The Impending Arrival of Newly Proposed Patent Subject Matter Eligibility Guidelines: An Opportunity for Clarity?

On April
11, 2018, the Director of the United States Patent and Trademark Office
(USPTO), Andrei Iancu, delivered remarks
at the United States Chamber of Commerce Patent Policy Conference, stating that
the law surrounding patent subject matter eligibility (35 U.S.C. § 101) has
resulted in “a more unpredictable patent landscape that is hurting innovation
and, consequently, investment and job creation.” During these remarks, Director
Iancu said the USPTO was “actively looking for ways to simplify the eligibility
determination for [patent] examiners through forward-looking guidance.”

On
September 24, 2018, Director Iancu, delivered remarks
at the Intellectual Property Owners Association 46^th Annual Meeting
in Chicago, Illinois, specifically describing how he expects the USPTO to
address these issues. In particular, his comments focused on a specific
proposal pertaining to patentable subject matter under Section 101 of the
Patent Act (35 U.S.C. § 101) and what exactly is meant by the “abstract idea”
exception. The underlying push to attempt to simplify this area of the law has,
arguably, been a long time coming. Director Iancu highlighted several Federal
Circuit decisions calling the abstract idea test indeterminate and arbitrary
and highlighting the “incoherent body of doctrine” surrounding this area of
law.

Current
law carves out three judicial exceptions to patentability under § 101: abstract
ideas, laws of nature, and natural phenomena. The current test for patent
subject matter eligibility of claims that are directed towards these exceptions
is the Mayo/Alice test, a two-part
test emerging from the eponymously named Supreme Court cases in 2012 and 2014,
respectively. The test, in its current state, first asks whether the claims are
“directed to” an abstract idea, law of nature, or natural phenomena (step 2A in
the USPTO’s analysis). Next, the test looks for something “significantly more”
that would take the claims outside of the exceptions (Step 2B in the USPTO’s
analysis)[1].
The USPTO proposed guidance appears to be an attempt to clean up the analysis
under this test and, in particular, the first part of the analysis.[2]

In
short, Iancu’s proposal is to, what he calls, “keep rejections in their own
distinct lanes”; that is, to stop comingling categories of invention
(pertaining to subject matter eligibility) and the conditions of patentability
(like novelty, nonobviousness, and enablement). It is this precise combination
that has led to the murky waters surrounding § 101.

In
order to achieve a clearer picture of the law surrounding § 101, a more easily
applicable definition of the “abstract idea” exception must be established. To
start, the USPTO appears to be seeking ways to categorize exceptions focusing
on Supreme Court case law that has established what should explicitly remain
outside the categories of patent protection. In short, these fall under the
“basic tools of scientific and technological work.”

The
proposed PTO guidance synthesizing “abstract ideas” would result in the following
three categories, as described by Director Iancu:

• Mathematical
  concepts like mathematical relationships, formulas, and calculations
• Certain
  methods of organizing human interactions, such as fundamental economic
  practices commercial and legal interactions; managing relationships or
  interactions between people; and advertising, marketing and sales activities.
• Mental
  Processes, which are concepts performed in the human mind, such as forming an
  observation, evaluation, judgement, or opinion,

Iancu
then described how the USPTO would proceed in its analysis:

• First,
  the USPTO would look to see whether the claims fall within the four statutory
  categories that are within § 101 (process, machine, manufacture, or composition
  of matter). Iancu stresses that this step “is not new—we always do this.” The
  USPTO would then check to see whether the claims recite matter that falls
  within one of the three categories, as listed above. This, Iancu highlights, is
  the new approach to the analysis.
• Second,
  if the claims at issue do not recite subject matter that fall into one of the
  delineated categories, the claim is eligible. Iancu alleges that “this alone
  would resolve a significant number of cases currently confounding our system.”
• If,
  however, the claims do recite subject matter that fall into one of the
  delineated categories, more analysis will be required. Here the question is
  whether the claims are “directed to” the delineated categories. A claim will
  not be “directed to” the unpatentable subject matter if the claim integrates
  the exception into a “practical application.” Importantly, it is not clear
  whether the USPTO has a current working definition of “practical application”
  or whether one will emerge as this proposed guidance evolves.

This
guidance, overall, is meant to emphasize the following: “that eligibility
rejections are to be applied only to claims that recite subject matter within
the defined categories of judicial exceptions. And even then, a rejection would
only be applied if the claim does not integrate the recited exception into a
practical application.”

Although there is reason to be optimistic
regarding the proposed changes, there are a few potential caveats that cannot
and should not be ignored. First, these are merely proposed guidelines and, as such, it could take a potentially
substantial amount of time and effort before they are solidified, commented
upon, finalized, and issued. Second, as with any substantive change in
standards and analysis, it is not entirely clear how the proposed changes will
work on the ground at the USPTO and for inventors and filing attorneys.
Although the changes seem plausibly functional, reasonably efficient, and
potentially beneficial on paper (or, to be more accurate, when spoken by
Director Iancu), that is no guarantee that the finalized and issued guidelines
will clarify the problematic aura and marked uncertainty surrounding § 101.
Furthermore, Director Iancu recognizes that there could still be a number of
difficult cases under this framework and, at least in his remarks, does not
propose a way to deal with these. Finally, and tangentially related to the
second point, it is not clear that these substantive changes will be the
panacea that Director Iancu hopes for them to be—it is always possible that these
changes will merely ceremoniously signify a changing of the guard at the helm
of the USPTO. That being said, however, the potential for streamlining § 101
analysis is high. The proposed changes could mark a step forward in the effort
to better systematize the analysis for patent subject matter eligibility or, at
the very least, send a clear signal that it is time for a more substantial, and
perhaps judicial, intervention.

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[1] Although the Mayo/Alice test is often billed as a
two-step test, the USPTO has added an additional step. In their analysis, step
1 asks whether the claim is to a process, machine, manufacture, or composition
of matter. Step 2A corresponds to whether the claim is directed to one of the
judicial exceptions to § 101 (i.e., step one of the Mayo/Alice test). Step 2B corresponds to whether the claim recites
additional elements that amount to “significantly more” than the judicial
exception (i.e., step two of the Mayo/Alice
test).

[2] That is, USPTO
steps 1 and 2A. The Berkheimer
Memo was issued by the
USPTO on April 19, 2018 to provide guidance as to the interpretation of step 2B
of the analysis.

Nicholas G. Vincent is a JD candidate, 2020, at NYU School of Law.