As the Patent Community Awaits Direction From the Supreme Court on Patentable Subject Matter, the Patent and Trademark Office Hosts the 2009 Business Method Partnership Meeting
On July 15, the Patent and Trademark Office hosted the 10th annual Business Method Partnership Meeting at the Office’s headquarters in Alexandria, Virginia. As in prior years, the partnership meeting included presentations and Q&A sessions by leaders of the Office and Technology Center (TC) 3600. This year’s partnership meeting included remarks or presentations by Acting Commissioner for Patents Margaret A. Focarino, TC Director Wynn W. Coggins, Training Quality Assurance Specialist Terry Melius and Supervisory Patent Examiners Robert A. Weinhardt and John Weiss. In a bit of a change from the 2008 meeting, however, the 2009 partnership meeting also included two presentations by practitioners who gave their views on the major topics of this year’s meeting, namely statutory subject matter and examiner interviews.
The Machine-or-Transformation Uncertainty
Taking on one of the major topics of the partnership meeting, Weinhardt gave an overview of the PTO’s treatment of statutory subject matter. Weinhardt noted the agency is currently following the ‘‘machine-ortransformation test’’ enumerated by the Federal Circuit in In re Bilski,1 although Weinhardt acknowledged that the Supreme Court recently granted certiorari to review the Federal Circuit’s decision (78 PTCJ 145, 6/5/09).
Under the machine-or-transformation test, a patent eligible process or method must either be tied to a particular machine, or transform a particular article to a different state or thing. Weinhardt provided a few generalities regarding implementation of the test, but, notably, he sidestepped the seemingly more pressing issues in interpreting the test—i.e., what qualifies as a ‘‘particular machine’’ or ‘‘transformation of a particular article.’’
When a member of the audience pressed Weinhardt on implementation of the test, Coggins jumped in to explain that the PTO currently just does not have definitive answers, and that the agency is struggling with these issues just as others in the patent community. Coggins pointed the audience to a January 2009 memorandum from former Commissioner for Patents John J. Love as the last guidance to examiners on the machine-or-transformation test (notably, the memorandum also does not address what will satisfy ‘‘particular machine’’ or ‘‘transformation of a particular article’’ requirements).2 Coggins further noted that, although a number of internal measures were underway to address additional examiner guidance, the PTO may not publish additional guidance until after the Supreme Court’s review of Bilski.
Interestingly, Coggins did note that one point of agreement in the examining corps is that Bilski’s machine-or-transformation test should only apply to process or method claims. When a member of the audience remarked that this limited application of the test seemed contrary to recent decisions from the Board of Patent Appeals and Interferences, Coggins would only acknowledge that Office leaders were aware of those decisions.3
Furthering the discussion of statutory subject matter, practitioners Lawrence T. Kass and Blake Reese led an interactive session focusing on how members of the audience were dealing with attempting to satisfy the machine prong of the machine-or-transformation test, while avoiding unnecessarily narrow interpretations of the machine to which a claimed method may be tied. The presenters suggested defining the machine (e.g., ‘‘computing system’’) in the specification and/or the claims of a patent application to avoid a claim construction limiting the machine to a singular machine, avoiding terms defining the machine that one could interpret as not requiring hardware.
Although applicants may employ a number of different claim-drafting strategies in an effort to satisfy the machine-or-transformation test, it is worth repeating that PTO leadership admittedly does not have definitive answers as to what is required to satisfy the test. Often, an examiner or the examiner’s art unit will internally settle on the claim language that they will accept to define statutory subject matter, although this language may differ between art units, or even between examiners in the same art unit.
While claim drafters should satisfy themselves that their claims are not overly narrowed, until the Supreme Court addresses the issue, applicants should consider the issue of statutory subject matter on not only a case-by-case, but also an examiner-by-examiner basis, and solicit and consider claim language preferred by the their particular examiners. Before considering an appeal on the issue, remember that the Board of Patent Appeals may have a further take on satisfying the machine-or-transformation test, and has already expanded application of the test beyond method claims (again, PTO leadership indicated their belief that the scope of the test should be limited to method claims). Furthermore, the board has not hesitated to apply new statutory-subject matter rejections on its own initiative.4
Claim Interpretation and Statutory Subject Matter
Following Weinhardt’s discussion of Bilski and the machine-or-transformation test, he presented the audience with a select number of claim interpretation issues that may affect the determination of whether a claim is directed to statutory subject matter. The issues Weinhardt covered included the broadest reasonable interpretation standard for construing claims, conditional language in method claims, so-called ‘‘chain of commerce’’ method claims and ‘‘hybrid’’ apparatus/method claims.
During prosecution, claims are to be given their broadest reasonable interpretation consistent with the specification, and with the interpretation those skilled in the art would reach. Under this standard, claim terms are to be given their ordinary and customary meaning to those skilled in the art, which may be guided by the words of the claims and those in the remainder of the specification, as well as the prosecution history and extrinsic sources (dictionaries, other patents and published applications).
As explained by Weinhardt, if a claim may be broadly interpreted to cover both statutory and non-statutory subject matter, then the claim may be rejected as being directed to non-statutory subject matter. An example of such a claim is one reciting a ‘‘computer-readable medium,’’ which under certain conditions may be interpreted as a physical storage medium (statutory subject matter) or as an electromagnetic signal (non-statutory subject matter).
Weinhardt acknowledged the difficulty in choosing or defining claim terms to preclude their being interpreted as relating to non-statutory subject matter, but he indicated that including a limiting definition of a term in the specification may avoid a non-statutory interpretation of a claim (e.g., defining a ‘‘computer-readable medium’’ to be limited to physical storage media, such as a hard disk, EPROM, CD-ROM, etc.).
As another possibility for avoiding a non-statutory interpretation, Weinhardt mentioned compartmentalizing a broader concept into one term used to refer to the statutory interpretation of the concept, and another term used to refer to the non-statutory interpretation of the concept. For example, in the specification, one may define a ‘‘computer-readable medium’’ as including a ‘‘computer-readable storage medium’’ referring to a physical storage medium, and a ‘‘computer-readable transmission medium’’ referring to an electromagnetic signal—and then recite the ‘‘computer-readable storage medium’’ in the claims.
In addition to the broadest reasonable interpretation standard, Weinhardt noted that conditional language in method claims, ‘‘chain of commerce’’ and ‘‘hybrid’’ apparatus/method claims may also present issues when determining whether claims are directed to statutory subject matter. In this regard, conditional language in method claims (reciting actions that are only optionally performed) is often discounted as not being required.
To the extent such language provides the only manner for satisfying the machine-or-transformation test, the Office may reject such method claims for failing to satisfy the test. As explained by Weinhardt, ‘‘chain of commerce’’ method claims often include steps for commercial actions performed with respect to a disclosed product or apparatus (e.g., providing, leasing, selling, distributing, etc.), but may not include any steps actually performed by the product or apparatus.
To the extent one relies on the machine prong of the machine-or-transformation test, these claims may also be rejected as not having a sufficient tie to the product or apparatus. Finally, ‘‘hybrid’’ apparatus/method claims that include recitations to both the apparatus and steps for using the apparatus may raise definiteness issues under 35 U.S.C. § 112, second paragraph,5 as well as statutory subject matter issues as being neither a ‘‘process’’ nor a ‘‘machine,’’ but some combination of the two (35 U.S.C. § 101 enumerating the statutory classes of invention in the alternative).
Examiner Interviews; Prosecution “Off the Record”
In response to internal and external feedback, the PTO is currently in the midst of corps-wide training of its examiners on interview practice and encouraging applicants to conduct interviews, and to do so early in the examination process. During the partnership meeting, Melius gave the audience a presentation on requesting, conducting and documenting an effective interview.
As explained by Melius, three keys to an effective interview are preparation, cooperation and communication. Before an interview, examiners are trained to solicit from applicants a written agenda and any proposed amendments, so that they may prepare for the interview and focus the discussion during the interview. Examiners are also trained to review the record in advance of an interview and, as appropriate, consult with their supervisory patent examiners or primary examiners and/or consider any suggested claim language.
During the interview, examiners are trained to cooperate with applicants to stay focused on the agenda and seek common ground on the issues presented. A suggested sequence for an effective interview begins with the applicant or their representative explaining the invention and how the inventive concepts are (or are not) reflected in the claims. The discussion then turns to the prior art and rejections, and if appropriate, proposed language (by either the applicant or examiner) to overcome the rejections.
As pointed out by Melius, an effective interview does not necessarily require resolving all issues or even reducing the number of issues. Instead, an effective interview may also be one in which the issues are clarified, whether by clarification of the applicant’s or examiner’s position, or by reaching a common understanding of the interpretation that should be given to the claims.
Following an interview, examiners are trained to prepare and enter into the record an interview summary, so that no prosecution is conducted ‘‘off the record.’’ In this regard, examiners are trained to include in an interview summary enough detail of the substance of the interview to clarify the record as to claim limitations discussed, claim interpretation issues and proposed claim amendments, and to indicate—where appropriate—any issues resolved or left unresolved.
In a notable change from past examination practices, Melius explained that examiners are now being trained to copy into the record any proposed amendments submitted by applicants for discussion during an interview. Thus, even though a proposed amendment may never be formally entered against the pending claims, if the proposed amendment is discussed during a telephone interview, the examiner is to copy the proposed amendment into the record. This may be accomplished, for example, by appending a copy of the proposed amendment to the examiner’s interview summary.
A Practitioner’s View of Examiner Interviews
As a parallel to Melius’ presentation on conducting examiner interviews, practitioner Ernest J. Beffel Jr. presented a practitioner’s view of examiner interviews. Sharing the same sentiment as PTO leadership with respect to the benefits of examiner interviews, Beffel outlined a number of avenues by which an applicant may attempt to conduct an interview before the PTO issues a first Office Action. Among these avenues, he suggested tracking an application in PAIR to catch an examiner around the time the application comes up for examination on the examiner’s docket, participating in the PTO’s First-Action Interview Pilot Program6 or participating in the PTO’s Accelerated Examination.7
Similar to Melius, Beffel also stressed the importance of preparation and communication to an effective interview. From the practitioner’s standpoint, however, Beffel stressed the use of figures from the application or other images that may assist the examiner in understanding the invention, as well as understanding terms used in the claims. And although the PTO currently permits video conferencing during an interview, Beffel suggested that further benefits may be realized by also permitting desktop sharing between the practitioner and examiner.
Beffel further suggested applicants may benefit from knowing their audience (i.e., the examiner) and tailoring their remarks to that audience. For instance, Beffel suggested soliciting information from the examiner that may inform the practitioner as to the relative sophistication of the examiner to the technology to which the invention is directed, such as by asking the examiner questions about their art unit and the types of inventions examined in their art unit. Then, if necessary, the practitioner can add somewhat of a technology tutorial to help the examiner understand the invention.
PTO Continues to Address Pendency
In her remarks, Coggins updated the audience on the PTO’s efforts to reduce pendency of applications. Before doing so, however, she clarified for the audience how the PTO defines a ‘‘business method’’ invention as classified within Class 705.
According to Coggins, Class 705 ‘‘business methods’’ are confined to ‘‘computer-implemented processes related to e-commerce, the Internet and data processing involving finance, business practices, management or cost/price determination.’’ Other types of processes, such as those related to gaming or teaching methods, are classified elsewhere according to their structure or field of use.
As reported following the last Business Method Partnership Meeting, application filings in Class 705 showed a gradual increase from 2005 to 2007.8 This trend continued in 2008, during which Class 705 saw 13,779 filings.9 Likewise, in 2008, the allowance rate in Class 705 remained in the 17-22 percent range experienced by the PTO since 2006.
Notably, at mid-year 2009, Class 705 reported a pendency-to-first action of 31.6 months, down from a pendency of 41.4 months at mid-year 2008. Pendency to-disposal (through issuance or abandonment) likewise dropped, from 56.3 months at mid-year 2008 to 46.1 months at mid-year 2009.
At least part of the decrease in pendency may be due to an effort by Class 705 to increase and retain the number of examiners dedicated to examining business methods, up from 300 examiners in 2008 to 328 in 2009. During the partnership meeting, Focarino reported a corps-wide attrition of 6.7 percent, which is down from the 8.5 percent attrition reported by Commissioner for Patents John J. Doll at the 2008 partnership meeting.
Peer-to-Pilot Pilot Closes
As reported by Weiss, the PTO’s pilot of the Peer-to-Patent community patent review project concluded on June 15, with the project ceasing to accept new applications into the project after that date (78 PTCJ 337, 7/17/09). A number of applications remain in process by the project, however, but these are expected to be completed by the end of 2009. The project is now in the evaluation phase, which Weiss expected to conclude by early 2010.
As reported by Weiss, 211 applications were accepted to participate in the project, a number lower than the 400 applications the project was prepared to accept. Of the 211 applications, 76 applications have received a first Office Action (with 135 awaiting a first Office Action).
For the applications that have received a first Office Action, Weiss reported that the examiner applied a reference cited by the peer community in 19 of the applications, although in only nine of those applications was the cited reference not otherwise located by the examiner independent of it being cited by the peer community. These numbers suggest that, although the project has been championed by many in the patent community, the reception by the patent community has been lukewarm (approximately 50 percent of the available slots in the project being left unused) and its success somewhat limited (currently at approximately 12 percent for applications with references cited by the peer community that were not otherwise found by the examiner).
Further Progress, Navigating Uncertain Waters
This year’s partnership meeting offered an opportunity for PTO leadership, practitioners and industry participants to discuss many topics focused on patenting business methods. The PTO reported on its efforts to reduce pendency and its metrics seem to indicate that they are headed in the right direction; and the participants added valuable information on examiner interviews that should only help facilitate the examination process (ideally leading to an even further reduction in pendency).
At least partially dampening the positive discussions from the partnership meeting, however, is a strong sense of uncertainty regarding the proper scope of patent eligible processes or methods in view of the Federal Circuit’s decision in In re Bilski, and the extent to which the Bilski decision will impact system claims. Applicants do not have sufficient guidance on the contours of the machine-or-transformation test, and PTO leadership admittedly does not have all of the answers to questions regarding the test they are charged with implementing. At least until the Supreme Court weighs in on the issue, then, both the PTO and applicants would seem to benefit from an increase in communication to navigate the uncertain waters of patentable subject matter.
This article originally appeared in BNA’s Patent, Trademark, and Copyright Journal, 78 PTCJ 387, 07/24/2009.