PTO Revisits What is Patentable

by Audrey A. Millemann
The IP Law Blog

On Monday this week, the Director of the U.S. Patent and Trademark Office announced that the PTO would be revisiting the test for patent subject matter eligibility. The announcement was made on the blog homepage of PTO Director Kathi Vidal.

A patent protects an invention. To be patentable, an invention must fall within one of four categories of patentable (or patent-eligible) subject matter: articles of manufacture, machines, processes, and compositions of matter. These categories are listed in 35 U.S.C. §101. Things that are not patentable (by judicial exceptions) include laws of nature, natural phenomena, and abstract ideas. These nonpatentable things are referred to as patent-ineligible subject matter.

In 2014, the Supreme Court established a two-part test to determine whether an invention is patent-eligible. Alice Corp. Pty. Ltd. v. CLS Bank International, 573 U.S. 208, 216, 219 (2014). The first step is a determination of whether the claimed invention falls within one of the categories of patent-ineligible subject matter. If it does, then the second step is a determination of whether the claimed invention has an inventive concept that transforms the patent-ineligible subject matter into something patentable.

Since Alice was decided, the Alice test has been used many times by the PTO to reject claims during examination of patent applications and by the federal district courts to invalidate patents on the grounds that the claims are directed to patent-ineligible subject matter. Some patent practitioners and intellectual property experts think that the Alice test is not clear or easy to apply, and creates uncertainty as to whether an invention is patentable. It seems that the PTO Director thinks the same thing.

In her blog post, Director Vidal states that stakeholders with respect to U.S. patent laws agree that subject matter eligibility “needs to be clear, predictable, and consistently applied.” According to the Director, “this clarity and consistency will allow innovators to attract the investment and collaborations that bring more innovation to impact, in turn creating more jobs and solving world problems,” citing the PTO’s June 2022 report to Congress on the issue. She then discusses the PTO’s efforts to address the concerns.

The Director describes the “Deferred Subject Matter Eligibility Response” (DSMER) pilot program, begun in 2021. That program is intended to study whether the patent application examination process can be made more efficient and whether patent quality can be improved by postponing the determination of patent-eligible subject matter until after a determination has been made that the other requirements of patentability have been met. The Director notes that about 80% of the rejections of patent applications are on obviousness grounds, while only about 8% are on subject matter eligibility. This suggests that there is no reason for a patent examiner to determine subject matter eligibility if the applicant cannot overcome obviousness. The data from the pilot program will be available in 1-2 years, and may result in changes to the patent examination process.

Director Vidal explains that in 2019, the PTO revised its guidelines for how patent examiners should determine subject matter eligibility. These guidelines are set forth in the Manual of Patent Examining Procedure, at section 2106. Since the implementation of the revised guidelines, the rate of rejections for subject matter eligibility has dropped from 25% in 2018 to 8% in 2022. In addition, there has been a 25% decrease in the rate of subject matter eligibility rejections for inventions in those technologies most impacted by the Alice decision.

The Director states that the PTO is revisiting its guidelines on subject matter eligibility in section 2106 and is seeking public comment by September 15, 2022. The PTO is requesting that comments be specific and is even encouraging the public to submit redlines of the section.

Lastly, Director Vidal notes that the PTO is involved in discussions with foreign patent offices, including in Europe, Japan, China, and Korea, to learn how other countries determine subject matter eligibility.

Given that the Director states that “there is more work to be done” to clarify patent subject matter eligibility, we can expect further changes in the future.