The Impact of the January 2019 USPTO Guidance: One Year Later
In January 2019, the United States Patent and Trademark Office (“USPTO”) issued two new guidance documents that were expected to have a significant impact on patent examination. The first was a revised guidance to clarify the test for subject matter eligibility under Section 101, particularly for analyzing whether a patent claim is directed to a judicial exception under Step 2A of the USPTO’s framework for analyzing subject matter eligibility.1 The second was a guidance to assist Examiners when analyzing functional language under Section 112, particularly in claims directed to computer-implemented inventions.2 Now, over one year later, we have analyzed a data set of over 1 million office actions from 2018 and 2019 to see if these new guidance documents had an impact on Section 101 and 112 rejections.3 As expected, the clarity provided by the subject matter eligibility guidance led to a significant drop in the rate of Section 101 rejections in 2019 compared to 2018. But surprisingly, the functional claim limitation guidance had almost no impact on the rate of Section 112 rejections over the same timeframe.
The 2019 Patent Eligibility Guidance and its Effects on Section 101 Rejections
To determine whether a patent claimed a patent-eligible idea, the USPTO applies the two-step test created in Alice v. CLS Bank.4 At Step 1, if the Examiner determines that the claim is directed to one of the patent-eligible statutory categories (a process, machine, manufacture, or composition of nature), then the Examiner moves on to Step 2, which is divided into Steps 2A and 2B.5 Step 2A determines whether the claim is directed to a judicial exception.6 If the Examiner determines at Step 2A the claim is directed to an “abstract idea,” then at Step 2B the Examiner determines whether the claim recited additional elements that amounted to significantly more than a judicial exception.7 However, according to the USPTO, Examiners have found it difficult to consistently apply Step 2A.8 The lack of a clear framework gave Examiners discretion to broadly interpret what constituted an “abstract idea” and described in such a way that it could be rejected under Section 101. In the interest of consistency, and to clear up confusion faced by applicants and Examiners, the Section 101 guidance clarified how to apply Step 2A with regard to abstract ideas by restructuring Step 2A into a two-prong analysis.9 Prong 1 evaluates whether the claim recites a judicial exception such as an abstract idea, and prong 2 evaluates whether there are elements that integrate the judicial exception into a practical application (i.e., something “significantly more” than the judicial exception).10 The Section 101 guidance also expounded on what an abstract idea can be – mathematical concepts, certain methods of organizing human activity, and mental processes – as well as what can constitute mathematical concepts, certain methods of organizing human activity, and mental processes.11 The Section 101 guidance also provided examples of how the two-prong analysis should be applied,12 and instructed Examiners that claims that do not recite subject matter within one of the three defined categories should not be deemed as covering an abstract idea, with only rare exceptions, thus limiting the discretion of Examiners to classify a claim as being directed to an abstract idea.13
As expected, the patent eligibility guidance provided clarity that led to a significant reduction in the frequency of Section 101 rejections after it was released. In 2018, just before the new guidance was released, 15.72% of office actions issued by the USPTO included Section 101 rejections (117,657 office actions with 101 rejections out of 748,325 office actions analyzed). This dropped nearly in half to 8.19% in 2019 (57,553 office actions with 101 rejections out of 702,301 office actions analyzed), which we largely attribute to the new guidance. Further, we observed a reduction in Section 101 rejections across every Technology Center we analyzed. For example, TC2100 (Computer Architecture and Software) and TC2400 (Networking, Multiplexing, Cable, and Security) saw even greater reductions in the frequency of Section 101 rejections, with a year-over-year drop from 40.73% to 11.53% in TC2100 and from 23.65% to 8.37% in TC2400. We expect that the patent eligibility guidance particularly impacted 101 rejections in these Art Units because Examples 37-42 provided with the January 2019 guidance – which focused on computer-implemented inventions – offered Examiner clarity particularly for inventions falling under TC2100 and TC2400.14 Interestingly, the patent eligibility guidance did not have as large of an impact on Section 101 rejections issued by TC3600, which includes the Art Units that examine business method patent applications. TC3600 had a year-over-year drop from 68.97% to 53.47%, which is a drop of only about a one-quarter in frequency. This could be due to the lack of business method examples in the examples provided with the January 2019 guidance. A business method example was included in the October 2019 update to the January 2019 guidance, but our data set was not large enough to analyze the impact of this one example on Section 101 rejections in TC3600.15
Figure 1.16
The Functional Claim Limitation Guidance and its Effects on Section 112 Rejections
The USPTO asserted that courts had a problem construing “broad functional claim[s]” that allegedly lacked “adequate structural support in the specification.”17 To this end, the January 2019 guidance discussed functional claim limitations, particularly as they relate to computer-implemented claims and means-plus-function claim language under Section 112(f).18 To satisfy the written description requirement under Section 112(a), the Examiner must determine that a functional claim limitation provides a sufficient description of the invention, and that the patent application includes both a sufficient disclosure of the hardware and the software describing how the solution or outcome to a problem is accomplished by the claim – for example, by describing an algorithm.19 The Section 112 guidance clarifies if the claim invokes means-plus-function limitation under Section 112(f), the Examiner must find that the Applicant “express that algorithm in any understandable terms including as a mathematical formula, in prose, or as a flow chart, or in any other manner that provides sufficient structure.”20 It is insufficient to say that one having skill in the art would know how to achieve the result or the invention.21 In short, if the claim invokes Section 112(f), the specification must sufficiently inform how the solution or outcome is accomplished, and not merely what is achieved by the invention.
We anticipated that the functional claim limitation guidance would lead to an increase in Section 112 rejections, particularly in Art Units that deal with computer-implemented inventions. However, the Section 112 guidance did not lead to a significant change in the frequency of Section 112 rejections after it was released. In 2018, just before the new guidance was released, 6.41% of office actions issued by the USPTO included Section 112 rejections (47,931 office actions with 112 rejections out of 748,325 analyzed). This stayed level at 6.39% the following year (44,854 office actions with 112 rejections out of 702,301 analyzed). Even more surprisingly, Section 112 rejections dropped slightly in the Technology Centers dealing with computer-implemented inventions. Section 112 rejections fell from 6.00% to 5.72% in TC2100, from 4.12% to 3.28% in TC2400, and from 12.39% to 10.72% in TC3600. While the reason for these drops in the frequency of Section 112 rejections is not clear, one explanation may be that the guidance provides patent applicants clarity in successfully claiming functional limitations in computer-implemented claims and provides a clear roadmap to traversing Section 112 rejections. Although there was a decrease in the frequency of Section 112 rejections for TC2100, TC2400, and TC3600, the decrease was far less substantial than the decrease in the frequency of Section 101 rejections. One explanation is that quality draftsmanship already requires having the how – and not just the results – supported in the specification. Seeing that the frequency of overall Section 112 rejections has not decreased, it does not appear that Section 112 guidance significantly changed examination procedures overall, but provided some clarity for applicants pursing computer-implemented claims.
Figure 2.22
1 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. 4, 50 (January 9, 2019) (hereinafter “101 Guidance”); see also Manual of Patent Examining Procedure, 9th ed., rev. 08.2017, § 2106 (January 2018) (hereinafter “MPEP”).
2 Examining Computer-Implemented Functional Claim Limitations for Compliance with 35 U.S.C. 112, 84 Fed. Reg. 4, 57 (January 9, 2019) (hereinafter “112 Guidance”).
3 Data was analyzed on Patent Advisor (https://go.patentadvisor.com/), which as of March 17, 2020, has information on 748,325 office actions issued in 2018 and 702,301 office actions issued in 2019. Due to the USPTO’s revised data access guidelines that restricted access by third parties in late 2019, the set of office action for 2019 is incomplete. Securing USPTO online access, United States Patent and Trademark Office - An Agency of the Department of Commerce (2019), https://www.uspto.gov/about-us/news-updates/securing-uspto-online-access (last visited Mar 17, 2020). Queries were run on Patent Advisor based on type of document (office actions), by type of rejection (Section 101 rejections, and Section 112 rejections) by year (2018 and 2019), by Technology Center (2100, 2400, and 3600), and search terms (no search terms for Section 101 and Section 112 rejections searches).
4 MPEP § 2106; see also Alice Corp. Pty. v. CLS Bank Int’l, 573 U.S. 208 (2014).
5 Id.
6 Id. at § 2106.04.
7 101 Guidance, 84 Fed. Reg. at 56.
8 Id. at 52; see also Alice Corp. Pty. v. CLS Bank Int’l, 573 U.S. 208 (2014); Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66 (2012).
9 101 Guidance, 84 Fed. Reg. at 54.
10 Id.
11 Id. at 52. Mathematical concepts can include mathematical relationships, mathematical formulas or equations, and mathematical calculations. Certain methods of organizing human activity can include fundamental economic principles or practices (including hedging, insurance, mitigating risk), commercial or legal interactions (including agreements in the form of contracts; legal obligations; advertising, marketing or sales activities or behaviors; business relations), managing personal behavior or relationships or interactions between people (including social activities, teaching, and following rules or instructions). Mental processes can include concepts performed in the human mind (including an observation, evaluation, judgment, opinion).
12 Id. See also Appendices 1-3.
13 October 2019 Update: Subject Matter Eligibility at 5 (hereinafter “October 2019 Update”) (“The term “certain” qualifies the “certain methods of organizing human activity” grouping as a reminder of several important points. First, not all methods of organizing human activity are abstract ideas (e.g., “a defined set of steps for combining particular ingredients to create a drug formulation” is not a “certain method of organizing human activity”). Second, this grouping is limited to activity that falls within the enumerated sub-groupings of fundamental economic principles or practices, commercial or legal interactions, managing personal behavior, and relationships or interactions between people, and is not to be expanded beyond these enumerated sub-groupings except in rare circumstances as explained in Section III(C) of the 2019 PEG.”).
14 2019 PEG Examples 37 through 42 (January 7, 2019). Examples 43-46, which were issued alongside the October 2019 Update, directly address life sciences and business methods. However, there is not enough data to determine the impact of the October 2019 Update and Examples 43-46 on 101 rejections.
15 See October 2019 Update, Example 46 (October 17, 2019). A March 17, 2020 Patent Advisor query of Section 101 rejections in Technology Center 3600 (Art Units 3620, 3660, 3680, and 3690) between October 18, 2019 and February 29, 2020 resulted in 8,603 rejections.
16 Data gathered from Patent Advisor on March 17, 2020.
17 112 Guidance, 84 Fed. Reg. at 57 (noting that the Federal Circuit “has recognized a problem with broad functional claiming without adequate structural support in the specification.” (citing Williamson v. Citrix Online, LLC, 792 F.3d 1339, 1349 (Fed. Cir. 2015) (en banc))).
18 84 Fed. Reg. at 57.
19 84 Fed. Reg. at 61-62.
20 Id. at 62.
21 Id. at 60.
22 Data gathered from Patent Advisor on March 17, 2020.
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