Posts Tagged: "business method patent"

Four years after the Alice decision, we seem to just now be detecting the full impact of the decision. The initial response by the USPTO resulted in an somewhat expected increase in the percentage of applications with eligibility rejections from business-method art units. Three years after Alice, eligibility rejections became much more common across the remaining computer-related technology centers (i.e. 2100, 2400, and 2600)… The sudden increase in eligibility rejections from other computer-related technology centers may have a number of causes. For example, case law from the Federal Circuit and the USTPO began to expanded the application of Alice to inventions that appear abstract despite not being directed to a traditional business-method concept… The increase in the percentage of office actions with eligibility rejections in TC 2100 was much higher than the increase in other computer related technology centers TC 2400 and TC 2600. Given that TC 2100 is a primarily software-focused technology center, this trend discrepancy suggests that post-Alice eligibility assessments performed by software examiners present increased challenges for patenting software based inventions.

As we mark the close of yet another year, we’re provided with a perfect opportunity to look back on the previous twelve months and see what has transpired. No one could call it a good year for patent owners (except those with the largest pockets, of course) starting with the United States’ 10th-place ranking among national patent systems in the U.S. Chamber of Commerce’s IP Index, and it didn’t appear as though any weaknesses in uncertain patentability across the U.S. technological landscape were addressed in a positive manner this year. It’s inevitable that the ball will drop on New Year’s Eve and calendars everywhere will turn from 2017 to 2018. Whether the U.S. federal government will be able to stop the death knell sounding doom for our nation’s patent system, however, is still anyone’s guess and it seems far from likely.

In the years after the Alice decision, it had seemed as though examiners in the business method art units felt as though their hands were tied with respect to issuing applications. Even if they had recommended an application for allowance, it was often sent back by quality review with an indication that a patent-eligibility rejection should be made or maintained. However, in early 2017 – at least with respect to a handful of applications – examiners’ perspectives seem to have changed, where they were more willing to work with the applicants to find eligible claim material and/or suitable arguments to be put on the record that would suffice for an allowance… While we note that the business method allowance prospects still remain substantially below those in other Technology Centers, the beyond-doubling of this statistic is of practical significance.

Guidelines, set to go into effect on April 1st in China, continue to leave the window open for software and business method patents. For software patents, patent applicants will be able to claim a medium plus computer program process instead of claiming means plus function, a term which has typically been narrowly construed by SIPO examiners. As ZY Partners’ analysis notes, previously ineligible claims directed at “a computer program product” or “a machine-readable medium” will now be eligible for patent protection in China…. Given this trend towards delegitimizing the patentability of inventions within valuable growth sectors in the U.S., it’s particularly galling to see that China, often portrayed as the United States’ top economic competitor, has been moving in the opposite direction, even if only slightly. Last October, China’s State Intellectual Property Office (SIPO) released revised guidelines for its patent examiners and some were quick to note that the revised guidelines were friendlier to both software and business method patents.

First, this type of circular “logic” is at the heart of virtually all Alice rejections. Here the examiner concludes there is nothing significantly more than the judicial exception (which in this case is an abstract idea) because the additional elements add no more than the abstract idea. In other words, the examiner says there is nothing significantly more than the abstract idea because there is nothing more than the abstract idea. The Alice equivalent of this “how dare you ask me, I’m your mother” simply says what you’ve claimed is abstract because it is abstract, period. Clearly, a conclusory rejection like this without any real explanation does not satisfy the examiner’s prima facie burden to articulate a valid reason to reject. After all “because” is not a reason.

In every art unit examiners confirm that there is an examiner within the Art Unit who is the Alice expert and that examiners have said that even if they are ready to allow a case, nothing can be allowed without the approval of that Alice expert. This sounds quite similar to second pair of eyes review, which wreaked enormous havoc on the patent system over a decade ago. Second pair of eyes review was one of the primary reasons why patent pendency got out of control and the backlog of patent applications grew to well over 1 million unexamined patent applications. It seems to have returned under the guise of Alice.

What is happening in TC 3600 is prosecution is being re-opened for the purpose of issuing Alice rejections. With the help of readers, so far I’ve found eleven (11) separate cases over the last 10 months where prosecution was re-opened by Greg Vidovich, Director of TC 3600, after the Board issued a decision completely reversing the examiner on every rejection of every claim. In each case the Vidovich authorized re-opening of prosecution simply to issue Alice rejections… What good is an appeal when the TC Director has demonstrated that even if the appeal is successful prosecution can be re-opened and more bogus rejections made? What good is going back into prosecution with the same unreasonable examiner that has just has each and every rejection of each and every claim reversed? There is no relief for applicants, which is not how the system is supposed to work.

Upon closer review things are much, much worse than I previously reported. The problem is also far more widespread. Using LexisNexis Patent Advisor®, I looked at the E-commerce Art Units, this time focusing on what has happened over the past 18 months. Focusing on this segment of post-Alice prosecution the allowance picture is utterly atrocious… Only 12 patents were issued by Art Unit 3689 in 2015, while 365 applications went abandoned, which corresponds to an allowance rate of 3.2%. So far in 2016 there have been only 3 patents issued by Art Unit 3689, while 232 patent applications have gone abandoned, which corresponds to an allowance rate of 1.3%.

This new post-prosecution pilot program feels a lot like rearranging the chairs on the Titanic. Unless and until the Patent Office does something about recalcitrant patent examiners this effort may wind up being much ado about nothing… If you look at Art Unit 3622, which handles applications dealing with incentive programs and coupons, and compare it with Art Unit 3688 and Art Unit 3682, both of which also handle patent applications relating to incentive programs and coupons, you see the same alarming trend. These three Art Units that handle the same type of patent application yet have allowance rates of 9.5%, 29.2% and 63.2%. Something seems seriously wrong and is screaming for investigation.

Seeking to push this issue to a head sooner rather than later, Technology Trading International, the owner of the ‘304 patent, has recently filed a Petition for Writ of Mandamus with the United States Court of Appeals for the Federal Circuit. As the mandamus petition explains, the ‘304 patent has been the subject of serial CBM petitions. They are challenging the institution of this CBM because the ‘304 patent is clearly not a business method patent.

Several questions every patent attorney should be asking before responding to an Alice rejection are: (1) How many Alice rejections has the examiner issued? (2) What does he or she consider to be the sticking points of the decision? (3) How many applications that received an Alice rejection were eventually allowed? Once an attorney has the answers to these questions in hand, the path to success in responding to an Alice rejection is considerably clearer.

In CBM2015-00161, the Patent Trial and Appeal Board (PTAB) at the United States Patent & Trademark Office (USPTO) recently instituted a Covered Business Method (CBM) review on a non-business method patent with a clear and unambiguous technological aspect. This institution decision is in direct contravention of the statute, which is by its express terms prevents CBM review from anything with a technical aspect. In short, only covered business methods, which are financial related business method patents without a technological aspect, are supposed to be subject to this special form of post grant review. Even more troubling, the patent in question has been found to be directed to technological improvements by both the European Patent Office and the United States Federal District Court for the Northern District of Illinois. Nevertheless, the PTAB still instituted a CBM.

The key to obtaining a software patent is to thoroughly describe the system and processes from a technological level. As to Judge Chen explained in DDR Holdings, in order for software patent claims to be patent eligible they must not “merely recite the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet.” To be patent eligible claims to software must be “rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.” Of course, this patent eligible example of software patent claims is extremely relevant for business methods because a naked business method is no longer patent eligible. To have a realistic chance of being patented business methods must be tied to a particular compute technology in a meaningful and substantial way. Said another way, the business method really needs to be performed by and through a concrete and tangible system, where the system and processes are painstakingly described.

Business method patents are still being granted after Alice, but are being granted at lower rates than before, and some assignees are better at obtaining them than others. The top assignees in the business methods art units have a wide range of allowance rates, from Oracle at 83.3% to Siemens at 35.3%, resulting in a difference of 48 percentage points. Even among the most successful assignees, only three have allowance rates of over 50%.