New Guidance from the USPTO – a Boon for Patent Applicants

On January 4, 2019, the USPTO announced the issuance of revised guidance relevant to 35 U.S.C. § 101 (Subject Matter Eligibility) rejections. Entitled, 2019 Revised Patent Subject Matter Eligibility Guidance, the document adds a new pathway for patent eligibility, whereby a claim that includes a judicial exception is still subject matter eligible under 35. U.S.C. § 101, if the judicial exception is “integrated into a practical application” of the judicial exception. The guidance was incorporated into the Federal Register on January 7, 2019, and applies to all USPTO personnel, which includes the examiners that review applications for 35 U.S.C. § 101 concerns, and the administrative judges that oversee appeals and disputes on these issues.

Of considerable note, the new procedure, referred to in the guidance and Federal Register as “revised Step 2A,” changes how Step 2A of the Alice/Mayo test is applied.

The old Step 2A asked whether a claim is directed to a judicial exception.   There are three enumerated judicial exceptions: 1) laws of nature; 2) natural phenomena; and 3) abstract ideas. If a claim had no judicial exception, it was patent eligible subject matter.  If a claim did have a judicial exception, the analysis would then move to Step 2B for further review.

The revised Step 2A still looks to see if there is a judicial exception in a claim, and if there is no judicial exception, the claim is considered directed to patent eligible subject matter.  However, the revised Step 2A differs in that if a judicial exception is identified, the claim is still directed to patent eligible subject matter if the judicial exception is “integrated into a practical application” of the judicial exception. For example, if a patent application with claims directed to a software method which incorporated an abstract idea, so long as that abstract idea is integrated into a practical application of that abstract idea, the claim is directed to patent eligible subject matter and may still be entitled to patenting.

 

The Guidance in Action at the Patent Trial and Appeal Board

Now that a little over a month has passed since the new guidance has gone into effect, we are starting to see some opinions from the Patent Trial and Appeal Board (PTAB).  While the PTAB has still issued a greater number of affirmed 101 rejections than reversals since the new guidance, the opinions have been positive with respect to those reversals.

One very telling reversal came on application 14/282,015, for claims directed to a software-based system for vehicles that allows users to provide consent for installing optional software updates that add a feature to a vehicle module or adjust a configuration of an existing feature, and, in lack of receipt of such consent, displaying an icon in a gauge cluster in the vehicle.  The examiner had initially rejected the claims under 101 as directed to: i) the abstract idea of updating software; and ii) organizing human activity (i.e., receiving consent to take an action).

The PTAB reversed, noting that there was a “specific practical application” of the abstract ideas in the claims.   The PTAB found that the claims were “directed to a practical application of updating software specifically for a vehicle module, in which user consent is required and in which lack of receipt of user consent is communicated to a user via an icon within the gauge cluster of a vehicle.  The opinion also noted that the claims were “directed to providing in a head unit display of the vehicle an indication of an optional status of the software update and a request for consent to install the optional update and upon receipt of user consent sends an update command over the vehicle bus and installs the update to a memory of the vehicle module.”

Notably, here we have an opinion from the PTAB identifying a quite low bar for application of the “practical application” standard.  In this case, the “practical application” seems to be not much more than having a prompt for approval that you would see on any software update (e.g., “accept the new Terms of Service”) and then displaying an icon on a display when there is an update still pending approval.

The second opinion we find interesting is one involving US Patent Application No. 12/374,372, and the following claim in particular:

A method of surfing the Internet comprising: a. selecting information on a web page; b. clicking on the information as it resides on the web page; and c. in response to the clicking, conducting a web search on the information.

The PTAB’s opinion in this case is less telling on the what constitutes “practical application” standard, as the opinion does not make such an analysis, and merely focuses on the examiner’s failing to adequately assert a valid analysis of the claim as an abstract idea unto itself.  Rather, the opinion simply notes that:

[T]he Examiner’s factual findings regarding the underlying abstract idea to overgeneralize the claimed invention under the patent eligibility guidelines at the time of the rejection in the Final Action and Examiner’s Answer and this same overgeneralized abstract idea similarly does not meet the Examiner’s requisite burden for analysis under the 2019 Revised Patent Subject Matter Eligibility Guidance.

 Given the simplicity and breadth of the claim, it is likely good news for applicants with inventions in the software space that the PTAB is not outright viewing broad claims as inherently abstract under the new guidance.  The opinion does note other likely issues with the application, but it is in the context of the PTAB’s views on 101 with which we are concerned.

Conclusion

It has only been a month since the USPTO issued the latest in subject matter eligibility guidance, and our initial impressions of how the PTAB is using the new guidance is positive and optimistic.  Even though a greater percentage of opinions citing the 2019 Revised Patent Subject Matter Eligibility Guidance affirmed the 101 findings of the examiner, the limited numbers are not truly representative of what we expect to see over the long run.  Further, a closer look at those affirmed 101 findings leads us to believe that the cases were destined to be maintained, regardless of the updated guidance.

Most notably for us is that the current interpretation of what constitutes when claimed subject matter is “integrated into a practical application” of the judicial exception seems to be initially very favorable for applicants, particularly for those with inventions in the software space.

Leveraging Track I Prioritized Examination at the USPTO to Slash Global Patent Filing Costs and Accelerate Obtaining of Foreign Patents

Global patent filing using conventional procedures entails significant costs.  Optimizing the use of Track I in an enterprise’s patent filing processes may provide an overlooked strategy to help drive down the cost of foreign prosecution and accelerate issuance of a global patent portfolio.

The Conventional Approach

When going global with patent filings, Applicants often follow the same route.  They begin with either a provisional or nonprovisional application in the U.S. or another jurisdiction, such as wherethe Applicant is located or where its R&D takes place.  If the covered invention warrants global filing, Applicants often pay to file an international application under the Patent Cooperation Treaty (PCT) at 12 months from the earliest priority filing.  Perhaps, with luck, they will receive a first action on the merits during the second year of the first application’s pendency.  If an Applicant filed the first application with the U.S. Patent & Trademark Office (USPTO), the examining art unit’s backlog typically determines the wait until examination starts.

By the time the 30/31 month due date under the PCT arrive, an Applicant may still be engaged in prosecution of the original application and may not have a clear view of patentable subject matter.  Depending on the art unit, or if the Applicant first filed a provisional utility patent application at the USPTO, the original application may not haven even received a first action on the merits prior to the national filing deadlines under the PCT.

Accordingly, Applicants may find themselves in the situation of making national stage filing decisions without having a clear picture of their odds of success in obtaining valuable patent scope for a given invention.  Depending on the number of countries an Applicant wishes to file in, an Applicants can easily spend $25,000 to $100,000 on these national stage filings.  This figure is just detailing the filing fees and does not include costs for prosecution of each application during examination.  All this expenditure occurs without really knowing if an Applicant stands a chance of acquiring valuable global intellectual property.  If patent prosecution turns sour in the U.S. or elsewhere, or an application collides with unforeseen prior art, then the already-invested resources may simply evaporate into a loss.

Gaining clarity relatively early in the global filing process through use of the Track I Prioritized Examination program at the USPTO, though, can avoid wasting the enterprise’s resources later during worldwide patent prosecution.

Track I:  Gaining an Earlier Picture of Clarity

As an alternative to the usual flow of global prosecution sketched above, Applicants may consider taking a different tack by maximizing the benefits of the Track I Prioritized Examination program offered by the USPTO.

As a quick background on the Track I Prioritized Examination program, it is basically a Pay-to-Play system for fast tracking the examination of a US Non-Provisional Utility Patent Application.  For an additional fee of USD $4,000 on top of usual nonprovisional patent filing fees, patent owners may file a request for prioritized examination with the USPTO, gaining access to Track I benefits.  Small entity Applicants will enjoy access to the Track I program for half of that fee ($2,000), while micro-entity discounts bring the Track I fee down to USD $1,000.    Given that most universities and other institutions of higher education can take advantage of the micro-entity status, the Track I program becomes a very viable option for those with heavy domestic and foreign patent prosecution programs.

The Track I Prioritized Examination program includes a number of special conditions, but they will typically not amount to an onerous requirement for most Applicants.  For example, patent owners may not take extensions, must file no more than 4 independent claims and 30 claims total, and must be sure to pay all fees at application filing.

As long as the Applicant files the paperwork correctly and overall U.S. Track I filings have not exceeded the Office’s quota for the year, the USPTO will usually accept the application for prioritized examination.  The Office will then issue a first Office Action within approximately 3-4 months and produce a final disposition, such as a Notice of Allowance or a Final Office Action, within 12 months.  The USPTO currently advertises that it actually issues final dispositions much earlier, by about the six-month mark.  If the final disposition displeases the filer, the Applicant retains the option to either re-pay the Track I fee to pursue another round of prioritized examination, or revert back to the standard examination timeline by submitting a request for continued examination (RCE).

Applicants may elect to use the Track I Prioritized Examination program for applications in which they expect to attempt global filing based on the anticipated value to the organization of filing in various nations.  Although the USPTO offers other techniques for accelerating prosecution, Track I has emerged as the go-to program for prioritized examination.

In contrast to the conventional approach for global filing, a Track I Prioritized Examination application will likely provide a filer with clarity on patentability before the one year deadline for PCT filing.  The insight provided by the Track I Prioritized Examination program may make global filing decision-making clearer, and help to ensure that the organization focuses resources on applications that have a significant probability for earning strong protection.  For a relatively small up-front additional fee of a few thousand dollars, Applicants may avoid wasting tens of thousands of dollars on applications that may ultimately be doomed by unknown prior art.

As a quick aside, Applicants should also consider checking to see if any inventor on an application is over 65.  If at least one inventor is over 65, the USPTO will make an application special and advance it out of turn for relatively quick prosecution.  Filing a simple petition asserting an inventor’s age will expedite prosecution.  The USPTO charges no fee for acceleration on the basis of age.  Patent owners may accordingly also use age-based acceleration to gain earlier clarity on patentability, without a fee.  Age-based acceleration, though, will most likely not be as fast as Track I Prioritized Examination.

Combining Track I with the Patent Prosecution Highway

In addition to the advantage of gaining the earlier clarity highlighted above, Applicants may also leverage other foreign filing programs available through the USPTO in conjunction with the Track I prioritized examination program.  For example, the USPTO has a number of Patent Prosecution Highway (PPH) agreements with other patent offices worldwide in which subject matter deemed patentable by one office may be allowed with little or limited additional examination.  The USPTO participates in such PPH programs with counterpart offices in Europe, Japan, Korea, China, Russia, Australia, and other jurisdictions.  Although procedures vary based on the nations involved, the basic process usually involves filing an indication of allowable subject matter from a first patent office with a second patent office patent filing, along with a petition to participate in a given PPH program.  The patent owner may thereby request limited or streamlined examination to issue a patent in the second nation based on the allowance in the first nation.

Turning back to Track I Prioritized Examination program, if an Applicant receives a Notice of Allowance or other indication of allowable subject matter relatively quickly, the owner may then parlay that allowance into accelerated allowances in other nations based on using various available PPH programs.   This not only accelerates the granting of the foreign patents, but also reduces the overall cost of foreign prosecution, as fewer office action responses are required in each jurisdiction.  The cost savings can be massive, particularly when the Applicant is entering a large number of foreign jurisdictions.

In practice, PPH programs work with varying degrees of success based on the nations involved.  For example, commentators have noted that using PPH to turn USPTO allowances into patents at the European Patent Office (EPO) may tend to hit headwinds, with the EPO essentially fully examining a given application notwithstanding a U.S. allowance.  However, using Track I allowances as a springboard to obtain accelerated allowances in other nations remains, in general, a viable option for quickly driving a global patent family to issue.   Further, if an EPO patent is part of the strategy for a given application, an Applicant’s US based patent attorneys or agents can draft and prosecute the claims of the US application with that in mind, in order to keep claims that will eventually be allowed in the US patent more similar to those that the EPO would typically grant.  This is something an Applicant would want to address early on with their counsel, so that the strategy is in place during the examination of the Track I application.

Takeaways

For slightly higher initial filing fees in the USPTO, an Applicant may leverage prioritized examination under the Track I Prioritized Examination program to gain clarity on patentability of a patent application intended for international filing.  Patent owners may thereby avoid expending resources on global prosecution of applications that perform poorly during Track I prosecution.  Owners may accordingly use Track I to inform decision-making to optimize the probability of success for global patent acquisition.  Applicants may also combine the benefits of Track I with Patent Prosecution Highway programs, leveraging Track I prioritization to accelerate prosecution globally and significantly reduce the overall cost of foreign prosecution.

Authors

James M. Smedley, Esq. & Steve Keefe, Esq.

Steve Keefe, Esq.
Senior Attorney
James M Smedley LLC

Steve is an attorney in the firm’s Intellectual Property law group. Steve has extensive experience in patent prosecution and corporate transactions. Steve’s career has given him experience both in the law firm setting as well as time spent as in house counsel. Steve’s experience with both national and international IP matters is extensive.