By: Philip Brown

A rejection under 35 U.S.C. §101 (“§101 Rejection”) has recently been a common sight for those seeking patents on computer related technology as well as several other technology fields. These rejections are often difficult to overcome once established as the case law does not set forth straight forward rules. However, in January, the United States Patent and Trademark Office (USPTO) issued new revised guidelines for how to evaluate §101 in light of the ever-growing case law addressing this question.


What is a §101 Rejection?


Patentable subject matter is defined in 35 U.S.C. §101 as a “process, machine, manufacture, or composition of matter.” This subject matter is further limited by judicial exceptions to patentable subject matter including: abstract ideas, laws of nature, and natural phenomena. If claimed subject matter does not fall into a covered area or falls into an exception, the USPTO issues a §101 rejection. Prior to the update, the old standard followed the Manual of Patent Examining Procedure (MPEP 2106), and required examiners to consider the similarities of the claim to cases the court had already decided finding an abstract idea or not. This practice became increasingly more difficult as the number of cases grew, and the differentiating lines became less clear.


Why Change the Evaluation Process?


The “2019 Revised Patent Subject Matter Eligibility Guidance” (Revised Guidance) issued on January 7th, 2019 focused on updating how the analysis for whether claimed subject matter is considered an abstract idea. USPTO Director Andrei Iancu intends the Revised Guidance to bring more predictability to patent applicants with inventions that could be considered abstract ideas. Director Iancu stressed the importance of §101 and explained it as the heart of the patent system. After completing a yearlong review of the most current §101 jurisprudence, he felt revision of the guidelines was necessary to keep the §101 rejections (which was above 70% for certain art areas) in line with the goal of the patent system. These revisions are designed to keep the exceptions from swallowing the whole patent system as Justice Thomas warned in Alice Corp. Pty. Ltd. v. CLS Bank Int’l.


What is the New Evaluation Process?


The Revised Guidance follows a similar two step approach to that established in MPEP 2106 and changes only the second step. In Step 1, the examiner will consider whether the claimed subject matter falls within the four statutory categories of patentable subject matter identified in §101. If it doesn’t, then it is not patentable, and the evaluation can end here. If it is, then they must proceed to Step 2.


Step 2 is split into two parts, A and B. The primary changes in the Revised Guidance focus on Step 2A. Revised step 2A is again split into two prongs. The first prong requires evaluation of whether the claims recite a judicial exception. Under the new guidelines, if it is an abstract idea it must fall into one of three enumerated categories or groups of abstract ideas. These groups are mathematical concepts, certain methods of organizing human activity, and mental processes. If the claim fits into one of these groups, then the process must proceed to the second prong, otherwise the evaluation is complete.


The second prong of Step 2A requires evaluating whether the claim recites additional elements that integrate the exception into a practical application of that exception. If the recited exception is integrated into a practical application of the exception, then the subject matter is eligible for patent protection. Some examples the Revised Guidance provides for what constitutes sufficient integration into a practical application include: an additional element that transforms a particular article, an additional element that improves the functioning of a technology, and an additional element that incorporates a judicial exception with another machine or manufacture that is integral to the claim. Simply reciting “applying it” or applying it to an “insignificant extra-solution activity” will not be enough. If there is not practical application, then proceed to step 2B.


Step 2B follows the second step of the Alice/Mayo test, asking if the claim provides an inventive concept. Step 2B remains mostly unchanged by the Revised Guidance. At this step, the examiner is to evaluate if there is significantly more than the recited judicial exception. This is also the proper time to consider if the claim is unconventional—weighing in favor of finding that there was an inventive step—as opposed to well-established in practice.


The Revised Guidance also explains the procedure for a claim that the examiner believes is an abstract idea but does not fit in the groups of abstract ideas. Although this should not occur often, an examiner must get approval from the Technology Center Director prior to issuing a rejection. Examiners should consider if the claim is eligible under 2A or 2B, and if not, they will then have to submit it to the Technology Center with a justification to get approval.


Here is a summary of this evaluation process:


Step 1: Within four statutory categories?

[If yes, proceed to Step 2; if no, not patentable.]

Step 2:

2A-1: Claim recites judicial exception? (If abstract idea must fall in enumerated group)

[If yes, proceed to 2A-2; if no, patent eligible.]

2A-2:  Exception integrates into a practical application?

[If yes, patent eligible; if no, proceed to 2B.]

2B: Significantly more than judicial exception?

[If yes, patent eligible; if no, not patentable.]


What will the Impact Be?


Although the results will become more transparent with time, these changes should make rejections for abstract ideas less frequent and more predictable. In January after the Revised Guidance was issued, the Patent Trial and Appeal Board (PTAB) started citing them almost immediately, and the reversal rate for abstract idea rejections was 35% which is much higher than it has been in over two years.


Specifically, there are already success stories of using the Revised Guidance in arguments to overcome abstract idea rejections on computer software patents in prosecution. The expectation is that these revisions could make it easier to acquire patents on computer related software inventions, as these frequently were rejected under §101, but only time will tell.