Director of the U.S. Patent and Trademark Office Andrei Iancu made some interesting remarks yesterday at the Intellectual Property Owners Association Annual Meeting in Chicago on September 24, 2018 regarding a proposal for new guidance on how the USPTO would approach determination of subject matter eligibility under §101.
Offering a remarkably simple summary of a proposed approach, Dir. Iancu summarizes:
In sum, the proposed guidance for Section 101, which addresses step 1 of Alice, would explain that eligibility rejections are to be applied only to claims that recite subject matter within the defined categories of judicial exceptions. And even then, a rejection would only be applied if the claim does not integrate the recited exception into a practical application. This provides significantly more clarity for the great bulk of cases (emphasis added).
In the IPO meeting’s (written) remarks, Director Iancu speaks at length about the current confusion in the Mayo/Alice framework and how “significantly more work needs to be done, especially on the ‘abstract idea’ exception.” Specifically, Director Iancu discusses recent Federal Circuit concurrences and dissents identifying the uncertainty in the law and, in fact, calling for a change. While echoing the issues voiced by the appeals court judges, Director Iancu harkens back almost 40 years to Judge Giles Rich and the problems of commingling §101 jurisprudence with other statutory provisions.
The result is an announcement that the USPTO is contemplating revised guidance to categorize (i.e., name) the judicial exceptions … and instruct examiners on how to apply the categories. Director Iancu states:
More specifically, the contemplated guidance would do two primary things: First, it would categorize the exceptions based on a synthesis of the case law to date. And second, if a claim does recite a categorized exception, we would instruct examiners to decide if it is “directed to” that exception by determining whether such exception is integrated into a practical application. These two clarifications would help drive more predictability back into the analysis while remaining true to the case law that gave rise to these judicial exceptions in the first place.
So first, what exactly should be captured by the judicial exceptions to §101? In essence, and because we no longer want to mush subject matter with the conditions of patentability, the exceptions should capture only those claims that the Supreme Court has said remain outside the categories of patent protection, despite being novel, nonobvious, and well-disclosed. And what are the categories of inventions that the court told us that we should not patent even where the applicant demonstrates full compliance with Sections 102, 103 and 112? The Supreme Court gave us the answer: the “basic tools of scientific and technological work.”(emphasis added)
And what are these “basic tools?” I believe that the Supreme Court has also told us that, at least through their examples.
Identifying seminal cases in each area and discussing their focus, Director Iancu proposes the categories, saying:
And so, the proposed PTO guidance would synthesize “abstract ideas” as falling into the following three categories:
- Mathematical concepts like mathematical relationships, formulas, and calculations
- Certain methods of organizing human interactions, such as fundamental economic practices commercial and legal interactions; managing relationships or interactions between people; and advertising, marketing, and sales activities
- Mental processes, which are concepts performed in the human mind, such as forming an observation, evaluation, judgment, or opinion.
Under the first step of the proposed guidance, we would first look to see if the claims are within the four statutory categories: process, machine, manufacture, or composition of matter. This is not new—we always do this. If statutory, we would then check to see if the claims recite matter within one of the judicial exceptions, categorized as I just mentioned. This is the new approach.
If the claims at issue do not recite subject matter falling into one of these categories, then the 101 analysis is essentially concluded and the claim is eligible. This alone would resolve a significant number of cases currently confounding our system. If an examiner does not find matter within the disallowed categories, he or she can move on.
Now, on the other hand, if the claims do recite subject matter in one of the excluded categories, the Supreme Court has instructed that we need to do more analysis. Specifically, the court instructed us that in such cases we need to decide whether the claims are “directed to” those categories. (emphasis added)
This is a key first step to be added into, e.g., what Step 2A currently looks like. This “new approach” may require the examiner to articulate that the claims fall into one of the three categories before proceeding to decide whether the claims are “directed to” those categories.
Now, an examiner could potentially include many things under these categories, such as any time the claims look like a business method or compare information, but there appears to be an additional step of saying “Yes, this falls into a category of judicial exception. Now we look at whether the claim is ‘directed to’ a judicial exception.”
Director Iancu then offers an explanation of what “directed to” actually would mean:
To that end, we must first understand what the line is that the court wants us to draw to decide whether the claim is “directed to” an excluded category or not. The proposed new guidance would explain that Supreme Court jurisprudence taken together effectively allows claims that include otherwise excluded matter as long as that matter is integrated into a practical application. The line, in other words, delineates mere principles, on one hand, from practical applications of such principles, on the other.
For example, in Le Roy v. Tathem, the court said in 1853 that “a new property discovered in matter, when practically applied in the construction of a useful article of commerce or manufacture, is patentable.” Then 128 years later, in Diamond v. Diehr, the court repeated that “an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection.” And recently, in Mayo, the court explained that “applications of such concepts to a new and useful end … remain eligible for patent protection.”
And so, if the claim integrates the exception into a practical application, then the claim is not “directed to” the prohibited matter. In such cases, the claim passes 101 and the eligibility analysis would conclude. Otherwise, we would move to step 2 of Alice, for example as explained in the office’s Berkheimer memo from earlier this year. (emphasis added)
Perhaps it is that simple—practical applications of the judicial exceptions are eligible while mere principles are not eligible.
Director Iancu continues by identifying that Step 2B and again references a need to keep each statutory look on the correct track:
It is important to note that the first step of our analysis does not include questions about “conventionality,” which are addressed in Alice Step 2. That is, it does not matter if the “integration” steps are arguably “conventional”; as long as the integration is into a practical application, then the 101 analysis is concluded. This helps to ensure that there is a meaningful dividing line between 101 and 102/103 analysis. A fully “conventional” yet patent-eligible claim may still be unpatentable as obvious. But it is better to address such a claim with obviousness law that has been developed over 65 years of practice.
The analysis also does not deny claims as ineligible merely because they are broad or functionally-stated or result-oriented. I understand the concern with certain types of broad, functionally defined claims that do not have sufficient support in the specification. But for these cases, USPTO examiners know, and will receive further guidance and training on, how to apply well-defined Section 112 principles.
Put another way, the examination does not conclude merely because we overcome Section 101; we must still examine for patentability under sections 102, 103 and 112. And so for claims that pass 101 because they do not articulate matter in a defined category, or that integrate the matter into a practical application, we can rest assured that other sections of the code should still prevent a patent if the claim is not inventive or is merely on a non-enabled or undescribed or indefinite idea. (emphasis added)
To close the remarks, Director Iancu offers the above-included summary and reiterates the need for simplification and calls for other authorities to “join in helping us get out of the rut, at least by keeping rejections in their lane and by clearly categorizing the subject matter of any exception.”
This speech appears to be timed with the recent revisions of Standard Operating Procedures in the Patent Trial and Appeal Board (PTAB) of September 20, 2018 and harkens back to Director Iancu’s April 11, 2018 remarks at U.S. Chamber of Commerce Patent Policy Conference where Director Iancu identified the concerns of increased uncertainty in §101 determinations and PTAB proceedings from the Chamber’s report. Director Iancu asserted that “Currently, we’re actively looking for ways to simplify the eligibility determination for our examiners through forward-looking guidance. Through our administration of the patent laws, which we are charged to execute, the USPTO can lead, not just react to, every new case the courts issue.” This new approach appears to fulfill that promise of a simplification and leadership.
After the April 11th remarks the famous “Berkheimer Memo” (a/k/a the “2B Memo”) was issued on April 19, 2018. In this case, the new guidance would be expected to be issued soon but of course would require some time (and public comments) before finalization.