The Supreme Court’s 2014 decision, Alice Corp. v. CLS Bank International, 573 U.S. __, 134 S. Ct. 2347 (2014), dealing with patent eligible subject matter under 35 U.S.C. § 101, has made it harder to receive a patent for software.  In addition, since the courts’ and the USPTO’s interpretation of 35 U.S.C. § 101 and its relation to software patents is complex and ever changing, USPTO Examiners might not give software-related claims proper review.  In one recent ex-parte appeal a 35 U.S.C. § 101 rejection of  claims related to commerce-related software made by an Examiner was reversed, after the Applicant appealed the Examiner’s prior art rejection.  February 24, 2017 Decision on Appeal for U.S. Patent Application No. 12/300,494 (the “‘494 Application”).  The Applicant initiated the appeal before Alice was decided, and in response to Alice, the Examiner added a 35 U.S.C. § 101 rejection.  In the end, the Patent Trials and Appeal Board (the “PTAB”, the internal appeal board at the USPTO) agreed with the Applicant that in light of more recent US cases refining Alice, the claims were patent-eligible under 35 U.S.C. § 101.

Alice itself provided little guidance on how to apply its holdings, and in addition provided ammunition for Examiners to hold claims patent-ineligible while providing few arguments for applicants to use to assert claims are patent-eligible. 

However, over the last year, the US Court of Appeals for the Federal Circuit has decided cases providing arguments software applicants can use, and which should show the USPTO how to allow software claims.  Cases such as Enfish, LLC v. Microsoft Corp., 822 F. 3d 1327, 1336 (Fed. Cir. 2016); Bascom Global Internet v. AT&T Mobility LLC, 827 F.33d 1341 (Fed. Cir. 2016); and McRO, Inc. v. Bandai Namco Games America Inc., 837 F.3d 1299, 1306 (Fed. Cir. 2016), held that the software patent claims at issue were patent eligible and consequently improved software patent applicants’ chances of establishing that their inventions are patent eligible subject matter.

Consequently, software patent applicants currently facing Alice rejections at oral hearings for appeals to the PTAB generally have a better chance of overcoming the Alice rejection than they had at the time of deciding whether to appeal or not, since the PTAB takes years before issuing a decision, and the Courts have provided more arguments for applicants over the last year.

In the ’494 Application, after the appeal was initiated, and within a few months of the Alice decision, the Examiner introduced a new ground of rejection of the claims, under 35 U.S.C. § 101.  The claims of the ‘494 Application were directed data mining and using statistical methods in the context of obtaining relevant information from customers.  For example, independent method claim 12 recited:

receiving, during a specific interaction between a customer and a call center agent, one or more interaction-specific parameters values;

during the interaction, determining by a data-mining model engine based on statistical methods, one or more selected parameters for which a value associated with the customer is not stored in the CRM system, using data stored in model tables that rank customer parameters according to relative contribution to purchasing of a plurality of products, wherein the model tables are formed based on results of statistical analysis; 

sending instructions to the call center agent to obtain from the customer, one or more customer-specific values for the one or more selected parameters, for which a value associated with the customer is not stored in the CRM system and receiving from the call center agent the one or more customer-specific values by the model engine;

during the interaction, choosing by the data-mining model engine based on statistical methods, one or more of the plurality of products as a selected product using the model tables, the stored data and the one or more customer-specific values for the one or more selected parameters; and

during the interaction, sending instructions to the call center agent to suggest the selected product as on offer to the customer.

At the time of the Examiner’s 35 USC § 101 rejection, there had not been a single court case which held a claim patent eligible under  35 USC § 101  and Alice, which made Alice seem at the time like the beginning of the end for software patents.  Prior to the February 2017 Oral Hearing, the Applicant  filed a Petition with the PTAB explaining the recent case law developments refining Alice, and requesting that these cases be argued at the Oral Hearing.  The PTAB granted this petition.

The Petition argued that “[t]o force Applicant to rely on Alice, and not on the more recent developments, would reduce the Board’s ability to decide the merits of the Examiner’s rejection, would result in a Board decision which is not based on the most recent law, and would prejudice Applicant’s ability to achieve a fair hearing”.

In the Petition and during the Oral Hearing,  the Applicant successfully argued that “[s]imilar to the claims in Enfish, the present claims are directed to a specific implementation of a solution to a problem in the data arts”; similar to the claims in Bascom, “the [claim] components are arranged in a non-conventional and non-generic manner”; and the claims recite “operations which are different from the operations a human would go through to reach the result of outcome or outcome of the claims, which per McRO counsels towards patent-eligibility”.  The Applicant also successfully argued that the claims were allowable over the prior art the Examiner had used for the rejection.

While this is only one panel of three judges out of over 115 judges participating in ex-parte appeals at the PTAB, and it is unclear if the PTAB is more inclined towards finding claims are patent eligible than examiners, it is clear that the chances of overcoming software related rejections have improved since the Federal Circuit decisions in Enfish, Bascom, and McRO, decided in May 12, 2016, June 27, 2016, and September 13, 2016, respectively.