How to Correctly Apply the Alice Examination Guidance

By: Robert R. Sachs

In my previous post, I provided an explanation of Abstract Ideas under Alice, emphasizing that to be an ineligible abstract idea, a claim must recite a fundamental building block of human ingenuity. How then does an examiner know whether a claim recites this kind of fundamental building block? It is not enough for the examiner to simply make the assertion based on subjective opinion. For example, here is an excerpt from a recently issued office action:

Claims 17-31 are rejected under 35 U.S.C. 101 because the claimed invention is directed to non-statutory subject matter. In the instant invention, the claims are directed towards the concept of Fraud Determination. Determining fraud in reviews is considered a fundamental internet business practice and is simply a series of mathematical formulations, therefore the claims are drawn to an abstract idea.

This rejection illustrates the problem: the examiner asserts that “Determining fraud in reviews is considered a fundamental internet business practice.” Considered by whom? The examiner? On what facts or evidence is the examiner making this assertion? On what basis can it be said that a process inherently restricted to a computer system (the Internet) that has been used for commerce for just over than 20 years is now “fundamental”? [1] Further, note that the examiner’s contention is not that “determining fraud” generally is fundamental (which is certainly true), but rather even determining fraud “in reviews” is fundamental. That’s a bit of stretch.

The correct answer to the question of “considered by whom” is the POSITA, the person of ordinary skill in the art. This is the only objective standard used in the patent law, and is the recognized standard for evaluating enablement and written description support. The POSITA recognizes that the presence of abstraction, i.e., a generalization, does not make a claim to an abstract intellectual idea, since all claims must use generalizations to define an invention that is not limited to the specific embodiments: “[T]he Patent Act requires that the claims themselves set forth the limits of the patent grant, but also because persons of ordinary skill in the art rarely would confine their definitions of terms to the exact representations depicted in the embodiments.” Phillips v. AWH Corp., 415 F.3d 1303, 1323 (Fed. Cir. 2005) (en banc). Further, this POSITA perspective is also technology-independent—it does not discriminate for or against specific technologies, since the relevant POSITA depends on the claimed subject matter, not an arbitrary fixed point of view.

For the examiner to reject a claim for anticipation or obviousness, she must have a reference: a mere opinion that something is anticipated or obvious is insufficient. More precisely, to take Official Notice (which can only be done for anticipation) the examiner must meet specific rules set forth in MPEP 2144.03. “Official notice unsupported by documentary evidence should only be taken by the examiner where the facts asserted to be well-known, or to be common knowledge in the art are capable of instant and unquestionable demonstration as being well-known.” Id. (emphasis added). This is because the burden is always on the examiner to make a prima facie case for the rejection. Given that the proper focus of the Abstract Ideas exception is on fundamental building blocks, to support such a rejection the examiner should have to establish, with at least a reference or the equivalent of Official Notice, that the alleged abstract idea is fundamental in this sense. Indeed, this would faithfully mirror how the Court treated Alice’s claims: the Court cited two references to establish that Alice’s claims were on fundamental abstract ideas that are building blocks of commerce:

On their face, the claims before us are drawn to the concept of intermediated settlement, i.e., the use of a third party to mitigate settlement risk. Like the risk hedging in Bilski, the concept of intermediated settlement is " 'a fundamental economic practice long prevalent in our system of commerce.' " Ibid.; see, e.g., Emery, Speculation on the Stock and Produce Exchanges of the United States, in 7 Studies in History, Economics and Public Law 283, 346-356 (1896) (discussing the use of a "clearing-house" as an intermediary to reduce settlement risk). The use of a third-party intermediary (or "clearing house") is also a building block of the modern economy. See, e.g., Yadav, The Problematic Case of Clearinghouses in Complex Markets, 101 Geo. L. J. 387, 406-412 (2013); J. Hull, Risk Management and Financial Institutions 103-104 (3d ed. 2012). Thus, intermediated settlement, like hedging, is an abstract idea beyond the scope of §101. Alice, at 2356 (emphasis added)

It was only after citation of such primary references that the Court concludes that intermediated settlement is a fundamental Abstract Idea. If the Court felt it was necessary to ground its holding in two references, than certainly examiners should be required to ground their opinion as well in objective evidence.

This leads to the further question of what a reference would have to disclose in order to satisfy this requirement. That in part depends on the age and nature of the reference. A reference like Emery above, being over 100 years old, and providing a comprehensive discussion of ideas still practiced today would be sufficient in most cases to establish an idea as fundamental. A more contemporary reference would have to disclose that the alleged abstract idea is commonly used in the field or industry; for example, a college textbook describing the idea, or an industry reference publication, or a technical or journal article providing a survey of basic industry practices. This approach will prevent examiners from asserting that the abstract idea underlying just about any type of claim is fundamental. Consider the following recent rejection:

The claims are directed toward the abstract idea of viewing formula dependencies in a spreadsheet.

This idea is obviously not a fundamental building block of science or commerce, or even computer science. You will not find it discussed in textbooks in computer science or engineering. First, whatever the invention is, it is specific to spreadsheets. While spreadsheets are common, that does not make them fundamental building blocks of human ingenuity. An invention that is specific to spreadsheets, or word processors, or other particular tools (whether computer-implemented or not) should never qualify as fundamental. This rejection demonstrates the further the risk of conflating Section 101 with Section 102; here, the examiner’s underlying concern is more likely that the claims are anticipated, but if that is the case, she must cite a reference.

Again, an important aspect of the Court’s approach to implementing the Abstract Idea is that it is meant to avoid concluding that every claim is an Abstract Idea. Specifically, the claim must be “directed” to the Abstract Idea “on its face”—it is not enough that the claim “involves” it. The Court was very precise in its phrasing:

We must first determine whether the claims at issue are directed to a patent-ineligible concept. Alice, 134 S. Ct. at 2355.

It follows from our prior cases, and Bilski in particular, that the claims at issue here are directed to an abstract idea. Id. at 2356.

On their face, the claims before us are drawn to the concept of intermediated settlement, i.e., the use of a third party to mitigate settlement risk. Id.

Because the claims at issue are directed to the abstract idea of intermediated settlement, we turn to the second step in Mayo's framework. Id. at 2357.

Being “directed” to an Abstract Idea “on its face” is very different and much more restrictive than merely “involving” an Abstract Idea, because again, all claims “embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.” Id. at 2356. In Bilski, Flook, Mayo, Myriad, and Alice, the claims were directed to and on their face recited what the Court considered to be an impermissible concept.

This requirement is further necessary because step 1 of Mayo is an actual test. As noted above, that means that some claims will be directed to an Abstract Idea and some will not. Otherwise, if every claim (or even every computer-implemented claim) satisfies this test, then Part 1 is not a test at all, it is merely a step of “identification” and the only real test is Step 2. This approach is clearly not what the Court intended, again based on the Court’s emphasis in Mayo and Alice on not having the exception swallow the patent law.

In the next post, I will review the specific categories of Abstract Ideas that are discussed in the Guidance.

[1] Commercial use of the Internet was originally prohibited. It was not until April 30, 1995 that the final restrictions on commercial usage were removed.

*The perspectives expressed in the Bilski Blog, as well as in various sources cited therein from time to time, are those of the respective authors and do not necessarily represent the views of Fenwick & West LLP or its clients.