Pass the Mayo: Finally, some good news for companies that own computer-related patents

In 2012 and 2014, the U.S. Supreme Court issued watershed decisions on what types of inventions are allowed to be protected by a patent, often called the Alice/Mayo test for patent "eligibility."  In Alice, the Supreme Court held that an escrow service for financial transactions was an abstract idea and thus not eligible for patent protection, which immediately called into question the validity of thousands of issued patents directed to computer-implemented inventions. 

For a company like ours that helps clients make decisions about their respective patent portfolios, the Alice/Mayo test has been both a source of work as companies wrestled with how the test impacted the value of their existing patents, but also a source of frustration because the whole framework that developed was fraught with imprecision and uncertainty.

The USPTO finally brought some clarity to the world of computer-related patents with its Revised Patent Subject Matter Eligibility Guidance issued on January 7, 2019. The new guidelines provide guidance to patent examiners who are examining applications, but more importantly, from a strategy perspective, provide a roadmap to companies interested in seeking patent protection. Based on what we are observing with our own clients, companies who for the last few years have invested in forms of intellectual property other than patents have decided to get back into the patent game in large part based on the new guidelines. 

The new guidelines can be found at 84 Fed. Reg. 4, 50-57 (see link) and USPTO Examiners are required to use them in analyzing whether a claim is patent eligible under 35 U.S.C. § 101. Section 101 sets forth the four classes of eligible subject matter on which a patent may be granted: "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." (Emphasis added.) However, demonstrating that a claim is directed to one of these four classes is only the first step in satisfying the patent eligibility requirement. 

Section 101 contains an implicit exception for "[l]aws of nature, natural phenomena, and abstract ideas," which are "the basic tools of scientific and technological work."  Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208, 216 (2014) and Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 71 (2012)). Thus, the second step in evaluating patent eligible subject matter focuses on whether a claim falls into one of these "judicial exceptions" (i.e., laws of nature, natural phenomena, or abstract ideas). If the claim avoids these judicial exceptions, then it passes the test for patent eligible subject matter. It is this step of the analysis that the PTO has revised in its recently issued guidance. 

The image with this article is the flow chart for evaluating patent eligible subject matter that appears in the USPTO's Manual of Patent Examining Procedure § 2106. As noted above, it includes the four classes of eligible subject matter as step 1 and the judicial exceptions to patent eligibility as step 2. Claims that end up on the bottom left of the flow chart pass muster, and those that end up on the bottom right do not. Yellow highlighting has been added to the portion of this flowchart that is now superseded by the PTO's recently issued guidance.

Prior to issuance of its new guidelines, the USPTO evaluated step 2 by analyzing the singular question of whether a claim was "directed to" a judicial exception. It has now been superseded in two salient ways that provide additional avenues for demonstrating patent eligible subject matter. First, the revised guidelines limit abstract ideas to mathematical concepts, certain methods of organizing human activity, and mental processes. 84 Fed. Reg. 4, 52-53. If a claim does not recite subject matter in those three groupings, then the claim should not be treated as reciting an abstract idea and it is patent eligible, except in rare circumstances. Id. at 56-57.

Second, the new guidelines add a further step to determining when a claim is "directed to" a judicial exception. Examiners must now "evaluate whether the claim as a whole integrates the recited judicial exception into a practical application of the exception" thereby imposing a meaningful limit on the judicial exception. 84 Fed. Reg. 4, 54. Such claims are not "directed to" a judicial exception and thus are patent eligible.  Id.

The new guidelines also provide "exemplary considerations" to use in analyzing whether a claim includes an additional limitation(s) that integrates the judicial exception into a practical application. 84 Fed. Reg. 4, 55. Such additional limitations may apply, rely on, or use the judicial exception in the following manner: improving the functioning of a computer; effecting a particular treatment or prophylaxis for a disease or medical condition; implementing a particular machine or manufacture that is integral to the claim; effecting a transformation or reduction of a particular article to a different state or thing; applying or using the judicial exception in some other meaningful way beyond generally linking the use of the judicial exception to a particular technological environment, such that the claim as a whole is more than a drafting effort designed to monopolize the exception. Id. These types of additional limitations are "indicative" of claims that integrate the judicial exception into a practical application and satisfy the eligible subject matter requirement. 

Key takeaways: For companies that own computer-related patents, the USPTO guidelines provide more certainty as to whether the patents remain valid. For companies who have been forgoing patent protection because of the uncertainty of the Alice/Mayo test, the guidelines are a signal that certain computer-related inventions are patentable and that investment in U.S. patents for those inventions is a strategy that should be considered. 

With respect to the mechanics of prosecuting the patent application, the USPTO provided patentees additional arrows in their quiver to use in overcoming patent eligibility rejections. The reach of "abstract ideas" as a judicial exclusion to eligible subject matter has been narrowed. And an additional carve out has been created for claims that integrate a judicial exception into a practical application.

About the authors: Anthony Jacono and Karl Maersch are principals at West Four IP, a boutique intellectual property consulting firm that delivers IP strategy advice to business leaders, R&D teams, and legal teams, with service offerings that cover all facets of intellectual property strategy including analysis, generation, protection, valuation, monetization and licensing.