the PTO should do. “I recognize that we are not going to make everyone happy,” Hirschfeld told me. “While we cannot make everyone happy I do hope we can get across that we are being transparent, very open and are working with the public.”
Indeed, a willingness to work with the public both in the past and moving forward in the future would come up a number of times during our conversation. At one point Hirschfeld said “whether people like the guidance or not, I think people will see that the PTO has taken the feedback received very seriously… we will continue to make changes if needed.” This isn’t to suggest that Hirschfeld thinks the guidance isn’t as good as it can be, but rather a recognition that this area of law is evolving quickly and it will require the USPTO to calibrate and recalibrate its guidance as new development arises. Also clear is the desire of senior Patent Office officials to let the public know that the PTO is listening and where appropriate will make changes. This was not always the case at the USPTO, but the cooperative tone set by David Kappos in his time as Director continues.
Already the industry is weighing in on the guidance, largely with a hopeful and appreciative response. “Today’s updated Alice guidelines sends an important message that software technology continues to be fully eligible for patent protection,” according to a Microsoft spokesperson. “Innovative software technologies power our economy and the patent system protects billions of dollars in software R&D.”