If Congress does not act on Section 101, has the PTAB hinted at a path forward?

A recent blog post by IPWatchdog recapped specific consensus views at the Patent Masters Symposium™ where Congress can help fix the messy state of patent-eligibility at the USPTO. Getting Congress involved seems like the best way to stabilize and make patent-eligibility more predictable. But if patent reform loses steam on Capitol Hill, it working with the current law is critical. Recent developments at the PTAB show most effective arguments (Step 2A or Step 1 of Alice/Mayo) to argue against patent-ineligibility. 

Last week, we published updated data of appeal outcomes for abstract idea rejections in April 2019. Now we delve into one of the more interesting trends for these reversals since the 2019 revised Subject Matter Guidance. This is the growing disparity of PTAB panels relying on step 2A (Step 1 of Alice/Mayo) versus step 2B (Step 2 of Alice/Mayo).  

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As can be seen from the graph below, starting in January, the number of decisions reversing abstract idea rejections increasingly rely on Step 2A compared with Step 2B. The past couple months of March and April has been particularly noticeable. March had 61 Step 2A such decisions compared with 15 Step 2B decisions. April was even more stark with 46 Step 2A reversals and only 4 Step 2B reversals. This is at least partially due to the courts constantly struggling to make sense of Alice and Mayo’s definition of “inventive concept”. It appears that for those decisions where the Board reverses, Step 2B (including the Berkheimer/Aatrix requiremen for evidentiary support for conventionality) has become a forgotten approach for many panels.

As the USPTO has struggled to reconcile the confusion about an inventive concept (Step 2B), the actual analysis of the step has recently veered into Step 2A. As most US patent practitioners are aware, the 2019 guidelines have split the Step 2A analysis for abstract ideas into two prongs. The first prong asks: do the claims recite one of three groupings of abstract ideas (mathematical relationships, mental processes, or methods of organizing human behavior). The second prong asks whether the claim is directed to a practical application of the judicial exception. Exemplary considerations are as follows:

  1. an additional element reflects an improvement in the functioning of a computer, or an improvement to other technology or technical field;
  2. an additional element that applies or uses a judicial exception to effect a particular treatment or prophylaxis for a disease or medical condition;
  3. an additional element implements a judicial exception with, or uses a judicial exception in conjunction with, a particular machine or manufacture that is integral to the claim;
  4. an additional element effects a transformation or reduction of a particular article to a different state or thing; and
  5. an additional element applies or uses the judicial exception in some other meaningful way beyond generally linking the use of the judicial exception to a particular technological environment, such that the claim as a whole is more than a drafting effort designed to monopolize the exception.

 Confusingly, above point 1 was explicitly analyzed in the Alice Supreme Court decision in Step 2 (Step 2B). This shows signs that the search for the inventive concept at the USPTO is now happening at Step 2A and Step 2B. This is not too surprising to those following subsequent Federal Circuit case law. But knowing the specific arguments that are successful, it can be helpful to press the right inventive concept buttons early in the argumentation.  

Before getting into how recent Board decisions overturn abstract idea rejections, some context is helpful. Indeed, much of the confusion about the inventive concept is historical. When the Supreme Court decided Parker v. Flook (an appealed Board decision by the way), a split Court found that the claim for adjusting alarm limits was a patent-ineligible abstract idea under Section 101. It states that what was needed was an inventive concept for patent-eligibility. The majority ignored arguments that other statutory provisions should address concerns the Court had over the patent application.

A few years later, a split Supreme Court in Diamond v. Diehr (another appealed Board decision) reversed course. The majority held that the rubber-curing claim was a practical application of a known mathematical equation and was therefore patent-eligible. In a footnote, the majority rebutted the dissent by saying that Section 101 is not the vehicle for inventiveness. It seemed like Diehr had overturned at least the inventiveness dicta of Flook.

Years later the Supreme Court in Mayo reversed course yet again. In invalidating a claim as directed to a law of nature, the Court introduced a two-step framework for determining patent-eligibility under Section 101. Step 2 of this framework was the inventive concept under Flook. A couple years later, Alice cemented the Mayo framework for computer-implemented claims.

How can this information be helpful in guiding your personal prosecution strategy? For one, this can help you identify winning strategies for overturning Examiners during open prosecution of an application. The Examiner or SPE will know about any of his/her recent reversals on a particular abstract idea rejection, and using argumentation that is consistent with this Board panel’s reversal can resonate with the Examiner or supervisor (especially if the decided claim has some similarities to your claim).

Consider a case where the Board recently overturned an abstract idea rejection Ex parte Dearing et al (PTAB June 27, 2019). If you are facing abstract rejections with Examiner Dante Ravetti, or in art unit 3685, or even have a business method application in general, it could be helpful to see the arguments used in both Step 2A and Step 2B in overturning this abstract idea rejection. Likewise, if you’re hitting headwind prosecute abstract idea rejections with Examiner John Chunyang Kuan, you could look at the argumentation in a recently decided decision Ex Parte Hunter et al. (PTAB June 27, 2019). This decision shows arguments for Step 2A that were sufficient to overturn the rejection in computer art unit 2857. 

The other way this data can be helpful relates to appeal strategy. If an Examiner or supervisor is unconvinced of your arguments, tailoring argumentation that has been used by PTAB judges overseeing similar technology or art units will more likely set you up for a favorable outcome on appeal. 

By using Anticipat Research, you can easily find those cases that have been reversed in your technology class, by your examiner, the art unit, or technology center. You can then model argumentation to your present case, if applicable. While you can find this information for any type of rejection (102, 103, 112, OTDP, etc.), Section 101 is a powerful breakdown because you can drill into the subissues of judicial exceptions and filter away the other Section 101 rejections not relevant to your rejection.  

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In times of flux, it is great to push for change and progress. But in the meantime, having the best patent prosecution data can dramatically improve your advocacy and ability to show patent-eligibility.  

 

 

 

If you’re going to appeal your application to the Board twice, res judicata should make you think twice

Sometimes it makes sense to appeal an application more than one time. Perhaps the Examiner isn’t complying with the direction from the first Board decision. Maybe an invention is so valuable that you’d rather avoid overlimiting the claims with lots of prosecution history estoppel and claim amendments and instead try getting broader claim scope through the appeal process the second time. Or maybe the application is in such a desperate state that another appeal is the only good option left. Regardless of the motivation for appealing twice, a good practice tip shown in a recent ex parte decision shows the importance of making sure that the claims are different enough from a previously unfavorable outcome.

In Ex Parte Tsypkaykin (PTAB Jun 20, 2019), on appeal was an obviousness rejection. The PTAB had previously decided a substantially similar obviousness rejection a few years previous in Ex Parte Tsypkaykin (PTAB Sept. 22, 2016). Buchanan Ingersoll went up against Examiner Jay Hann the first time and lost, but in the second attempt had made claim amendments. It was Round II of Buchanan Ingersoll vs Examiner Hann.

In the recent decision, the Board first adopted the Examiner’s findings regarding the obviousness rejection, affirming the rejection. The panel then agreed with the Examiner that the claim amendments are synonymous or “not patentably distinct” from the previous claim, which rejection was affirmed previously. See MPEP 706.03(w), 706.07(h)(XI)(A). Here are the amendments to the representative

Thus, the rejection was also affirmed based on res judicata.

A good law student should be able to tell you about the doctrine of res judicata. This is a doctrine of judicial efficiency and fairness, which is that an issue that has been decided once need not be decided again. What that good law student may not know is how res judicata applies to administrative bodies, such as the USPTO. At least from the patent prosecution perspective, the PTAB seems open to using this doctrine if the claims are not patentably distinct from claims that were previously affirmed as rejected.

How often does res judicata get applied by the board? In short, extremely rarely. For one, it is rare that an application gets appealed twice. It’s even more rare for res judicata. Of over 100,000 decisions, the Anticipat database showed 45 such decisions with the key word match.

Interestingly, both decisions were penned by Gregg I. Anderson. Given the small cohort of PTAB judges for tech centers, having the same PTAB judge write the opinion for two decisions is not out of the ordinary. Here, Judge Anderson may have recognized familiar argumentation and was not convinced the second time. As a former litigator, he was also familiar with res judicata. The two panels had two overlapping judges: the second panel consisted of administrative patent judges Carolyn D. Thomas, Jeremy J. Curcuri, and Gregg I. Anderson while the first panel included Jeremy J. Curcuri, Gregg I. Anderson and Eric B. Chen.

Keep in mind res judicata when pursuing a second appeal. It might save you a lot of effort and time.

April shows fewer (but still high) abstract idea (Alice-based) reversals

April showed a continued high number (204) of abstract idea decisions decided at the Board. Of the 204 total decisions deciding abstract idea rejections for this month, the Board completely reversed the rejection 54 times. This shows a reversal rate of 26.5%, which is lower than the last several months, but higher than many previous months.

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In addition to the reversal rate, the volume of this type of rejection being decided continues to be high—higher than last year, with the number of reversals significantly higher.

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In a prior blog post, we correctly predicted that the reversal rates for these rejections would come down from record-breaking. We’ll emphasize here factors that are leading to this.

First, Federal Circuit case law has likely contributed to a cautious approach by the PTAB. As we mentioned, Director Iancu can only push patent-eligibility so far before it is inconsistent with case law. And this came to a head most recently with the Athena v. Mayo case, in which the Federal Circuit affirmed an invalidiy judgment on a claim as directed to a judicial exception (law of nature). This, despite the fact that the Examiner had found that it was analogous to a 2016 example claim that was patent-eligible. The Federal Circuit panel gave its respect to the USPTO, but said it was not bound by its guidance.

Likewise, the Board likely appreciates that even though it is bound by the 2019 Subject Matter Guidance, it also shares the USPTO’s interest in making sure that patents don’t get issued that will later be found patent-ineliigible. Thus, adherence to guidance won’t guarantee a patent eligible claim set, so panels are likely taking a careful consideration of the case law as well.

Second, an uptick in the number of remands (PAIR event code = “APAR”) have been observed. These remands are instructions from the Technology Center Director that sua sponte orders the proceeding to be remanded to the Examiner “for further consideration.”

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For patent-eligibility rejections, these remands (especially in light of recent subject matter guidance) serve as a sort of proxy for reversals. These remands, are normally very rare. Between 2008 – 2017, there were 2084 remands out of a total of roughly 78,000 final decisions. A quick review of recent remands showed that immediately after a remand, a Notice of Allowance was the next event. See 10/629,597. This seems to indicate that the application likely would have been allowed or had the proceeding continued at the Board Examiner to reopen prosecution, the Board could have reversed the ground.

Third, many of the upstream events have eliminated the need for a reversal from final appeal decisions. This is linked to the above point about remands. That is, Berkheimer and the subsequent Berkheimer memo were issued in March of 2018, which may have started the thaw in freezes to patent-eligibility for applications in examination. This is represented in applications that were allowed before a notice of appeal was filed, after a pre-appeal brief was filed, and after an appeal brief was filed. Thus, many of the reversals in recent months may represent easier cases than those now being decided that have survived such pre-filtering.

Despite chatter on Capital Hill about amending Section 101 for greater predictability, many believe that passage of such a bill will be difficult in this year with competing priorities. And even with such amendments, it appears unlikely that the problem of patent-eligibility will go away—it will simply change. Thus, abstract idea rejections do not appear to be going away any time soon. Expect the reversal rate to continue to be higher than historical reversal rates, but not necessarily record-breaking unless new more favorable case law is made.

 

 

 

 

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.

Backlog for PTAB ex parte appeals reverses course, up across almost all tech centers

While Chief Judge of the PTAB, David Ruschke took pride in the PTAB’s work in reducing the backlog of ex parte appeals. And for good reason. As we previously reported, the historically long backlog for appeals plunged during his leadership. But since Ruschke stepped down from his position, the backlog has been going back up.

The USPTO recently released the December 2018 ex parte statistics, showing some significant changes in appeal backlog from the previous year.

As can be seen, almost every tech center experienced an increase in the pendency of decided appeals from the prior year. The two exceptions are 3600, home to business methods and software-related tech, and 3700, home to medical devices and mechanical tech. Looking at similar graphs of previous months, there are a few ways to interpret these data.

The first interpretation for the overall backlog increase is that PTAB judges are focusing their production work less on ex parte appeals. Assuming the number of judges has not considerably changed across tech centers, we can see the production difference most apparently in the number of total decisions. In 2017, there were about 11,899 ex parte appeal decisions whereas in 2018, there have been 8,928 to date. One caveat to the 2018 numbers is that as of January 16, 2019 the USPTO is still delayed in rolling out all of December 2018’s decisions. But the total number for 2018 should only shift upward by a few hundred decisions at most. This means that 2018 saw judges deciding fewer appeal decisions than in 2017.

We may assume that the impressive backlog reduction under Ruschke was the exception rather than a sustainable norm. With the ramping up of hiring PTAB judges to accommodate post-grant trials involved training new PTAB judges, which required a period of judges to work on ex parte appeals. Speculating, the PTAB may have seen fit to shift priorities, especially with the ex parte appeal backlogs at historic lows. In August of 2018, Scott R. Boalick became acting chief judge after Ruschke stepped down to become a special adviser to the USPTO patent division. It is unclear whether Boalick has the same enthusiasm for reducing backlog as Ruschke or whether he is interested in other issues, such as quality of decisions.

Further, the change in backlog may be the simple result of monthly fluctuations. But going back to previous months, some tech centers do not seem like a flash in the pan. For example, tech center 1600 increased a significant 4 months each of the three months, fundamental examination disputes being appealed specific to the technology in these tech centers might be at issue. An increase of pendency of decided appeals can be the result of increased appeals. This can indicate a measure of perceived unreasonableness by Examiner rejections assuming applicants appeal at a greater frequency with more unreasonable rejections. What exactly is the specific reason for this consistently higher backlog in TC1600? It’s unclear. It could stem from great uncertainty regarding subject matter eligibility in the diagnostics space.

Another tech center with a skyrocketed backlog is 2900, home of design patent applications. This was consistently and significantly higher for three consecutive months including December 2018. True, the sample size for design appeals is much smaller than other tech centers so the much higher standard deviation contributes to increased flux. See below.

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But at the same token there could be grounds of rejection specific to design applications that are getting appealed. The trickiness here is that since design applications are not published, the e-Foia page does not publish these appealed decisions so Anticipat currently does not keep track of them.

One tech center that consistently continued to decrease its backlog was 3600, home of software/business method applications. At a current backlog of 17 months, it makes the strategy to pursue an appeal ever more appealing, especially in the face of difficult rejections with no progress with the examiner in sight. Knowing the backlogs in real-time for an application you are pursuing can arm you with the information you need to make the best patent prosecution decision.

November 2018 PTAB Appeal Decisions: Record Number of Abstract Idea Reversals, Reversal Rate Dramatically Increases

Ever since a slew of Federal circuit decisions in early 2018, we predicted that many abstract idea rejections would be reversed by the PTAB to comply with the case law. This did not immediately come to pass, as we pointed out. But our prediction has turned out to be prophetic, even if it took longer than predicted. We report here that the PTAB continues its trend of overturning these types of rejections on appeal. In November, it was relatively dramatic, given the high number of abstract idea appeals decided.

First some context for why we have been tracking abstract idea (Alice) rejections so closely at the PTAB. While Examiners can apply multiple types of rejections under Section 101, one category stands out as the most arbitrary: patent-eligible subject matter.

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This so-called judicial exception to eligibility has no real statutory foundation, but is instead rooted in Supreme Court decisions dating back to the 19th century. Today, the most frequently applied–and controversial–of the judicial exceptions is abstract ideas. And over the past 10 years, this type of judicial exception has crept into almost every technology field, but especially computer-related inventions.

November 2018 was a fairly normal month in the number of total appeal decisions, at 708. The number of appeal decisions that included an abstract idea rejection (200) was proportionally higher than previous months, but not by much. In fact, previous months having decisions with abstract idea rejections have exceeded 200.

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But November was remarkable in its number of reversals. Of these 200 decisions, the Board completely reversed 42 times–a record number of reversals for this type of rejection. This bested the previous record in September 2018 with 37 reversals, but with far fewer abstract idea decisions to get there.

November’s high number of abstract idea reversals with fewer total decisions translates into a reversal rate much higher than previous months. That is, November took far fewer abstract idea decisions to yield this record number of reversals, a complete reversal rate (all claims reversed) of 21%. The last time the reversal rate exceeded 20% was back in February 2017 (almost two years ago), when the total number of abstract idea decisions for that month was far fewer. In fact, the 31 such decisions in February 2017 was a small fraction of November’s 200 decisions, making February 2017 at least partially due to a statistical blip. With such a high number of abstract idea decisions in November, it seems like November’s high reversal rate is not an anomaly, but instead a new normal.

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This confirms our predictions that Berkheimer and other factors are contributing to the PTAB reversing Examiner rejections at an unprecedented rate.

Through the Anticipat Research database, you can find these reversals for Board analysis that is persuasive and/or relevant to a related matter you may be working on. You can filter based on Examiner, Art Unit, Tech Center, classification, and many more filters.

Besides showing high-level trends of reversal rates, as described above, Anticipat allows for targeted appeal lookups for specific grounds of rejections or issues. Here, by narrowing the search to November 2018 for the subissue under Section 101 of Abstract Idea, you can access every relevant decision. See filters outlined in red below.

And of course knowing how the Board is reversing Examiners can guide your prosecution strategy.

With recent revised subject matter eligibility guidance, and comments from high-level USPTO personnel, the USPTO is poised to continue to relax the high standard for patent-eligibility, especially for abstract idea rejections. The PTAB is one front that should continue to support this relaxation. Expect more reversals at the PTAB for abstract idea rejections. And subscribe to Anticipat to stay current on developments at the PTAB.

The PTAB continues to increase reversal rate of abstract idea rejections

Recently, the state of patent-eligibility (especially abstract ideas) has been the talk of the patent bar. Yesterday, revised examination guidelines took effect, changing the direction for examiners to examine abstract ideas at the USPTO. For its part, the PTAB has been playing a role in the abstract idea flux as applicants increasingly turn to the Board for overturning difficult rejections. Here, we report that the reversal rate for abstract ideas continues to climb slightly higher.

October 2018 had 30 decisions out of 185 total decisions in which the Board wholly reversed abstract idea rejections, or a reversal rate of 16.2%. This is up from the previous month (September) and it continues a largely unbroken streak of 5 consecutive months with relatively high reversal rates. In fact, during this streak, each month experienced an abstract idea reversal rate over 15% with the sole exception of September, which came close at 14.4%. Prior to this streak, the PTAB had a much gloomier streak for abstract idea appellants, where the reversal rate for abstract ideas was below 15% for eight consecutive months, as we reported here.

Below is a snapshot of October 2018 being queried for abstract idea rejections on Anticipat’s Research page. You can find all these decisions for this time frame, for other time frames, and a whole host of other issues on appeal to guide your prosecution strategy.

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To access this and other types of appeals information using Anticipat’s Research database, feel free to sign up for a 14-day trial.

With new leadership at the USPTO, and as seen from recent appeals data, the pendulum of patent-eligibility continues its slow swing in favor of applicants, even if this swing is at times unpredictable.