Federal Circuit Curtails Alice: Economic arrangements using generic computer technology ‘significant, if not determinative’

By John M. Rogitz
December 20, 2017

Illustration by John Tenniel of the Red Queen lecturing Alice, circa 1870.

Illustration by John Tenniel of the Red Queen lecturing Alice, circa 1870.

On December 8, 2017, the U.S. Court of Appeals for the Federal Circuit issued a precedential decision in Inventor Holdings, LLC v. Bed Bath & Beyond, Inc. (2016-2442) that provides some useful language to practitioners dealing with patent ineligibility rejections having Alice as their basis.

The Federal Circuit panel for Inventor Holdings consisted of Judges Wallach, Chen, and Stoll. Judge Chen delivered the panel’s opinion.

In Inventor Holdings the Federal Circuit affirmed an award of attorneys fees under Octane Fitness against a business method patentee who filed suit before the Supreme Court decided Alice. The Federal Circuit affirmed the award because Inventor Holdings did not “reassess” its case in light of Alice and at that point decide sua sponte that its claims were “objectively without merit”. This was done despite the fact that business methods are not unpatentable per se and, as Inventor Holdings itself argued, it was still reasonable post-Alice to believe its patent covered eligible material because Section 101 “was, and is, an evolving area of law and… the § 101 inquiry in this case was therefore difficult.”

But in so holding, the Federal Circuit also provided some very useful language that could be used by patent prosecutors and litigators alike in an attempt to overcome Alice:

“Prior to Alice, the state of the law for computer-implemented business transaction inventions was less than clear, given this court’s divided en banc opinion in CLS Bank International v. Alice Corp., 717 F.3d 1269, 1273 (Fed. Cir. 2013). As we later explained, post-Alice, in Mortgage Grader, Inc. v. First Choice Loan Services Inc., ‘a § 101 defense previously lacking in merit may be meritorious after Alice. This scenario is most likely to occur with respect to patent claims that involve implementations of economic arrangements using generic computer technology, as the claims do here.’ 811 F.3d 1314, 1322 (Fed. Cir. 2016). Like the claims at issue in Mortgage Grader, the [claims at issue] are directed to an ‘economic arrangement’ implemented using ‘generic computer technology.’ These issues were significant, if not determinative, of the Court’s holding in Alice.” [emphasis added]

The Federal Circuit then went on to state that the claims at issue in Inventor Holdings do not “require us to engage in a difficult line-drawing exercise for a claimed invention resting on, or anywhere near, the margins of patent-eligibility; rather, the patent claims here are directed to a fundamental economic practice, which Alice made clear is, without more, outside the patent system… In addition, here, as in Alice, the patentee is attempting to broadly monopolize an abstract idea as implemented using generic computer technology. IH’s asserted claims were plainly invalid in view of Alice and its reasoning.” [emphasis added]

In making these statements, Inventor Holdings is in accord with heavily-cited EnfishLLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016). In Enfish, the Federal Circuit observed that claims directed to an improvement to computer functionality are patent-eligible, as opposed to “economic or other tasks for which a computer is used in its ordinary capacity.” Enfish further explained that claims directed to computer improvements are different from those directed to economic arrangements where it stated that “the claims at issue in Alice and Versata can readily be understood as simply adding conventional computer components to well-known business practices” and hence “we are not faced with a situation [here] where general-purpose computer components are added post-hoc to a fundamental economic practice or mathematical equation. Rather, the claims [at issue] are directed to a specific implementation of a solution to a problem in the software arts. Accordingly, we find the claims at issue are not directed to an abstract idea.” [emphasis added]

The Author

John M. Rogitz

John M. Rogitz is a registered patent attorney with his own practice in San Diego, CA. His background includes preparation and prosecution of a large number of patent applications for high-tech Fortune 500 companies in a wide range of technologies. John has also been active on behalf of his clients in the acquisition of patent portfolios. He writes frequently for various publications on developments in patent law and also lectures on intellectual property for DeVry University. Previously, John was engaged in civil litigation at the Watkins Firm, a San Diego-based law firm. Prior to that, he worked as a web developer for Loyola Marymount University. John received his J.D. in 2009 from California Western School of Law.

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 as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 51 Comments comments.

  1. Anon December 20, 2017 2:16 pm

    A disappointing article – given the “exuberance” of the headline.

    Embedding and fortifying a “broken scoreboard” type of “logic” is NOT “curtailing Alice” in any meaningful way.

    If one were to pan for gold here, all one would find is iron pyrite.

  2. Curious December 20, 2017 3:03 pm

    rather, the patent claims here are directed to a fundamental economic practice, which Alice made clear is, without more, outside the patent system…
    I just looked at the claims (USP 6381582). I don’t think the Federal Circuit understands the meaning of the word “fundamental.”

    One definition of fundamental is “serving as a basis supporting existence or determining essential structure or function.”

    Claim 1 of USP 6,381,582:
    A method of processing a payment for a purchase of goods, comprising the steps of:
    receiving at a point-of-sale system a code relating to a purchase of goods;
    determining if said code relates to a local order or to a remote order from a remote seller;
    if said code relates to a remote order, then
    determining a price for said remote order,
    generating data to indicate a payment has been received by a third party for said remote order, and
    transmitting said data to said remote seller.

    What in the world makes this a fundamental economic practice? This isn’t hedging — something that has been around for at least a couple hundred years. The whole 101 jurisprudence is founded on terms that have no defined meaning: “abstract idea,” “fundamental economic practice,” “substantially more,” “directed to.”

  3. Paul Johnson December 20, 2017 4:42 pm

    It’s too bad the U.S. Supreme Court is so averse to adopting foreign practices. I believe the European “any hardware” approach would be much better. (This would leave issues of what is “well known” or “conventional” to the part of the patentability analysis that is best suited for dealing with that: obviousness.)

  4. Judge Rich's Ghost December 21, 2017 4:33 pm

    I read the headline and thought I had missed a recent 101 decision. But, alas, the headline is completely misleading. The Federal Circuit in no way “curtails” Alice with its ruling in Inventor Holdings

  5. Curious December 22, 2017 8:23 am

    It’s too bad the U.S. Supreme Court is so averse to adopting foreign practices.
    They don’t need to even go that far — just start with the plain language of 35 USC 101 and stop adding requirements not expressed by Congress.

    Creating patent law was assigned to Congress by the Constitution. Sure, it is the job of SCOTUS to interpret the law. However, there is a difference between interpretation and creating new requirements that don’t have a shred of support in the law.

  6. Edward Heller December 23, 2017 12:22 pm

    Curious, you argue that we should start with 101 and its plain language and then simply ignore that language. The invention has to be within one of the four classes and you continue to completely ignore this language.

    There is little doubt when the Federal Circuit distinguishes business methods that use computers generically with improvements to computer systems using software that they are delivering a message.

  7. Anon December 23, 2017 2:26 pm

    Mr. Heller,

    You should not admonish anyone as you continue to attempt to ploy a version of law that is simply false.

  8. step back December 25, 2017 2:39 pm

    Ned of LawSchoolNot.edu @6

    First off Ed, Happy Holidays despite our different view points.

    You write at 6, “The invention **has to be** within one of the four classes and you continue to completely ignore this language.”

    Sorry Ned, that is not what they teach in law school.

    The word “may” is permissive.
    The word “any” is as broad as one can get.
    The word “or” means either way.

    35 U.S.C. 101 Inventions patentable.
    Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

    Nowhere in 101 does it say, “and may not obtain a patent therefor if not in a singular one of these four enumerated subject matter areas.”

    Be of good cheer and try to read what is actually written on the blackboard.

  9. Mark Nowotarski December 27, 2017 1:11 pm

    This decision could have a very chilling effect on anyone attempting to enforce a business method patent. The Court’s standard of attorney fees are due when the claim is “manifestly directed to an abstract idea”….”without complex programming” can be applied to just about any class 705 business method patent that is issuing today. Consider US 9,799,023 “Self-Checkout Method and Apparatus”. This patent was just allowed in June of 2017. Claim 1 reads as follows:

    1. A product purchasing method comprising: at a point-of-sale self-checkout terminal comprising a code reader device for automated entry of a product identification code present on items for purchase (conventional scanner) and a customer input device for receipt of data from a customer (conventional keyboard), receiving from a self-checkout customer a first input at the customer input device initiating a purchase of an item non-scannable by the reader device (e.g. an apple) ; receiving from a purchaser successive ones of a plurality of alpha-numeric characters (conventional input); querying a database based on the received plurality of alpha-numeric characters to determine a query result independent of the relative ordering of the plurality of alphanumeric characters comprising one or more products identified based on a match between the entered alpha-numeric characters and keywords associated with the identified products (no complex programming given in application); displaying to the purchaser a graphical user interface comprising a plurality of icons, each icon depicting one of the products identified in the query result (conventional output); receiving from the purchaser a selection of one of the displayed icons (conventional input); and recording a purchased transaction for an item associated with the selected icon (conventional action). 

    If this patent is ever enforced, a court could foreseeably find that the claim is directed to the manifestly abstract idea of “looking up a product when the barcode is missing”. This is clearly a fundamental economic practice. All of the technological components in the claim are conventional. There is no complex programming is provided in the application to “determine a query result independent of the relative ordering of the plurality of alphanumeric characters”.

    The plaintiff will not only lose the case, but be liable for the defendant’s attorney fees as well.

  10. Paul Johnson December 27, 2017 1:38 pm

    Mark Nowotarski
    Isn’t there something inherently wrong with a court punishing a person for attempting to enforce a property right (that wasn’t acquired by fraud)?

  11. Mark Nowotarski December 27, 2017 3:15 pm

    Paul @10

    Yes, in my humble opinion, it is inherently wrong. The tone I get from the language in this decision, however, is that the CAFC feels very threatened by the 101 quagmire it’s in. How can any claim be “manifestly directed to an abstract idea”, when the Alice decision specifically said it was not going to define “abstract”? How can you possibly know what economic processes are “fundamental” or not? You can’t.

    The inventor on this patent is Jay Walker of Priceline fame. I suspect that he will not let this one drop.

  12. Edward Heller December 27, 2017 4:36 pm

    Mark, there is no doubt that business method patents are not the stuff of patentable subject matter; and those who continue to believe that they can enforce such patents in the courts are not only mistaken, but they probably will have to pay the other side’s legal fees if the attempt to assert their business method patents.

    This is not so much about property rights this is about the Federal Circuit ignoring the law – basically overruling well-established law that stood the test of time for a century: business methods are not patentable subject matter and claims involving a business method are not patentable to except to the extent that the underlying means are inventive. That law was laid down in a case called Hotel Security. It was in the MPEP. But in the mid-90s, the PTO revised the MPEP to remove the reference to Hotel Security; and soon the Federal Circuit followed with State Street Bank formally “overruling” that case and the cases in the C.C.P.A. that had followed it.

    From the mid-90s until Bilski, the PTO would issue business method patents. After Bilski, they continued to issue business method patents that involved the use of computers. That was put to an end in Alice. Thus the status quo ante – prior to State Street Bank – was restored.

    It is a shame that the Federal Circuit and the PTO did this to a lot of people who invested in these applications, invested in businesses that depended on the validity of these application. It is a shame.

    But at the time, there were many, I was one of them, who were simply dumbstruck at the arrogance of the Federal Circuit: For if they were right, the Supreme Court was wrong, because the Supreme Court had by then independently developed 101 law to hold that simply running mathematical algorithms on a computer was not the stuff of patentable subject matter. It was but a small step further to hold business method inelible even if they were based on software.

    Blame the PTO and the Federal Circuit for creating this mess.

    Today, in response to Alice, the Federal Circuit is follow the prior law (for Alice is but a restatement of Hotel Security, but in broader terms) and is looking for inventive means: inventive software. But there is caveat: Versata. It appears that even novel and inventive software for implementing a business method will be struck down simply because price is being calculated.

  13. Edward Heller December 27, 2017 4:41 pm

    Mark, regarding “fundamental,” this is another red herring. You have to understand that the courts are looking for improvements to “machines, manufactures and compositions.” A method that does that is eligible. A method that does not do that, but simply improves or provides a better business method is not going to be held eligible.

    You should know that the EPC bans the patenting of business methods, without defining that term.

  14. Anon December 27, 2017 4:48 pm


    Not only “abstract”, but on point here is the “significantly more” undefined term.

    And even that is not the all of it.

    Further to “fundamental” – and especially as has been applied by the administrative agency of the patent office (which lacks an ability of Article III courts to engage in common law making – setting aside for the moment that even the judicial branch has limits to its own use of common law making), what is being “determined” to be “fundamental” or even “generic” or “conventional” are EACH aspects of making a factual decision as to a “state of art” which is one of the express “No-no’s” when it comes to the Office taking official notice (see MPEP § 2144.03 and the fallout from an attempt to reject under 101 without a proper factual basis in In Re Poisson).

  15. Anon December 27, 2017 4:54 pm

    Mr, Heller,

    Your comment of “You should know that the EPC bans the patenting of business methods, without defining that term.” omits the important caveats of “as such and “per se.”

    With those caveats in place, the EPC routinely grants patents on what YOU would consider to be business methods.

    And that does not even take into account that OUR Sovereign has chosen a different – and broader – view of patent eligibility vis a vis the fact that Useful Arts is broader than the EPC’s “technical effect” filter.

    I would add that if you are going to join this conversation, I expect you to do better than you have of late in portraying the actual laws as written by Congress.

    Notably, there are four categories of patent eligible subject matter – and NOT the “three and a half” that you wish to portray with your attempts to denigrate the “process” category to include ONLY those things that are directly tied to one of the hard goods categories.

  16. Edward Heller December 27, 2017 4:57 pm

    anon, if there is novel and inventive technical implementation (I think if Versata as a good example), then yes, the EPO allows such claims. That is why I think Versata has to be reversed.

  17. Anon December 27, 2017 5:00 pm

    Mr. Heller,

    Please stop your legal errors.

    Particularly, your attempt to elevate “law was laid down in a case called Hotel Security” is a serious misrepresentation of law that you have taken from the anti-patent Justice Stevens (in a minority in clothing, but really a dissent decision).

    On that other blog, your position in regards to Hotel Security was both deconstructed in detail by David Stein and rejected on the record by Prof. Crouch.

    This site runs a far tighter ship. Purposefully misrepresenting the law is not tolerated and your views here ARE purposefully misrepresenting the law.

  18. Edward Heller December 27, 2017 5:05 pm

    anon, “my position” on Hotel Security. Yeah, what position?

  19. Anon December 27, 2017 5:44 pm

    Mr. Heller,

    Asked and answered. Again with the “internet-shoutdown” style of posting from you.

    As I indicated, Mr. David Stein took apart your position vis a vis your attempts to place Hotel Security as a far more powerful “authority” than that aberrant case ever was.

  20. Edward Heller December 27, 2017 6:23 pm

    anon, as always, a response that only refers to a past response that perhaps only you know about but that does not help anyone here to understand your position.

  21. Anon December 27, 2017 7:29 pm

    Mr. Heller,

    With you and your game of internet shout down, ALL responses can be linked to past responses.

    That is because your tactic is to spout nonsense, get called out for your nonsense, avoid any real discussion of the issues, run away, and post the SAME nonsense yet again on another thread on another day.

    Just like ANY topic of merit, the meat of the points presented to you will have multiple points of attempting to have you join on the merits – in an inte11ectually honest manner, only to have you disappear (or, as colorfully put on another recent thread, have you dance about like a squirrel in the backyard).

    BOTH items I post: Prof. Crouch calling you out for misapplying Hotel Security and Mr. Stein taking the time to go into detail as to why your citations to that case (and others) were not proper were on posts “on that other blog,” and to which (true to your form) you abstained from a continued conversation.

    Goodness knows, that you have abandoned so many of my very own attempts at conversation with you that I long ago lost track.

    As to “the other blog,” and since you have a penchant (or so you like to occasionally pretend) for history, I leave it to you to find the instances. But make no mistake, the points I present here and now are very much real.

  22. Mark Nowotarski December 28, 2017 8:31 am

    “Mark, there is no doubt that business method patents are not the stuff of patentable subject matter”

    Ed @12

    The problem with the “business method exception” is that it ignores physical reality. There is no physical difference between a computer implemented process that is applied to a business method and one that is applied to any other application.

    Consider the very first patent to issue from an examination, Pascal’s Calculator https://en.wikipedia.org/wiki/Pascal%27s_calculator This is a mechanical computer that was invented to perform tax calculations. By today’s standards, this would be rejected as a business method. It would be assigned to a business method art unit as a machine to perform tax calculations. The examiner would reject it under 101 stating that the invention was directed to the abstract idea of performing tax calculations. The examiner would then state that it was not significantly more than the abstract idea since the elements that went beyond the abstract idea (e. g. gears and dials) were conventional elements doing nothing more than what conventional elements conventionally do (e.g. turn other gears and dials or display numbers).

    But suppose our intrepid patent drafter submitted a patent application describing the exact same calculator only now it was applied to calculating when to terminate a rubber curing process. Now the very same calculator is patentable since it is controlling a manufacturing process.

    So what we call the “business method exception” has nothing to do with the invention itself. It’s only related to an invention’s intended use as stated in a patent application. Leave the business method use out of the patent application and there is no problem with patenting the exact same device or equivalent method.

  23. Night Writer December 28, 2017 9:24 am

    Information processing is what this is about. Processing information takes time, space, and energy. The conservation of information is the most important law of physics.

    A method to process information should be patent eligible just as a method to make a new alloy. They both are subject to the same physical laws.

  24. Night Writer December 28, 2017 9:39 am

    Just bizarre that people like Ned are arguing that machines that perform the job of a judge are not eligible for patentability. Just bizarre.

    I guess Anon internet shout down is a good term for what Ned does. Who can compete with his insistent posting.

  25. Night Writer December 28, 2017 10:25 am

    @22 The other thing is that business methods and information processing machines create new ways of doing business and all sorts of innovation. This is a classic example of vast opportunities.

    And, again–the reference to the EPO as something to emulate is absurd. You see we are number one in innovation in information processing.

  26. Anon December 28, 2017 11:00 am

    I have a deal (but it is not a new one) for Mr. Heller:

    I will stop referencing arguments previously presented if you engage fully and in complete inte11ectual honesty to arguments as they are presented, and you acknowledge the counterpoints presented and if you then incorporate those counterpoints into your ongoing posts.

    Since, as mentioned, your current screed has been countered numerous times, I expect that your accceptance of this deal will result in vastly different posts from you from this point forward.

    Anything else is considered to be your continued proselytizing with errant views of law, facts, and even history.

  27. Paul Johnson December 28, 2017 12:23 pm

    Night Writer
    Why is emulating the EPO absurd?

  28. Night Writer December 28, 2017 1:13 pm

    @27 Paul

    Because the USA is number one by far in information processing innovation.

  29. Anon December 28, 2017 1:28 pm

    Mr. Johnson,

    The EPO reflects a different cultural zeitgeist. Feudal serfdom has not broken away from the “guilds” as has the innovative spirit that marked the US rise to power in world wide innovation.

    Unfortunately (and as an aside, our Congress has been more – rather than less – subject to capture from the type of large entity that would rather compete on non-innovation terms), in the likes of “Citizens United” and THAT still needs to be rectified (good luck with that with Trump as president).

  30. Paul Johnson December 28, 2017 5:11 pm

    Night Writer
    But what is it about the EPO’s approach to determining what constitutes patent-eligible subject matter do you have issue with?

  31. Edward Heller December 28, 2017 5:19 pm

    anon, BOTH items I post: Prof. Crouch calling you out for misapplying Hotel Security and Mr. Stein taking the time to go into detail as to why your citations to that case (and others) were not proper were on posts “on that other blog,” and to which (true to your form) you abstained from a continued conversation.

    anon, regarding Prof. Crouch, he took issue with the fact that I said that Hotel Security have been cited by 500 times. He used Shepherds, which showed, if I recall correctly, around 300 citations. I relied on Google Scholar which does in fact show 496 citations.

    I don’t recall exactly what Stein said, but he was critical of that part of Hotel Security that said business methods were abstract and therefore not subject of 101. He pointed out that the case did not appear to be resolved on 101 but on novelty. But there were two claims: The first claim was to a business method means and the second was to a business method per se. The means were found not to be novel and the method not the subject of 101.

    One of the problems with having any discussion with you anon is that tell only tell half the story. You to say that Prof. Crouch said this or Mr. Stein said that without even hinting at the fact that I responded and had an adequate response.

    The same is very true of you prior references to yourself. For example, you say you previously stated the holding of Alappat and therefor have no need to restate it. But you and I both know that you have never stated the holding of Alappat and have studiously avoided making any such statement. And the reason you do so is that either that you do not know the holding, or, more likely, that you cannot reconcile your propaganda with the truth.

  32. Anon December 28, 2017 5:29 pm

    MR. Heller,

    The issue brought up by Prof. Crouch was not a citation count, but how you attempted to use a lower court case as if that case had the authority of a Supreme Court case.

    I note _ with no small sense of irony – that you seem able to (mis)remember this facet after your whining post of 20.

    There is NO “half the story” from me – quite the opposite (maybe a habit of accusing others of that which you do that you picked up on that other blog…?)

    As far as Alappat, not only has the holding been provided – but importantly, the FACT that a case may have more than one holding has been extensively covered. YOU are the one that seems to shy away from the fact that any and all positions advanced by the antagonist (the government challenger in the case of Alappat) create holdings – by definition – because ANY ONE position advanced, if successful, would have changed the decision. Instead, you seek to state that ONLY ONE item is “the holding” when such is simply a pure legal error.

  33. Edward Heller December 28, 2017 5:29 pm

    Mark@22, you state that business methods are an “exception.” But the truth is that that Hotel Security held them not to be within 101.

    When a claim includes both patentable subject matter and unpatentable subject matter, invention (novelty) has to be in the patentable subject matter.

    Thus when a claim is found to include ineligible subject matter, the search in part II of Alice is to determine whether the patentable subject matter in the claim is new or improved.

    Simply reciting old and unimproved, but otherwise patentable, subject matter in a claim is not enough. If simply including conventional, but patentable, subject matter in a claim were enough, anyone could patent any otherwise ineligible subject matter. The courts are not that dumb.

    Regarding what going on in the patent office, you can easily get through the process if your invention is directed to an improvement in technology – the software or computer systems involved. Emphasize this to the examiner and you will prevail.

  34. Edward Heller December 28, 2017 5:31 pm

    anon, you and I both know that Dennis does not post my comments to you for whatever reason.

  35. Anon December 28, 2017 5:31 pm

    Mr. Johnson @ 30,

    I will let Night Writer answer for himself, but one aspect of critical difference between the US Sovereign’s choices as to patent eligibility and the choices of other sovereigns (including the “sovereign” of the EPO) is that the US choice of Useful Arts is broader than the “Technical Arts” of those other sovereigns.

    There is plenty of mischief afoot with many people attempting to obfuscate upon this critical difference.

  36. Anon December 28, 2017 5:35 pm

    Mr. Heller,

    The limited posting effects of “that other blog” do not – and cannot – account for all of the times that YOU have stopped short in responding in a full and inte11ectually honest manner.

    Further, your choice of not responding goes back many years – well before the current editorial controls that caps the number of posts for a given thread in a given time period.

    Further, to your comment of 33, you are CHANGING the US law, and importing a “technical arts” test that is simply NOT in accord with the US Sovereign choice of the Useful Arts.

    Your advocacy on this point is not inte11ectually honest.

  37. Edward Heller December 28, 2017 5:39 pm

    Anon, there is no doubt that Hotel Security did not have the force of Supreme Court decision. But it had been followed by all the courts of appeal, including the C.C.P.A., since it was announced in the early 1900s. The Federal Circuit, sitting en banc, could choose not to follow that case and the C.C.P.A. cases that followed Hotel Security and that were binding on the Federal Circuit. But rather than taking the case en banc, a panel, Judge Rich writing for the court, simply refused to follow the case allegedly on the basis that the holding was based upon novelty, and not on 101. But that only demonstrated that Judge Rich refused to follow the reasoning of the case would was that the ineligible party claim could not support patentability; invention had to be in the means. Thus the analysis always had to include a determination of whether the means for implementing the business method were inventive.

  38. Edward Heller December 28, 2017 5:40 pm

    anon, regarding “technology,” it is intended only as shorthand for the four classes.

  39. Night Writer December 28, 2017 7:32 pm

    @30 Paul Johnson

    It is a piecemeal approach that doesn’t really have any consistency. I have done some work at the EPO. And, it excludes a lot of inventions that I think should be included. But, hey, some years ago I spent a lot of time on a couple of cases for clients at the EPO. And worked with some of the best European patent attorneys. The cases are simply not consistent. Basically, if you have political pull and money you can get what you want.

    Not the type of laws that make USA strong. The EPO’s technological problem/ solution is a lot like Alice jurisprudence.

  40. Anon December 28, 2017 9:55 pm

    Mr> Heller,

    Your view of “regarding “technology,” it is intended only as shorthand for the four classes” is incorrect for several reasons.

    First, your view of the four classes is notoriously off (seeing as you really mean three and a half classes, as you only give full credit to the hard goods categories and treat the process class as a mere subset or handmaiden to the other three classes).

    Second, the notion of useful arts (to which you would to exchange with “technological arts”) has LESS to do with the statutory categories and MORE to do with the other aspect of 101: utility. The utility aspect is quite separate and apart from the statutory category aspect. Your view on this is decidedly NOT of US vintage, but rather reflects your “other sovereign” preferences.

    As I noted above at 35, this attempt by you is pure mischief.

  41. Anon December 28, 2017 9:57 pm

    Further to your statement of “But it had been followed by all the courts of appeal, including the C.C.P.A., since it was announced in the early 1900s.

    You could not be more wrong. It simply does NOT have the pedigree that you attempt to ascribe to it. THIS was part of the details that Mr. Stein provided to you (and for which, you did not have anything close to a “reasonable reply” in the conversation).

  42. Mark Nowotarski December 29, 2017 10:07 am

    “you can easily get through the process if your invention is directed to an improvement in technology – the software or computer systems involved. “

    Ed @ 33

    I was about to tell you all the reasons why I disagreed with your statement when I realized that I actually completely agree with it. Yes, you can easily get through the process (i.e. avoid or over come a 101 rejection) if your invention is directed to an improvement in technology…provided, your case is classified in the field of said technology and your case is assigned to an art unit that examines said technology.

  43. Anon December 29, 2017 10:59 am

    An interesting comment, Mark.

    You may even find some resonance with Mr. Heller as to emphasizing an aspect of the the executive branch administrative agency that is the USPTO evidences “political ties,” and that aspect may even extend to a “death sentence” technique in the examination process of assigning an application to a particular examining unit.

    The prior articles by Mr. Quinn on the wide disparities between art unit allowance rates, coupled with the “political” choice of where to assign whom’s applications, may yet be another indicator of the limitations inherent to the “Administrative State.”

    Perhaps one (quick) answer would be to allow the applicant to designate the art unit to which the application is to be sent to…

  44. Edward Heller December 29, 2017 11:07 am

    Anon, I think you can suggest a figure to publish on the ADS. This should move the application in the direction of an examination group that you want. Just pick something to do with the software as opposed to any business method.

  45. Anon December 29, 2017 12:36 pm

    Just pick something to do with the software as opposed to any business method.

    Mr. Heller,

    Your continued attempts to use those terms “begs the question” as to how you MIS-use those terms.

    Given that, your comment has no meaning.

    A way to perhaps move forward would be to recognize that the attempt to portray “business method” as a “per se” item outside of the process category is legally insufficient (as well as inte11ectually dishonest).

    At once, that term is both overbroad and under-inclusive – especially as you have attempted to shape the narrative with your spins.

  46. Paul Johnson December 29, 2017 1:16 pm

    Night Writer
    What about the Smart Systems patent in
    The EPO would have found the invention to be patent-eligible.

  47. A Rational Person December 29, 2017 2:14 pm


    “And, again–the reference to the EPO as something to emulate is absurd. You see we are number one in innovation in information processing.”

    But maybe not number one for long:

    “China relaxing barriers to software, business method patents with revised patent guidelines”


    Hmmm. i wonder who knows more about science and technology, the political science, government, history, philosophy majors on the Supreme Court or the people running the Chinese patent system? I think I would bet on the people running the Chinese patent system.

    I do not see future generations of Americans looking kindly on the people who helped destroy the U.S. patent system and helped hand technological superiority and economic superiority to the Chinese.

  48. Mark Nowotarski December 29, 2017 7:08 pm

    Anon @43

    Some time ago I hired a classification consultant to get a better handle on exactly how classification is done at the USPTO. It turns out that it is outsourced to an independent contractor. The contractor hires engineers to review applications and then classify them. The USPTO then uses the classifications to assign the applications to art units.

    Classification is still done manually. The classification engineers have between 20 minutes and 1 hour per application to classify them. This means that they don’t have time to read the specifications. As far as we can tell, they only read the title, abstract, figures and first claim.

    You can model the results quite nicely using keywords in one or more of the title, abstract, figures and first claim. For example, “insurance” is a powerful key word for class 705/004. If you have the word “insurance” in one of the above, you are very likely to be classified as 705/004 and assigned to the financial business method work group 3690.

    The goal in drafting a business method patents, therefore, is to determine before hand what field the technological invention is in, find out the key words for that field and write your title, abstract, figures and first claim using those key words and none of the key words of a business method (e.g. price, trade, purchase, etc.)

    So far, this appears to be quite effective.


  49. Anon December 29, 2017 8:45 pm

    Thanks Mark – excellent suggestions – and glad to see at least that the classification is not like one of those (shadows) “quality” programs.

  50. Mark Nowotarski December 30, 2017 10:16 am

    Anon @49 Well at least I haven’t seen any shadow classification actions so far, but it’s always a good idea to stay vigilant.

  51. Night Writer December 30, 2017 8:57 pm

    @ARP I do not see future generations of Americans looking kindly on the people who helped destroy the U.S. patent system and helped hand technological superiority and economic superiority to the Chinese.

    I agree. The big picture is that a few giant corporations are getting their way with our laws. Thanks Obama for stacking the CAFC with Google appointees.