Bilski Blog

Alice Brings a Mix of Gifts For 2016 Holidays

by Robert R. Sachs

Like the odd aunt whose holiday gifts can range from the wonderful to the recyclable, in 2016 Alice brought both good and bad tidings.  Let’s start with the nice ones.

The numbers here are through December 22, 2016.  The big picture is that the overall rate of district court ineligibility decisions* has declined each year since Alice, while the total number of decisions has increased each year.  This may be an indication of several factors.  First, plaintiffs are being more careful in selecting which patents to assert.  Thus, clear losers do not get picked for litigation. On the other hand, defendants continue to push the envelope on what they can challenge under Section 101, and in doing so, have overreached. As a result, the overall invalidity rate has fallen.

Drilling down to the monthly numbers, the news is a little more mixed:

As I previously reported, the monthly data showed a drop in the number of invalidity decisions as well as an overall downward trend in the invalidity rate for district court decisions.  In December thus far there’s been an uptick in such invalidity decisions (seven thus far) and a few more may issue in the before the year is out.  The dotted line above shows the invalidity over three month periods, to smooth out the monthly fluctuations; overall the trend has been downward. 

Nonetheless, in October, I cautioned that “I would prefer to see these numbers hold for several months,” because the Federal Circuit “continues to affirm more invalidity decisions than it reverses.”  This fact still holds true:  there have been nine decisions by the Federal Circuit since October, and they have affirmed ineligible subject matter in seven of them (77%).   

Here are the overall Alicestorm numbers:

PTAB continues its remarkable streak of invaliding patents in CBMs.  While the numbers above show less than 100% kill rate, that only because there have been three cases in which the Board split, invalidating some claims, but not others.  To date, there is not a single CBM final decision in which the Board reversed the institution decision on § 101 and found all of claims patent eligible.   While the number of final decisions is up, on the bright side, the number of institution decisions on § 101 is down from last year:

The drop in institutions more has more to do with the behavior of litigants filing less CBM’s than PTAB itself. 

Returning to the courts, the rates on motions on the pleadings in the district courts appear to be levelling off. The three month average success rate for motions on the pleadings (JOP and MTD) has been steadily declining over the past five months:

The most active judges in Section 101 continue to be those in Delaware and E.D. Texas:

Here’s the current Federal Circuit § 101 Scorecard

Finally, software patents continue to bear the brunt of § 101 challenges:

The good news however, is that the percent of software patents invalidated has dropped a bit from 61% in 2015 to 54% in 2016.

I’ll review the impact of Alice in the USPTO in an upcoming blog.

Finally, I'll send you off with the following wish:

May your toasts this season always be novel,

Your gifts non-obvious,

And most importantly of all,

your holidays enjoyment-eligible.

 ------

* An ineligibility decision is one in which the court finds at least one claim invalid under Section 101.

Exploring the Legal Contours of Patent Subject Matter Eligibility

 

Editor's Introduction:  The following post is by Wayne Sobon, and is based on the remarks he made at the USPTO's Patent Subject Matter Eligibility Roundtable on December 5, 2016.  Mr. Sobon has over thirty years of experience as a patent attorney. He has served as chief IP counsel in several major corporations, as well as being an entrepreneur.  He is a past president of AIPLA and recently served on the Patent Public Advisory Committee of the USPTO.

********

 By Wayne Sobon

I'd like to go back to some first principles and history.

Article 1, Section 8 of the Constitution neatly divided the promotion of, on the one hand:

• Science, the fields of knowledge and ideas, by securing exclusive rights to Authors of their Writings. Things like books and maps and charts.
• And the Useful Arts, where science and ideas are transformed into tools and actions in the world, by securing exclusive rights to Inventors of their Discoveries.

Basic ideas and science would remain free for all.

One of the first Congressional acts was the Patent Act of 1790, which granted patents to any persons that “have invented or discovered any useful Art, Manufacture, Engine, Machine or Device, or any improvement therein, not before known or used”, provided that the invention or discovery was deemed “sufficiently useful and important”.

It’s instructive to go back and understand what was meant by “Useful Arts.” According to the Sheridan's Dictionary of 1780, “Useful” meant “convenient, profitable to any end, conducive or helpful to any purpose;” and “Art” meant: “the power of doing something not taught by nature and instinct; . . . a trade; artfulness; skill; dexterity; cunning;”. It’s also interesting for us modern ears, to know that the original sense of “technology” was from the Greek “techné,” which simply meant “art, craft”, as opposed to “episteme,” “scientific knowledge, a system of understanding.” Indeed, “technology” was much broader than its current engineering-focused meaning; Sheridan defined "technical" as "belonging to the arts, not in common or popular use"; Webster in 1833 defined a “Technology”:  as “a treatise on the arts, and explanation of terms of art.”[1]

The intellectual property system framed in the Constitution, and enacted in the first of our Patent Laws, was elegant and sensical. Science (the world of pure ideas and systemic understanding of our world: episteme), was free to all people to advance. The work advancing science was protected through copyrighted works of scholarship, atlases, and other creative expressive, tangible works.

Applied knowledge (transforming ideas into useful arts, into tools and processes that acted in the world: techne), was protected by patents. And the breadth of useful arts was extremely wide: encompassing all that was useful in the real world and in commerce. “the power of doing something not taught by nature and instinct.”

This elegant scaffolding sufficed the US patent system for the better part of 200 years. Certain cases touched on the boundaries between abstract idea, episteme, and protectable useful art, techne. The Morse telegraph case is instructive. There, the Supreme Court denied Morse his super-broad claim 8 on “the use of the motive power of the electric or galvanic current, which I call electro-magnetism, however developed for marking or printing intelligible characters, signs, or letters, at any distances.”. The Court rejected this, saying “he claims an exclusive right to use a manner and process which he has not described and indeed had not invented, and therefore could not describe when he obtained his patent. The court is of the opinion that the claim is too broad, and not warranted by law.” While often cited as an early subject matter case, the Court invalidated the claim on what would now be termed Section 112 indefiniteness and lack of written description.

It’s also instructive to note that that same Court allowed Morse’s claim 5, which broadly claimed “the system of signs, consisting of dots and spaces, and horizontal lines, for numerals, letters, words or sentences, substantially as herein set forth and illustrated, for telegraphic purposes.” A system of signs. But specifically applied in the real world, within telegraphy. Query whether this claim would survive Alice.

Section 101 patentability challenges of the 1970’s, in Benson and Flook, culminated in the Diamond v. Diehr decision of 1981, and the roughly contemporaneous Chakrabarty decision of 1980, set out an admirably broad ambit for patentability on the advent of the digital and biotechnological revolutions that have transformed our world these last 35 years. Coming as they did at the foundation of the Federal Circuit, these decisions reinforced a view that the US patent system was capable of broadly encompassing “anything under the sun that is made by man,” the Chakrabarty Court quoting the Senate Committee report on the 1952 Patent Act.

The Diehr Court noted that Section 101 simply provides “a general statement of the type of subject matter that is eligible for patent protection ‘subject to the conditions and requirements of this title.’” The more substantive requirements for whether a particular invention is novel (section 102) and nonobvious (section 103) stand “‘wholly apart from whether the invention falls into a category of statutory subject matter.’” Here, the Court was quoting the 1979 CCPA case In re Bergy, authored by Judge Rich, who as we know coauthored the Patent Act of 1952.

As Judge Rich underscored in Bergy, Section “101 was never intended to be a ‘standard of patentability’; the standards, or conditions as the statute calls them, are in § 102 and § 103.” This is consistent with the legislative history accompanying the 1952 act, which explains “[s]ection 101 sets forth the subject matter that can be patented, ‘subject to the conditions and requirements of this title.’(that is 102, 103 and 112).”

As we all now know, and like so many of the comments eloquently expressed today, that broad promise has been severely damaged. After the Alice, Prometheus and Myriad cases, Section 101 is being used with ferocious effect, by District Courts at the pleading stage, with little to any factual development, and by Patent examiners, in hundreds and thousands of cases, as a new, often insurmountable hurdle to patentability. Like the internet video of the raccoon washing cotton candy in water only to see it disappear, the courts and PTO often reduce proposed claims to a collection of quote “abstract” ideas, and then wash each of those away under the acid of the new 101 jurisprudence, leaving nothing patentable behind. All of this belies the purpose, structure and logic of our patent system.

Of course, every innovation is a set of abstract ideas given concrete application in the real world. Unfortunately, under current practice, Section 101 has become a destructive, rusted machete for an area of law that calls for sharp scalpels.

There seems to be something especially difficult for courts and the PTO in handling digital and biological innovations. It’s far easier today to get a patent by adding one more gear or lever to an 18^th century cuckoo clock, then trying to protect an elaborate coded new application on a smart phone.

The US is now falling behind Europe and China, in the protectability of these inventions. We have allowed the Supreme Court to craft our US industrial policy: as noted by at least some today, there is some mounting evidence that failure to protect these inventions is affecting early-stage funding and development. And may impose significant additional harms on a variety of industries competing in the global market

Absent a strong turn by the Federal Courts back to the Diehr and Chakrabarty vision of patentability, I would argue we probably do need a legislative adjustment, one that should be as elegant and brief as possible, in line with the adjustment in the 1952 Act that added a new, brief section 103 to “stabilize” existing jurisprudence about obviousness. We need to somehow stop the Courts and the USPTO from importing their own often hazy, subjective view of “abstractness” (often really just unbound, personal views of novelty, obviousness or distinctiveness) into the purposefully low Section 101 patentability threshold.

To address this situation through legislation, I suggest something along the lines of adding a straightforward sentence at the end of Section 101:

101. Inventions patentable. Whoever 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 therefor, subject to the conditions and requirements of this title. For purposes of this section, it is irrelevant whether the invention or any of its claimed elements, is otherwise unpatentable under sections 102, 103 or 112.

I believe something this simple, or its equivalent, accompanied by clear legislative history, could help undo so much of the new troubling jurisprudence that imports these other conditions of patentability at the outset, and restore 101 to the minimal, simple threshold for inventions of the useful arts to which it was always intended.

Endnotes

[1] See, Oxford English Dictionary, Vol. V. 338, Vol. XVII 705 (2d ed. 1991); see also Noah Webster, Dictionary of the English Language 35 (11th ed. 1833).

A Long Road Ahead: A Solo Entrepreneur's Perspective on the USPTO’s Roundtable I - Subject Matter Eligibility Guidelines

By Ingrid Cook

I am a solo entrepreneur.  After twenty plus years in industry, I decided to take the risk and start my own business using my own capital. In the parlance of the law I am considered, almost affectionately, a micro-entity. 

I knew I needed intellectual property protection and one of the first things I did was file for a trademark application.  With my micro-entity status, I successfully prosecuted my own trademark application, without objection from the examiner.  I also wanted to protect my underlying business process, and I assumed that my experience going through the patent prosecution process would go just as smoothly. I have come to learn otherwise.

As a micro-entity, getting my invention patented has proven to be a long and difficult road. With no political connections and very limited resources, it is painfully obvious that this system of multiple office actions, RCEs, and then perhaps appeals to PTAB and the Federal Circuit, was not designed for solo entrepreneurs.  The complexity of the system put me at a particular disadvantage to the larger corporations who are clearly benefiting from my, now published, patent application.

From the beginning my application was rejected, and continues to be rejected, under Section 101, even though we have recently overcome all of the prior art rejections.  As a result, I have become something of an accidental student of patent eligibility and as such was very interested in attending the USPTO’s Patent Subject Matter Eligibility Roundtable I on November 14, 2016.  Prior to the roundtable, I had assumed that my application was something of an outlier, that there was something wrong with it and that was why it had been rejected.  At the roundtable I learned that “it’s not me, it’s you” applies not just to exes but to the patent system as well.

As a first time attendee, I was encouraged by Under Secretary Lee’s opening remarks, particularly as they related to finding ways to make sure examiners were not only aware of newly issued judicial decisions (i.e. Enfish, Bascom, McRO, and Rapid Litigation Management), but to make certain that these decisions were being incorporated into the USPTO’s Subject Matter Eligibility Guidelines, and appropriately interpreted and applied to pending business method patent applications. Yet, my strong feeling of encouragement quickly dissipated when I noticed only four out of the 35 speakers who addressed this serious issue did so in a manner relative to micro-entities. I was further disenfranchised by the process when I realized that the USPTO did not provide any time for discussion or a question-and-answer segment at the conclusion of the “roundtable.”

The few speakers at the roundtable who did advocate on behalf of us “little guys” often mentioned how the “direct costs” negatively impacted micro-entities, focusing on the need for examiners to avoid using “blanket statements,” to be specific in their responses, and carefully ensure the law is being properly interpreted and applied on a case by case basis.  As a solo entrepreneur, I couldn’t agree more with the need to “get it right the first time,” as this would substantially reduce direct costs for us. My impression is that the examiner’s first instinct is often to reject without any substantive reason, hoping we’ll simply abandon the process altogether, or better yet, pay the ever increasing, exorbitant fees (for me) involved in requests for continued examinations and the appeals process.

As any desperate and determined entrepreneur would likely do following attendance of this event, I made a plea to the Under Secretary of Commerce for Intellectual Property and Director of the USPTO to consider the following important suggestions for future roundtables, particularly as they relate to micro-entities like myself:

1. Strongly consider the points raised by speakers David Stein of the National Association of Patent Practitioners and Moti Barkan of HackNot, as they appear to embody the essence of my frustration as it relates to micro-entities with pending business method patents; particularly the direct cost impact for us when it comes to innovation and maintaining a competitive edge.
2. Seek the counsel of trusted practicing attorneys to minimize the risk of error in interpretation and application of new judicial decisions before rolling out the training to examiners.
3. Implement “best practices” for on-time delivery of analysis of new judicial patent eligibility decisions and have quality assurance systems in place to make sure all examiners in all units appropriately and consistently apply the law, regardless of the political climate.
4. Take measures to empower the examiners to utilize the recommended tools to reach a quality decision without fear of “getting in trouble.”
5. Address deficient 101 rejections received from examiners and incorporate accountability measures to ensure specific, sound, non-generic, substantive reasoning behind decisions to accept or reject proposed claims.
6. Rather than increasing USPTO fees for micro-entities, consider reducing fees in an effort to help even out the playing field.
7. Make an effort to improve transparency among the USPTO, micro-entities and the general public by encouraging meaningful roundtable discussions that include an open and honest question and answer segment.

While the above list is not all inclusive, I’m convinced taking these initial steps will help make the road easier to travel for micro-entities and equip us with the necessary tools to remain innovative and competitive.

USPTO's Patent Subject Matter Eligibility Roundtable on Dec. 5, 2016

by Robert R. Sachs

On December 5, 2016 the USPTO will hold its second Patent Subject Matter Eligibility Roundtable to discuss issues in patent eligibility.  The USPTO published a list of eighteen questions in anticipation of the event, dealing with various issues in eligibility theory, legislative changes and so forth, and requesting comments in response.  Here are the answers I will be submitting to the Office. 

Impact of Judicial Interpretation of Section 101

1. How has the Supreme Court’s interpretation of 35 U.S.C. 101 in the past several years affected the enforcement of patents and the development of subject-matter- eligibility law? 

The Supreme Court’s current definition of a law of nature is scientifically incorrect.  The analysis of this issue is quite complex, but I will attempt to summarize the issue.  The Court’s definition in the Mayo case came down to: “the relation itself exists in principle apart from any human action. The relation is a consequence of the ways in which thiopurine compounds are metabolized by the body—entirely natural processes. And so a patent that simply describes that relation sets forth a natural law.” 

This approach makes every natural relationship a “law of nature.” This is not how the scientific community would define a law of nature.  A law of nature defines the basic, essential characteristics of reality, in a way that can be said to be 1) universally true under all circumstances, and 2) true by necessity, not merely by definition or mathematics.   For example, consider the statement “All robin eggs are greenish-blue.” To be universally true, there would have to be no examples of robin eggs that are not greenish-blue. Without this universality, the statement would not be a law of nature. It would merely be an “accidental generalization,” a statement that happens to be true for a large body of observations.  In essence, it would be no different from the statement that ‘all patent attorneys have registration numbers.” 

Second, there must be something that makes it necessary that all robin eggs are blue. For some theories of laws of nature, necessity is what distinguishes a law-like statement from a (mere) universal truth.  The obvious answer here is no, it is not necessary that all robins’ eggs are greenish-blue.  We can easily imagine and likely find eggs of other colors, as a result of genetic variations.

The absence of the universality and necessity applies all biological relationships, including the relationship of genetic mutations to particular diseases, and thus prevents them from being laws of nature.  This is because all biological relationships are the result of evolution.  Different biological outcomes are inherent in the operation of evolution and have several sources: 1) random mutation, which is necessary for any adaptation, 2) variances in the environments that present selection pressure and 3) the existence of multiple different functionally equivalent adaptations. Stephen Gould, in Wonderful Life: The Burgess Shale and the Nature of History (1989), puts it vividly: “evolution is like a videotape that, if replayed over and over, would have a different ending every time.”  Even the specific sequence of the human genome is argued to be the result of evolutionary force.  Francis Crick, who discovered the structure of DNA, held essentially this view of the randomly evolved and thus arbitrary nature of the human genome. Crick's "frozen accident" hypothesis argues that the genetic code—the relationship between specific codons and the amino acids they code for—is an arbitrary relationship that resulted from all life having a common genetic ancestor. (While variants of the genetic code have been discovered, nonetheless a significant portion of the code is common across all life forms).   

As a result of the Court's incorrect definition of laws of nature, the lower court's have found numerous patents to specific uses of biological relationships to be ineligible, such as:

• The effect of nutrition on the expression of least one gene in the genomic map of an animal. Hemopet v. Hill's Pet Nutrition, Inc. (affirmed by Fed. Cir.)
• Whether a dog is susceptible to "exercise induced collapse" based on the presence of a mutation at position 767 of the DNM1 gene. Genetic Veterinary Sciences v. Canine EIC Genetics.
• The production of interferon-gamma by CD4 T-cells and  CD6 T-cells in response to the presence in vitro to synthetic peptides found in tuberculosis bacterium. Oxford Immunotec Ltd. v. Qiagen, Inc. 
• The presence of certain mutations in the kinase domain of a patient’s EGFR gene substantially increases the sensitivity of epidermal growth factor receptor to tyrosine kinase inhibitor therapy, in the treatment of epithelial cell cancer. Esoterix Genetic Labs. LLC v. Qiagen Inc.
• The relationship between an internal body temperature to ambient (skin) temperature.  Exergen Corp. v. Brooklands Inc. (affirmed by Fed. Cir.)
• The bioavailability of controlled released oxymorphone being affected by renal function. Endo Pharms. Inc. v. Actavis Inc.
• The presence of two copies of the 577R allele being positively associated with "elite athletic performance." Genetic Techs. Ltd. v. Lab. Corp. of Am. Holdings.

None of these are laws of nature properly understood, and the invalidation of the underlying patents in these cases has been in error.

As to abstract ideas, again no definition has been provided, and the Supreme Court and Federal Circuit have essentially decided that they cannot define the term.  The Federal Circuit in Amdocs recently stated:

However, a search for a single test or definition in the decided cases concerning § 101 from this court, and indeed from the Supreme Court, reveals that at present there is no such single, succinct, usable definition or test. The problem with articulating a single, universal definition of ‘abstract idea’ is that it is difficult to fashion a workable definition to be applied to as-yet-unknown cases with as-yet-unknown inventions. That is not for want of trying; to the extent the efforts so far have been unsuccessful it is because they often end up using alternative but equally abstract terms or are overly narrow.

The problem is not that articulating a definition is difficult.  Rather, the problem is that the courts are entirely unaware of a long tradition in philosophy addressing this very issue and that there are a number of approaches to the problem.  

First, the courts have confused “abstract ideas” with “abstractions.” There is a difference between an abstract idea and an abstraction, and it is this difference that is overlooked in almost every discussion of patent-eligibility. An abstraction is a generalization; it is a term or definition that identifies the principle aspects or features of the concept that are relevant to a given context, while removing features that are not important. 

One use of abstraction is classification. Some concepts reference a particular species, and some concepts reference the genus—the genus may be considered an abstraction of the species. Consider the following concrete concepts: cup, glass, tumbler, stein, pitcher, demitasse, high ball, champagne flute. These are all familiar types of beverage containers. Thus, container is an abstraction over these various species. What makes container an abstraction is that it connotes the features that are common to these objects—generally hollow, capable of holding some substance—while eliminating the particulars that differentiate them—whether their size, shape, whether they have handles, and whether they are used for coffee, beer, or spirits. But a container is clearly not an abstract idea.

Abstraction is also a process, which when applied to a given concept in a given domain for a given purpose, yields the desired generalization. It is an artifact of the English language, and not something inherent in the word abstraction, that the same word is used for both the process and the result; similarly explanation is used to refer to both the act of explaining, and the thing provided. (Though linguists and strict grammarians would prefer the Latin explanans).  Thus, labeling a claim as an abstraction does not in any way answer the questions as to whether the claim is for an abstract concept or a concrete concept. 

Finally, all patent claims necessarily make use of abstractions, but that does not make them recite abstract ideas.  That patent claims use abstractions—as opposed to abstract ideas—is easily demonstrated. Consider the following claim:

    A method of preparing a dessert, comprising:

        freezing a volume of water into ice;

        granulating the ice;

        compacting the granulated ice; and

        applying a sweet liquid to the granulated ice.

No one would argue that this claim for making the familiar sno-cone is ineligible subject matter. The claim can be broadened by applying the process of abstraction as follows:

    A method of preparing a dessert, comprising:

        freezing a volume of liquid into a frozen portion;

        granulating the frozen portion;

        compacting the frozen portion; and

        applying a sweetener to the frozen portion.

Here, the specific concrete nouns, “water,” “ice” and “sweet liquid” have been replaced with broader abstractions, “volume of liquid,” “frozen portion” and “sweetener.” The result here is not a claim on the “abstract idea” of making dessert, but simply a broader claim covering different types of treats, including ice cream. Of course, the verbs here could have been abstracted as well: "freezing" could be replaced by "cooling," "granulating" by "fragmenting," etc., again altering the scope of coverage, but always resulting in a clearly patent-eligible claim on a real physical process.  The same is true of any claim in software, hardware, chemistry, etc.  

The process of claim drafting by abstracting from specific nouns and verbs to more general ones is not some artifice or exercise in “clever drafting.” Rather it is the fundamental way in which claims are written. Contract attorneys use particular clauses for granting a license or making an offer. So too patent attorneys select particular terms, whether narrow or broad ones, as necessary to distinguish the claim over the prior art. “The choice of which word (gerund) to use for introducing a method step is similar to the choice of which word to use for describing elements in apparatus claims. Generally, one chooses the broadest word that the prior art will allow.” Farber, Landis on Mechanics of Claim Drafting, 3rd Edition, Practicing Law Institute (New York 1990), p. 102. Indeed, the parallel between contract drafting and claim drafting is particularly apropos because patent claims form the essential part of the bargain between the grant of the patent right in exchange for public disclosure of the invention.

In view of the foregoing, it is manifest that there is a difference between a broad process claim that uses various abstractions and a claim that itself is for an abstract intellectual idea. One can have the former, without necessarily having the latter. A broad claim is acceptable, and may be patent-eligible and patentable (novel and non-obvious) as long as it is definite and supported by the patent specification. 

Statutory Categories for Inventions

2. Should the patent statute be amended to further define the statutory categories of invention, i.e., process, machine, manufacture, and composition of matter? If so, please identify possible legislative changes, including which sections of title 35 should be amended, e.g., sections 100 or 101.

The statutory categories are generally based on a 19^th mechanical view of the kinds of things that humans invent. After all, categories were defined before advent of computer software, biotechnology or other recent developments.  The most advanced technologies in that day were highly complicated machines, including early automatons.  As such, current technologies must be shoe-horned into these categories by claim drafting approaches.  This makes it very difficult to claim inventions in software, such as application programming interfaces, user interfaces, virtual reality, and network-based inventions, just to new a few. 

Section 101 doctrine now discriminates against inventions made using a “generic computer” when it is used in the “normal, expected manner.”  This is illogical, and inconsistent with how the law treats any other type of technology.  A court would not hold an invention that made use of a motor and battery to simply energize a mechanical device to be ineligible because the motor and battery operate in the normal expected manner.  Indeed, it is bizarre to suggest that there would be an “abnormal” or “unexpected” manner of using a computer at all, and that that should be the basis of eligibility. 

Section 101 in its own terms focuses on utility as the hallmark of eligibility, and a new use of a computer created by programming should be eligible by default. Section 100(b)—"the term 'process' means process, art or method, and includes a new use of a known ..., machine,"—sanctions the use of known machines—motors as well as computers—in new processes. However, in Electric Power, the Federal Circuit has essentially abrogated Section 100(b) by holding that using "readily available" "off-the-shelf, conventional computer, network, and display technology" is “insufficient to pass the test of an inventive concept". While we may find that a patent claim that recites the use of an off-the-shelf motor to motorize a mechanical process is obvious, we would never say it is ineligible because it merely uses the motor as a "tool." And yet the Federal Circuit's rationale, if applied generally—as any principle of patent law should be—would result in exactly that outcome.

No theoretical explanation of the Federal Circuit's expansion of Alice in this way is given, nor can there be because it is entirely contrary to the nature of both the patent law (at least Section 100(b)) and human invention. Humans frequently invent by taking conventional, off-the-shelf, readily available components and combining them into new structures and functions, all the while making use of the normal and expected operation of the components. In this sense, using a computer as a tool is no different from using any other physical device as a tool for some purpose, some other function. All inventions make use of existing components and use them as "tools" in their ordinary way to achieve a desired function; sometimes the function is known, sometimes it is new, but it is (almost) always useful. Any complex machine is made of components—whether nuts and bolts, motors and relays, integrated circuits, batteries, etc., etc.—that function precisely as they are intended: if the parts did not function as intended, we could not build anything.  Similarly, we program conventional computers, using conventional languages and methods, to result in new functions—just like we create new machines by combining conventional parts using known engineering approaches. 

We would not hold that an invention made of existing off-the shelf parts, used entirely for their intended purposes in the “normal, expected manner,” was not patent-eligible simply because the function performed by the parts was known, or because the parts operated in the expected manner. We would not say that the function was an abstract idea, and the application of that idea using conventional parts failed to provide an inventive contribution sufficient to be eligible. Any such analysis would clearly be seen as an obviousness analysis masquerading as eligibility. Yet, this is precisely what the Federal Circuit is guiding the lower courts, and the USPTO, to do.

Possible statutory amendments to address these issues would be:

100(b)(1) The term “process” means process, art, method, or procedure, and includes any [new] use of a known process, machine, system, computer, manufacture, composition of matter, or material, regardless of physical embodiment or means of implementation.

100(b)(2) The term “machine” means a system or apparatus, made by human agency, regardless of physical embodiment or means of implementation.

The above amendments first clarify that Section 100 is about the kinds or types of processes—which is a separate question as to whether such processes are “new,” which is what Section 102 handles.  Further, the first amendment clarifies that processes include uses of a computer (e.g., computer programs, user interfaces, etc.).   The second amendment clarifies that a “machine” can be a system (such as a complex arrangement of distributed computers or other machines).   Both amendments allow for any physical embodiment or implementation.

Exceptions to Patentable Subject Matter

3. Do you think there should be exceptions to patentable subject matter?

There is no need for the judicial exceptions.  There is a well-developed argument by Robert Armitage (See, Amicus Brief for Eli Lilly) that the existing sections (102, 103, 112), when properly implemented, do all the necessary “work” to exclude otherwise “ineligible” subject matter.

In a nutshell, the argument is this.  As to laws of nature and natural phenomena, these are handled by Sections 102 and 103.  By definition, a law of nature is something that existed before it was identified by the alleged inventor.  What the inventor came up with is the description of the law of nature, but not the actual law.  Consider that before Newton derived the laws of universal motion, objects, in fact, moved according to those laws.  What Newton discovered was a way of formally describing that motion.  A claim to any process describing the motion of an object according to the law would thus be anticipated.  A claim to controlling or determining the motion or expected location, time, etc. of an object moving according to Newton’s laws would be an obvious application of the laws themselves. 

The same goes for natural phenomena.  The phenomenon must have existed in nature prior to its identification by the “inventor.” Thus, a claim to the phenomenon itself is anticipated.  The appropriate question whether the application of the phenomenon to a useful purpose is claimed, and if so, then that claim is evaluated with respect to Sections 112 and 103.

As to abstract ideas, the problem is only complicated by the very assumption that there are in fact claims to abstract ideas at all.   If a claim is so broad as to be “directed to” and cover the entire category of an abstract idea—say “performing intermediate settlement” (Alice) or “hedging” (Bilski) or “creating a contractual relationship (buySAFE) or any other generalized category, then it necessarily is anticipated under Section 102 (and possibly not described or enabled under Section 112).  If there are minor specific details that limit the claim to a particular category (e.g., hedging as applied to quinoa instead of corn), such limitations would be evaluated under Section 103.  

The key issue then becomes the treatment of “discover” in Section 101.  On its face, it would appear that one who discovers a natural phenomenon or law of nature would be eligible for a patent.  This problem, however, is addressed by the requirement that the discovered thing must be “useful.”   A law or natural phenomenon by itself has no utility, and thus a claim to the law or phenomenon would fail under Section 112.  However, when the claim recites a useful application, it recites eligible subject matter.

Amendments to Section 101 to Define the Judicial Exceptions

4. Should the patent statute be amended to define the judicial exceptions? If so, please suggest possible legislative changes, including which sections of title 35 should be amended, e.g., sections 100 or 101.

The following are possible definitions for the judicial exceptions:

101(b)(3) The terms “process,” “machine,” “art”, “method” excludes any law of nature, natural product, or abstract idea, as defined by this title.

100(k) A “law of nature” means an express statement of a physical, causal relationship governing the natural properties or behaviors of physical objects and events, and that is recognized as such by the relevant scientific community.

100(l) A “natural product” means a material, substance, or composition as it exists in nature without any purposeful change, modification, or alteration by human agency, and excludes any extracted, purified, simulated, copied, isolated, or replicated product.

100(m) An “abstract idea” means a purely mental concept or mental process as it occurs in the human mind, and that is incapable of any physical embodiment, and excludes any process performed by any machine, computer, or computer program, or any data or information stored or carried in a tangible medium.

Are Discoveries Inventions?

6. Do you think that title 35 should be amended to revise the definition for the term ‘‘invention’’ and/or provide a definition for the term ‘‘discovery’’ along with specific examples of subject matter that should not be treated as an invention and/or discovery?

No revision is necessary.  A clarification in the legislative history should be made that a “discovery” means the discovery of a useful application of a law of nature or natural phenomenon, not the discovery of the law of nature or phenomenon itself. If an amendment is deemed necessary the following is suggested:

100(n) The term “discover” includes the creation of a useful application of a law of nature or natural phenomenon, and excludes the identification or description of the law of nature or natural phenomenon itself.

Preemption

7. Does the concept of preemption, either separately or in the context of the Mayo two-step framework, capture useful insight in guarding against the issuance of overly broad patents? If so, please suggest possible legislative changes to capture those insights.

It is not the function of Section 101 to guard against such patents. To the extent that there is a need to “guard[] against the issuance of overly broad patents” that need is satisfied by Sections 102, 103, and 112 as well as by the various doctrines that restrict the basis of infringement and the doctrines of claim construction.  Indeed, the phrasing of the question itself here reveals the answer:  what does it mean that a claim is ‘overly broad’? Claims can only be overly broad relative to the prior art, or with respect to the disclosure (i.e., lack of written description or enabling full scope of claim).  In those case, the claims are evaluated properly under the existing sections 102, 103, and 112, without resort to Section 101.

Further, the entire preemption doctrine, which originated in Gottschalk v. Benson (1972) was based on a mistaken understanding of the Supreme Court.  The actual claims at issue in Benson were very narrow and easily designed around—they preempted very little at all. The Court mistakenly believed that that claims were directed to the already known algorithm for converting binary coded decimal to binary, but that was incorrect. Benson expressly admitted that that BCD algorithm was known and that his claims were limited to a specific, low-level set of operations (indeed at the level of memory registers) as one way to implement the algorithm.  “The translation of binary-coded decimal numbers to binary numbers was solved long ago, indeed, as soon as BCD numbers were thought of in the first instance. Rather, the problem solved by appellants' invention is a machine problem, the slow speed and large storage capacity required for prior art translators.” Appeal to Board of Appeals, February 27, 1967, 84-85, found in Appendix to Gottschalk v. Benson at 75. The file history in Benson explains: “More specifically, the present invention is directed toward simplifying such numerical conversions by simplifying the apparatus necessary to achieve this conversion and increasing the speed at which conversion can be accomplished.” Id. at 52.  In short, Benson’s claims was not dictated by the axioms of mathematics as believed by the Court (based on the misleading arguments of the Solicitor General) but rather was a specific improvement on existing BCD to binary conversions, designed to take advantage of the speed differences of then-available shifting registers over memory circuits. Thus, Benson’s claim did not “preempt” the BCD to binary algorithm as believed by the Court. 

Finally, it should be remembered that the Supreme Court itself once considered preemption not as a problem, but a sign of the importance of the invention:

It may be that electricity cannot be used at all for the transmission of speech except in the way Bell has discovered, and that therefore, practically, his patent gives him its exclusive use for that purpose; but that does not make his claim one for the use of electricity distinct from the particular process with which it is connected in his patent. It will, if true, show more clearly the great importance of his discovery, but it will not invalidate his patent.

The Telephone Cases, 126 U.S.1, 535 (1888).

Patentable Subject Matter in the Life Sciences

11.  To what extent should a ‘‘diagnostic method’’ be eligible for a patent? Please provide specific examples.

Diagnostic methods should be generally eligible.  First, as pointed out above, the Supreme Court’s definition of a law of nature is incorrect.  Methods of diagnosis based on relationships between biomarkers and diseases are unequivocally not “laws of nature.”  That a particular disease results more frequently when a given gene mutation is found is not a law of nature—it is the result of evolution.  It could have certainly turned out that the particular mutation had no relationship to the disease at all.  Indeed, that is already what is the case:  in many situations having a particular gene mutation increases the likelihood of a getting the diseases, but it does not necessarily cause the disease itself.   In other words, as discussed above, the relationship between the mutation and disease is not even universally true, let alone necessary.  

The Mayo case is a perfect example.  There, the defendant, Mayo Clinic, has come up with different thresholds than those claimed by Prometheus for the toxic and effective ranges of the metabolites. Using the Court’s logic that would mean there were multiple different and conflicting laws of nature here, Mayo's laws and Prometheus's laws.  And by extension, it would mean that every toxic and effective dosage relationship on every drug (there are over 1450 drugs approved by the FDA) would be a law of nature.  Clearly, this are preposterous outcomes, demonstrating again the falsity of the Court's definition.

From this, any such diagnostic relationship does not necessarily identify the “true” causal mechanism for the disease. This follows from the well-known principle that correlation does not imply causation.  It may be that the true cause of the disease is some other unidentified agent that also causes the identified mutation in the biomarker.  Or it may be that the disease itself causes the mutation, not the other way around.  In short, the statement that “the presence of mutation A is correlated with an the risk of disease B” is not a statement of a law of nature, even if it is a true statement of a statistical fact.  Thus, a claim to detecting the presence of mutation A to diagnose disease B is not a claim to a law of nature.

Second, laws of nature are found empirically.  To assume that all natural relationships are laws of nature without empirical evidence is simply scientifically unsound.   Many statements of diagnostic markers for diseases turn out later to be incorrect, either because of poorly designed studies or the discovery of the actual underlying mechanism, or other factors.  This is very common in the biological sciences.  For example, some researchers suggested that Alzheimer’s disease was caused by high levels of exposure to aluminum or zinc, or the result of a virus.  All of these statements have turned out to be false; and yet a patent claim that used the presence of trace aluminum or zinc or some viral agent to diagnose Alzheimer’s would be rejected as an ineligible law of nature. (And again, they could not all be true at the same time). These results would be absurd on their face.  Thus, a claim here should not be denied as a law of nature; at best it would be denied as lacking utility.  At worst, the claim is allowed and the patent granted on a method that would not be used at all because it is ineffective.  In that event, there is no harm to the public since no one would use the “invention.”   Judge Rich, the author of the 1952 Patent Act was keenly aware of this possible outcome. He wrote:

If it [the invention] is a total dud, how is the public injured by a patent on it?  A monopoly on something nobody wants is pretty much of a nullity.  That is one of the beauties of the patent system.

Rich, The Principles of Patentability, J. Patent Office Society, Feb. 1960, vol. 52, No. 2, p. 75-91, at 85.

Third, the use of that relationship to diagnose a disease is a useful application of that relationship.  It must be remembered that the characterization of something as a “disease” is a human construction for human purposes: nature does not “know” of diseases at all, only organisms that exist subject to mutation and environmental conditions.  That a certain complex of bodily states and function is considered a “disease” is only such because we, as humans, decided it to be one.  Nature does not distinguish between “healthy” and “diseased” organisms or tissues.  Mutations occur in the human bodily constantly, but only some of them are considered to be diseases.  A mutation causing a cancer tumor is just as “natural” an event as a mutation causing a birthmark; only humans decided that cancer is a “disease” and birthmarks are not.   It follows the decision to associate a particular biomarker with the presence of a biological state that we call a “disease,” is the human originated, useful and intentional application of the underlying biological facts. It thus meets the current statutory definition of invention.

Process Patents and the Machine or Transformation Test

14. Should patents be available for methods that do not involve a machine or a transformation? If so, please provide specific examples.

Yes. First, there is a definitional problem: What is a “transformation”?  At a reductionist level, all processes, including information processing, transform the atoms from one state to another. Similarly, what counts as a “machine”?  Is a collection of DNA that performs biological computations a “machine”?  What about a pair of atoms that yield quantum information? Without suitable definitions of machine or transformation the test is no better than the Alice test.

Focusing on the presence of transformation excludes some types of useful inventions. One example that does not offer clear a physical “transformation” are process claims for user interfaces.  User interfaces are a well-developed field of technology, part of the field of human factors and ergonomics.  User interfaces and the operations that they provide are inventions no different in kind than other inventions: they enable or improve the use of a machine or the performance of a method.  However, it may be difficult to consider the structure or operation of a user interface as either a machine or providing any transformation.  A process claim for the operation of user interface may provide useful results without clearly “transforming” anything other than an arrangement of icons, the appearance of the user interface, or causing changes in underlying operations of a machine. Such user interfaces are useful, they should be eligible regardless of whether there is a physical transformation.

Patentability of Business Methods

16. To what extent should an invention that involves a business method be eligible for a patent? Please provide specific examples.

Business methods are no different in kind than any other kinds of inventions.  That such methods involve financial relationships does not make them suspect: after all, humans invented the concepts and implementations of money, contracts, accounting, as well as banking, finance, insurance, and so forth. All of these developments were the product of human creativity to solve particular problems.  Such inventions are useful and should be eligible subject matter.

Historically, the USPTO granted patents on business methods going back to the 1800s. There are hundreds of patents for recording abstract of real estate title, sales and accounting books, and ledgers for recording securities, loans and other financial arrangements, tickets and coupons, as well as mechanisms for advertising and gambling.  In those days, the inventions were claimed by linking them to the manner in which the useful business information was recorded: paper. Claims were directed to books, ledgers, and other forms of paper with specific information that defined the business aspects of the invention, say the arrangement of columns or rows on a ledger sheet to record a sales transaction.  Today, the mechanism of recording information is of course computer memory.  If business methods using paper “memory” were historically eligible subject matter, then doing so using computer memory should be as well. Thus, there is historical precedent for claiming business methods that make use of computers. 

Patentability of Software/Computer- Related Inventions

17. To what extent should an invention that involves computer software be eligible for a patent? Please provide specific examples.

Software based inventions are patent-eligible and should be.  The arguments against software patents (e.g., software is abstract, a language, just math) typically misstate the nature of the technology or the facts.  Software is not abstract by being a set of instructions to a machine, any more so than the physical configuration of a machine that performs a desired function (e.g., a circuit designed to perform the same function as the software) is abstract.

Computer programming languages are not like normal human languages.  You cannot use a programming language to make a promise or to lie to the computer, create a metaphor or a simile that the computer can understand, or tell a joke to the computer and expect it to laugh in return.   While programming languages use what appears to be normal words (“print”, "get", "if...then", "do", etc.), these are just arbitrary tokens for our benefit; to the computer they have no meaning other than linking to a specific functional operation of the computer.  And while we can program a computer to be used to output promises, or tell lies or jokes, the underlying programming language is not performing those acts, but rather the overall program under human control.  

Nor is software just mathematics; this confuses the underlying binary operations that are performed to control the digital logic of the computer with the higher functions actually performed by the computer.   This is like saying that running a mile is really just cells in your body processing carbohydrates and fats for energy to power your muscles.  That may be true, but it fails to describe what it is actually happening.

Patents protect structures (machines, apparatus, and compositions of matter) and functions (process and methods).  Software is a way of configuring machines (computers) into new structures to perform new functions.  In that regards, software satisfies the requirements of the statute.

“Overly Broad” Patents?

18. What mechanisms, other than the judicial exceptions, can be used to prevent issuance of overly broad software or computer-related patents that cover wide swaths of economic activity? Do you think that other provisions of title 35 (enablement, written description, definiteness, novelty, nonobviousness) could be used more effectively to achieve this goal? If not, please explain why.

To the extent that there is a need to “issuance of overly broad software or computer-related patents that cover wide swaths of economic activity” that need is satisfied by Section 102, 103, and 112 as well as by the various doctrines that restrict the basis of infringement, and the doctrines of claim construction.  It is not the function of Section 101 to guard against such patents.   Indeed, the phrasing of the question itself here reveals the answer:  what does it mean that a claim is ‘overly broad’? Claims can only be overly broad relative to the prior art, or with respect to the disclosure (i.e., lack of written description or enabling full scope of claim), and thus are evaluated properly under the existing sections 102, 103, and 112. 

The more subtle problem is the suggestion that “cover[ing] wide swaths of economic activity” is a proper justification to deny a patent.  A patent examiner working on a given software patent will have little if any sense of how “wide” a swath of economic activity a given patent claim will cover now, let alone in the future.  Patent examiners can only deal with the facts before them, not speculation about how a given patent claim may impact economic activity in the future. A patent claim on what appears to be an or dinary invention at the time may turn out to be enormously important in the future.  Or it may turn out, as Judge Rich acknowledges, to be a total dud. What evidence could the examiner have to make such a finding?  And if a patent examiner can reliably tell the difference, she shouldn't be examining patents, she should be investing in the stock market.  

Let's assume that some patent will cover a wide swath of an emerging industry. That does not justify the examiner denying the patent claim.  The invention may be a pioneering invention in the field, as noted by the Supreme Court in the Telegraph Cases.  Would the USPTO have denied the Wright Brothers or Thomas Edison their patents simply because the airplane or the light bulb become important economically?  Would it have denied Rivest, Shamir and Adleman their patents on public-key cryptography? Would an examiner at that times of any of these inventions have been able to predict their importance, for example, that public-key cryptography would become essential to modern communications and business? Not likely.  In short, this so-called “need” cannot be used to justify an examiner denying issuance of a patent.  

Busting the Myth of the Unlimited RCEs

by Robert R. Sachs

In June, the Government Accounting Office (GAO) issued a performance audit of the U.S. Patent and Trademark Office (USPTO), “Patent Office Should Define Quality, Reassess Incentives, and Improve Clarity.” [1] The report was prepared at the request of the House Judiciary Committee, which asked the GAO to examine trends in patent litigation and identify opportunities to improve patent quality. To address the latter, the GAO attempted to identify the factors that contributed to “low quality patents.” The GAO’s analysis of these factors was based primarily on a lengthy survey of USPTO patent examiners on various factors that affected the quality of the applications they examined.

The GAO report identified Requests for Continued Examination (RCEs) as a key issue impacting patent quality:

Requests for continued examination: Applicants are currently allowed to file an unlimited number of requests for continued examination, which is a request by an applicant to reopen examination of the patent application after the prosecution of the application has been closed. Applicants request continued examination most often after final rejection of an application, according to USPTO officials. Such requests provide applicants with virtually unlimited attempts to secure a patent, which is problematic for patent quality, according to some stakeholders. Some stakeholders also told us that such unlimited requests can wear down examiners, making them more likely to eventually grant the patent. While USPTO has reached out to patent applicants to learn why they were using such continued examinations, the number of requests for continued examination continues to pose a burden for the agency’s examiners. [2]

In its introductory paragraph the GAO report expressly linked “low quality patents” to “an increase in patent infringement suits,” and in the above quotation it links RCEs to “low quality patents,” stating “Such requests provide applicants with virtually unlimited attempts to secure a patent, which is problematic for patent quality, according to some stakeholders.” Other than the “stakeholders” the GAO offers no evidence for this assertion. 

Then in October 2016, two authors of the GAO report published a blog in which they echoed these conclusions, stating that the “USPTO is also not able to make terminal rejections. Applicants can re-apply an unlimited number of times, and this contributes to the sizeable backlog of unexamined applications and subsequent time pressures at the agency.”[3] Some commentators propose that the USPTO should abolish RCEs and close prosecution after a fixed number of office actions.[4]

The problem of “unlimited” RCEs is a myth.  While it is true that the patent statute does not limit the number of RCEs, the reality of patent examination and prosecution results in a negligible number of high count RCE patents, and they have no impact on the patent litigation landscape.

To bust this myth, I analyzed the frequencies of RCEs for both litigated patents and a random sample of issued patents.  The litigated patents included 12,753 utility patents drawn from over 24,400 patent litigations filed between January 2010 and October 2016, with filing dates after November 29, 2000.[5] The control group was a random sample of 38,265 patents, also filed after November 29, 2000.[6] Using data from Patent Advisor, I obtained the number of RCEs in each patent, as well as data identifying Tech Center, Art Unit, classification and so forth. Figure 1 summarizes the analysis.

The first column shows that the majority of the issued patents, about 72%, issue with no RCEs at all.  Second, in both the Control and Litigated groups, more than 99% of the patents issued with three RCEs or less.  There were only 14 patents (0.00037%) in the Control Group, and only 6 (0.00047%) in the Litigated Group, that had seven or more RCEs. Patent examiners are made of stronger stuff than to be worn down by these thimblefuls of high-count RCEs.  More importantly, it demonstrates that high-count RCE patents do not contribute to the current spate of patent litigation.

I also looked at the RCE patterns in different Tech Centers ("TC"). The average number of RCEs per patent is shown in Figure 2, for both the Control Group and the Litigated Group.

I break TC 3600 into two groups, “3600BM” which comprises the “business methods” art units 3620, 3680 and 3690, and “3600” which covers the remainder (e.g., transportation, construction, apparel, structures, engineering). Tech Center 2400 (Computers) and TC 3600BM have the highest average RCE rates, but still far less than one RCE per patent on average. In addition, the average number of RCEs as between the Control and Litigation Group in each Tech Center is very close overall, with the most pronounced differences in TC 1600 (Biology) and TC 3600.  This suggests that litigated patents do not have significantly different RCE characteristics as compared to non-litigated patents—contrary to the suggestions of the stakeholders interviewed by the GAO. 

Different Tech Centers do experience different RCE distributions.  Table 1 shows the percentages of patents in each Tech Center by the number of RCEs:

In each column, the highest values are shaded red and the lowest values are light green. Here, we see that TC 2800 (Semiconductors, Memory, Optics) has the highest percentage of patents without any RCEs at all (79.77%), while TC 2400 (Computers) has the lowest (57.68%). Even so, about 41% of patents in TC 2400 issued with 1-3 RCEs.  The differences between Tech Centers may be at least in part a result of differences between examiners.  Considering just the 338 examiners in the study with more than 20 patents each, the average number of RCEs per examiner per patent ranged from zero to about 1.2, a significant variance.

Because the GAO suggests that RCEs are linked to highly litigated patents, I looked at the RCEs patterns of the most frequently litigated patents. Table 2 summarizes all patents that had been in at least 80 patent cases since 2010:

There is only a single RCE in these 13 patents (which account for over 2,000 litigations). The top 100 most litigated patents, accounting for about 20% all patent cases since 2010, have only 37 RCEs between them. This average (0.37 RCEs per patent) is exactly in line with the average figures in Figure 2.   On the other end of the spectrum, 89% of the patents in the Litigated Group were involved in three or less lawsuits, and for these patents, the average number of RCEs per patent was 0.39, a statistically insignificant difference.  In short, high-count RCE patents themselves do not contribute to patent litigation.  

Indeed, anyone who knows prosecution understands that all things being equal, the more RCEs, the less likely the patent is to be litigated. This is because more RCEs typically means more office actions, which in turn implies more amendments and statements in the file history as the applicant attempts to narrow the claims to reach allowable subject matter. Thus, higher RCE counts typically result in narrower, not broader claims. Further, multiple amendments provide fertile ground for defendants to find a basis for further narrowing claim constructions.  Table 2 above shows that in the most frequently litigated patents, the average number of office actions (and hence amendments) is less than 1, exactly in line with expectations. Figure 3 shows the average number of office actions per RCE for the Control and Litigated Groups:

Here, the values below five RCEs are most reliable, as the number of patents with six or more RCE is very low, as noted above, and so the averages are very sensitive to outliers.  This graph confirms that on average the number of office actions is just about two times the number of RCEs, precisely what we would expect under the current rules of compact prosecution which make the second office action final in most cases.  At the upper end the number of actions drops off sharply; a review of the patents at this upper end of the RCE count shows these tend to be serial RCEs with information disclosure statements filed after an earlier allowance.  In other words, the applicants were not wearing down the examiner, but paying to submit additional prior art, perhaps to bolster the patent or otherwise delay issuance.

Let’s return then to the GAO report.  First, the GAO’s repeated use of the term unlimited introduces an implicit argument and bias. While it is true that the statute does not put a limit on the number of RCEs, the word itself implies there is a problem.  Those of us who have, had, or were children know that too many requests for anything can overwhelm. Unlimited suggests the desired conclusion in the last sentence: “the number of requests for continued examination continues to pose a burden for the agency’s examiners.” Providing the basis for this assertion are the all-knowing “stakeholders” who suggest that unlimited RCEs can “wear down” the examiner. I can only surmise that these stakeholders do not, in fact, prosecute patents because if they did, they would know this is not true, as I have shown. Most examiners I have spoken to since the GAO report told me that RCEs are easy to handle because they already know the details of the application and the prior art. So, far from being worn down, most RCEs are easy work for examiners and typically move the claims towards a narrower scope. Perhaps this is why comments from stakeholders are mentioned here, but the comments of examiners were not.

The GAO survey asked the examiners to evaluate which factors impacted their ability to conduct a prior art search and examination of the patent application, and the degree to which each factor made their work more or less difficult. Overall, there were 47 factors that could impact the difficulty of search and examination.[7]

Significantly, the GAO did not ask the examiners whether “unlimited RCEs” impacted their work. Instead, the GAO asked:

How much easier or more difficult do the following factors make it to complete a thorough examination: The ability of applicants to file RCEs.

This was the proper question, because it did not implicitly bias the examiners’ views of RCEs.  Accordingly, any conclusion that the GAO made regarding the alleged "unlimited RCE" problem could not be supported by the survey responses. 

Most importantly, the GAO report did not attempt to compare the differences between the various factors, but simply reported the percentages of responses for some of the factors without any context. This made it impossible for the reader to figure out which factors were really most important to examiners.  To overcome that problem I obtained the tabulated survey data from the GAO’s website, and re-analyzed the results to obtain comparative rankings.[8]

Out of the 47 factors that make examination and search much more difficult for examiners—the factors that would seem to contribute significantly to patent quality— the “ability of applicants to file RCEs” ranked near the bottom, 40^th out of the 47, with just 1.6% of examiners indicating that this factor made their work “much more difficult.” 

By comparison, the PTO’s misclassification of patent applications was much more significant, ranking 5^th overall, with 43.6% of examiners indicating that misclassification made examination much more difficult. “New patentability related case law (e.g. Alice)” ranked 17^th (23.2% of examiners), pro se applications ranked 19^th (21%) and poor quality drawings ranked 25^th (18%). Even the USPTO’s own IT systems were considered a greater impediment to examination than RCE, ranking 32^nd (8.1%).  Why the GAO chose to focus on RCEs rather than these more significant factors is unknown.

Further, the GAO's own data on RCEs is essentially absent from its analysis.  In a footnote the GAO acknowledges that only about 10% of all RCEs filed in 2015 were for a third RCE.[9] While the GAO provided the numerical details of the examiners’ responses in their discussion of other quality factors, they provided none in support of their RCE analysis. [10] This may also explain why the GAO relied only on some “stakeholders” for their conclusions, rather than the actual data from the survey. 

Finally, examiners already have the tools to combat overly aggressive applicants: if an applicant files an RCE without a substantial amendment, the examiner can issue a first-action final rejection under MPEP 706.07(b).  Given that the fees for RCEs escalate and are higher than typically new application filing fees, it would be wasteful for an applicant to file multiple RCEs with the same or trivially amended claims to “wear down” the examiner.  This costly strategy, if is used at all, is extremely rare: in my study, I found only 45 patents (0.0008%) that had three or more RCEs and more final rejections than non-final rejections (which happens only if there are multiple first-action finals). In a number of these cases, one or more RCEs were after allowance, and used to file supplemental IDS's.  This data suggests that only a tiny fraction of applicants are filing RCEs without making significant amendments.

That said, while there is no evidence that frequency of RCEs itself impacts patent quality, proposals to change the RCE rules are worth considering.  Figure 4  shows that in both the Control and Litigated Group, about 97% of the patents issued with five or fewer office actions (counting both non-final and final rejections):

This is consistent with the common observation that two office actions are simply not enough for the examiner and applicant to identify whether there is allowable subject matter. Thus, instead of routinely making the second office action final, the fourth action can be final, at which point the first RCE would be available.  Subsequent RCEs would be necessary in only about 5% of cases and could be priced accordingly.  Adjustments to the examiner count system and the number of hours allocated per application would likewise need to be made.

It’s time that the myth of “unlimited RCEs” be terminally rejected.

End notes:

[1] U.S. Government Accountability Office, Patent Office Should Define Quality, Reassess Incentives, and Improve Clarity, GAO-16-490 (Washington D.C., 2016).

[2] Id. at 31, emphasis added.

[3] John Neumann and Frank Ruscom, “Q&A With GAO Directors: Improving Patent Quality,” https://www.law360.com/articles/848267/q-a-with-gao-directors-improving-patent-quality,  October 7, 2016.

[4] Laura Sheridan, “Making 'Compact Prosecution' Truly Compact,” www.law360.com/articles/845387/opinion-making-compact-prosecution-truly-compact, September 28, 2016.

[5] The data was limited to applications filed after November 29, 2000, since RCE counts for applications filed before this date are not available in Patent Advisor. The Litigated Group excludes design patents, plant patents, and some reissues. A small number of litigated utility patents filed after 11/29/2000 were excluded due to the absence of complete data for them in Patent Advisor.

[6] The random sample for the Control Group was stratified to match the distribution of the Litigated Group with respect to USPTO Technology Centers. The margin of error for this random sample is 0.5% at a 95% confidence level.  The distribution of patents by Technology Centers is as follows:

[7] The GAO asked the examiners “how much easier or more difficult” do the following factors make completing a thorough prior art search:

• Larger number of independent claims than necessary to describe the invention
• Larger number of dependent claims than necessary to describe the invention
• Non-standard use of terms of art
• Terms that are not well-defined in the specification
• Broadly worded claims
• Vague and indefinite claims
• Presence of functional claiming language (g Section 112(f))
• Misclassification of patent applications (e.g. routed to wrong art area)
• An equivalent foreign application
• Absence of an Information Disclosure Statement (IDS)
• An excessive number of art references provided by applicant
• Irrelevant art references provided by applicant
• IDS with relevant references
• Search results from a foreign patent office or international search authority e.g. (PCT)
• Third-party submissions
• A subject matter in which you have knowledge of existing prior art based on your experience (education, previous work experience)
• Pro se applications
• Poor quality drawings or images
• The PTO search tools available to you (e.g. EAST/WEST)
• Third party search tools available to you (e.g. Google Patents, Derwent)
• Quantity of art available (i.e. the sheer number of possibly relevant references across all sources)
• Cooperative Patent Classification (CPC)
• Adherence to compact prosecution (addressing everything in the first office action)
• Documenting your search strategy and search results from all sources
• Completing required forms that accompany an office action
• The count system as currently designed
• Rewarding examiners based on production
• Automated search results from PLUS

The examiners were asked how “much easier or more difficult” do the following factors make it to complete a thorough examination:

• Amount of time allotted for prosecution of a case
• Amount of time available for FAOM (First Action on the Merits)
• Larger number of independent claims than necessary to describe the invention
• Larger number of dependent claims than necessary to describe the invention
• Non-standard use of terms of art
• Terms that are not well-defined in the specification
• Broadly worded claims
• Vague and indefinite claims
• Presence of functional claiming language (e.g. Section 112(f))
• Misclassification of patent applications,e. routed to wrong art area
• PTO’s existing IT systems
• Statutory changes in patent law
• New patentability related case law (e.g. Alice)
• Pro se application
• Interviews with applicants in person
• Interviews with applicants by WebEx
• Interviews with applicants by telephone
• The ability of applicants to file RCEs
• Compact Prosecution

The examiners could select from the following responses: Much Easier, Somewhat Easier, Neither Easier Nor More Difficult, Somewhat More Difficult, Much More Difficult, Don’t Know, No Response.

[8] The data is available at http://www.gao.gov/special.pubs/gao-16-478sp/index.htm.

[9] See, GAO Report, fn. 64, “The USPTO received about 111,000 requests for continued examination in fiscal year 2015; about 11,000 of those applications were the third such request for continued examination, according to data provided by USPTO officials.”

[10] For example, in the GAO Report at p. 30 discussing the impact of compact prosecution, the GAO states “based on our survey, we estimate that a change in policy that would not require examiners to address every issue in the first office action would help about half of USPTO examiners perform examinations more effectively,” and then provides in footnote 60 the supporting data: “Based on our survey, we estimate all examiners’ responses would be as follows: much more effectively, 24 percent; somewhat more effectively, 24 percent; neither more or less effectively, 22 percent; somewhat less effectively, 14 percent; much less effectively, 8 percent; don’t know, 6 percent; and no response, 2 percent.”  No such supporting data was offered for the GAO's RCE analysis.