Artificial Intelligence Technologies Facing Heavy Scrutiny at the USPTO

By Kate Gaudry & Samuel Hayim
November 28, 2018

The stark reality appears to be that artificial intelligence technologies are likely to be more heavily scrutinized under 35 U.S.C. § 101 and less likely to be allowed.

Artificial Intelligence Technologies Facing Heavy Scrutiny at the USPTOArtificial intelligence technologies are transforming industries and improving human productivity and health. For example, artificial intelligence (A.I.) is used in vehicle navigation to identify quicker routes between destinations, in voice assistants to process natural-language commands, and in robotic systems to assist with surgeries. Yet, the use of A.I. by (or for) the everyday consumer is just scratching the surface of A.I.’s transformative potential. Artificial intelligence may provide an economic boost of approximately $14 trillion within two decades.[1]

Artificial intelligence corresponds to a large and diverse set of computer technologies that allow machines to interpret a physical or data environment and employ reasoning or problem-solving to generate a result. Task-oriented artificial intelligence can use specific constraints, goals and task definitions. Other types of A.I. can include fewer constraints, less structure and/or higher-level task definitions to facilitate more creative solutions. Artificial intelligence systems can be transparent, such that rationale supporting results are easily understood by humans. Alternatively, A.I. systems can be opaque, which is often a consequence of designing a system in which a very large number of variables (which may have interrelationships) are defined as inputs.

Importantly, the extraordinary processing capabilities of A.I. systems creates sizable design challenges. How should a program be created (in terms of what types of inputs are received, the processing that is to be performed, and the outputs that are to be generated) if it is foreseeable that it is practically impossible to “check” whether a computation is performed correctly? Many developers instead rely on merely comparing results (and not the computations themselves) from a limited test data set to those generated by the A.I. system. This illustrates additional complexities, such as how to define training, validation and test data sets? And what degree of accuracy is sufficient to potentially stop training (or is to trigger additional training)?

The United States is the global leader in artificial-intelligence research and development. For example, two Americans are credited with creating the first artificial neural network.[2] However, whether the United States will maintain this position is in question: China’s R&D investment in this technology is expected to exceed the United States’ by the end of 2018.[3] A report published by the U.S. House of Representatives’ Subcommittee on Information Technology stressed that the United States must prioritize support for this technology, as it recognized the substantial military and economic advantages that will accompany the A.I. leadership position.[4] The report emphasized the importance of maintaining the United States’ competitive strength of support of innovation, via R&D funds, regulations and respect of intellectual property.

A prominent technique for securing intellectual-property rights is to apply for a patent. Upon receiving a new application, the United States Patent and Trademark Office (USPTO) assigns the application to a particular technological class, such that an examiner having a suitable understanding of a given technology can be identified to conduct examination. One technological class (class 706) is defined as “Artificial Intelligence”. This creates the opportunity to conduct a focused review on the prospects of securing intellectual property on A.I. technology.

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To investigate this the degree to which the U.S. avails patent protection for A.I. innovations, we obtained data from LexisNexis®PatentAdvisorSMthat characterized each action issued by the USPTO after July 2013. The data indicated whether each action was an allowance or a rejection (i.e., office action); whether the office action included a rejection under 35 U.S.C. § 101, the art unit of the action, and the date on which the action was issued.

The blue line in Figure 1 shows the percentage of actions issued within the A.I. technological class that were allowances. Notably, this variable does not represent the overall probability that a patent application will be allowed to issue as a patent, as a fair number of patents received multiple rejections prior to an allowance. Thus, the depicted metric is substantially lower than an allowance rate. Nonetheless, this metric is useful, as it quickly captures changes in examination approaches at the USPTO and is less dependent on applicants’ decisions (as to whether to abandon an application) than the traditional allowance-rate metric.

Notably, with respect to A.I. patent applications, the probability that a USPTO action was an allowance (versus a rejection) has recently decreased more than two-fold. This falloff largely coincided with a Federal Circuit decision: Electric Power Group, LLC v. Alstom S.A., 830 F.3d 1350 (Fed. Cir. 2016). This case held that patent claims directed to monitoring and reporting on the performance of an electric power grid were ineligible for patent protection under 35 U.S.C. § 101 and thus were invalid. More specifically, the Federal Circuit held that they were ineligible as a result of merely being directed to generating, collecting and analyzing information.

The Federal Circuit’s analysis used an approach identified by the Supreme Court in Alice Corp. v. CLS Bank Int’l, 134 S.Ct 2347 (2014). There, the Supreme Court held that claims from four business-method patents (related to electronic escrow services) were (1) directed to an abstract idea and (2) not significantly more than the abstract idea. This two-part test has since been adopted by lower courts and the USPTO to assess patent eligibility. A near-immediate impact on the examination of business-method patent applications is evident in the red line of Figure 1.

To further explore whether the decrease in allowances was likely attributable to different examination approaches for assessing patent eligibility, we generated trend lines to show the percentage of office actions that included a subject-matter eligibility rejection (under 35 U.S.C. § 101). As we have previously reported, the Alice decision had an immediate and drastic effect on the prevalence of eligibility rejections issued against business-method patent applications. (See the red line in Figure 2.) The percentage of applications that received eligibility rejections increased from 58% to 95%.

While not as temporally precise, a similarly marked increase in eligibility rejections was observed for the A.I. patent applications when comparing examination prior to Electric Power Group to more recent examination. (See the blue line in Figure 2.) To illustrate, 42% of the A.I. office actions of the third quarter of 2016 included an eligibility rejection, as compared to 84% of the A.I. office actions from the third quarter of 2017.

What does that mean for artificial-intelligence applications? The stark reality appears to be that artificial intelligence technologies are likely to be more heavily scrutinized under 35 U.S.C. § 101 and less likely to be allowed. This presents two questions: Is this examination shift appropriate in view of Electric Power Group? And, from a policy perspective, is this shift acceptable?

The Court in Electric Power Group made note that: “we have treated analyzing information by steps people go through in their minds, or by mathematical algorithms, without more, as essentially mental processes within the abstract-idea category”.  The authors propose that this sentence of the decision is of utmost importance in the context of patenting A.I. technology. It is frequently impossible for humans to perform the calculations of A.I. systems. For example, the processing that the A.I. system performs on a given data set is often not pre-programmed[5] and may vary depending on dynamic factors, such as a time at which the input data set was processed, which other input data sets were previously processed or a random-number seed. For A.I. systems that employ repeated or continuous learning, it may even be impossible to identify the particular algorithm(s) used to process a given input data set. These complexities indicate that A.I. systems are more than just a set of algorithms. They are (frequently) frameworks that are carefully designed (in terms of input variables, hyperparameters, optimization variables, training data sets, validation data sets, etc.) in view of the reality that it may soon be difficult to impossible for a human to even understand (much less perform) the processing of the system. Thus, even though algorithms may support and define a high-level A.I. framework, they are not the same algorithms that are used to process input data. Rather, in many instances, a machine-learning framework would have been designed because an inventor believed that a human would do an inferior job of identifying specific data-processing algorithms (e.g., in terms of machine-learning parameters). Thus, the authors propose that the actual data processing performed by many A.I. systems is not performed by predefined computer algorithms and extends well beyond mental processes and abstract ideas.

From a policy perspective – should artificial-intelligence innovations be eligible for patent protection? We propose that the answer is ‘yes’, provided that other statutory requirements (e.g., novelty and non-obvious) are satisfied. This technology is exponentially increasing in its complexity (both with respect to the inner workings of the systems and the types of data to be processed) and use cases. A.I. innovations typically involve a high-level design effort to construct a computational system that can appropriately process unpredictable data. While mathematical algorithms are used as a basis for this system, they often serve as building blocks for a framework within which the system will itself learn its own operation parameters. Through strategic design efforts, we have witnessed this technology quickly extending beyond more efficiently doing what a human can do. Rather, at least in narrow applications, A.I. is achieving better results (e.g., higher accuracy, fewer errors, fewer crashes, etc.).

Thus, A.I. technologies frequently extend beyond mere implementation of pre-defined algorithms. These technologies are further rapidly becoming apparent or invisible cornerstones of our daily lives. And other countries are committed to funding and supporting A.I. technological innovations at levels soon to exceed that of the U.S. government. If we believe that the patent system promotes innovation, how could we exclude A.I. technologies from patenting opportunities in the U.S.?

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[1] Purdy, M. and Daugherty, P., “How AI Boosts Industry Profits and Innovation”, Accenture, 2017.

[2] McCulloch, W. and Pitts, W., “A Logical Calculus of Ideas Immanent in Nervous Activity”, Bulletin of Mathematical Biophysics Vol. 5 Issue 4 Pages 115-133, 1943.

[3] National Science Foundation, “National Science Board Statement On Global Research And Development (R&D) Investments NSB-2018-9”, National Science Foundation,  Feb. 7, 2018.  Retrieved from  www.nsf.gov/nsb/news/news_summ.jsp?cntn_id=244465 (last accessed September 17, 2018).

[4] Hurd, W. and Kelly, R., “Rise of the Machines”, Subcommittee on Information Technology, Committee on Oversight and Government Reform, U.S. House of Representatives, 2018.

[5] In terms of the particular processing, which can depend on learned parameters, such as weights, coefficients or support vectors.

 

Image Source: Deposit Photos.

The Author

Kate Gaudry

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.

Kate Gaudry

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.

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 4 Comments comments. Join the discussion.

  1. Paul Morinville November 28, 2018 11:06 am

    Last year 48% of early stage AI funding went to startups in China… only 36% went to US startups.

    https://www.theverge.com/2018/2/22/17039696/china-us-ai-funding-startup-comparison

    If we keep this abstract idea insanity much longer, we will never recover. AI will be in China for generations.

    https://www.ipwatchdog.com/2018/03/04/petri-dish-effect-technology-china-generations/id=94323/

  2. Paul Morinville November 28, 2018 7:49 pm

    Last year 48% of early stage funding, the first funding a startup gets, went to Chinese firms. Only 36% went to US firms. I believe that is primarily related to the gutted US patent system (primarily Alice) and the strengthened Chinese patent system.

    China is setting itself up to own the AI space for generations. https://www.ipwatchdog.com/2018/03/04/petri-dish-effect-technology-china-generations/id=94323/

  3. Ternary November 28, 2018 11:13 pm

    The report “A Patent System for the 21st Century” of the Academies of Sciences, Engineering, Medicine recommends changes to the patent system that were implemented in the AIA. The report includes “concerns” about issuing patents on “abstract ideas.”

    The report on page 19 says: “The American economy’s innovation capacity, although resilient, is not fore-ordained…” That concern is now becoming reality.

    America does not have a monopoly on smart people, smart ideas and smart technology. The authors of the NAS report realized that. Despite that insight, they proposed to screw around with, what was acknowledged to be, the world’s greatest patent system.

    The report, published in 2004, almost completely misses the point on the Internet, does not mention smartphones (they did not exist) or mobile technology and does not mention Artificial Intelligence at all. However, there is some concern in the report about the ease with which biotech patents were obtained at the time.

    We got what we wished for. The patent system was adapted to the “need” of “new technology.” And AI, like other computer implemented inventions are caught in America’s own created trap of deliberately mis-understood and misrepresented technologies.

    Our mistakes have presented an opportunity that America’s competitors have been waiting for.

  4. Jonathan Stroud November 30, 2018 11:41 am

    Kate is a great attorney and this is interesting information.

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