PTABWatch Takeaway: The United States Patent and Trademark Office (USPTO)’s 2019 Revised Patent Subject Matter Eligibility Guidance provides a useful, and effective, tool for demonstrating patent eligibility of software-related inventions. While the 2019 Guidance acts as persuasive authority only, the PTAB has relied on the 2019 Guidance as a rubric in numerous cases to analyze, and find patent eligible, software-related inventions. Practitioners and inventors seeking to overcome, or avoid, patent eligibility issues under Section 101 would do well to draft or amend claims in view of the 2019 Guidance.
It has been about two months since the United States Patent and Trademark Office (USPTO) issued its 2019 Revised Patent Subject Matter Eligibility Guidance. See 84 Fed. Reg. 50 (Jan. 7, 2019) (the “2019 Guidance”). Within that time, the PTAB has issued over 80 decisions citing the 2019 Guidance. Of note, more than 20 of these decisions address software-related inventions, a particular type of invention generally at risk of being identified as an “abstract idea,” and, thus, found to be patent ineligible. See Alice Corp. Pty. Ltd. v. CLS Bank Int ‘l, 573 U.S. 208, 215-17 (2014) (“Alice”).
The 2019 Guidance represent a fundamental change to patent examination procedure, with a focus on “abstract ideas.” In particular, the 2019 Guidance seeks to clarify the Supreme Court’s Alice test by breaking the first step of the Alice decision (i.e., Step 2A under the 2019 Guidance) into a two-prong test. In particular, under the first prong of the 2019 Guidance (Step 2A, Prong 1), if an examiner determines that a claim recites an “abstract idea,” then the examiner must determine whether the claim falls within an enumerated list of three subject matter groupings.
The below table lists the three subject matter groupings, together with descriptions and examples as provided by the 2019 Guidance. The three subject matter groupings (and their respective examples and descriptions) are based on Supreme Court and Federal Circuit precedent that “synthesize key concepts identified by the courts as abstract ideas.” 2019 Guidance at 52.
In addition, the below flowchart shows the conventional steps of the Supreme Court’s Alice test (Alice Steps 1 and 2) (i.e., USPTO Steps 2A and 2B, respectively.). The below flowchart also shows the two new prongs of Step 2A under the 2019 Guidance, including the three new subject matter groupings (a) – (c) of Step 2A, Prong 1.
In this post we explore the PTAB’s recent treatment of a sampling of software-related applications on ex parte appeal under the 2019 Guidance. In particular, the below case review demonstrates the PTAB’s analysis of software-related claims under each of Steps 2A (Prongs 1 and 2) and 2B under the 2019 Guidance.
Software Inventions found Patent Eligible under Step 2A, Prong 1
- Ex parte Hocquete, Appeal No. 2017-009679, (Jan. 18 2019) (IBM Corp.): The claims-at-issue directed to “a method of automated partitioning of transportation routing problems.” Under step 2A, Prong 1 of the 2019 Guidelines, the PTAB reversed the Examiner’s Section 101 rejection stating that “[w]e fail to see how the claimed process of partitioning transportation routing problems is directed to an economic concept as discussed by the Examiner.”
- Ex parte Fanaru, Appeal No. 2017-002898, (Jan. 22 2019) (Microsoft Technology Licensing, LLC): The claims-at-issue directed to “[d]ifferent analytics data systems [used to] analyze data and produce reports for a user to view.” Under step 2A, Prong 1 of the 2019 Guidelines, the PTAB reversed the Examiner’s Section 101 rejection “because collecting usage information is not a mathematical concept, an identified method of organizing human activity, or a mental process.” (citing 2019 Guidelines at 52-53).
- Ex parte Carr, Appeal No. 2018-005890, (Jan. 24 2019): Claim 1 recited “[a] method of surfing the Internet comprising: a. selecting information on a web page; b. clicking on the information as it resides on the web page; and c. in response to the clicking, conducting a web search on the information.” Under step 2A, Prong 1, the PTAB reversed the Examiner’s Section 101 rejection and found that, while the Examiner argued that the claim was directed to “a fundamental economic practice, (ii) a method of organizing human activities, (iii) an idea of itself, or (iv) a mathematical relationship or formula,” the Examiner failed to provide a general discussion of patent eligibility without any specific findings or analysis to support the Examiner’s conclusion.
- Ex parte Herbst, Appeal No. 2018-000602, (Jan. 28 2019): Claim 1 recited “[o]ne or more computer storage devices having computer executable instructions embodied thereon, that when executed, perform a method of prepopulating clinical events with image based documentation … .” Under step 2A, Prong 1 of the 2019 Guidelines, the PTAB reversed the Examiner’s Section 101 rejection because “the claims do not recite any of the judicial exceptions,” and, in particular, the step of: “embedding the tag, the image, and the corresponding metadata at a location on a silhouette of a human body corresponding to the body part described by the tag, wherein the silhouette of the human body is a graphical representation of the human body and is included in the electronic medical record for the patient,” requires action by a processor that cannot be practically performed in the mind.
- Ex parte Boding, Appeal No. 017-008591 (Feb. 4, 2019): The claims-at-issue directed to “systems and methods for detecting the likelihood that a transaction is fraudulent using  user access pattern data and  device fingerprint data,” where the PTAB reversed the examiner because the claims failed to recite “(1) mathematical concepts; (2) mental processes; or (3) certain methods of organizing human activity,” (Step2A, Prong 1) where the claims recited e.g., “determining, by the processor, a likelihood that the request is fraudulent by comparing the quantity to a previously measured quantity of user interactions associated with the user utilizing a user device that is of the same type of device as the user client computer.”
Software Inventions found Patent Eligible under Step 2A, Prong 2
- Ex parte Rockwell, Appeal No. 2018-004973, Jan. 16, 2019 (Ford Global Technologies, LLC): The claims-at-issue directed to “a module interface for facilitating software updates to modules of a receiving vehicle.” The specification discloses a system in which “a processor of a vehicle [is] configured to communicate [wirelessly] with an update server hosting software updates.” Under step 2A, Prong 2 of the 2019 Guidelines, the PTAB reversed the Examiner’s Section 101 rejection “because the claims as a whole integrate the asserted abstract ideas (i.e., updating software and organizing human activity) into specific practical applications of those ideas.” Of particular note, the PTAB noted the Examiner’s failure to analyze the claims under the new 2019 Guidelines: “the Examiner has not determined that the claims recite an abstract idea that falls within one of the enumerated grouping of abstract ideas in the Revised Guidance” (citing 2019 Guidelines at 52).
- Ex parte Marcus, Appeal No. Appeal 2017-003371, Jan. 30, 2019 (Mobisave LLC): The claims-at-issue directed to “electronic coupon redemption and verification.” The PTAB found that Examiner provided “insufficient evidence that the claims fail to either sufficiently integrate the abstract idea into a practical application [Step 2A, Prong 2] or recite significantly more than an abstract idea [Step 2B].” With respect to Step 2A, Prong 2, the PTAB found that the Examiner provided “insufficient evidence or reasoning to meet the burden of showing that this claimed functionality does not entail an improvement to conventional OCR technology beyond the abstract idea. As such, the Examiner has not established that the claim fails to integrate the purported abstract idea into a practical application.”
- Ex parte Scheer, Appeal No. Appeal 2017-011742, Jan. 30, 2019 (ADT Security Services, Inc.): The claims-at-issue directed to “people such as business owners to detect and respond to specific types of events taking place at a business location according to a predetermined procedures,” which the PTAB found to be “a method of organizing human interactions [Step 2A, Prong 1].” Under Step 2A, Prong 2, however, the PTAB found that the claims recite “additional elements including a local agent device, a subsystem at the location which is in communication with the local agent device, contacting a remote monitoring center in response to detecting an alarm event at or within the sub-system, and contacting emergency personnel in response to detecting an emergency event at or within the subsystem.” The PTAB found that these additional limitations “integrate the judicial exceptions, namely the mental processes and human organizing activity identified above, into a practical application.” Specifically, the PTAB found that “these additional elements recite an improvement to location monitoring in that specific events may be defined which cause the system to automatically contact a remote monitoring center without user intervention, and other emergency events cause the system to automatically contact emergency personnel without needing user intervention.”
- Ex parte Borucki, Appeal No. 2018-001010 (Feb. 4, 2019): The claims-at-issue directed to “a method for automated profile-based transaction processing with an enterprise by establishing one or more cloud-based transaction profiles defining a customer’s options and settings for completing transactions with the enterprise,” (Step 2, Prong 2) where the PTAB reversed the examiner because the claims “integrate the judicial exception (abstract idea) into a practical application,” where the claims recited, e.g., “requesting and receiving a client’s transaction profile from a cloud-transaction processing service, and automatically completing the client’s transaction on the self-service device/kiosk by executing the profile’s executable script on the self-service device.”
- Ex parte Kamath, Appeal No. 2018-000030 (Feb. 5, 2019): The claims-at-issue directed to “contextual advertisement position bidding,” where the PTAB reversed the examiner because the claims “integrate the abstract idea into a practical application,” (Step 2, Prong 2) where the claims recited e.g., “generating a predictive model that comprises one or more statistical modes, wherein the predictive model is generated based on empirical data.”
Software cases affirming Examiner’s 35 USC § 101 rejection
- Ex parte Seid, Appeal No. 2017-009988, Jan. 22 2019 (Ten-X, LLC): The claims-at-issue directed to “valuation of a property sold in online markets, and more specifically, to methods for determining valuation of a property using price elasticity information or an alternative probable valuation.” The PTAB affirmed the Examiner’s Section 101 rejection that the claims recited an abstract idea in the category of “certain methods of organizing human activity,” (Step 2A, Prong 1) because the claims described “concepts relating to interpersonal and intrapersonal activities such as managing relationships or transactions between people, social activities, and human behavior, satisfying or avoiding a legal obligation, advertising, marketing, and sales activities, and managing human mental activity,” which merely recited a method for determining the valuation of a “subject item,” rather than the practical application of an abstract idea. (Step 2B, Prong 2). While the Appellant argued under Step 2B that “conventional approaches do not account for elasticity factors, such as randomness, or factors that are inherent and specific to a particular item,” the PTAB noted that such factors were not recited in the independent claims, and, thus, the claims did not amount to significantly more than an abstract idea.
- Ex parte Hertenstein, Appeal No. 2017-010781, Jan. 25 2019 (International Business Machines Corporation): The claims-at-issue directed to systems and methods “for verifying insurance claim submissions.” The PTAB affirmed the Examiner’s Section 101 finding that the claims recite “a method of organizing human activity” (Step 2A, Prong 1) and because “[t]aking the claim limitations separately, the computer server, at each step of the process, performs actions that are purely functional and devoid of implementation details” such that the claims do “not integrate the claimed abstract idea into a practical application.” (Step 2A, Prong 2). And the claims do no more than require a generic computer server to perform generic computer functions (Step 2B).
- Ex parte Leber, Appeal No. 2017- 011338, Jan. 28 2019 (Hurricane Electric):The claims-at-issue directed to a “method for facilitating at least a portion of a secure electronic financial transaction.” The PTAB affirmed the Examiner’s Section 101 rejection finding that the claims were directed toward facilitating a secure electronic transaction, “where facilitating a secure electronic transaction is a fundamental economic practice.” (Step 2A, Prong 1). The PTAB found that the claims did not integrate the abstract idea into a practical application (Step 2B, Prong 2) at least because the claims were not directed to an improvement to computer-related technology or an improvement in a technological field. And the remainder of claim elements are “typically found in computing systems and represent computer components that are well-known in the art.” (Step 2B).
The above cases represent a selection of PTAB decisions that we reviewed related to software-related inventions. We found that, in all cases, in addition to analyzing the claims under the 2019 Guidance, the PTAB included in its decision a discussion of the conventional Alice two part test. In such cases, the PTAB treated the PTAB Guidance as persuasive authority only. This is not surprising as the 2019 Guidance does “not constitute substantive rule making and does not have the force and effect of law.” 2019 Guidance at 5. In particular, we note that, where the PTAB affirmed an examiner’s rejection (i.e., by affirming the examiner’s rejection that the given claims were directed to an “abstract idea,”), the PTAB’s decision focused more on an analysis of Supreme Court and/or Federal Circuit decisions rather on the 2019 Guidance.
Still, as the above cases demonstrate, the PTAB relies on, and regularly cites, the 2019 Guidance to formulate its patent eligibility decisions as to whether software-related inventions are patent eligible. We found that the most successful patentee arguments were those that argued Step 2A, Prong 1, i.e., that the claims did not fall within one or more of the specific subject matter groupings, which include (a) mathematical concepts; (b) certain methods of organizing human activity; or (c) mental processes. Under Step 2A, Prong 1, the PTAB used the 2019 Guidance to determine that, since the claims did not fall within one of the three subject matter groupings, the claims did not recite an “abstract idea,” and, thus, were patent eligible.
Patentees were also successful arguing Step 2A, Prong 2 and Step 2B, but such arguments generally required more of a showing, including specific citations by the patentee tying the claims-at-issue to the patent specification in order to demonstrate that the claims were “integrated into a practical application” (Step 2A, Prong 2) and/or amounted to “significantly more” than the given abstract idea (Step 2B).
In any event, as demonstrated in the case analysis above, the 2019 Guidance offers patent applicants a useful and effective tool to help demonstrate patent eligibility of software-related inventions. Practitioners and inventors seeking to overcome, or avoid, Section 101 issues would do well to draft or amend claims in view of the 2019 Guidance.
Perhaps more interesting will be how the Federal Circuit (or Supreme Court) treats a patent that relied on the 2019 Guidance for issuance. That may be the focus of a future article. For the time being, because the 2019 Guidance is not controlling law, practitioners should approach prosecution in a manner consistent with the recent PTAB decisions, i.e., by citing a Federal Circuit or Supreme Court decision in support of any reliance on the 2019 Guidance, especially in an appeal brief to the Board.