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 46th 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.


[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.