US Patent and Trademark Office in Alexandria, VA.

Following the recent Federal Circuit decisions in BASCOM and McRO, the United States Patent and Trademark Office (“USPTO”) responded by providing all stakeholders with a helpful memorandum discussing these cases and how they affect patent subject matter eligibility. In addition, the USPTO continues its outreach efforts to identify where gaps exist in its guidance, and to incorporate public feedback into subsequent guidance.

On Monday, November 14, the USPTO hosted the first of two roundtable discussions on patent subject matter eligibility. USPTO Director Michelle Lee welcomed the roundtable with opening remarks, and continued with an overview of recent USPTO initiatives regarding its response to this fast-moving topic in patent law. Director Lee noted that part of the Enhanced Patent Quality Initiative has included conducting several case studies to understand the effectiveness and remaining challenges of applying the 2014 U.S. Supreme Court’s Alice decision. Specifically, the USPTO is reviewing the clarity of 35 U.S.C. §101 rejections in Office Actions, the consistency of how section 101 is applied across art units, and the adherence to best practices for compact prosecution when a section 101 rejection applies. Director Lee noted that these case studies should conclude within the next few months, and their findings will be incorporated into future section 101 guidance to assist both the public and examining corps in understanding its proper application. Director Lee also reiterated that the USPTO is continuing to solicit public comments on how the USPTO can further improve its examples and guidance that accompany examiner training, and welcomed any feedback in addition to the comments provided during the roundtable. Director Lee then turned the discussion over to Robert Bahr, Deputy Commissioner for Patent Examination Policy, who presented the remaining speakers.

The roundtable brought together a wide variety of industry representatives and IP practitioners having an interest in the future of section 101 development, and several topics arose throughout the discussion. One of the most frequent topics was the difficulties practitioners have experienced when understanding and responding to a section 101 rejection. In addition to frustration with boilerplate language, many practitioners expressed concern with rejections either failing to provide a meaningful analysis, or avoiding the section 101 rejection altogether despite an expectation for section 101 to be an issue. Several speakers debated the differences where examiners utilized general principles when determining subject matter eligibility versus where examiners drew analogies to court decisions considering subject matter eligibility. As a last resort, appeals are being used with increasing frequency where questions of subject matter eligibility remain unresolved, and there were concerns expressed by some that the Patent Trial and Appeal Board was becoming a very expensive venue for making this determination.

However, several ideas were presented on how to respond to these challenges, including strictly enforcing the requirement for examiners to provide clear and complete reasoning in their analysis, and ensuring that examiners are issuing the rejections, rather than supervisors or quality assurance specialists. A rejection that establishes a prima facie case on the record would not only comply with MPEP section 2106, it would also assist the practitioner in overcoming a finding of ineligibility. Speakers also requested that the USPTO publish additional example-based guidance in view of the recent BASCOM and McRO decisions, and commended the USPTO on advising examiners away from using non-precedential decisions in their analysis, such as SmartGene and Cyberfone.

In addition to the quality of the rejections, discussions also arose about the quantity of rejections when viewed across technology centers and art units. The ABA presented data revealing inconsistencies across TCs and AUs, while other speakers suggested that an application’s chances of being allowed were too closely tied to its assigned art unit. To illustrate this point, speakers reported instances of applicants abandoning an application upon receiving a first Office Action because it included a section 101 rejection, and asked the USPTO to release additional data on this trend.

In addition to the application of section 101 itself, many of the speakers sought to remind the audience and USPTO of the very real impact section 101 has on both applicants and the US economy. Beyond providing legal certainty on the bounds of eligible subject matter, more clarity in this area would encourage, rather than stifle, innovation, prevent jobs from moving overseas, and prevent section 101 from acting as a barrier to domestic innovators when competing internationally. This could be accomplished by encouraging the future Trump administration to keep clarity of subject matter eligibility as a priority at the USPTO.

The USPTO will host its second section 101 roundtable discussion on Monday, December 5, 2016, which will focus on broad questions regarding the boundaries of eligible subject matter in patent law.