Ex Parte Appeals in the Post-Alice World

Approximately two years ago, the Supreme Court’s issuance of Alice Corp. v. CLS Bank[i] changed the world of prosecution. The decision led to a stark decrease in allowances of patent applicants across industries as diverse as software to biotechnology.[ii] Applicants stuck in the post-Alice purgatory have had several prosecution options:

• Abandon their application;
• Attempt to wait out the Alice effects, in hopes that a new Federal-Circuit or Supreme-Court decision would change the current eligibility stance of an art unit or examiner; or
• Appeal a rejection.

Past reports have indicated that the reduced-allowance effect of Alice is not consistent across biotechnology art units[iii] or across computer-related art units[iv] Potentially, this art-unit variability suggests that some of the “harsher” art units are issuing erroneous eligibility rejections and that appealing the rejection would lead to favorable results. [v]

Only recently has the Patent and Trademark Appeals Board (PTAB) begun to issue decisions on appeals with appeal briefs filed after the Alice decision. We requested that the United States Patent and Trademark Office (PTO) identify each published application (and the art unit for which the application was assigned) for which: (1) an appeal brief was filed since September 1, 2014 (a date on which we estimated that Alice would have been considered by the applicant or representative) and (2) a PTAB decision was issued. As of July 12, 2016, 162 PTAB decisions met these criteria.

Over Half of PTAB Decisions on Post-Alice Appeals Fully Affirm Rejections

Overall, the PTAB affirmed or affirmed-in-part two-thirds of the appeals, 53% of which being affirmed in full and 14% being affirmed in part. As shown in FIG. 1, the lowest affirmance rate was observed in Technology Center 3700 (which examines applications corresponding to industries such as manufacturing, medical devices, mechanical engineering and education), where only 22% of the appeals were fully affirmed. Meanwhile, approximately 70% of appeals in each of Technology Center 1600 (Biotechnology and Organic Chemistry), Technology Center 1700 ( Chemical and Materials Engineering) and the business-method “BM” art units (3621-29 and 3681-96) were fully affirmed.

FIG. 1. PTAB decisions per technology center. PTAB decisions corresponding to appeals with Appeal Briefs filed since September 1, 2014 were analyzed to associate overall PTAB decisions with technology centers. Technology center 3600 was divided in business-method (“BM”) art units (art units 3620-29 and 3680-96) and other art units in the center (“Other 3600”).

Few PTAB Decisions on Post-Alice Appeals have involved Patent-Eligibility Rejections

We manually reviewed each decision to identify each particular type of rejection at issue in the appeal and the decision types of the PTAB corresponding to each particular rejection. Specifically, we determined whether the appeal involved any of the following issues: patent eligibility under 35 U.S.C. § 101 (“101, Elig”), anticipation under 35 U.S.C. § 102 (“102”), obviousness under 35 U.S.C. § 103 (“103”), written description under 35 U.S.C. § 112(a) (“112, WD”), enablement under 35 U.S.C. § 112(a) (“112, Enab”), indefiniteness under 35 U.S.C. § 112(b) (“112, Indef”) or double patenting under 35 U.S.C. § 101 (“101, DP”). For each of these issues, we determined whether a rejection was affirmed, reversed, affirmed with respect to a portion of the rejection or claims (“split”) or whether the PTAB had issued a new rejection on these grounds.

The most common type of rejection at issue in the appeals was obviousness. (See FIG. 2.) Meanwhile, only 18 appeals involved patent eligibility, which is perhaps surprising given the recent turmoil in this space. Of the eligibility appeals, 12 (66%) were from a business-method art unit.

FIG. 2. Types of decisions appealed from different Technology Centers. PTAB decisions were analyzed to identify which types of rejections were of issue. The plot shows the number of appeals from each Technology Center (dividing Technology Center 3600 as described in the legend of FIG. 1) that involved each rejection type.

The PTAB has Predominately Affirmed Eligibility Rejections Challenged in Post-Alice Appeals

Appeals of rejections involving § 101 were unlikely to be successful, with 79% of patent-eligibility rejections (15 of 19 appeals) being affirmed. (See FIG. 3.) Specific data on each of these appeals involving an eligibility are shown below in the Table. The Appeal Briefs filed in appeals where at least one 101 rejection differed markedly, in terms of an extensiveness of argument, cases cited and whether extrinsic evidence (e.g., a Declaration) was submitted.

FIG. 3. PTAB decisions per rejection types. PTAB decisions were analyzed to identify which types of rejections were of issue and the decision corresponding to each decision type. A “split” decision may indicate that a rejection corresponding to some (but not all) claims were affirmed or that a different decision was reached with respect to different rejections (e.g., corresponding to same or different claims) of a same type.

TABLE. Application data for post-Alice appeals with PTAB decisions rendered for eligibility rejections. Data is defined by column headings. Business-method art units are highlighted in blue. We highlighted the “Status” cells in purple for applications where the applicant has engaged in prosecution following a PTAB affirmance decision.

The high affirmance rate of eligibility rejections does not reflect an overall Board-affirmance tendency. The Board was substantially more likely to reverse other types of rejections. For example, with respect to prior-art rejections, only 32% of anticipation rejections were fully affirmed, and 52% of obviousness rejections were fully affirmed. Five years ago, it was reported that rejections under § 112 and in Technology Center 1600 were the most likely to be reversed.[vi] Our data supports that same result with respect to § 112(a) rejections today. Specifically, only 27% of written-description rejections and 33% of enablement rejections were affirmed.

The PTAB eligibility decision is highly predictive of the current status of the applications: For each of the three appeals for which the eligibility decision was reversed, the application was allowed immediately after the Decision (meaning with no intervening office actions). Meanwhile, amongst the applications corresponding to the fifteen appeals with affirmances of eligibility rejections, none have been allowed.

Conclusions

Does this data mean that it is unwise to appeal a patent-eligibility rejection? The authors feel as though, unfortunately, this is yet to be clearly determined. The sample size is small with only 19 decisions having been issued by the PTAB to address arguments corresponding to patent eligibility presented after the Alice holding. Further, amongst the appeals involving patent-eligibility rejections, the most recently filed appeal brief was filed in November 2015. Thus, all of the appeal briefs and most of the PTAB decisions were filed prior to the development of more recent case law that has further illustrated why and how various software technologies can be patent eligible.[vii] Further, most of the eligibility-involved PTAB decisions were issued prior to these recent cases, which may further have disadvantaged the appellants. Continued assessment of PTAB decisions on post-Alice appeals will provide further insight as to the Board’s interpretation of this area of law fraught with uncertainty and applicant frustration.

However, despite the small sample size, the fact remains that only 16% of the Board’s eligibility decisions fully reversed the eligibility rejections, and none of the other 84% of the applications have been allowed despite the effort and the expense of the appeal. While appeals can be an attractive mechanism by which to present arguments to a new decision-maker, an applicant should be aware that the statistical tendency of the PTAB “decision-maker” may no longer seem so attractive in the land of § 101 rejections, and that this gamble may not be worth the cost unless the applicant is equipped with very strong arguments.

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[i] Alice Corp. Pty. Ltd. v. CLS Bank Int’l., 134 S. Ct. 2347 (2014).

[ii] Gaudry, Grab & McKeon, Trends in Subject Matter Eligibility for Biotechnology Inventions, IPWatchdog (July 12, 2015 ); Kate Gaudry, Post-Alice, Allowances are a Rare Sighting in Business-Method Art Units, IPWatchdog (Dec. 16, 2014).

[iii] McKeon, supra.

[iv] Gaudry, supra.

[v] Gaudry, supra.

[vi] Kate Gaudry and Joseph Mallon, Appeals and RCEs – the Frequency and Success of Challenges to Specific Rejection Types, Intellectual Property Today (Nov. 2011).

[vii] See Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016); See also BASCOM Global Internet Servs. v. AT&T Mobility LLC, 2016 U.S. App. LEXIS 11687 (Fed. Cir. 2016).