Mark Nowotarski is the founder of Surviving Alice ® IP consulting. Surviving Alice specializes in developing data-based strategies to help clients obtain business method patents in a timely and cost effective manner. Mark is also the inventor of Allowance Cloud™ graphics. Allowance Cloud graphics help practitioners visualize changes in examiner behavior caused by court decisions, management changes and USPTO policy directives. Mark is the author of the “Surviving Alice” series on Bilski Blog, a contributor to IPWatchdog and the ABA’s Landslide magazine. Mark is a registered US patent agent and has been prosecuting business method patents since 2002. He is a former Corporate Fellow for Praxair Inc. where he invented and patented 17 innovations in green manufacturing technologies. Mark has a Master’s degree in Mechanical Engineering from Stanford University and a Bachelor’s degree with honors in Aerospace, Mechanical Sciences and Engineering Physics from Princeton University.
The most effective way to protect an inventive business method is with a patent on a technical invention. Ever since the U.S. Supreme Court’s 2014 Alice decision, the U.S. courts and the U.S. Patent and Trademark Office (USPTO) have consistently held that you can’t patent a business method by itself. The Alice decision overturned several related business method patents as being nothing more than an attempt to patent a fundamental economic process. Lower court decisions have since affirmed that “no matter how groundbreaking, innovative or even brilliant” a business method might be, you still can’t patent it. The only way to use patents, therefore, to protect business method inventions, is to patent the technological inventions required to make the business methods work. These inventions will be patentable since they will “improve the functioning of the computer itself.” See Buysafe, Inc., v. Google, Inc. 765 F.3d 1350 (2014) citing Association for Molecular Pathology v. Myriad Genetics, Inc., ___ U.S. ___, 133 S.Ct. 2107, 2116, 186 L.Ed.2d 124 (2013).
It’s tough to fight on after losing an Alice appeal, but that’s just what most applicants are doing. An “Alice appeal” is an appeal of a patent rejection under 35 U.S.C. 101 for lack of statutory subject matter. The major field of these patents is business methods (class 705). More than half of business method applicants that are losing Alice appeals are taking action to keep their applications alive. The reasons for renewed hopes include the new 2019 Subject Matter Eligibility Guidance that came out in January, as well as the current movement in Congress to clarify 35 U.S.C. 101. With hope on the horizon, now is not the time to give up. The table below gives some recent examples of how both large and small applicants are continuing to prosecute their patent applications after losing an Alice appeal.
Business method patents have recovered under the new 2019 Revised Patent Subject Matter Eligibility Guidance. As the graph above shows, allowances per office action (APOA) dropped from 17% before the 2014 Alice decision to 4% right after the Alice decision. APOA then increased to about 11% in 2017 when a new business method director, Tariq Hafiz was appointed. Tariq made a special point of encouraging examiners to allow cases if they genuinely felt the claims met the 101 guidelines set forth by the patent office. APOA rose to 17% in 2019 after the new 2019 Guidance came out in January. It is now back at its pre-Alice level of 17%. It’s still not easy to get a business method patent. An APOA of 17% implies that, on average, an applicant will have to respond to five rejections before getting an allowance. Nonetheless, it is now at least a realistic possibility to get a business method patent in a reasonable amount of cost and time.
Artificial Intelligence (AI) patents have made a strong comeback under the new 2019 Revised Patent Subject Matter Eligibility Guidance. As the first graph above shows, allowances per office action have gone from an average of 15% before the guidance to 38% after the guidance. The increase occurred almost immediately after examiners were trained on the new guidance in January. For AI inventors concerned about the impact of the old Alice guidelines on the examination of AI-related applications, it looks like more hopeful times are ahead. The situation is grimmer for finance patents. The new guidance has not had any significant effect on allowances per office action. I reviewed a number of recent office actions under the new guidelines to see where the problem might be. It appears that most examiners in the finance art units 3691 to 3697 consider any improvement to a computer implemented financial process to be nothing more than an abstract idea. It doesn’t matter how novel or sophisticated the algorithms might be. The Patent Trial and Appeal Board has been backing up this examiner perspective, with the affirmance rate for related appeals being more than 90%.