©2020. Published in Landslide, Vol. 13, No. 1, September/October 2020, by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.
As new technologies have rapidly advanced in recent decades, practitioners, courts, and the U.S. Patent and Trademark Office (USPTO) have struggled to determine whether these emerging technologies are patent eligible under U.S. patent law. The Patent Act defines broad categories of eligible subject matter, such as new and useful processes or machines, but the real challenge in deciding eligibility has focused on the judicial exceptions to those categories—laws of nature, natural phenomena, and abstract ideas. Technologies facing the harshest scrutiny have included computer-implemented inventions, like artificial intelligence and big data, and involved whether they encompass a patent-ineligible abstract idea.
Ten years ago, in the well-known Bilski case, the U.S. Supreme Court rejected the “machine-or-transformation test” that the Federal Circuit had long used as the exclusive test for eligibility of computer-implemented processes. In its place, the Court imposed a more flexible analysis that has since turned into a two-step test, known as the Alice/Mayo framework. Step 1 asks whether the claim recites a judicial exception, and if so, step 2 asks whether the claim further recites an inventive concept that transforms the exception into eligible subject matter. In implementing these steps, the Federal Circuit has avoided any bright-line rules. While such an approach follows the Supreme Court’s lead, its inherent ambiguity has challenged practitioners. In 2019, the USPTO tackled this uncertainty with guidelines that synthesize the growing case law into what it believes is a more consistent and clearer framework. This article discusses the interaction between the case law and the USPTO’s new framework and their application to computer-implemented inventions in the emerging technologies space.
Bilski and Its Progeny at the Supreme Court and Federal Circuit
Patent eligibility is defined by statute: 35 U.S.C. § 101 provides, “[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent.” This language is expansive and supports the notion that “ingenuity should receive a liberal encouragement.”1 The Supreme Court, however, has recognized three implicit exceptions to the statutory categories: laws of nature, natural phenomena, and abstract ideas. For computer-implemented inventions, practitioners and courts struggle in particular with distinguishing between patent-eligible inventions and patent-ineligible abstract ideas.
In deciding whether a claim falls within an exception, the Supreme Court has a storied—yet short—history under the current eligibility regime. Ten years ago, in Bilski v. Kappos,2 the Supreme Court rejected the Federal Circuit’s long-used machine-or-transformation test3 as the sole test for patent eligibility and, instead, considered the “guideposts” of its prior opinions: Gottschalk v. Benson,4 Parker v. Flook,5 and Diamond v. Diehr.6 Following these guideposts, the Supreme Court reestablished that: a claim should be considered as a whole, without dissecting the claims into old and new elements and ignoring the presence of old elements; an application of an abstract idea to a known structure or process may well be deserving of patent protection; and merely attempting to limit an abstract idea to a particular technological environment or adding insignificant extra-solution activity cannot save a claim.7
Expanding on this guidance, the Supreme Court in Mayo Collaborative Services v. Prometheus Laboratories, Inc.8 and Alice Corp. Pty. Ltd. v. CLS Bank International9 established a two-step framework to distinguish patents that claim judicial exceptions from those that claim patent-eligible applications of the exceptions.10 Under this framework, step 1 requires determining whether a claim is “directed to” a judicial exception. If so, step 2 then considers “whether [the claim] contains an ‘inventive concept’ sufficient to ‘transform’ the [judicial exception] into a patent-eligible application.”11 While the contours of an inventive concept were not defined, the Supreme Court suggested that “improv[ing] the functioning of the computer itself . . . [or] any other technology or technical field” could amount to an inventive concept.12
The Federal Circuit did not read this suggestion to mean that all improvements in computer-implemented technology are abstract and should only be considered under step 2 to determine whether they contain an inventive concept.13 Instead, under Alice/Mayo step 1, the court found that a computer-implemented claim is not “directed to” a judicial exception if it focuses on a specific means or method that improves a relevant technology rather than produces an abstract result or effect for which a computer is invoked merely as a tool.14 For example, in McRO, Inc. v. Bandai Namco Games America Inc., the Federal Circuit found that a computer-implemented method “for automatically animating lip synchronization and facial expression of three-dimensional characters” was not directed to an abstract idea because the claims focused on a specific improvement in computer animation.15 Similarly, in SRI International, Inc. v. Cisco Systems, Inc., the Federal Circuit found that a computer-implemented method for monitoring and analyzing suspicious activity within an enterprise network was not directed to an abstract idea because the claims used a specific technique to solve a technological problem arising in computer networks.16
If the claim is directed to an abstract idea, however, the claim must also contain an “inventive concept” to transform the abstract idea into a patent-eligible application. Under Alice/Mayo step 2, a claim contains an “inventive concept” if an element or a combination of elements amounts to significantly more than the abstract idea itself. The mere recitation of concrete, tangible components is insufficient.17 The claim cannot simply recite a generic computer and contain the words “apply it” or simply limit the use of the judicial exception to a particular technological environment. Rather, the claim must involve more than “well-understood, routine, conventional” activities or must arrange these activities in a nonconventional and nongeneric way.18 As examples, the Federal Circuit has found that the following instances may provide significantly more than the abstract idea itself: (1) providing “an unconventional technological solution . . . to a technological problem”;19 (2) “transform[ing an] abstract idea . . . into a particular, practical application of that abstract idea”;20 and (3) providing a “solution . . . necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.”21
USPTO’s Framework for Deciding Patent Eligibility
In view of the case law, the USPTO issued patent eligibility guidance in January 2019—followed by an update in October 2019—that was intended to simplify the § 101 analysis.22 This guidance (2019 PEG) attempts to address ambiguities of examining abstract ideas under Alice/Mayo step 1, and to a lesser extent step 2, “by synthesizing controlling case law and providing greater clarity for the majority of cases that come before [the USPTO].”23 In particular, the 2019 PEG develops additional inquiries within Alice/Mayo step 1 to facilitate the analysis.
As before and in accordance with § 101, examiners must first determine whether a claim recites one of the four statutory categories: a process, machine, manufacture, or composition of matter. The 2019 PEG does not revise this analysis, which it calls step 1. Examiners should then proceed through the two-step Alice/Mayo framework, which the 2019 PEG calls steps 2A and 2B, but with modification: the USPTO revised step 2A (or Alice/Mayo step 1) to contain two prongs. In step 2A prong one, examiners must evaluate whether a claim recites a judicial exception.24 Then, under step 2A prong two, examiners must newly consider whether “the claim recites additional elements that integrate the exception into a practical application of that exception.”25 Only when a claim recites a judicial exception and fails to integrate that exception into a practical application does the claim fail step 2A.26 Only then should examiners consider whether the claim contains an “inventive concept” under step 2B (or Alice/Mayo step 2).27
Step 2A Prong One—Reciting a Judicial Exception
Considering more closely step 2A prong one, examiners must evaluate whether a claim recites one of the exceptions: an abstract idea, law of nature, or natural phenomenon. For abstract ideas, the USPTO does not instruct examiners to use a case-comparison analysis, as both the USPTO and the courts have historically used. Instead, examiners must identify whether the claims recite one of three enumerated groupings: (1) mathematical concepts, (2) certain methods of organizing human activity, or (3) mental processes.
A claim recites a “mathematical concept” when it includes a mathematical relationship, formula, equation, or calculation. For example, the claims in Flook recited a mathematical concept by incorporating an equation—considered the only novel aspect of the claims—to update the value of an alarm limit.28 A claim does not recite a “mathematical concept,” however, when it includes a limitation that is “merely based on or involves” that concept.29 For example, a method for training a neural network by applying mathematical transformation functions to facial images does not recite a mathematical concept when it recites no mathematical formulas or equations, even though the transformation limitation is based on mathematical concepts.30
A claim recites a “certain method of organizing human activity” when the activity involves fundamental economic principles or practices, commercial or legal interactions, or managing personal behavior or relationships or interactions between people. The activity may involve a single person or multiple people, including a person interacting with a computer. As examples, these activities may include the local processing of payments for remotely purchased goods, processing insurance claims, using advertising as an exchange or currency, and instructions on how to hedge risk.31
Finally, a claim recites a “mental process” when it incorporates an observation, evaluation, judgment, opinion, or other concept that can be practically performed in the human mind. The use of a physical aid (such as pen and paper) to help perform the process “does not negate the mental nature.”32 Nor does reciting the nominal use of a generic computer convert a mental process into patent-eligible subject matter. For example, in Ex parte Kimizuka, the Patent Trial and Appeal Board (PTAB) found that a claimed method of fitting a golf club recited a mental process because “determining, by a processor, a suitable dynamic loft,” “a dynamic loft difference,” and “a recommended loft angle” could be performed practically in the mind or with pen and paper.33 A human, according to the PTAB, only needed to analyze a small amount of data; compare the “flight distances, dynamic lofts, and blow angles” to a predetermined table; and perform addition and subtraction.
Step 2A Prong Two—The Practical Application
If a claim recites a judicial exception, examiners must then evaluate whether the claim as a whole integrates the exception into “a practical application [that] will apply, rely on, or use the judicial exception in a manner that imposes a meaningful limit on [that] exception.”34 The 2019 PEG discusses considerations from the case law that are indicative of a practical application. Notably, the Federal Circuit has addressed these considerations at both steps 1 and 2 of the Alice/Mayo framework in different cases. And prior USPTO guidance discussed these considerations under step 2B. The USPTO shifted this evaluation from step 2B to step 2A to promote “early and efficient resolution of patent eligibility” and increase “certainty and reliability.”35 The 2019 PEG also removed any analysis of whether the exception is integrated using well-understood, routine, conventional elements in step 2A, unlike the inventive concept in step 2B, which does consider conventionality.
In step 2A prong two, determining whether a claimed invention improves the functioning of a computer or other technology is an important consideration. For example, in Ex parte Fautz, the PTAB held that the claims recited a “mathematical concept,” by reciting mathematical formulas, but integrated that concept into a practical application.36 Specifically, the claimed invention optimized the signal-to-noise ratio from reception coils in a magnetic resonance tomography device using mathematical formulas. The PTAB found that the claimed invention improved the output by reconstructing “image data of the examination subject on the basis of the sum signal” and thus improved the imaging system.37
Other considerations that may indicate integration into a practical application include: (1) “implement[ing] a judicial exception with . . . a particular machine or manufacture that is integral to the claim,” (2) “effect[ing] a transformation or reduction of a particular article to a different state or thing,” and (3) “appl[ying] . . . the judicial exception in some other meaningful way . . . such that the claim as a whole is more than a drafting effort designed to monopolize the exception.”38 For example, in Ex parte Olson, the PTAB held that the claims recited a “mathematical concept,” again by reciting mathematical formulas, but integrated that concept into a practical application.39 There, the claimed invention registered a catheter navigation system to a three-dimensional image using formulas. The PTAB found that additional elements applied the formulas “in a meaningful way, such that it is more than a drafting effort designed to monopolize” an abstract idea.40 Importantly, the formulas were used to improve a particular technology—i.e., avoiding errors in existing systems—using a particular machine—i.e., the catheter navigation system.
Conversely, the USPTO recognizes instances when additional elements fail to integrate a judicial exception into a practical application: (1) merely reciting the words ‘‘apply it’’ or the like, merely including instructions to implement an abstract idea on a computer, or merely using a computer as a tool to perform an abstract idea; (2) adding insignificant extra-solution activity, such as mere data gathering; or (3) doing no more than generally linking the use of a judicial exception to a particular technological environment or field of use.41 For example, in Ex parte Savescu, the PTAB held that the claims recited a method of organizing human activity—i.e., managing personal behavior or relationships or interactions between people—and failed to integrate the activity into a practical application.42 The claimed invention created a life-cycle workflow for a project by incorporating steps that organize how people perform project tasks. The PTAB found that adding a “server” and the step of “creating one or more project detail pages on the server computer” failed to improve the functioning of the computer itself or any other technology or technical field. Instead, these elements merely added “generic computer activity to deliver web pages and store data, which is insufficient to integrate the [activity] into a practical application.”43
Step 2B—The Inventive Concept
When a claim recites a judicial exception and fails to integrate that exception into a practical application, the examiner moves to step 2B (or Alice/Mayo step 2): whether additional elements, individually or in combination, amount to significantly more than the judicial exception such that the claim contains an inventive concept. In this step, examiners must consider whether the additional elements are not well-understood, routine, conventional activity. Because the USPTO shifted the other “considerations” from step 2B to step 2A, unconventionality is the primary question. Thus, if an additional limitation is found to be insignificant extra-solution activity in step 2A prong two, examiners should still consider in step 2B whether the limitation is unconventional.44 In one example from the USPTO, a system for monitoring health and activity in animals did not provide an inventive concept where insignificant extra-solution activities—e.g., using an interface to gather data and display analysis results—were well-known and conventional, as disclosed in the specification.45 Similarly, in Ex parte Savescu, the PTAB found that a “server” was “used in its ordinary capacity performing well-understood, routine, and conventional activities.”46 Nonetheless, if these additional limitations were considered unconventional or not well-known in the particular industry, they may provide an inventive concept.
Ultimately, the path to patent eligibility based on finding an inventive concept after finding no practical application appears narrow. The USPTO, however, provides such an example, where the extra-solution activity involved repeatedly measuring the temperature of a plastic mold using a certain thermocouple.47 The claim recited a mathematical concept and a mental process because it recited a controller that performed a calculation based on a mathematical equation that could be practically performed in the human mind. The claim did not integrate these exceptions into a practical application because the claimed controller represented mere instructions to apply the exceptions to a computer. The additional element of repeatedly measuring the temperature with a certain thermocouple was considered mere data gathering and, thus, insignificant. Considering the claim as a whole, however, this additional element added an inventive concept because using the particularly claimed thermocouple to measure mold temperatures was not well-known.
Applying the Case Law and USPTO Framework to Computer-Implemented Inventions
Although the case law and 2019 PEG provide no bright-line rules, several important considerations can be drawn for practitioners in the emerging technologies space. The 2019 PEG does “not constitute substantive rulemaking,” and the Federal Circuit is not bound by it.48 Nonetheless, USPTO examiners and the PTAB follow the 2019 PEG and stand as gatekeepers for patent eligibility. Emerging technology companies should, therefore, understand how to prosecute computer-related patents so that they are eligible under the 2019 PEG and still hold up in litigation under the current case law.
The most straightforward, but often elusive, way to increase the odds of eligibility is to avoid reciting a judicial exception, as decided in Alice/Mayo step 1 and step 2A prong one of the 2019 PEG. For computer-implemented inventions, practitioners should avoid claims that recite mathematical formulas or consist of steps that can be practically performed in the human mind. Such claims may not survive if only limited to a particular technological environment or accompanied by insignificant extra-solution activity.49 They would be “directed to” an abstract idea and require some other inventive concept to be eligible.50 While emerging technologies, such as 5G and artificial intelligence, will inevitably involve inventive devices that utilize mathematical equations or steps that can be performed in the human mind, claims should avoid reciting those equations or steps and focus instead on the technological improvement.
For situations where claims may be found to recite a judicial exception, practitioners should claim additional limitations that integrate the exception into a practical application, as decided in Alice/Mayo step 1 or 2 and step 2A prong two of the 2019 PEG. For example, while limitations should not merely add insignificant extra-solution activity, adding limitations beyond just the novel features can impose “a meaningful limit . . . such that the claim is more than a drafting effort designed to monopolize the judicial exception.”51 Adding limitations can also create a meaningful combination of steps for accomplishing a result.52 Both of these have been found patent eligible. Companies should, therefore, consider adding limitations to their claims that impose meaningful limits, reflect a technological improvement, or address a technological problem.
Importantly, the specification should provide technical details underlying the invention that can be relied on for finding a technological improvement. For example, companies should avoid claiming a “black box” system capable of performing various functions, such as machine learning in the artificial intelligence space. Instead, the specification should sufficiently describe what the claimed device or system is doing, how it is structured, how its components are nongeneric, and how it improves a relevant technology.
Ex parte Hannun illustrates how to draft claims using these principles.53 In this case, the PTAB found that the claims concerning speech transcription into text using machine learning were not directed to an abstract idea. Although speech transcription is generally considered to be a mental process, the PTAB found that a number of claimed steps could not be practically performed in the human mind—e.g., “normalizing an input file . . . and decoding a transcription of the input audio using the predicted character probability outputs.”54 The PTAB further concluded that the claims did not recite a mathematical concept, even though some limitations were based on one, because the claims did not explicitly recite a formula or equation. Even if the claims did recite one, the PTAB found that the concept was integrated into a practical application because the specification described a trained neural network and language model that “achieves higher performance than traditional methods on hard speech recognition tasks while also being simpler”—i.e., specific features that were specifically designed to improve a technical field.55
One way not to integrate an abstract idea into a practical application is to merely implement it using generic computer components.56 Such components do not provide any “practical assurance that the process is more than a drafting effort designed to monopolize the [exception] itself.”57 For example, in Ex parte Smith, the PTAB found that a “hybrid exchange system,” “communication network and order routing system,” “electronic trade engine,” “electronic book database,” and “electronic reporting system” could not integrate an abstract idea into a practical application.58 The PTAB reasoned that these features were described at a high level in the specification without any meaningful detail about their structure or configuration and, in turn, should be considered generic computer components. Thus, claiming and describing nongeneric components of an inventive system can be crucial for making the claims patent eligible.
Lastly, while the path to an inventive concept—as decided in Alice/Mayo step 2 and step 2B of the 2019 PEG—may be narrow when claiming a judicial exception without a practical application, practitioners should still draft claims with an “inventive concept” in mind. For example, in the big data space, the Federal Circuit has found that a patent cannot merely claim “collecting, analyzing, manipulating, and displaying data” while using any kind of computer system or apparatus.59 Practitioners should therefore describe in the specification—and make evident in the claims—how the invention’s particular arrangement of elements is an improvement in a relevant technology. And the claims should include one or more elements that are unconventional or not well-known in the industry, as described in the specification, even if the element may be considered insignificant extra-solution activity.
1. Diamond v. Chakrabarty, 447 U.S. 303, 308 (1980).
2. 561 U.S. 593, 611 (2010).
3. Under the machine-or-transformation test, an invention was considered a patent-eligible “process” only if (1) it was tied to a particular machine or apparatus, or (2) it transformed a particular article into a different state or thing. Id. at 600.
4. 409 U.S. 63 (1972).
5. 437 U.S. 584 (1978).
6. 450 U.S. 175 (1981).
7. Bilski, 561 U.S. at 610–11.
8. 566 U.S. 66 (2012).
9. 573 U.S. 208 (2014).
10. Id. at 217.
11. Id. at 221 (quoting Mayo, 566 U.S. at 72, 79).
12. Id. at 225.
13. Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1334–35 (Fed. Cir. 2016).
14. McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299, 1314 (Fed. Cir. 2016); see Enfish, 822 F.3d at 1335–36.
15. McRO, 837 F.3d at 1314.
16. 930 F.3d 1295, 1303 (Fed. Cir. 2019).
17. In re TLI Commc’ns LLC Patent Litig., 823 F.3d 607, 613 (Fed. Cir. 2016).
18. The mere fact that an activity is disclosed in a piece of prior art does not mean that it is well-understood, routine, and conventional—the inquiry goes beyond that. Berkheimer v. HP Inc., 881 F.3d 1360, 1369 (Fed. Cir. 2018). Whether something is well-understood, routine, and conventional to a skilled artisan at the time of the patent is a factual determination. Id.
19. Amdocs (Israel) Ltd. v. Openet Telecom, Inc., 841 F.3d 1288, 1300 (Fed. Cir. 2016).
20. BASCOM Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1352 (Fed. Cir. 2016).
21. DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245, 1257 (Fed. Cir. 2014).
22. Andrei Iancu, The Role of the Courts in Shaping Patent Law & Policy, 34 Berkeley Tech. L.J. 333, 341 (2019).
24. 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. 50, 54 (Jan. 7, 2019).
26. Id. at 51.
27. The subject matter eligibility guidance, including a flowchart depicting the two-prong analysis (see October 2019 Update, infra note 29), may be found on the USPTO’s website at https://www.uspto.gov/patenteligibility.
28. Parker v. Flook, 437 U.S. 584, 596–97 (1978).
29. U.S. Patent & Trademark Office, October 2019 Update: Subject Matter Eligibility 3 (Oct. 17, 2019) [hereinafter October 2019 Update], https://www.uspto.gov/sites/default/files/documents/peg_oct_2019_update.pdf.
30. U.S. Patent & Trademark Office, Subject Matter Eligibility Examples: Abstract Ideas 8–9 (Jan. 7, 2019), https://www.uspto.gov/sites/default/files/documents/101_examples_37to42_20190107.pdf.
31. October 2019 Update, supra note 29, at 5–6.
32. Id. at 9.
33. No. 2018-001081, at 7–10 (P.T.A.B. May 15, 2019).
34. October 2019 Update, supra note 29, at 11.
35. 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. 50, 55 (Jan. 7, 2019).
36. No. 2019-000106, at 6–11 (P.T.A.B. May 15, 2019).
37. Id. at 11.
38. 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. at 55.
39. No. 2017-006489, at 9–13 (P.T.A.B. Mar. 25, 2019).
40. Id. at 11.
41. 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. at 55.
42. No. 2018-003174, at 9–12 (P.T.A.B. Apr. 1, 2019).
43. Id. at 9–10.
44. October 2019 Update, supra note 29, at 15.
45. U.S. Patent & Trademark Office, Appendix 1 to the October 2019 Update: Subject Matter Eligibility Life Sciences & Data Processing Examples 32–36 (Oct. 17, 2019) [hereinafter Appendix 1], https://www.uspto.gov/sites/default/files/documents/peg_oct_2019_app1.pdf.
46. Savescu, No. 2018-003174, at 14.
47. Appendix 1, supra note 45, at 25–27.
48. Cleveland Clinic Found. v. True Health Diagnostics LLC, 760 F. App’x 1013 (Fed. Cir. 2019).
49. Thales Visionix Inc. v. United States, 850 F.3d 1343, 1347 (Fed. Cir. 2017) (citing Diamond v. Diehr, 450 U.S. 175, 191 (1981)).
50. Parker v. Flook, 437 U.S. 584, 594 (1978).
51. October 2019 Update, supra note 29, at 11.
52. Finjan, Inc. v. Blue Coat Sys., Inc., 879 F.3d 1299, 1305–06 (Fed. Cir. 2018).
53. No. 2018-003323 (P.T.A.B. Apr. 1, 2019).
54. Id. at 9–10.
55. Id. at 10–11.
56. October 2019 Update, supra note 29, at 11–12.
57. Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208, 223–24 (2014).
58. No. 2018-000064, at 8 (P.T.A.B. Feb. 1, 2019).
59. Univ. of Fla. Research Found., Inc. v. Gen. Elec. Co., 916 F.3d 1363, 1369 (Fed. Cir. 2019).