Recent critiques of the PTAB ex parte appeal process focus on Examiner involvement post-appeal

In the past month, two complementary but distinct criticisms of the ex parte appeal process have emerged. They deal with the way the Board treats appeals where the Examiner embellishes/modifies the rejections in between the last rejection on the record but before forwarding to the Board. These are serious criticisms that deserve serious attention. As people learn more about current Examiner practices, expect change at some level at the PTAB.

open Baltic sea at the sunset

The first criticism comes from Bill Smith and Allen Sokal on Law360 in a piece titled “A Way to Improve PTAB Ex Parte Appeals.” In the article, the authors decry the practice of examiners at the Examiner Answer stage. Examiners will copy and paste the written rejection from the appealed office action into the “statement of the rejection” section and state new facts and reasons in support of the rejection in the “response to arguments” section.

In essence, the Examiner gets to clean up the rejection before being heard by the Board. And for the most part, the Examiner can get away with introducing new analysis and new facts (new ground of rejection) without reopening prosecution. Then the Board decides the enhanced rejections as if it were part of the original rejection being appealed. According to the authors, this practice “injects unpredictability into the board’s decision since the appeal brief addressed the as-stated record rejection, not the rejection based on the expanded facts and reasons.”

The solution that the authors propose: limit its review of the merits to the facts and reasons in the as-stated rejections in the “statement of rejection” section of the examiner’s answer. If an Examiner raises anything else in the Examiner Answer, do not let the Board give it weight.

The second criticism is interrelated and comes from a recent lawsuit Odyssey Logistics & Tech. Corp. v. Andre Iancu, (E.D. Va. May 11, 2018). This lawsuit challenges the above-noted practice at a more fundamental level by hitting against the the Amended Ex Parte Appeal Rules enacted on January 23, 2012.

The complaint cites U.S. Patent Application No. 11/458,603 as an example of the appeal process running afoul. In this Examiner Answer, the Examiner, for the first time, apparently cited three patents as new evidence to be considered in support of his rejection. The Examiner’s Answer also allegedly included changes in the Examiner’s rationale for his rejections.

While this fact pattern is eerily similar to the fact pattern proposed by Sokal and Smith, here the complaint alleges that these new grounds of rejection would not be proper but for the Amended Ex Parte Appeals Rules and their retroactive application to the ‘603 application. According to the complaint, the Amended Rules included changes to 37 C.F.R. §41.35(a) that change the start of the Board’s jurisdiction. Modifications were also allegedly made to the provisions for new grounds of rejection in 37 C.F.R. §41.39, and new definitions were provided for the terms “Evidence” and “Record” in 37 C.F.R. §41.30.

According to the complaint, the Examiner, the official whose rejection is challenged in the appeal, will always have the jurisdiction necessary to change the rejection challenged on appeal or provide entirely new grounds of rejection, and may add arguments, dictionaries, or other documents to the record, even after the applicant has filed an appeal brief. 76 Fed. Reg. at 72276-78.

The complaint then proceeds to raise a very interesting point that is consistent with the points raised by Sokal and Smith.

In this event, the decision rendered by the PTAB is not a decision affirming or reversing the original rejection(s) challenged on appeal but instead is a decision on the new and different grounds of rejection. If the PTAB’s decision is on different grounds of rejection, the applicant’s right to obtain a patent term adjustment is frustrated since there is no reversal of the original rejection on the written record. See 35 U.S.C. §154(b)(1)(C). Therefore, the Amended Jurisdiction Rule interferes with applicant’s statutory right to appeal and to obtain a patent term adjustment if the appeal is of a rejection that should be reversed.

 

In reviewing tens of thousands of final decisions at the PTAB, we at Anticipat.com confirm the unpredictability in how rejections are decided (More on this in a forthcoming piece). Being a relatively obscure procedure in a relatively dry practice, this issue does not get too many headlines. But as a new administration seeks to foster greater predictability and strength to the patent system, watch for this issue to become more prominent with some sort of change in the horizon.

 

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.

Movie Review: AlphaGo is fresh

This blog focuses mostly on patent law, patent prosecution (especially ex parte appeals), and related statistics. But Anticipat’s end goal is to better understand the entirety of patent prosecution through analyzing big patent data. So other technology topics are naturally very interesting. That is why today we present our first movie review for the recently debuted documentary “AlphaGo.”

The specific details of neural networks, machine learning and artificial intelligence are not for all audiences. In fact, these topics can be generally regarded as boring to most. The Netflix original “AlphaGo” is a documentary that turns this stereotype around with a thrilling man vs machine theme. In the process, it shows why deep learning is important and fascinating. It also touches on the human experience in a world that increasingly relies on computer algorithms.

As a side-effect, the film educates on the game of Go. The game of Go is to the China, Korea and Japan what the game of chess is to the West. Popularity aside, the two board games are quite different. While in chess different pieces with different possible routes seek to eventually pin a single opposing piece (the king), in Go players place their own colored-stones (white or black) on a grid to claim the most territory. Because of the larger grid, Go is astoundingly complex, having 10^170 legal board arrangements. For context, there are only 10^80 atoms in the known universe.

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The film details one of the most pivotal matches between man and machine in a match between Lee Sedol, one of the best Go players in the world, and the algorithm AlphaGo. Partly because of the complexity, experts thought that a computer was decades away from beating the best human. But the application of specific deep learning networks, which were aided by a semi-supervised network that learned from the games of the brightest Go players, greatly accelerated that future moment.

Lee Sedol was very confident going into the match. Even though AlphaGo had previously beaten a champion in Europe champion, Fan Hui, the difference in skill between Fan (2nd dan) and Lee Sedol (9th dan) was stark. So leading up to the showdown with Lee Sedol, many wondered whether the match would even be close.

The first few games between Lee Sedol and AlphaGo established very convincingly how good this AlphaGo algorithm really was. One particular move, so-called move 37, was panned by critics as being a mistake by AlphaGo. Humans never would have considered such a move a good idea. But in the end, this move was described as “something beautiful” that helped win the game.

The documentary goes through the journey from DeepMind’s perspective. This is a team that has spent years developing the technology to train AlphaGo. And it shows times where the team understood areas of weakness in the program and really had no idea how it would fare against one of the world’s best. This side of vulnerability, not known to the public at the time, is especially interesting.

In a later game between the two, the film powerfully conveys the human spirit. Lee Sedol’s move 78, the “God move”, completely reversed the trajectory of the game. A moment of human triumph. It is understood that Lee Sedol was able to improve through this game. Speaking of Sedol, reporter Cade Metz remarked: “He improved through this machine. His humanness was expanded after playing this inanimate creation. The hope is that machine and in particular the technologies behind it can have the same effect with all of us.”

 

With such a story, questions of human obsolescence are bound to be raised. But an even better question gets answered of how humans will work going forward being benefited by computers. After all, seeing how a machine can invent new ways to tackle a problem can help push people down new and productive paths. So the feeling after watching this movie was entirely more optimistic.

Since filming, the AlphaGo algorithm went on to beat Ke Jie, the game’s best player, in Wuzhen, China three games to zero. But like Lee Sedol, Ke Jie studied the algorithm’s moves, looking for ideas. He proceeded to go on a 22-game winning streak against human opponents, impressive even for someone of his skill.

Also since filming, DeepMind has created an improved algorithm called AlphaGo Zero, which does not rely on the semi-supervised network that has learned from expert human Go players. Instead, this algorithm has learned the game of Go entirely by itself. And the results have been amazing. In 100 simulated games, the improved algorithm beat this version featured in the film 100 games to 0. Source.

The creators of DeepMind hope to apply the AlphaGo algorithm to a whole host of applications. Indeed, Demis Hassabis, one of the creators of AlphaGo, has said that anything that boils down to an intelligent search through an enormous number of possibilities could benefit from AlphaGo’s approach.

In one of the concluding scenes, David Silver, lead researcher on the AlphaGo team, comments: “There are so many application domains where creativity, in a different dimension to what humans could do, could be immensely valuable to us.”

You will very likely not be disappointed by checking out the film AlphaGo. Don’t expect a documentary about patent law algorithms to be as broadly interesting any time soon.

Update: These firms overturn abstract idea (Alice) rejections on appeal at PTAB

(Update: Kilpatrick was previously reported as having 4 reversals; in fact, it has 7)

A previous post showcased firms that successfully appeal abstract idea rejections at the PTAB. In that post, two firms stood out as clear leaders in overcoming the most difficult ground of rejection on appeal, Section 101 abstract idea. These firms were Schwegman Lundberg Woessner and Morgan Lewis. Five months later, we update the top firms to now add Kilpatrick Townsend and provide additional context of how many appeals it took to get there, with the aid of a recently introduced Customer Number lookup functionality.

Total Reversals for Abstract Idea Rejections (Numerator)

In an almost 2-year span post-Alice (July 25, 2016-April 30, 2018), there were 189 reversed abstract idea rejections on appeal at the PTAB. Of these, three firms–Schwegman, Morgan Lewis and Kilpatrick Townsend–were responsible for 11% of these reversals, with 7 reversals each. This is far ahead of the rest of firms. For context, the next closest firm had 3 abstract idea reversals on appeal. We discuss each of these three firms in more detail.

Total Abstract Idea Appeals (Denominator)

The first firm, Schwegman, took 42 abstract idea appeals to get its 7 reversals. This means that the reverse rate is 17%. This is a higher rate (more successful) than the average reverse rates for abstract ideas. From a comparison to other big patent firms, Schwegman pursues appeals for abstract idea rejections a lot more by a long shot. For comparison, during this window Knobbe Martens had 6 total abstract idea appeal decisions; and Fish & Richardson and Finnegan each had 19 total abstract idea appeal decisions.

But even with a more aggressive appeal strategy, Schwegman still maintains a higher-than-average reversal rate. And from the 204 total appealed decisions, almost a quarter have an abstract idea rejection. This suggests that a focus of the overall appeals includes in abstract idea rejections. Here is the firm’s information filters on the Anticipat Research page and the link to the Schwegman-filtered page here

schwegman

The second firm, Morgan Lewis, took far fewer appeals to get to its 7 reversals. It only appealed eight cases to get seven reversals. This translates into a reversal rate of 88% for abstract idea rejections. For a firm as big as Morgan Lewis, having only eight abstract idea appealed decisions is low compared to firms that are comparable in number of applications: Schwegman, Finnegan, Fish, Kilpatrick and Knobbe.

The overall number of appeals for Morgan Lewis during this time period is 52. This suggests that Morgan Lewis is conservative in pursuing ex parte appeals–not only for abstract idea rejections but in general. But when Morgan Lewis does proceed to appeal with a case (at least for Section 101 abstract idea rejections), it is very good at overturning such rejections. Again, the Research page and the Morgan Lewis-filtered Research page here.

morganlewis

The third firm, Kilpatrick, took 40 abstract idea rejections to get to its 7 reversals. This reversal rate of 18% is slightly above average, suggesting that Kilpatrick aggressively pursues appeals for this type of rejection. From 170 total appeals during that time period, it shows that abstract ideas make up a sizable part of the appealed rejections.  Kilpatrick Townsend-filtered Research page here.

kilpatrick

Conclusion

Each firm should be commended on the high number of abstract idea reversals. With such a difficult rejection, these firms are showing that one avenue of overcoming the rejection is by going straight to the Board for relief.

Context is extremely important for these statistics. Just because a particular firm has a higher reversal rate than another firm does not necessarily mean that the higher reversal rate firm is better. Perhaps the lower reversal rate firm is taking on more difficult cases. Perhaps the lower reversal rate firm had victories earlier in prosecution (like at the pre-appeal conference or appeal conference or even by responding to an Office Action) that are not counted in these statistics. But these statistics do show that when the Examiner conferees believe that an abstract idea rejection is proper, these firms know how to pursue a favorable outcome for their clients.

With a user account to Anticipat (sign up here for a free trial), you can lookup the above-discussed listing of reversed abstract idea decisions using the following links.

 

 

 

 

New timeline for sending Anticipat Recap emails: 14 days

Anticipat Recap is slightly changing its delivery timeframe. In an effort to balance delivering the freshest but most complete set of decisions, in the past Anticipat has delivered a recap of decisions after 8 days of a particular date’s decisions. However,certain times in the year the USPTO has delays in posting the decisions, which sneak in after the eight day window. The eight-day approach thus insufficiently captures all the decisions so we are changing the timeframe to 14 days.

Anticipat currently gets the bulk of its appeals decisions from a USPTO-powered efoia webpage. This webpage on an almost daily basis posts ex parte PTAB decisions after some document processing (including OCR’ing the PDFs and assigning limited metadata to the decisions). For the most part, it takes the USPTO several days to post these decisions after such processing.

Recently, we have concluded that sometimes, this 8-day window of time doesn’t cut it. Some of the slowest times of the year for the USPTO to post these decisions to the efoia page are at the end of fiscal quarters. The end of December is always especially slow. The last days of this past month, March, was also much slower than usual: only a fraction of decisions were available at the 8 day mark compared with the total number of decisions subsequently posted after the eighth day.

For those users who would prefer a shorter timeframe for delivering these Recap emails, feel free to take advantage of the Research page. The Research page is updated every day at 3PM EST and allows users to check for specific issues or the most recent decisions at any time. In fact, the Research page will have the exact same decisions that the USPTO’s webpage has within 24 hours. And this even includes our unique ground of rejection and outcome annotation.

As fresh as the Research page is, it doesn’t neatly organize the various issues and outcomes like the Recap email does. See below.

recap

Even though we’ve opted to prioritize (for the time being) slightly less freshness for completeness in these daily emails, we are working on a way that we can have both. We are currently developing our infrastructure to ingest these decisions that is not dependent on the e-foia webpage and that is much speedier. And we are also developing settings for users who want weekly recap emails instead of the daily emails.

Stay tuned for future developments. And if you have any feedback, please reach out to us.

The State of Appealing Abstract Idea Rejections of Business Method Applications post-Alice

As seen from Anticipat’s daily recap emails, last month the PTAB reversed a slew of abstract idea rejections. As already discussed in our blog post, several of these reversals related to business method applications. Using Anticipat’s Research database to look even beyond last month, we see interesting results relating to trends of business method appeals outcomes.

The term “business method” has been broadly defined as “a method of operating any aspect of an economic enterprise”. Tech center 3600 includes broad categories of business methods. For example, three sets of art unit groups are listed below.

Here is a visual representation of the reversals over the course of almost the past two years. These are appeals that make it all the way to a final decision on tech center 3600 (Data from Anticipat Research.)

abstractidea3

The first interesting point is that last month’s 10 abstract idea reversals at first blush seems high. Only two other months in the last couple years have had higher numbers of reversals for business method rejections. From such numbers, one might think that the PTAB might be engaging in business method friendly behavior. But looking at the denominator of how many total abstract idea decisions of business method applications, a different picture is painted. It took 125 decisions to get these 10 reversals, a reversal rate of 8%. This is hardly business method friendly.

The second interesting point is that the number of appeals of abstract idea rejections for business methods is going up even as appeal production is going down. As pointed out by Ryan Alley, the PTAB’s opinion output for ex parte appeals is down from 2017. More concretely, in March of 2017, the PTAB decided a total of about 1650 decisions. In contrast, in March of 2018, the PTAB decided a total of about 930 decisions. Even with monthly variability of output (December 2017 and January 2018 had much lower output), it is telling that with such a dramatic drop for the same month, the number of abstract idea rejections decided increased substantially from 43 to 125. This goes to show that the trend is to appeal business method abstract idea rejections. This is especially apparent when looking at the total number of abstract idea decisions for business methods in months of 2016.

The reversal rate for these business method applications seems to be stabilizing at a low rate, as shown in the following graph. (Data from Anticipat Research.)

reversalratesabstract

For the past year, these abstract idea rejections for business method applications have been consistently reversed at about 10%. This is a very low reversal rate compared with all grounds of rejection. But as applicants choose to appeal rejections of their business method applications, even if the reversal rate stays low, it still means that a large number of such rejections will get reversed. That is, a 10% reversal rate of 120 applications still yields 12 reversals even if it took a lot of applications to get there.

In conclusion, Examiners will likely continue to reject business method applications as patent-ineligible abstract ideas and as applicants opt to pursue an appeal, the Board seems to be overturning the Examiner relatively infrequently. This may change, as case law continues to develop and as a new director of the USPTO Andrei Iancu has promised a new path which could include better application of Section 101. Use Anticipat Research to analyze trends of business methods or of other technology centers. Sign up for a free trial here.

 

The PTAB backlog for ex parte appeals continues its plunge

Perhaps one of the most interesting speakers at the PTAB Bar Association annual conference on March 22, 2018 was Chief Judge Ruschke. Ruschke highlighted several statistics at the Board including the ever-diminishing backlog for ex parte appeals. Noticeably proud of this effort, which we report on below, Ruschke deserves credit for being at the helm of the PTAB during this time of a historic drop in appeals backlog.

Several months back, we reported on the dip in ex parte appeals backlog comparing fiscal year 2016 with fiscal year 2017. Since then, the USPTO recently released a chart, of which Chief Judge Ruschke spoke, that tracks a moving monthly average for February 2018 with February 2017. Here is the new chart available here at the USPTO.

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Any way you slice it, this chart with updated data shows that the PTAB appeals backlog continues its plunge. For biotech/chemical art, this decrease is pronounced. For example, for tech center 1600, which previously dipped all the way to 19.2 months as we reported previously, the backlog is now down to 18.3 months. For tech center 1700, which we reported as previously dipping to 16.9 months, is now down to an impressive 13.1 months.

For computer/electrical art, the backlog shows modest, but consistent declines. Tech center 2100 had previously dipped to 13.2 months. Now, it has decreased to 13 months. Tech center 2400, which had previously dipped its backlog to 12.7, now has a backlog of 12.5 months. Tech center 2600, previously at 13 months, now has the backlog lowered to 12.8. Finally, tech center 2800, which dipped to 16.9 months is now at 14.4 months.

The tech center with the most number of forwarded appeals is 3600, home of many business method applications. This tech center had previously decreased to 22.4 months. Now this backlog is all the way down to 19.3 months.

Finally, tech center 3700, home to mechanical and biomedical art, had previously decreased its backlog to 23 months. Now, the tech center’s backlog has decreased even further to 15.2 months.

The appeal backlog is calculated as the amount of time from when the appeal is forwarded to the Board (shortly after an Examiner’s Answer is issued) until a final decision is made. As this backlog increasingly shortens, the decision to pursue an appeal becomes more attractive. This, in combination with recent increases in USPTO fees that disproportionately makes more expensive pursuing continuing prosecution with RCEs. This also, knowing that some grounds of rejection statistically get overturned at higher levels than you might think. You can see for yourself how your specific grounds of rejection are handled at the Board to guide your particular prosecution strategy.

From all accounts, Chief Judge Ruschke does not intend to discontinue the work at cutting the backlog for ex parte appeals. We at Anticipat.com will continue to track this as well as other PTAB appeals statistics. Stay tuned for developments such as backlog that can affect the decision to pursue an ex parte appeal.