Update on Section 101 Abstract Idea Reversal Rates at the PTAB

We previously reported on the relative high number of reversals for abstract idea rejections. While still respectable, some months reached into the 30%s of rejections being reversed. This was jump from previous months (where the reversal rate hovered around 15%) likely stemmed from new USPTO leadership and new guidelines. Now it looks like the Board has fallen back. 

In October, there were 193 abstract idea rejections decided at the PTAB. Of these, 34 were reversed, meaning that the reversal rate was only 17.6%. A few things might explain this. 

It is likely that the applications that are actually making their way to the Board have already been filtered based on the updated guidance. So the applications that were weaker may have had prosecution reopened or allowances rather than getting sent to the Board. To confirm, we should have functionality on Anticipat as we just added bulk PEDs data to our database. Stay tuned. 

Another reason is that while Congress appears to be getting more serious about fixing Section 101, recent case law hasn’t made it as friendly for applicants. Early last month, a split Federal Circuit panel held that a method of manufacturing claim was invalid as a patent-ineligible law of nature. American Axle & Manufacturing, Inc. v. Neapco Holdings LLC (Fed. Cir. 2019). Many patent practitioners provided real-time responses for the majority opinion. Dennis Crouch wrote an interesting blog post “Hey Mechanical Engineers: Your Patents are Also Ineligible”, focusing on the new Federal Circuit case. It was a clever title that underscored an important effect of this decision.

While the opinion’s analysis is not unprecedented, it is rare. This decision is likely to continue to have an effect on strengthening the two-step analysis of Section 101 and increasing the frequency of Examiners rejecting claims across all technology classes. 

The one true thing about Section 101 is that it is a pendulum that oscillates back and forth depending on Federal Circuit panels and USPTO directives. The challenge for patent practitioners is to anticipate which way the pendulum is moving and act quickly with that knowledge. 

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.  

 

 

 

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.

abstractjune

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.”

remandjune

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.

 

 

 

 

The PTAB sets Another Record for Reversing Abstract Idea Rejections

On April 30, 2019, a customer partnership meeting took place between the USPTO Technology Centers 3600 and 3700 and American Intellectual Property Law Association (AIPLA). The topics for this meeting varied widely (e.g., a training on functional claim drafting and a training on means-plus-function limitations in medical device claims). But for this meeting in these tech centers, the elephant in the room was Section 101, which Paul Kitch covered. Here we provide updated data on how the revised guidance continues to drive record-setting reversals for abstract idea rejections at the Board. We also show that these reversal rates are unevenly distributed throughout the tech centers, especially in tech centers 3600 and 3700.

March 2019 saw the PTAB break another record for total abstract idea rejections reversed. We previously reported that February broke the record with 62 total reversals, but we predicted that this record should not last long. This post turned out to be particularly prescient. In March 2019, the PTAB wholly reversed 77 decisions, exceeding the previous record-holding month by 15.

updated_march_abstract_idea
Besides the total number of reversals, the PTAB also maintained a high reversal rate. That is, about 33%, or one in three abstract idea rejections were reversed.

reversal_rate_updated_march_abstract_idea

We’re also seeing that Step 1 is becoming the main way in which PTAB panels overturn Examiner abstract idea rejections. In March, 61 decisions relied on Step 1 of the Alice/Mayo framework (Step 2A of the USPTO vernacular) while only 15 relied on Step 2 (Step 2B).

abstract_idea_steps_revised_march

How does these reversals and reversal rates relate specifically to tech centers 3600 and 3700? With tech center 3600 being the home of many business method art units, one would correctly assume lower reversal rates. Since December 2018 – March 2019, 134 out of 520 decisions were wholly reversed, yielding a reversal rate of 26%. Tech center 3700, home to mechanical and medical device tech, had 23 such reversals out of 47 total, yielding a reversal rate of 50%. The tech centers with the highest rates turned out to be tech center 2100 (27/43 = 63%), home to electrical and computer tech, followed by tech center 2400 (14/26= 54%), home also to electrical and computer tech. 

The abstract idea reversals should continue for several months as applications that have been on appeal wait their turn before the Board. But as applications further upstream (e.g., appeal conference, pre-appeal conference and before the Examiner) are increasingly getting allowed, expect the reversals to return to earth. Especially when Federal Circuit decisions such as Athena v. Mayo (Fed. Cir. Feb. 2019) are pushing back on how valid allowed claims (inspired by USPTO guidance and examples) really are in the real world, .

 

Updated February ex parte decisions show Alice-based rejections getting overturned at a dizzying rate

For the past year, the PTAB has increasingly reversed so-called abstract idea rejections (Alice). But in recent months, the pace of these reversals has been nothing short of remarkable. Here, we report updated February numbers, which show the PTAB continuing to overturn abstract ideas at an unprecedented rate. We also look more deeply into how these rejections are getting overturned. It turns out the Board is increasingly relying on step 2A (Step 1 of Alice/Mayo) thanks to new guidance that makes it more difficult for an examiner’s rejection to hold.

As we recently reported on Patexia, the new examination guidance (effective early January) has fueled reversals at the Board. Now, with increased numbers for February 2019, this effect can now be seen much more dramatically.
reversalratefebup

In February, there were 61 completely reversed decisions from a total 149 such rejections. This yields an astonishing 41% reversal rate. This is of course astonishing by standards of Section 101 judicial exceptions. We have long reported that many grounds of rejection are overturned by the PTAB (such as Section 112 and Section 102) at even higher rates. But even just over a year ago, the PTAB routinely sided with examiners on abstract idea grounds upwards of 90% of the time. Now the climate is completely different.

Notable changes in reversal rates can be seen from the color-coded timeline events in the graph above. Red refers to when Berkheimer and similar Federal Circuit decisions were decided, which put a higher evidentiary standard on showing that claims did not recite an “inventive concept.” With a little lag, the reversal rate ticked up. Then in the fall of 2018, Director Andrei Iancu started more actively promoting better (more consistent) Section 101 examination, eventually resulting in new 101 Examination guidance shown by the yellow line. The PTAB appears to quickly adapt to case law, guidance and internal cultural changes.

And these results do not appear to be from a sample size distortion (because applicants have already given up). while the total number of abstract idea rejections decided did not reach months seen last year, this is likely due to the PTAB picking up the new year on a slow note, which is historically the case. In fact, February 2019 saw the Board decide more abstract idea rejections than February 2018. See below. And even with the total number of decisions deciding abstract idea grounds of rejections being lower than prior months, it still set a record in the total number of such reversals (61) breaking the previous record of December 2018 (58).

totalabstractreversalsfebup

How is the PTAB overturning these rejections? Thankfully, the Anticipat research database makes this question easy to answer, cataloging the specific rationale (tag) that is used in overcoming the rejections. As shown from the following graph, Step 1 (which the USPTO refers to as Step 2A) has now separated itself from Step 2.

abstractideastep2a

A good practitioner will tell you that thanks to the new Section 101 guidance and other case law developments, it is now easier to overcome Abstract Idea rejections. These Board decisions directly show this at the final stage, but results can also be felt farther upstream of these decisions. 

Like many USPTO personnel, PTAB judges are quota-motivated. Because of this, end of quarters typically have higher output of decisions. For this reason, expect March 2019 to be a big month in the volume of abstract idea rejections decided and in the total number of reversals. If history is any indication, we could be looking at another record month.

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.

revisedreversalrate

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.

revjanabstractidea.png

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.