PTAB is Bogged Down by Eligibility Appeals

By Samuel Hayim & Kate Gaudry
March 5, 2018

The PTAB has been slow to respond to business-method eligibility appeals, such that decisions are frequently issued after applicable case law has shifted relative to the filings of the correspond appeal briefs.

PTAB is Bogged Down by Eligibility AppealsAppealing a rejection to the Patent Trial and Appeal Board (PTAB) may seem desirable to many Applicants who have reached an impasse with their examiner. Appealing may seem especially desirable when the prospects of reaching an allowance are low with a particular examiner. This is often the case when sudden landmark court decisions radically alter the prosecution landscape. Thus, new case law that materially affects allowance prospects might cause a sharp increases in the number of appeals filed. The steep increase in appeals may put significant pressure on the PTAB.

The recent Alice v. CLS Bank decision is an excellent example of landmark Supreme Court decision that materially affected the allowance prospects for large number of applications. After Alice, there was large increase in the number of subject matter eligibility rejections, especially in the business-method art units.[1] Applicants subject to persistent eligibility rejections may find appealing to be the only remaining desirable option. For these applicants, appeal provides two potential benefits: an opportunity to reach a new decision-maker and putting prosecution on hold. Applicants interested pausing prosecution are typically hoping that more favorable case law would develop while their appeal is awaiting resolution.

Although Alice was decided in 2014, post-Alice appellate decisions have only recently been issued. In 2016, we first requested from the United States Patent Office (USPTO) an identification of each published application for which (1) an appeal brief was filed after September 1, 2014 (a date in which Alice was likely to be considered by the Applicant), and (2) a decision by the PTAB was issued from the USPTO. As of July 2016, only 162 ex parte appeal decisions satisfied our criteria. Our analysis of the 162 decisions revealed that only 20% of the decisions included a subject matter eligibility rejection.

Last year (in July 2017) we requested an updated set of PTAB decisions using the same two criteria and received over 10,000 ex parte appeals. We manually reviewed decisions to obtain a sample of the 10,000 ex parte appeals to determine whether similar statistics characterize the larger data set. Specifically, we reviewed 500 decisions, 125 decisions from four computer related Technology Centers (TCs), 2100, 2400, 2600, and Business Methods art units. Our goal was to identify particular rejection types at issue and the decision issued for each rejection type.

We reviewed an additional sample data set from the larger set that included decisions with more recently filed appeal briefs. This second data set included decisions in which an appeal brief was filed after October 2015 for business method art units and since July 2016 for the other TCs, so as to provide similar sample sizes (n=68 for the business method art units, n=48 for TC 2100, n=56 for TC 2400 and n=42 for TC 2600). Since the these appeal briefs were filed more recently, we reviewed the second sample set to determine what affect, if any, of any additional favorable case law on the appeal.

Relatively Few Decisions have been Rendered on Post-Alice Appeals

Across the entire dataset for computer related appeals (e.g., from TCs 2100, 2400, 2600, and business-method art units), 62% of the appeals resulted in full affirmances of the examiner’s rejections. (FIG. 1.) Full affirmances were much more common for applications assigned to a business-method art unit (full affirmances=78%) as compared to TC 2100 (61%), TC 2400 (58%) or TC 2600 (64%). The most notable difference among the TCs is that the PTAB issued three times as many decisions from each of TCs 2100, 2400, and 2600 then from the business-method art units.

Fig. 1: The number of decisions affirmed, split, and reversed from various Technology Centers.

But the Business-Method Technology Center is Sending the Most Appeals to the PTAB

One potential explanation is that the business-method art units having less total art units than the other TCs. Nevertheless, the number of appeals filed in the TC of the business-method art units (TC 3600) trounces the appeal count in the other computer-related TCs (with TC 3600 having had 2967 appeals filed in fiscal year 2017, as compared to TC 2100, 2400 and 2600, which had a mere 1164, 1238 and 1024 appeals filed).[2] (See FIG. 2.) Further, the business-method technology center is the only technology center for which the number of appeals received has sizably increased in recent years. (See FIG. 2.)

Fig. 2: Volume of appeals received by the PTAB from various Technology Centers.

The Business-Method Technology Center has the Highest Appeal Backlog

So how can we reconcile the relatively low number of business-method appeal decisions with the relatively high number of business-method appeals? The answer lies with our criteria for the decisions: the decisions must have corresponded with an appeal brief filed after August 2014. Though many appeals corresponding to the business-method TC are decided each year (n=2700 in fiscal year 2017)[3], these decisions merely were not based on recently filed appeals. Rather, TC 3600 has the largest backlog of unprocessed appeals (n=4317). (Table 1.)

Table 1: Number of unprocessed (pending) appeals from various Technology Centers.

This backlog may be explainable due to the business-method art unit’s distinguishably low allowance rates[4] and/or frequent eligibility-rejection issuance.[5]

Conclusions about Eligibility Appeals

The low allowance rates and the nearly blanket eligibility-rejection issuance in the business-method art units is not without consequence. Beyond disincentivizing innovation, the examination of business-method applications is protracted as the workload at the PTAB is increased. Not only do these results affect the PTO’s operation of handling matters currently at issue, but it results in an unjust postponement of guidance. After the recent adjustments of the eligibility thresholds, examiners and applicants alike are awaiting more precedence to know what can be patent eligible in this space as new patent applications are filed. However, the PTAB has been slow to respond to business-method appeal briefs (surely due to the high volume of appeals), such that decisions are frequently issued at a time when the applicable case law has shifted relative to the filings of the correspond appeal briefs. Perhaps the areas most needing guidance based upon the backlog should be prioritized to provide guidance more quickly to break this cycle.

_______________

[1] Gaudry et al., Ex Parte Appeals in the Post-Alice World, 2016 IPWatchdog.com, http://www.ipwatchdog.com/2016/08/02/ex-parte-appeals-post-alice/id=71562/

See also Kate Gaudry, Post-Alice, Allowances are a Rare Sighting in Business-Method Art Units, IPWatchdog.com, http://www.ipwatchdog.com/2014/12/16/post-alice-allowances-rare-in-business-method/id=52675/

[2] Patent Trial & Appeal Board Receipts and Dispositions by Technology Centers Appeals, 2017, USPTO, https://www.uspto.gov/sites/default/files/documents/fy2017_sep_e.pdf

[3] Id.

[4] Kate Gaudry, Post-Alice, Allowances are a Rare Sighting in Business-Method Art Units, 2014, IPWatchDog.com, http://www.ipwatchdog.com/2014/12/16/post-alice-allowances-rare-in-business-method/id=52675/

See also Gaudry et al., Ex Parte Appeals in the Post-Alice World, 2016, IPWatchdog.com, http://www.ipwatchdog.com/2016/08/02/ex-parte-appeals-post-alice/id=71562/

[5] Hayim et al., Nearly All Post-Alice Eligibility Rejections are Affirmed in Whole by the PTAB, 2018, Lexology, https://www.lexology.com/library/detail.aspx?g=b5dcb8ae-3478-4e4b-b344-38258b910431;

See also Hayim et al., Nearly All Post-Alice Eligibility Rejections are Affirmed in Whole by the PTAB, 2018, JDSupra, https://www.jdsupra.com/legalnews/nearly-all-post-alice-eligibility-74926/;

See also Hayim et al., Nearly All Biz-Method Appeals Contest Eligibility Rejection, 2018, Law360, https://www.law360.com/articles/1017405

The Author

Samuel Hayim

Samuel Hayim is a former patent examiner for the United States Patent and Trademark Office and recently joined Kilpatrick Townsend at their Washington DC office. Samuel's work focuses on patent prosecution in the software and electronic arts, in particular software development frameworks, control systems, and network security. Samuel is current student at Georgetown University Law Center and holds a degree in computer engineering and minors in mathematics and electrical engineering from University of Arizona.

Samuel Hayim

Kate Gaudry Kate Gaudry, Ph.D., is a senior associate at Kilpatrick Townsend & Stockton LLP. She focuses her practice on patent prosecution, with an emphasis on software, computer systems, and quantitative biology technologies. Dr. Gaudry also routinely performs statistical analysis of clients’ patent portfolios to identify effective prosecution strategies. Further, Dr. Gaudry regularly empirically evaluates programs and performance of the United States Patent and Trademark Office so as to provide her clients with prosecution recommendations and to advocate for compact and fair examination.

CLICK HERE to visit Dr. Gaudry's firm bio page.

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 17 Comments comments.

  1. Anon March 5, 2018 7:45 am

    It would be interesting to open up the database for a full review rather than a sampling.

    More “micro” trends may show (or may not show) the general “ping-pong” effect as the additional cases post-Alice have ricocheted back and forth (depending on CAFC panel composition).

  2. PTO-Indentured March 5, 2018 11:40 am

    Anon@1

    There may also be some proportionality discrepencies revealed (or that could calculated/surmised) e.g., a degree to which CBM filings alone ‘fund PTO examination’ in one or more of the above TCs yet, receive a lesser degree of priority in examiners-per-dollar charged. If so, a bias may be evident. Prosecution file wrappers do include fee transaction receipts indicating fees charged.

  3. Name withheld to protect the innocent March 5, 2018 1:56 pm

    An application in Tech Center 3600 is all but guaranteed to have a 101 rejection based Alice. In the old “machine or transformation” era, it was fairly easy to address a 101 rejection by amendment — even in Tech Center 3600. These days however, almost nothing is getting allowed in Tech Center 3600 and almost everything has a 101 rejection attached to it.

    Unless you are appealing, anybody in Tech Center 3600 is not going to get an allowance. As such, an applicant is all but forced to appeal in Tech Center 3600. Sad to say, this has been going on for years now, and it is not surprising that the backlog of appeals associated with Tech Center 3600 is so high.

    Unless a culture change gets instituted in Tech Center 3600 whereby examiners are told that NOT all patent applications are necessarily directed to patent eligible subject matter BY THE MERE FACT that the application was classified in Tech Center 3600, I don’t see any change happening.

    101 rejections in Tech Center 3600 are less about the law and more about the anti-patent culture that has LONG PERVADED that Tech Center for well over a decade.

  4. Name withheld to protect the innocent March 5, 2018 2:02 pm

    BTW — this article was written by Kate in May of 2017
    http://www.ipwatchdog.com/2017/05/25/prospects-patenting-business-method-innovations/id=83693/ In it, she wrote:
    In early 2017, the Director had been identified as Tariq Hafiz, who had previously been a Director of the 2620s, 2670s and 2690s in the Communications technology center. Thus, potentially, the new Director has influenced the process such that examiners are less dismissive of applicants’ subject matter eligibility.
    After nearly a year, I can say unequivocally that the new Director has done ABSOLUTELY NOTHING to change the process regarding how subject matter eligibility is being examined in Tech Center 3600.

  5. B March 5, 2018 7:14 pm

    Golly, it’s almost as if there’s a complete lack of reasonable guidance w.r.t. 101 rejections

  6. B March 5, 2018 7:41 pm

    @witheld

    “Unless you are appealing, anybody in Tech Center 3600 is not going to get an allowance.”

    I had a 3600 case with 101, 102 and 103 rejections. The Panel held that the Examiner erred on the 102 and 103 stating that there was no evidence that three separate limitations were found in the prior art. The Panel could have named a few others, but they didn’t get around to every idiotic flaw from the Examiner.

    Turning to the 101 rejection, the same Panel held that the same three limitations missing in the 102/103 rejections were “routine and conventional.”

    The PTAB has a lot to answer for.
    smh

  7. Jeff Lindsay March 5, 2018 8:10 pm

    I have a case that went to appeal on a 103 rejection over bad prior art. After wining the appeal and being clear of any reasonable obviousness rejection, the Examiner then gave a 101 rejection saying that the novel invention was routine and conventional. Over three years later, the PTAB reversed the 101 rejection. I’ve got a notice of allowance now, one of the few lucky ones. Wish me luck on my divisional that I’ll file this week. Related claims, drafted to even more clearly avoid Alice. What are the odds it will automatically receive a repeat 101 rejection? 99%?

    The hostility toward patents in the USPTO persists. In addition to mindless wielding of the Alice club, there is also some vigorous In re Keller clubbing going on. When a 103 rejection is cobbled together by cherry picking a few stray elements of, say, five or six references, many of which are unrelated to the invention and could not be combined together, a response that decimates each reference alone and in combination can be dismissed by claiming that the arguments are “attacking a reference singly” and not treating the combination as a whole, which is a complete abuse of what In re Keller actually states. Got another case on appeal where I needed to walk through the In re Keller decision and explain how wrong it is to apply it when the applicant responds to each and every reference, alone and in combination. In re Keller involved a case with a primary reference and a secondary reference in which the applicant only attacked the secondary reference.

    Our nation desperately needs to root out the anti-patent attitude the permeates some quarters of the USPTO.

  8. Anon March 5, 2018 8:11 pm

    B,

    Was that while they were attempting to rewrite their own ruling from In re Poisson?

    (I think that we may have already discussed this – and you being run over by the cart of horse manure…)

  9. Anon March 5, 2018 8:13 pm

    Mr. Lindsay,

    Congrats!

    Would you be open to sharing the granted patent number – if permissible? (I would like to see if the File Wrapper contains any gems)

  10. B March 5, 2018 8:53 pm

    “Was that while they were attempting to rewrite their own ruling from In re Poisson?”

    That was someone else – but we did discuss my case. I’ll be before the CAFC on 4/4 asking the Court to force the PTO to comply with s706 of the APA

  11. Name withheld to protect the innocent March 6, 2018 9:08 am

    In re Keller involved a case with a primary reference and a secondary reference in which the applicant only attacked the secondary reference.
    Just to be clear, In re Keller involved a case in which the applicant only addressed the secondary reference with regard to the legal conclusion of obviousness. This is a different “attack” than attacking whether a particular reference teaches a particular limitation, which is an attack on the Examiner’s findings of fact. Regardless, I would guess that the PTAB mis-cites Keller about 90% of the time.

    Our nation desperately needs to root out the anti-patent attitude the permeates some quarters of the USPTO.
    Target #1 –> Tech Center 3600. Target #2 –> PTAB.

    Anybody know what Director Iancu is up to these days? I haven’t heard anything out of the USPTO. If he decides that it is going to be business as usual at the USPTO, it is going to be a long 3 years for patent applicants and patent owners. I’m still holding out hope that he’s going to clamp down on these rogue portions of the USPTO. He’s had 5 month from his nomination to his confirmation to figure out what to do and he’s had 1 month already since his confirmation to get the ball rolling. However, I’m concerned about the silence.

  12. Paul Morgan March 6, 2018 10:15 am

    Hopefully the number of examiner 101 rejections will decline with experience, reversals, and the increasing number of Fed. Cir. decisions on that subject?
    As with any appeal, the latest applicable judicial opinions apply.
    The biggest decrease could come from enforcing requirements for effective 103 prior art searches.
    The number of CBMs challenging patents on 101 grounds is minuscule in number and as a % of PTO fees, and CBMs sunset in a few years.

  13. Paul Morgan March 6, 2018 10:23 am

    Given the long-known great difficulty noted here in obtaining pure business method patents [with noclaimed technology or computer operation improvements], which has been the case since the Sup. Ct. decision in Bilski, well before Alice, how much of the problem is due to patent attorneys having failed to give candid realistic advice in advance to clients on their low odds of obtaining enforceable broad generic patent claims to business methods?

  14. Mark Nowotarski March 6, 2018 10:31 am

    There has been a substantial increase in allowances from work groups 3620, 3680 and 3690 during 2017. We are not up to pre Alice levels, but many cases are getting allowed after multiple 101 rejections since Alice. I personally have seen a turn around in examiner attitudes.

    Bilski Blog has more details http://www.bilskiblog.com/blog/2018/03/thawing-in-the-3600s-an-updated-look-at-allowance-rates-post-alice.html

  15. B March 6, 2018 11:57 am

    “how much of the problem is due to patent attorneys having failed to give candid realistic advice in advance to clients on their low odds of obtaining enforceable broad generic patent claims to business methods?”

    Well, part of the problem is that Attorneys aren’t business majors. I myself told inventors not to bother with well over 50% of their CBM ideas before Bilski, but then again I am not aware of all known business methods. That said, the CAFC has gone overboard on the issue. Take Smart Systems v. Chi Transit. I thought the majority was dead wrong. Still do.

  16. B March 6, 2018 11:59 am

    “There has been a substantial increase in allowances from work groups 3620, 3680 and 3690 during 2017.”

    “Twice nothing is still nothing” — Cyrano Jones

  17. Horrified March 6, 2018 5:48 pm

    Not an attorney and I am a first-time inventor.

    Horrified that SCOTUS can add words to 101 and not define them, patent examiners can disregard the MPEP verbatim, the evidence is toss due to a matter of law (will the latest CAFC decisions even matter on underlying fact?), IPRs can be rapid-fire until successful against the inventor, and jury verdicts are invalidated.

    I beat the 102 and 103 via a truckload of hard evidence, and I mean a truckload, but still fighting the 101. Worked closely with assistants to many Attorneys General and this whole patent thing is not the Rule of Law I am familiar with over the years.

    Extremely sad and horrified. I am hoping sanity falls out of the sky in time.

    All you posters are great and so is Mr. Quinn. This blog is great, keep up the good fight. Thank you!

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