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Two-step analysis to assist in determining patent eligibility

published in McAfee & Taft tIPsheet | April 2, 2018


William D. Hall
William D. Hall

By Bill Hall


Napoleon Hill once famously said, “Whatever the mind of man can conceive and believe, it can achieve.”

However, what the mind of man can conceive is not necessarily patentable. Courts have long held that laws of nature, naturally occurring substances, and abstract ideas were not patentable. However, prior to 2014 patent examiners rarely considered whether or not a patent claim satisfied the criteria of patentable subject matter set forth in § 101 of the Patent Act. Section 101 states:

“Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.”

In 2014, the U.S. Supreme Court’s decision of Alice Corporation Pty. Ltd. v. CLS Bank International breathed new life into Section 101 and created a new tool for the patent examiners to reject patent claims. If your business relates to computer technology or finance, you are probably aware of the impact of the Alice decision as patent grants in both areas have dropped significantly. However, §101 rejections can occur in any technology field. For example, inclusion of mathematical operations in scientific procedures can open a claim up to a §101 rejection.

Since the Alice decision, the Patent Office has issued at least six sets of examples to the examining corps providing further guidance on the examination of patent claims for compliance with §101. The six sets of examples included two sets of examples on abstract ideas, two sets on nature-based or life sciences technology, one set on business methods, and a 44-page document on carrying out the Alice analysis. This month, the USPTO released a two-page Eligibility Quick Reference Sheet and a spread sheet of Supreme Court and Federal Circuit Court of Appeals Decisions. Copies of the various examples and guidelines can be obtained at this link. https://www.uspto.gov/patent/laws-and-regulations/examination-policy/subject-matter-eligibility

Clearly, the abundance of explanatory material reflects the difficulty the courts and the examiners face when determining whether or not a patent claim defines patent-eligible material. Fortunately, much of the material provided by the Patent Office is in the form of working examples describing patent-eligible and patent-ineligible subject matter. Although these examples are a good starting point, we can expect changes to the examples as the courts provide further guidance on §101.

In the meantime, we must look to these examples and the two-step analysis provided by the Alice court to determine whether or not a claim satisfies §101. When using the Alice two-step analysis, the first step considers whether the claims are directed to a patent-ineligible concept, i.e. an abstract idea, law of nature or natural phenomenon. If the answer is no, then the claims are patent-eligible. If the answer is yes, then we move to the second step of the Alice analysis. Under step two, we must determine whether or not the claims include additional features that render the invention something more than merely an abstract idea, a law of nature, or a natural phenomenon.

For example, the use of an algorithm in a claim directed to a scientific procedure might result in classification of the claim as being directed to an abstract idea. However, if the claim defines sufficient process steps that result in an overall improvement in the field such that the claim produces a result that is transformative in nature, then those steps likely satisfy step two of the Alice analysis and qualify as patent-eligible. A transformative effect might be found if the additional claim elements involve more than the practice of well-known steps.

The Patent Office approaches the Alice two-step analysis in a slightly different manner. In 2014, the Patent Office provided an Interim Eligibility Guidance Quick Reference Sheet. Either approach is a valid means for reviewing patent claims prior to filing a patent application.

The essential take away from the new era of §101 analysis is to identify whether or not the invention might incorporate an abstract idea, law of nature or natural phenomena. If the invention does include one of these elements, then the patent application and claims must clearly identify the additional subject matter that allows the invention to amount to significantly more than the mere abstract idea or other element. Preferably, the patent application will clearly emphasize the transformative effect of the other claim elements which take the invention well beyond the abstract idea or law of nature.

The March 2018: Eligibility Quick Reference Sheet provided by the USPTO is available at the following link: https://www.uspto.gov/sites/default/files/documents/ieg-qrs.pdf

A spreadsheet of subject matter eligibility court decisions is available from the USPTO at this link: https://www.uspto.gov/sites/default/files/documents/ieg-sme_crt_dec.xlsx

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