Implementing the 101 guidelines at the patent office

With the recent spate of Supreme Court rulings on subject matter eligibility, based on 35 U.S. Code 101, many pundits have heralded the end of the patent system as we know it in the U.S. Indeed, the trend lines at a surface level look ominous, with decisions invalidating claims by the Patent Trial and Appeal Board (PTAB), district and federal courts far outnumbering those upholding claims.

But the Supreme Court decisions that were handed down were narrowly tailored to the facts in each case and the U.S. Patent and Trade Office (USPTO) has taken to an iterative implementation approach in its series of guidelines. Robert Sachs of Fenwick and West has done excellent and insightful research on the examiners’ use of subject matter eligibility rejections. Some of the results track against those invalidation trend lines — he reports that the affects on e-shopping, business modeling and banking have been brutal. Some of these technologies appear to have been struck down in nearly all of the cases brought forward. But outside of the areas loosely referred to as “business methods,” only the areas of gaming, education and molecular biology have seen a significant increase in 101 rejections.

The big surprise in this research is what is happening in the computer technology and software categories. Final rejections under 101 since 2012 appear to have decreased significantly in the computer arts, which necessarily includes software. To put it another way, these patent applications for software are not only still being approved, but they are being approved at higher rates than they were in the pre-Alice Corp. v. CLS Bank world.

As they should, the examiners in this area do not appear to rely on some formulaic model, but instead seem to be evaluating the totality of the claim to determine if the software technology is solving real-world problems. So, while there’s certainly some bad news in the most recent data, there are also some very good signs.

But we should not let this good news lull us into a false sense of security. Where the numbers are bad, they are really bad. Sachs called out Technology Center 3600 for special focus. He points out that “business method” class 705 is handled in this group but so are other technologies, like cryptography and insurance. 101 rejections are dramatically higher in Technology Center 3600 than in any other group. In fact, Sachs found that 58 business method examiners in Technology Center 3600 issued 101 rejections in 100 percent of their applications, even though the Supreme Court expressly stated that business method claims could be patented.

Likewise, the 101 rejections in the biotechnology areas handled by Technology Center 1600 are at an elevated level when compared to the rest of the examining corps. The increased use of the subject matter rejections there is not because of abstract ideas, but relates to the focus of those examiners on laws of nature and naturally occurring structures (like DNA).

These types of statistics are concerning to anyone who has to practice in the technologies handled in this group. Clearly, more work needs to be done.

One place where further improvements could be made is the latest version of the USPTO guidelines on 101. Even the current version of the guidelines retain the “certain methods of organizing human activity” language, which is not meant as an additional test in any of the Supreme Court’s decisions. The confusion this phrase causes for the examiners is evidenced by the unusually high level of 101 rejections in the gaming arts, amongst others.

It is also clear that more education needs to be provided to different clusters of the examining corps. Attorneys and patent holders must continue to work with and engage the USPTO on these issues. We should encourage the USPTO to provide more training and more oversight to the examiners handling these cases. This would save applicants from unnecessary actions and refilings, which spend resources that could otherwise be invested in innovation and economic activity.

To be fair to the Office, it is extremely difficult to train the over 8,000 examiners in different art areas at the USPTO to unerringly handle the complex issues of a claim that involves subject matter that in some manner tangentially relates to an abstract idea, a formula or a naturally occurring phenomenon. It is harder still to do so in light of the ambiguous (and occasionally contradictory) guidance being provided by the courts.

The bottom line is that — based on the most recent numbers — it looks like the USPTO is doing a pretty good job of managing a difficult situation. And while further improvements and clarifications to examiner guidelines are needed, the USPTO is generally headed in the right direction. While the statistics relating to the examination of software patents are encouraging and the office is to be applauded for the implementation of the guidelines in this area, we still need to assure that examiners in areas that have lagging statistics have a better understanding that it is important to the growth of our economy to allow claims drawn to innovative technologies. We are hopeful that the willingness of the office to continue to modify the guidance will lead to a better system for all.

Stoll is a partner and co-chair of the intellectual property group at Drinker Biddle & Reath and a former commissioner for patents at the United States Patent and Trademark Office.