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 48 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.

updatedabstractidea

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 a very long time. December continued November’s high reversal rate trend with 48 complete reversals out of 236 total abstract idea decisions, yielding a reversal rate of 20.3%. The last time the PTAB saw two consecutive months with such a high reversal rate was two years ago.

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.

 

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.

Section 101 Alice (Abstract Idea) Appeal Decisions Surge, but Reversal Rate Stays Steady

Abstract idea rejections (mostly Alice-impacted in computer-implemented inventions) are experiencing a surge at the PTAB. We previously reported that August 2018 saw a record number of abstract idea appeals decisions. But the following month shattered this record number of appeals decisions by a large margin. Practitioners have been increasingly appealing abstract idea rejections and it is dramatically showing itself in the final written decisions. The most recent data show that appeals are a more attractive option to overcoming such rejections with still small but not hopeless odds.

As we previously reported, August 2018 saw a record number of reversals (30) based in part from the equally record number of total abstract idea decisions that month (207). The following month of September saw these records shattered at the PTAB. Even with a modest total increase in the total number of decisions (771 to 840, or about a 9% increase), the number of abstract idea decisions for September increased to 257, a 24% increase.

abstractideanumbers

That surge in abstract idea decisions resulted in a record-setting 37 reversals. So while the total number of abstract idea reversals was impressive, the actual reverse rate (14.4%) stayed relatively level, on par with previous months and far lower than other grounds of rejection. As we reported, June and July saw a Berkheimer bump above the 16% reverse rate.

While the reversal rates of recent August and September months are lower than June and July, considering the substantial number of appeals with these rejections, it appears that practitioners are looking to the PTAB for relief. That is, rather than abandoning cases with determined Examiners standing by their Section 101 rejections, practitioners are increasingly using less-trodden techniques (appeals) with overcoming these rejections. After all, some practitioners view appeals as a last resort, especially in some technology sectors, due to the substantial time commitment to reach a final written decision.

Continue to expect appeal decisions that decide Section 101 rejections to increase, as the unpredictability at the USPTO plays out. Also, check out the new Research user interface that allows you to select the specific issues and subissues that you are interested in.

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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.

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.

Tech center directors currently use their own appeal metrics for assessing examiners, but should use Anticipat data instead

The USPTO has a vested interest in knowing how well its patent examiners examine applications. It tracks production, efficiency and quality. Even though quality examination has always been tricky to measure, one metric comes pretty close: an examiner’s appeal track record. And while tech center directors have had access to this data, until recently this has been difficult to access. Here we explore the known gaps of how this metric is being used at the USPTO.

According to sources at the USPTO, directors–who oversee each technology center–have access to their Examiners’ appeal track records. The more an Examiner gets affirmed by the PTAB on appeal, the more reasonable the Examiner’s rejections, the theory goes. This means that directors can evaluate examiners based on how often an examiner gets affirmed.

The acceptable examiner appeal track record appears to depend on the director. An Examiner’s appeal track record with an affirmance rate significantly below the director’s average will attract attention. The USPTO as a whole has an affirmance rate at the PTAB that hovers around 60%. Different art unit groupings vary significantly from this global affirmance rate. Anything consistently lower than an affirmance rate average can put a question mark on the Examiner’s examination quality.

Even without knowing the specific contours of the acceptable affirmance rate at the USPTO, a look at the numbers can give an Examiner a general idea how well he/she is doing. This can help an Examiner proactively find out about these metrics before getting into trouble to guide his/her appeal forwarding strategy (Full disclosure: As a quality control metric, examiners do not appear to get punished in any way for being reversed).

While the USPTO’s appeal outcomes are available from other patent analytics services, they only use the USPTO’s outcomes that are based on how the overall decision was decided. See below.

appealrate

This decision-based outcome doesn’t communicate the issues that are causing examination problems (which issues are being reversed at the Board). By contrast, Anticipat provides a detailed breakdown of all an Examiner’s decisions. Examiners can thus easily pull up all of their appealed decisions and quickly see on which issues they were affirmed/reversed/affirmed-in-part.

On top of Examiner-specific data, Anticipat can identify rejections reversal rate outcomes across art units. For example, take obviousness rejections. Using Anticipat’s Analytics page for looking up over the past couple years in art unit 2172, in the computer/electrical arts, the pure reversal rate is about 18%. See blue sections of graph. This is lower than the tech center reversal rate of 27% and lower than the global USPTO reversal rate for this time. 2172

On the other hand, art unit 1631 in the biotech arts has a much higher reversal rate with a decision pool of about the same number. Specifically, art unit 1631 has a reversal rate of 43% for the past couple years. This is greater than its tech center reversal rate in 1600 of 26%.

1631

Finally, art unit 3721 in the mechanical art has an obviousness reversal rate much higher than both of the above examples. Specifically, 3721 is wholly reversed during the past couple years at 53%. This is higher than the tech center reversal rate of 44%, which is in turn higher than the global USPTO level. 3721

The granularity of appeal data can show what currently available data for appeals does not show: whether an Examiner is substantively doing a good job of examining applications. There are three reasons this is important for meaningful analysis of the metric.

First, as we’ve previously reported, the USPTO labels a decision as affirmed if only one rejection sticks to all pending claims. So the USPTO/director statistics and other patent analytics websites that provide this statistic of affirmance rate lacks the proper context. And without such context, the appeal outcome is an incomplete and even misleading metric.

Second, not all of the responsibility for low affirmance rates falls on the Examiner. For example, the two other conferees at the appeal conference can push applications to the Board that don’t have good rejections. But the Examiner-specific metric is a good starting point for any deviations to any norms. Anticipat allows for other Examiner lookups (including the SPE) to determine conferee track records.

A third reason for variance in Examiner appeal outcomes stems from the judges’ label of the outcome. While it is somewhat rare for a decision to have a newly designated rejection, it does happen. And as Bill Smith and Allen Sokal have recently pointed out in a Law360 article, decisions that have new designations are inconsistently labeled as affirmed or reversed. Sometimes the panel will reverse the Examiner’s improper rejection, but introduce a new rejection on that same ground with their own analysis. Other times the panel will affirm the Examiner’s improper rejection with its own analysis and be forced to designate the rejection as new. These small differences in patent judges’ preferences can impact an Examiner’s appeal profile.

Anticipat makes up for these shortcomings by providing greater context to outcomes and grounds of rejection. You can look at judge rulings in a particular tech center and identify patterns. For example, you can see whether panels tend to reverse or affirm when introducing new rejections.

Other valuable information, such as art unit and tech center data, can predictively guide an Examiner’s chances of taking an appeal to the Board. If a particular rejection consistently gets reversed on appeal, at the pre-appeal conference or appeal conference this knowledge can guide strategy to forward to Board based on the specific rejection at hand. Especially if the appeal consists of only a single issue.

With this increased granularity in appeal data there are only more questions to be answered. These specific questions currently have less clear answers. For example, to what extent are greatly disparate appeal outcomes the result of differing quality of examination? To what extent are Examiners across different tech centers evaluated based on appeal outcomes? Is there a point that an Examiner is considered to need improvement based on appeals outcomes? Could appeal outcomes–even if they include many reversals–affect the Examiner’s performance review? Likely not. But a better lens could prompt questions about disparate reversal rates across art units.

Expect the Berkheimer-driven patent-eligibility pendulum to swing at the PTAB

The past few months have seen huge developments in patent-eligibility at the USPTO. In three and a half years after Alice, the most effective way to argue against patent-eligibility for software applications was to focus on Step 1–that the claims are not directed to an abstract idea. But based on these recent developments, Step 2–that additional elements of the claims transform the judicial exception into something more–looks to be the more powerful way. The only problem is that the PTAB has not yet caught on. It will.

These huge developments have taken place in the form of Federal Circuit decisions deciding patent-eligibility favorably to the patentee, especially Berkheimer v. HP Inc., 881 F.3d 1360, 1369 (Fed. Cir. 2018). Such a clear articulation of the need for factual findings for Step 2 should usher in big change in how the Alice/Mayo framework is applied.

Then on top of the decisions came the revised USPTO Berkheimer memo last month. These guidelines emphasized that to establish under Step 2 that an additional element (or combination of elements) is well-understood, routine or conventional, the examiner must find and expressly support a rejection in writing with one of the four:

1. A citation to an express statement in the specification or to a statement made by an applicant during prosecution that demonstrates the well-understood, routine, conventional nature of the additional element(s).

2. A citation to one or more of the court decisions discussed in MPEP § 2106.05(d)(II) as noting the well-understood, routine, conventional nature of the additional element(s).

3. A citation to a publication that demonstrates the well-understood, routine, conventional nature of the additional element(s).

4. A statement that the examiner is taking official notice of the well-understood, routine, conventional nature of the additional element(s).

It should come as no small surprise to any practitioner that Examiners have not been including the above support in their Step 2 analyses for these additional elements of claims. This is no slight to the examining corps; it simply was never a USPTO requirement. So if the PTAB were faithful to the principles set forth in the guidelines, one would expect a dramatic turning of the tide.

While the PTAB is not bound to the USPTO examiner memos, it shouldn’t stray too far from them. Plus, it must comply with the Federal Circuit decisions, which are consistent with the guidelines. So one wouldn’t expect the PTAB to continue its practice of overwhelmingly affirming on Section 101. However, so far the PTAB has not significantly deviated from its previous course of mostly affirming judicial exception rejections.

Since April 19, 2018–the day that the Berkheimer memo was published–there have been 120 decisions that have decided judicial exceptions. Of these, only 13 have reversed, meaning a reversal rate of 11%. This 11% reversal rate is below the recently reported reverse rate for abstract ideas of 14%. It would appear that panels have not yet had the time to incorporate this new Step 2 framework into their decision-making. Or alternatively, they are preoccupied with the arguments raised by the appellant. Expect a greater number of request for rehearings on these.

Sooner or later, these PTAB judges should realize that many Section 101 rejections on appeal do not have the proper support for Step 2. This is not to say that these Examiners, on remand, could reformulate a proper rejection given another opportunity. While theoretically the judges could affirm the 101 rejections with a designation of new, the Board may not be well-equipped for to do so as this new requirement requires factual basis supporting Step 2. That is, the PTAB is a body that decides the propriety of pending rejections, not a body for searching and making such support findings. So expect a greater number of reversals to let the Examiners follow Berkheimer.