Not a flash in the pan: abstract idea reversal rate continues upward trend for July

July saw a continued trend of reversing Examiners’ abstract idea rejections. Last month, we reported that the PTAB overturned abstract idea rejections in June above 15%. Before this, it had been a year since such a high reversal rate. Now it appears that June was not a one-off month anomaly, but rather a continuation of a trend.

Similar to June, in July the PTAB decided a lot of abstract idea rejections. Of 195 total, 32 were reversed, yielding a pure reversal rate of 16.5%. One decision was partially affirmed, yielding a partial reverse rate of 17%. 

Of note, in July the Board decided 20 more abstract idea decisions than in June. And June was no small month for abstract idea decisions. Such a greater sample size (from an already impressive total in June) with similar reversal rate suggests the board has changed its deference of examiner abstract idea rejections in light of recent case law. 

Check out additional information at anticipat.com. You can look up, for example, all the decisions where the board reversed specific examiner rejections. Try out a trial for Anticipat Research today. 

Another Section 101 lack of utility rejection bites the dust

As reported in today’s recap email, in Ex Parte GELFAND et al (Aug. 2, 2018), the Board reversed a lack of utility rejection. This continues a longstanding trend of the Board frequently reversing such rejections.

In rejecting the claims as lacking utility under Section 101, the Examiner had asserted that the claims were not supported by a specific, substantial, and credible asserted utility, or a well-established utility. For support, the Examiner relied on MPEP § 2107.01 B(C), which states that “[a] method of assaying for or identifying a material that itself has no specific and/or substantial utility” is not considered to have a substantial utility.”

On appeal, the appellant argued “The present invention relates to the field of nucleic acid detection” and that nucleic acid detection has numerous uses including diagnostic uses and research uses–a specific utility.

While acknowledging the Examiner’s cited MPEP section, the Board rejected the Examiner’s reasoning. That identifying the presence of target nucleic acid sequences is a method for assaying “a material that itself has no specific and/or substantial utility.”

According to Anticipat Research, this type of rejection (Section 101 – Lack of Utility) has a very high reversal rate. Over the past two years, the PTAB has reversed 14 of 19 of these rejections, a relatively incredible 74% reversal rate. This may stem from the rejection being applied less frequently with other rejections and Examiners hence not having much experience with properly applying it.

With a reversal rate so low for lack of utility rejections, when struggling with an Examiner with such a type of rejection, it may be helpful to go straight to the Board on appeal to overcome such a rejection.

The PTAB quietly hit a milestone in June in reversing Alice Section 101 rejections

As we have pointed out in a previous post, for more than a year, reversal rates for abstract idea (Alice) rejections have been extremely low. We are finally seeing an uptick of reversals likely due to Berkheimer and other Federal Circuit case law and recent guidance by the USPTO. As we’ve previously predicted, this reversal rate should continue (and may even go up). But until leadership at the USPTO clarifies its policies, it remains to be seen by how much.

As we’ve previously reported, from August 2016 to April 2017, the PTAB had months where it reversed abstract ideas in the 20 and 30 percentage range. That is, if a month had 100 abstract idea decisions, the Board would reverse the examiner on 20 or 30 of those cases. But May 2017 saw a dismal change in appellant fortunes: the reversal rate for abstract idea rejections tanked. For this period of over a year ago, many months saw only single digit reversal rates. Indeed, no month during this time exceeded a 15% reversal rate. The period was bad for Alice appellants.

abstractideareversals

But all this may be starting to change. Last month (June) saw a high number of abstract idea appeals decided, 176. Of those, 29 were wholly reversed, yielding a complete reversal rate of 16.5%.

It may be premature to characterize June as a watershed moment for patent eligibility at the PTAB. But there are three reasons for such hope.

First, June had a sizable number of reversals. In other words, the PTAB did not exceed a 15% reversal rate through a blip attributable to a small sample size. For some context, the number of reversals for the single month of June (29) was almost double the number of reversals for the six months between July 2016 and December 2016 (19).

Month Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18
Reversal Rate 33% 33% 27% 33% 29% 14% 28% 39% 20% 3% 11% 14% 15% 8% 15% 11% 14% 11% 14% 11% 10% 12% 9% 16%
Reversed 2 2 3 2 7 3 17 15 16 1 7 13 16 7 10 9 8 2 9 8 21 16 15 29
Total 6 6 11 6 24 22 60 38 81 31 63 94 108 93 68 83 56 19 64 73 203 137 172 176

Second, the number of decisions where the Board partially reverses an abstract idea rejection is increasing as well. In June, two decisions partially affirmed such rejections, pushing up the total rate with at least one claim reversed to 17.6%. March saw seven such decisions. These nine decisions for these months are more than the previous 9 months. The partial reversal rate tells a more complete story about how the Board is treating abstract idea rejections. As seen, the Board’s trend is toward increasing both the number of complete reversals and partial reversals. This means that the Board appears more willing to entertain dependent claims as patent-eligible, giving the appellant some options.

Finally, the Board is recently more holistically relying on both steps for reversing. We are starting to see a return to previous months where the PTAB has been more aggressive in reversing these types of rejections. Part of this is due to case law, which the Board follows. Berkheimer and Vanda guidelines may play a role. We previously noted that Berkheimer temporarily changed the way in which panels reverse. That is, whereas before panels primarily relied on Step 1 to overturn an abstract idea rejection, for a few months it was about even as to whether the Board uses Step 1 or Step 2 of the Alice/Mayo framework to reverse. June saw a return to the disproportionate reliance on Step 1 vs Step 2 reversal rationales (2:1). This goes to show that the Board may not be limiting itself to reversing cases just because of a single Federal Circuit decision (Berkheimer), but is developing a less erratic and more cogent way of deciding such rejections.

Why did the PTAB quietly hit this milestone in June? The PTO’s FOIA website, from which a majority of Anticipat’s data comes, has recently been delaying the time it takes to upload decisions to its page. Before a normal data upload would be a few business days and Anticipat Recap emails would play it safe by waiting until two weeks after a particular date to send a recap of a day’s decisions. So while we typically keep users updated on reversals using Recap emails after two weeks, for many days there have been no decisions to report on. Instead, we accessed this information by using the Research page.

After speaking with the USPTO’s webmaster, we were assured that the decisions will be more quickly uploaded going forward. This did not entirely assuage our concerns. So in the meantime, we are updating our Recap email functionality so that a user can modify the email settings to be sent in whatever way is most helpful to one’s practice. Stay tuned for updates very soon.

Anticipat blog recognized as top 100 IP blog

After a year and a half of posting, this blog is starting to get recognized. In addition to traffic growth, Anticipat blog has been selected as one of the Top 100 Intellectual Property Blogs on the web by Feedspot. See https://blog.feedspot.com/intellectual_property_blogs/

Feedspot’s top 100 list for IP blogs is a very comprehensive list of Top 100 Intellectual Property Blogs on the internet. Anticipat comes in at #74, at a rate of about a blog post a week. 

This list highlights that there are many good IP blogs to follow. In fact, we include a section in the right sidebar under BLOGS TO FOLLOW with a short list of some of these IP blogs to follow. 

Stay tuned for many more interesting and relevant posts. We will continue providing content to be practical to the patent prosecutor. 

Berkheimer’s biggest effect on PTAB outcomes

After Federal Circuit decisions Berkheimer and Aatrix held that abstract idea inquiries required a factual finding, this blog predicted that the number of abstract idea rejection reversals at the Board would dramatically increase. The logic being that many examiners did not perform the rigorous analysis seemingly required for Step 2 of the Alice/Mayo framework in light of these Federal Circuit decisions. It has now been over 4 months since Berkheimer was decided and we can safely say that this dramatic change has not yet happened.

In fact, take the decisions involving abstract idea rejections in the year leading up to Berkheimer (March 1, 2017-March 1, 2018, accounting for some lag time after Berkheimer was decided). In this year, the 107 reversals over the 901 total decisions yields a reversal rate of 11.9%. Post Berkheimer (from March 1, 2018 to present), there have been 54 reversals over 525 total decisions. This reversal rate is 10.3%–lower than the pre-Berkheimer range. (All these decisions can be found using the Anticipat Research page)

But there has been something that has changed: the way that the Board performs its analysis. Historically, the Board has favored relying on step 1 of the Alice/Mayo framework by almost a 3:2 ratio. That is, for every three decisions where the panel reversed because the claims were not directed to an abstract idea under step 1, there were two decisions where the panel reversed because the claims recited something more than the asserted abstract idea under step 2. From March 1, 2017 to March 1, 2018, there were 63 step 1 analyses versus 35 step 2 analyses.

An important piece of the step 2 analysis is whether the claims recite an element or combination of elements that are more than well-understood, routine, or conventional elements. As the Federal Circuit has made clear, this inquiry is an element of fact. And Examiners have been charged in the recent Berkheimer memo to carefully apply factual bases to this step. So it would make sense that the Board, in light of Berkheimer, is reversing under this step more frequently than before.

And that is exactly what is happening. Recently, the two steps are equally used in reversing abstract idea rejections. From March 30, 2018 to present, the Board has used step 1 analysis to reverse 16 times while using step 2 an almost equal 15 times. This means that the Board has become much more receptive to arguments of step 2 in light of Berkheimer–even if the reversal rates have not noticeably increased.

The lower post-Berkheimer reversal rate is not easy to explain. It may stem from a confluence of factors. Perhaps applicants are getting more aggressive and appealing claims that are less patent-eligible. It could be that some applications that would otherwise be reversed if appealed all the way to a final decision are getting allowed at the appeal conference stage or earlier.

Regardless of the success rates of appealing abstract idea rejections, the change in the way that the board reversed these decisions highlights a good practice tip. Focus appeal argumentation on step 2 where appropriate. For those appeals that have long since been forwarded to the appeal, it is not too late to bring this up to the panel by way of an oral hearing. During the oral hearing, explaining the step 2 piece could be helpful to the panel, assuming that some sort of step 2 argument has been made. And of course when interviewing and otherwise responding to Office Actions in response to abstract idea rejections, step 2 has become a powerful step.

Understanding the Examiner Answer: analyze anything new and contest as needed

The Examiner Answer can be a very important stage of the ex parte appeal process. It is at this stage that Examiners may want to make up for weak Office Action positions and set themselves up for getting affirmed at the Board. Understanding the Examiner incentives and tactical options, however, can give the patent practitioner the upper hand.

The Examiner Answer is technically optional (“The primary examiner may, within such time as may be directed by the Director, furnish a written answer to the appeal brief.” 37 CFR 41.39). Examiners usually prepare them because of the disposal credits that they receive. Outside of this most obvious incentive, Examiners also have an opportunity to present their case most favorably to the Board panel that will decide the case. Sometimes the analysis in the Answer can improperly go out of bounds. Since an appellant only gets 60 days to respond to an Examiner Answer (no extensions), a timely assessment of the Examiner Answer is critical. examineranswertimeline

Timeline image attributed to Fitch, Even, Tabin & Flannery LLP

One way that Examiners cure deficiencies in their pending rejections is by creeping their arguments closer to the definition of a new ground of rejection (new analysis or evidence described below). It requires a technology center signature to introduce a new rejection at the Examiner Answer stage, which makes formal new rejections unattractive to Examiners. We recently pointed out a growing awareness in the patent bar of improper Examiner Answers that include a new rejection without designating it as new.

There’s a good option for combating such an improper new ground of rejection that has not been so designated: file a Petition to designate the rejection as new and reopen prosecution. 1207.03(b). This petition tolls the 60 day window to respond to the Examiner’s Answer so that a resolution will not affect the ability to proceed with an appeal.

Another technique was very recently blessed by the Federal Circuit in In re Durance, 2017-1486 (Jun 1, 2018). This technique includes directly arguing against an improper new rejection in the Reply Brief–even if this appellant argument had never been argued before. In Durance, the Examiner in the Examiner Answer argued for the first time that there was no structural difference between the claimed invention and the combined teachings of the prior art references, citing a structural identity argument. The appellant challenged the structural-identity rejection in their reply brief, but it was not considered by the Board because of alleged waiver. This was error, the Federal Circuit held.

The Reply Brief, like the Examiner Answer, is also optional. There is not good data on whether filing a reply brief helps improve the chance of succeeding on appeal (although Anticipat is currently ingesting prosecution data to show this). But filing a Reply Brief can help the Board see defects in the Examiner’s case. This includes improper new rejections.

Whether an Examiner Answer includes an improper new rejection depends very much on the facts. The MPEP outlines what constitutes a new ground of rejection. See MPEP 1207.03(a). Here are factual factors for constituting a new ground of rejection.

  • Changing the statutory basis of rejection from 35 U.S.C. 102 to 35 U.S.C. 103.
  • Changing the statutory basis of rejection from 35 U.S.C. 103 to 35 U.S.C. 102, based on a different teaching.
  • Citing new calculations in support of overlapping ranges.
  • Citing new structure in support of structural obviousness.
  • Pointing to a different portion of the claim to maintain a “new matter” rejection.

In contrast to the above factual situations, no new ground of rejection issue arises when the basic thrust of the rejection remains the same, i.e., an appellant has been given a fair opportunity to react to the rejection. See In re Kronig, 539 F.2d 1300, 1302-03, 190 USPQ 425, 426-27 (CCPA 1976). Here are factual factors for the rejection not constituting a new ground of rejection.

  • Citing a different portion of a reference to elaborate upon that which has been cited previously.
  • Changing the statutory basis of rejection from 35 U.S.C. 103 to 35 U.S.C. 102, but relying on the same teachings.
  • Relying on fewer than all references in support of a 35 U.S.C. 103 rejection, but relying on the same teachings.
  • Changing the order of references in the statement of rejection, but relying on the same teachings of those references.
  • Considering, in order to respond to applicant’s arguments, other portions of a reference submitted by the applicant.

A good practice tip is to pay careful attention to arguments in the Examiner Answer. If they are different enough from the arguments on the record, consider pointing this out either in a petition or in a Reply Brief, as appropriate.

New USPTO subject matter memo in light of Vanda Pharms. v. West-Ward

After a relatively long break of over a year from issuing subject matter eligibility memos after Amdocs, the USPTO looks like it’s back on track. This year has already seen the Berkheimer memo. Now its latest memo from Bob Bahr was issued yesterday June 7, 2018 in light of Vanda Pharms. v. West-Ward Pharms (Fed. Cir. Apt. 13, 2018). 

The memo includes guidance to examiners for examining diagnostics applications under Section 101. The memo is nothing revolutionary for examining under the Mayo/Alice framework as it closely follows the Vanda holding. But the memo does clarify that examiners should consider an “application” of a natural relationship as satisfying step 2A of the Alice test, without having to go to the “routine, conventional, and well-known” analysis of Step 2B. Specifically, the memo states that practically applying a natural relationship should be considered eligible–it is not necessary for such method of treatment claims to include non-routine or unconventional steps. 

The recent memos offer some hope that USPTO will continue to improve the predictability of applying Section 101 rejections.