Reprinted with permission from the October 1, 2020 issue of The Intellectual Property Strategist, ALM Media, LLC.
During patent prosecution before the USPTO, applicant and examiner can become entrenched in conflicting positions on subject matter eligibility. Appeal to the Patent Trial and Appeal Board (PTAB) could clear prosecution impasse. However, Alice related issues taken to the PTAB are not necessarily the Alice related issues decided by the PTAB.
We herein discuss significant contrast between consideration of Alice related issues in prosecution and their resolution by the PTAB. Both the legal analytical framework to address Alice related issues as well as determinations resulting from application of the analytical framework can diverge in prosecution versus the PTAB. Prosecution culminating in recent PTAB decisions provides clear examples. The PTAB decisions are discussed below in summary fashion to identify incongruities between prosecution and appeal. Experienced practitioners will understand the impact of these incongruities on appeal consideration and strategy.
II. CURRENT ANALYTICAL FRAMEWORK
Current USPTO guidelines promulgated in 2019 regarding subject matter eligibility mandate a two step legal analytical framework. See USPTO, 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. 50 (Jan. 7, 2019); USPTO, October 2019 Update: Subject Matter Eligibility, 84 Fed. Reg. 55942 (Oct. 17, 2019).The first step in the current analytical framework determines whether a claim is directed to a judicial exception. In the first prong of the first step, an examiner should identify the "specific limitations" that allegedly recite an abstract idea. In the first prong, the examiner also should determine whether the identified specific limitations fall within familiar subject matter groupings - i.e., mathematical concepts, certain methods of organizing human activity, and mental processes. In the second prong of the first step, an examiner should evaluate whether a claim as a whole integrates a recited judicial exception into a practical application of the exception. In the second prong, the examiner should evaluate integration into a practical application by identifying any "additional elements" recited in the claim beyond the judicial exception. In the second prong, the examiner also should evaluate those additional elements to determine whether they integrate the judicial exception into a practical application using certain judicially recognized considerations. If the first step concludes with a determination that the claims recite a judicial exception, the second step in the analytical framework determines whether additional elements amount to significantly more than the judicial exception itself.
The USPTO examination corps and the PTAB alike, at least in principle, now apply the current two step legal analytical framework for issues relating to subject matter eligibility. In practice, however, the level of adherence to the current analytical framework can vary considerably, at the discretion of USPTO personnel. In any event, the application by the USPTO of the current analytical framework can engender problematic inconsistencies in handling Alice related issues.
A. Different Frameworks
The time between filing of a PTAB appeal and rendering of the appeal decision remains significant. During this time, legal analytical frameworks, especially those attempting to address the complexities of subject matter eligibility, may very well evolve. Thus, an appellant may have prosecuted its patent application and drafted its appeal brief based on one analytical framework. However, the appellant ultimately may find its appeal decided, most often unfavorably, on a different analytical framework that the appellant had no opportunity to consider or brief.
A recent example is Ex parte Gilbert, Appeal No. 2019-001719 (PTAB Aug. 12, 2020). The appeal brief was filed on August 21, 2018. Quite correctly, the appellant primarily anchored its appeal brief on a then prevailing analytical framework based on USPTO subject matter eligibility guidelines from 2016. However, by the time the PTAB authored its decision on the appeal, the USPTO came to embrace the current analytical framework over the earlier 2016 analytical framework. Accordingly, the PTAB in Gilbert applied only the current analytical framework. One important difference between the analytical framework of 2016 on which the appellant based its appeal versus the current analytical framework applied by the PTAB is the opportunity in the latter to establish a practical application in prong two. As experienced practitioners know, the opportunity is often a patent saving tool - but unfortunately one that the Gilbert appellant could not wield in prosecution or appeal. The appellant in Gilbert was left to accept a PTAB decision, which was unfavorable in relation to subject matter eligibility, that applied a new analytical framework on which the appellant had not presented argument. In this situation, continued prosecution including claim amendments after appeal might be an option to provide an appellant with the chance to address the new analytical framework. However, such prosecution would proceed uphill in view of the PTAB decision of ineligibility already on record.
As another example, the appellant in Ex parte Dangeville, Appeal No. 2019-002705 (PTAB July 1, 2020) likewise saw the examiner affirmed after the PTAB applied a different legal analysis. In Dangeville, the final office action dated March 16, 2018 rejected the claims as ineligible. The final office action made no reference to additional elements, which even under then prevailing USPTO guidelines were relevant to a determination about significantly more. In contrast, the PTAB two years later filled the gap. In applying prong two of the current analytical framework, the PTAB identified the additional elements in detail: "In claim 7, the additional elements are (1) 'receiving an initial UML class diagram modelizing the software application' and (2) a processor to modify 'the initial UML class diagram to generate an extended UML class diagram.'" Once again, this PTAB decision determined key issues implicated by the current analytical framework that were not raised by the examiner and thus not addressed by the appellant in prosecution.
Analytical frameworks of the USPTO will likely continue to develop. Since the Alice decision in 2014, the USPTO has steadily promulgated a series of evolving guidance on subject matter eligibility. Given the ongoing Alice related confusion expressed by the courts, academia, and practitioners alike, the series is likely to continue. As a result, an applicant must be aware of the threat posed by an appeal grounded on prevailing USPTO standards but rendered obsolete by a PTAB decision embracing different standards.
B. Overlapping Frameworks or the Same Framework
Inconsistencies exhibited between examiners and the PTAB are not limited to application of different analytical frameworks to address Alice related issues. Even to the extent that previous and current analytical frameworks applied during prosecution and appeal of a case significantly overlap with common issues, resolution of the common issues still can engender important differences. Further, even when an examiner and the PTAB apply the same analytical framework, incongruities in their respective determinations can arise.
While they contrast in many important respects, the previous USPTO guidelines and the current USPTO guidelines both require, for example, a determination about significantly more. However, that determination as made by examiners versus the PTAB can conflict. For example, in Ex parte Lee, Appeal No. 2019-004854 (PTAB July 20, 2020), the examiner applied a prior version of USPTO guidelines while the PTAB applied the current version. In relation to the common issue regarding existence of an "inventive concept," the final office action suggested the following as additional elements of the claims at issue: "providing a general processor device operable with a data store configured to store license agreements" and "having the processor track actual payments of royalties paid by the licensees, and monitoring for uniformity the actual royalty payments/rates in the licensing contracts to 'most favored nation rates' defined in the plurality of licensing agreements, and provide by the computer processor a notification of a compliance when a certain condition occurs." In contrast, the PTAB, before finding the claims ineligible, identified the additional elements as follows: "(1) providing a data store configured to store license agreement associated with the licensing package; (2) the computer processor device, and (3) providing an end-user visualization tool whose display is responsive to clicking on a particular license agreement clause." The delta between the disparate characterizations is not insignificant, and represents a scope of potential argument in favor of subject matter eligibility on which the appellant provided no advocacy.
Even application of the same analytical framework by an examiner and the PTAB can result in significant differences. One example is formulation of an abstract idea in prong one of the current analytical framework. An examiner's identification of an alleged abstract idea can dictate the arguments an applicant will advance to rebut the identification. However, like other Alice related determinations, the PTAB often replaces an examiner's determination of an abstract idea with its own de novo determination. This potentially eliminates the relevancy of the rebuttal arguments earlier advanced by the applicant. For example, in Ex parte Jenkins, Appeal No. 2020-002816 (PTAB Aug. 12, 2020), the examiner specified the alleged abstract idea in a lengthy formulation as follows: "conducting an auction for a limited amount of reinsurance capacity where eligible (i.e. 'validated') bids for quantities of capacity that can't be fully filled are reduced in quantity (i.e. 'signed down') according to bid price priority (and bid time of receipt priority) so that contracts can still be created for the partial portions of those bids that can be filled at their lower (or later) bid prices at the end of the auction while honoring more fully the higher priced (or earlier received) bids to the extent that the limited amount of reinsurance capacity permits." For the specified abstract idea, the examiner identified these subject matter groupings: certain methods of organizing human activity and mental processes. On appeal, the PTAB indicated high-level agreement with the examiner regarding the existence of an abstract idea. However, in divergence from the examiner, the PTAB rejected a lengthy formulation of the abstract idea. Instead, the PTAB recognized a different set of subject matter groupings: certain methods of organizing human activity in the form of commercial interactions or a fundamental economic practice. Contrary to the examiner, the PTAB rejected the relevance of the mental processes subject matter grouping.
PTAB decisions, like Jenkins, demonstrate that differences in abstract idea determinations have consequences. Arguments against an examiner's identification of a certain abstract idea over the course of prosecution and negotiation can develop and ultimately persuade. In contrast, if the same arguments are brought to the PTAB, the approach of the PTAB can render the arguments irrelevant. For example, as in Jenkins, an applicant may embrace arguments of subject matter eligibility in relation to a particular subject matter grouping. However, an appeal of the case can close the door on the arguments if the PTAB deems the subject matter grouping inapplicable. Worse still, the wasted arguments may constitute troublesome file history admissions for a patent obtained through continued prosecution on other grounds.
Incongruities in formulation of recited abstract ideas can engender more downstream divergence. Inconsistent identifications of specific limitations that recite an abstract idea, in turn, can prompt different identifications of additional elements. When additional elements are determined inconsistently, the inquiry about the existence of a practical application in prong two can result in disparate conclusions. For example, subject matter eligibility arguments anchored to a certain additional element in prosecution evaporate if the PTAB refuses to recognize the element as such. Alternatively, the PTAB can recognize more or different additional elements than the examiner. For example, in Jenkins, the examiner and the PTAB alike identified these additional elements in prong two: "server computer system," "processor," "memory," "received bids database," "auction database," "adjusted bids database," and "administration database." However, the PTAB alone further identified "cedent computer," "bidder computers," and "communications network" as additional elements. Differences in prong two analyses, like those in Jenkins, and their interplay with varied formulations of the abstract idea in prong one can define the arguments available to appellants and thus dictate subject matter eligibility outcomes.
In some instances, appeal can be the only viable choice of a determined applicant. Mostly, however, applicants have options. In deciding among options, an applicant should understand that subject matter eligibility issues raised and addressed during prosecution may vary markedly from those embraced and decided by the PTAB. No shortage of PTAB decisions demonstrate that Alice related issues on appeal are a moving target.
A prediction about the likelihood of a winning PTAB appeal often depends on familiar issues heavily vetted in prosecution. Such a prediction should carry little weight if those issues will not survive the appeal or will be superseded by new issues not contemplated by applicant, as recent PTAB decisions caution. Thus, the uncertainty in a PTAB appeal poses significant risk. That risk should inform the advisability of an appeal.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.