PTAB’s Abstract Idea Reversal Rate Surges in January after New Examiner Guidance Takes Effect

At last week’s Utah IP Summit (and subsequently published in a post at IPWatchdog), Gene Quinn squarely blamed the Federal Circuit for the “101 crisis”. And his point is hard to ignore as many divided Federal Circuit panels seem unwilling to distinguish Alice and Mayo even in the face of strong dissents that would. As much as Director Iancu would like to move the needle of patent-eligibility in a more straightforward and predictable way, the USPTO is bound by these majority Federal Circuit panels–not strong dissents. But the PTAB seems to be quietly listening to all the buzz, being more willing to reverse abstract idea rejections under Section 101 than ever before.

The new subject-matter eligibility guidelines took effect in early January 2019 and almost immediately Board panels started citing to the guidelines in their analysis. The result on reversals was profound. Of 91 total abstract idea decisions, the Board completely reversed 32. This is an astounding 35% reversal rate, a rate not seen in two years, which saw a significantly lower sample size than January 2019.

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While the reversal rate for January 2019 was dramatic, it is too early to tell whether this high of a reversal rate will continue, especially with the lower-than-expected total number of abstract idea decisions. While 91 such total decisions is not paltry, such a low number has not been seen since last February. This is not completely unexpected as the PTAB typically starts out the calendar year slow. But the next couple months will be insightful to see whether the high reversal rate continues even with a higher volume of abstract idea appeals being decided.

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The PTAB (previously BPAI) has a rich history in shaping patent-eligibility. The Supreme Court case Diamond v. Diehr moved the 101 needle in finding an algorithm claim to be patent-eligible because of its practical application to curing rubber. This decision originally stemmed from the CCPA (predecessor to the Fed circuit) reversing a Board decision that affirmed the Examiner’s 101 rejection. Another Supreme Court decision, Diamond v. Chakrabarty, paved the way for patenting man-made genetically-modified living organisms. This decision also stemmed from a Board rejection of the claims under 101, with the CCPA again reversing the Board’s affirmance of the examiner’s 101 rejection. 

Expect the PTAB to continue to reverse improper Section 101 rejections as it has a tail wind at its back. This could benefit the entire patent bar at least for predictability sake. Just by virtue of the Board deciding a more diverse set of applications than courts, there are more shades of gray to work with. And some of these gray cases can be good candidates for testing the proper boundaries of what is patent-eligible. Even if the Board affirms the rejections as patent-ineligible, appeals that go higher up could help give the Federal Circuit (like its CCPA predecessor) a chance of redeeming itself as the 101 conundrum culprit.

December 2018: PTAB Records Highest Total Number of Abstract Idea (Alice) Reversals

The PTAB continues to decide a large number of Alice-based (Section 101 – patent-ineligible subject matter) decisions. December continues both the large number of abstract idea reversals and the high reversal rate, compared to previous months. Expect the appellant-friendly trend to continue with revised USPTO Examiner Guidance, which the PTAB is bound to follow.

December 2018 showed two interesting data points. First, the total number of abstract idea reversals was record-setting. For context, the previous record number of such reversals was in November 2018 with 42. In December, the PTAB quietly crushed this previous record of reversed abstract idea rejections with 58 total such reversals. It was a quiet crushing because the holidays and end-of-year logistics at the USPTO resulted in a long lag-time for decisions to finally publish.

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Second, the total reversal rate for these rejections was very high as well. We previously reported that in November 2018, the PTAB hit an abstract idea reversal rate of 20%, which it had not done in quite some time. December continued November’s high reversal rate trend with 58 complete reversals out of¬†232 total abstract idea decisions, yielding a reversal rate of 25%. The last time the PTAB saw two consecutive months with such a high reversal rate was two years ago. The obvious difference is that two years ago saw much fewer abstract idea appeal decisions.

On January 7, 2019, the USPTO put into effect Examiner Guidance that looks to make it more difficult for Examiners to maintain abstract idea rejections. We have already seen many reversals citing to this Guidance. See below screenshot from Anticipat’s Research Database.

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More on this in a follow-up post. Expect in the coming months abstract idea rejections to continue to be reversed at higher rates and at a higher volume.