Alice on Dulany Street: How the PTAB handles 101 in ex parte appeals

By Eli Mazour & James Bennin
January 31, 2017

“[T]he outlook has become only more grim for appellants who are hoping that the PTAB will overturn a § 101 rejection.”

Alice in WonderlandPreviously, we analyzed ex parte appeal decisions by the Patent Trial and Appeal Board (PTAB) from the year following the Alice v. CLS Bank decision. At the time, we concluded that the PTAB is unlikely to reverse § 101 rejections based on Alice. We decided to revisit this conclusion based on ex parte appeal decisions from December 2016.

First, we identified 45 publicly available ex parte appeal decisions* that mention both Alice and § 101. In this article, we limit most of our analysis to the 38 decisions for applications that were not handled by USPTO’s Technology Center (TC) 1600 (Biotechnology and Organic Chemistry) for various reasons. First, Alice does not directly deal with (and is not generally associated with) the question of patentability of biotechnology and chemistry-related inventions. Second, we did not identify any decisions that mention Alice for applications from TC 1600 in our previous analysis.

Like in our previous analysis, the 38 decisions represent only about 3% of all of the publicly available ex parte appeal decisions from December 2016. We categorized the 38 decisions as follows:

There are some stark differences between the above table for December 2016 and the table presented in our previous article. In the previous article, we identified 140 publicly available ex parte appeal decisions from the one year time period following Alice that mention both Alice and § 101. In nearly half of those 140 decisions, the PTAB only encouraged (usually in a footnote) the examiners to consider reviewing the claims for compliance under § 101 in light of Alice. In those decisions, the examiners did not discuss whether the claims should be rejected under § 101 in detail. In two other decisions, the PTAB did not reach a decision regarding § 101 rejections made by the examiners while reaching a decision regarding other rejections. Thus, the PTAB demonstrated a reluctance to introduce § 101 rejections or make a decision regarding § 101 rejections when there were other rejections remaining. As shown in the above table, we did not identify any such decisions from December 2016.

As further shown in the table in our previous article, we identified 16 decisions where examiners introduced § 101 rejections, in light of Alice, in the year after Alice. Those 16 decisions represent only about 10% of the total 140 decisions from that year. In contrast, as shown in the above table, we identified 15 decisions where the examiner introduced § 101 rejections, in light of Alice, from December 2016. Those 15 decisions represent about 40% of the 38 identified decisions that mention Alice. And, in two other decisions, a judge argued that panels should introduce § 101 rejections. This clearly demonstrates a growing comfort and willingness by the PTAB to introduce a § 101 rejection even when the examiners did not reject the claims under § 101.

The examiners rejected at least one claim under § 101 in 23 of the 38 decisions. As shown in the chart below, the PTAB reversed the rejection, without introducing a new § 101 rejection, in only two of those decisions, resulting in an effective reversal rate that is below 9%. This reversal rate for § 101 rejections is even lower than the 14% reversal rate that we calculated for the decisions in the year after Alice. However, due to the small sample size, this difference might not be statistically significant.

We also identified the TCs that handled the applications for all of the 45 identified decisions. Seven decisions were for applications that were handled by TC 1600, which includes art units that handle biotechnology and organic chemistry-related applications. Thirty decisions were for applications handled by TC 3600, which includes art units that examine business method and electronic commerce-related applications. This represents 78% of the 38 applications, which is even greater than the 40% of the applications that were handled by TC 3600 in our previous analysis. Finally, four decisions were from TCs 2100, 2400, and 2600 combined, which include art units that examine computers and communication networks applications.

Summary of Decisions Where PTAB Reversed 101 Rejections

Appeal from Art Unit 3689 (TC 3600), which handles “Business Methods”

In the decision on appeal No. 2015-001146 regarding U.S. Patent Application No. 11/924,071, the PTAB reversed the § 101 rejection of claims that recite “a number of detailed operations performed by a ‘parametrizing unit’ of a motor vehicle” that is configured as one or more processors and operatively coupled with a plurality of control units of a configuration system of the vehicle (see claim 1 and related description in the decision). In reaching the decision, the PTAB 1) agreed with appellants “that the Examiner has not articulated an abstract idea”; 2) disagreed “with the Examiner that configuring control units are a fundamental economic practice or business practice”; and 3) indicated that “the use of a general purposes computer [does not] necessarily indicate that there is an abstract idea under Alice.” In this decision, the PTAB did not identify the requirement for properly articulating an abstract idea. Thus, the PTAB reversed the § 101 rejection because they were not persuaded by Examiner’s conclusory statements that alleged that the claims were directed to an abstract idea and involved nothing more than a generic computing device.

Appeal from Art Unit 3621 (TC 3600), which handles “Electronic Commerce”

In the decision on appeal No. 2014-009362 regarding U.S. Patent Application No. 13/525,187, the PTAB reversed the examiner’s § 101 rejection of claims that are directed to “determining votes recorded on a voter-marked paper ballot,” which “involves a ballot processing computer that performs a pixel count of voter-marked ballots on optical ballot images and determines whether the pixel count is above a first threshold, below a second threshold, or falls between the first and second thresholds (see claim 1 and related description in the decision). The PTAB reversed the § 101 rejection because there “is no articulation of an abstract idea” by the Examiner. Again, the PTAB did not identify the requirement for a proper “articulation of an abstract idea.” However, in reaching the decision, the PTAB did cite the description of the two-part Alice test in the USPTO 2014 Interim Guidance on Patent Subject Matter Eligibility.

Conclusion

We embarked on conducting a review of PTAB’s December 2016 ex-parte appeal decisions to find out if the PTAB’s approach based on Alice has changed since our previous analysis of PTAB decisions from the year after Alice.

In many of the decisions (including in the two decisions discussed above where the § 101 rejections were reversed), the examiners and appellants had an opportunity to make arguments based on Alice before the PTAB reached a decision. Yet, the outlook has become only more grim for appellants who are hoping that the PTAB will overturn a § 101 rejection. As indicated above, the reversal rate for a § 101 rejection in December 2016 based on Alice was less than 9%. Equally worrying for potential appellants is that some decisions introduced a § 101 rejection even when prior art rejections were reversed. The PTAB seems to have stopped the practice of urging examiners to review the claims for compliance under § 101 in light of Alice, and, instead, has become more active in introducing § 101 rejections on their own.

However, there are some important reasons for optimism. First, at least based on the publicly available information, Alice continues to negatively impact the outcome for only a sliver of the patent applications being considered by the PTAB during ex-parte appeals. Still, these applications are related to some of the areas that are most important for the growth of America’s economy, including electronic commerce. Second, the two § 101 reversals discussed above indicate that at least some PTAB panels that are willing to reverse § 101 rejections when examiners fail to provide sufficient reasoning regarding why claims are directed to an abstract idea, as required by the framework set out in Alice. Finally, new Federal Circuit decisions and additional guidance from the PTO might provide additional basis for the PTAB to reverse § 101 rejections in the future.

_______________

* There are 47 items found, but two of them were duplicates of other items.

The Author

Eli Mazour

Eli Mazour is an Associate with Harrity & Harrity LLP in Fairfax, Virginia. Mazour has extensive experience in all aspects of the patent prosecution process, including preparing and prosecuting hundreds of patent applications related to computer software, Internet and e-commerce, business methods, electronic consumer products, and telecommunications. Eli has particular experience in helping clients identify and assess patentable inventions and developing patent prosecution strategies. He has also been involved with conducting patent infringement investigations and clearance of products.

Eli Mazour

James Bennin is an IP attorney with Caterpillar. Prior to joining Caterpillar in March 2016, James was an associate with Harrity & Harrity LLP in Fairfax, Virginia. While in private practice his practice focuses on Intellectual Property matters, including the preparation and prosecution of patent applications in the U.S. and foreign jurisdictions.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 3 Comments comments.

  1. Bastian Best February 1, 2017 1:39 am

    Dramatic numbers!

    IMHO the USPTO should just do away with the awkward Alice “abstract idea” test and copy the EPO’s “any hardware” test! I’ve ranted about that here: https://youtu.be/XSqu1ZcNeIM

    I believe that would make our all lifes more easy and would finally create legal certainty when it comes to patent-eligibility.

    What do you think?

  2. Eli Mazour February 1, 2017 4:10 pm

    Bastian,

    I agree that a change is needed with regards to 101 in the US. As David Kappos has pointed out, it’s now often easier to get a patent for a software-related invention at the EPO or in China than in the US. So, I think your proposal is interesting.

    I’m also a fan of the IPO’s recent legislative proposal http://www.ipwatchdog.com/2017/01/31/ipo-adopts-resolution-legislation-amend-101/id=77818/

  3. Bastian Best February 1, 2017 5:22 pm

    Eli,

    The IPO’s recent legislative proposal indeed appears to aim at something quite similar to the EPO system!

    Just replace “exists in nature independently of and prior to any human activity, or exists solely in the human mind” with “lacks technical character”.

    The notion that eligibility and novelty/obviousness should be separate requirements is also long established at the EPO, see http://www.europeansoftwarepatents.com/software-patents-in-europe-7-principles/ at point (d).