Subject Matter Eligibility Retrospective: Informative PTAB Decisions Applying the 2019 Revised Guidance

It has long been recognized that, at a certain level, almost all patent claims include some abstract concepts. One of the hurdles facing practitioners and Examiners alike in determining subject matter eligibility under Section 101 has been drawing the line between claims that are “directed to” an abstract idea under the first step of the U.S. Supreme Court’s Alice/Mayo test (Step 2A of the USPTO analysis) for subject matter eligibility and claims that merely recite an abstract idea. In January of 2019, the USPTO published Revised Patent Subject Matter Eligibility Guidance (“Revised Guidance”) aimed at untying this knot.¹

The Revised Guidance alters how patent examiners should apply the first step of the U.S. Supreme Court’s Alice/Mayo test for subject matter eligibility. In particular, the Revised Guidance offers a formal method of determining whether a claim is “directed to” a judicial exception or merely “recites” that judicial exception. After over a year of operating under the new guidance, the Patent Trial and Appeal Board (PTAB) has published several decisions that have been deemed “informative” of how the new guidance is applied by the Board. Each of these decisions was appealed from an examination decision based on the old guidance. Here, we examine these informative decisions for insight into the Board’s application of the Revised Guidance.

The Revised Guidance alters Step 2A by breaking it into a two pronged inquiry for determining whether a claim recites a judicial exception and, if so, whether the claim is directed to the judicial exception. The first prong of Revised Step 2A requires the Examiner to determine whether a claim recites a judicial exception (law of nature, natural phenomenon, abstract idea). This step differs from the previous Subject Matter Eligibility guidance in that it simplifies the subject matter that qualifies as an abstract idea. A claim that recites subject matter falling into the groupings of mathematical concepts, methods of organizing human activity, and mental processes, is to be considered an abstract idea.

The second prong of Revised Step 2A requires the Examiner to determine whether a claim is “directed to” a judicial exception. In this step, a claim is not “directed to” a judicial exception if that judicial exception is “integrated into a practical application of the judicial exception.” If a claim is not “directed to” a judicial exception, then it is patent eligible.

Prior to the promulgation of the Revised Guidance, it was common practice for a PTO Examiner, upon determining that a claim contained an abstract idea, to determine that the claim was necessarily “directed to” that abstract idea. On its face, the Revised Guidance appears to add both clarity and nuance to this determination. The Revised Guidance clarifies what qualifies as an abstract idea and explains exactly how an Examiner should determine whether a claim that includes an abstract idea is also directed to that abstract idea. Based on the six decisions designated as “informative” in 2019, it appears that application of the Revised Guidance has the potential to alter examination outcomes.

In Ex parte Hannun,² application of Prong 1 of the new Step 2A resulted in a reversal of the Examiner’s rejection. The claims in question were directed to a computer-implemented method of transcribing speech from an input audio file and recited the use of “predicted character probabilities” obtained from a trained neural network. The Examiner had determined that the “predicted character probabilities” were a mathematical formula and that the claims were directed to using a mathematical formula based on a comparison with Gottschalk v. Benson.³ The Board reversed, finding that the “predicted character probabilities” were not themselves a mathematical concept, and that the claims did not recite any formula or algorithm to determine these. Therefore, the Board reasoned, the claims did not actually recite a “mathematical concept.”

In other decisions, the Board reversed the Examiner’s rejection based on Prong 2 of the new Step 2A. For example, in Ex parte Smith,⁴ the Board found that the claims integrated a “fundamental economic process” into the claims and that they were not “directed to” the abstract idea. The rejected claims, which recited a hybrid live/electronic derivatives trading system, were found by both the Board and the Examiner to recite fundamental economic processes related to derivatives trading. The Board, however, focusing on aspects of the claims that addressed issues arising from the specific context of a hybrid derivatives trading system, found that the abstract idea was sufficiently integrated into a practical application so that the claims were not “directed to” the abstract idea.

The features identified by the Board as providing “integration” were related to timing and delay of market orders. Under the previous guidance, these features may not have been enough to amount to “significantly more” than the judicial exception. Under the Revised Guidance, the Board was only required to find that these features integrated the judicial exception into a practical application to determine patent eligibility.

Similarly, in Ex parte Fautz,⁵ the Board applied the Revised Guidance to determine that the claims were patent eligible under prong two of the new Step 2A. The rejected claims recited several mathematical formulae to be used in conjunction with a magnetic resonance tomography apparatus. Both the Board and the Examiner found that the claims recited the abstract idea of a mathematical concept. The Examiner found that, because MR tomography machines were well known, claim features related to such did not qualify as “significantly more.” In contrast, the Board found that, because the recited mathematical formulae were integrated into the practical application of the MR tomography apparatus, the claims were not directed to mathematical concepts. As in Ex Parte Smith, although the MR tomography apparatus may not have qualified as “significantly more” under the old guidance, the “practical application” methodology of the new guidance permitted a finding of patent eligibility.

In Ex parte Olson,⁶ the Board also applied the Revised Guidance to determine that the claims were patent eligible under prong two of the new Step 2A. Here, the claims recited various mathematical formulae to be used in position registration of a catheter navigation system. Both the Examiner and the Board found that the claims recited the abstract idea of a mathematical concept. The Board, however, found that the series of steps related to the use of a catheter for determining and measuring various parameters used in the registration were sufficient to integrate the mathematical formulae into a practical application, thus providing patent eligibility.

The Board also found that the claims “improve[d] a particular technology” and “appl[ied] the mathematical concepts with a particular machine.” Although discussed during the Step 2A analysis, these tests are part of Step 2B of the USPTO analysis,⁷ which implements the second step of the Supreme Court’s Alice/Mayo Test. Thus, it is likely that the Board would have reversed this case under the old guidance as well.

In contrast to these cases, the Board also sustained some Examiner’s rejections under the Revised Guidance. For example, in Ex parte Kimizuka,⁸ 2018-001081 (May 15, 2019), the Board found that, even under the Revised Guidance, the claims were not patent eligible under the new Step 2A. Here, the claims recited the use of a processor and database to assist in fitting a user to a golf club. Both the Board and the Examiner found that the claims recited mental processes. The Board found that merely executing the claimed mental processes via a processor and database was not sufficient to integrate the abstract idea into a practical application.

Similarly, in Ex parte Savescu,⁹ the Board also found that, even under the Revised Guidance, the claims were not patent eligible under the new Step 2A. Here, the claims recited a method of creating a life cycle project workflow and using a computer to generate web pages related to the workflow. The Examiner and the Board found that these claims were related to a method of organizing human activity. When the Board applied Prong 2 of Step 2A, they found that the creation of web pages by a computer was generic and insufficient to integrate the judicial exception into a practical application.

The PTO and the PTAB have now had over a year to integrate the Revised Guidance into their practice and apply these concepts to actual claims. Practitioners have surely seen differing results on §101 rejections during prosecution, ranging from business as usual to greater allowance rates. Based on the PTO’s designation of Informative PTAB cases, it appears that the PTAB, at least, has applied the Revised Guidance to more easily find patent eligibility in places that may have been difficult before.