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USPTO Issues Guidance on Patent Subject Matter Eligibility

Many patent practitioners, inventors, and investors (especially in the software realm) since last year’s Supreme Court decision of Alice Corp. v. CLS Bank Int’l have found the concept of patentable subject matter eligibility to be a bit… murky.  Recently, the USPTO issued new guidelines to hopefully help clear things up a bit. 

What is patent eligible subject matter?

The short answer is this: a process, machine, manufacture, or composition of matter, or useful improvement of one of those four.  But it’s not quite that simple.  Laws of nature, natural phenomena, and “abstract ideas,” for example, are not patentable subject matter.

Patents have been around for a long time, why isn’t patent eligible subject matter clear?

In a word: Alice.  June 19, 2014, the United States Supreme Court in Alice Corp. v. CLS Bank Int’l took up the issue of patent eligible subject matter.  This was a highly anticipated case because it was the first time the Court looked at patent eligible subject matter as applied to a computer program (software). 

The case revolved around a patent which claimed the exchange of financial obligations between two parties by using a computer system as a third-party intermediary.  The Court found the claims invalid—it said they were made to subject matter ineligible for patent protection.  The court made a two-step inquiry:

  1. Are the claims directed to a patent-ineligible concept such as an abstract idea?
  2. Does the claim transform the nature of the claim into something more than the idea?

In step 1, the Court found intermediated settlement was an “abstract idea”—just an idea in and of itself.  In step 2, the Court found the claim lacked “something more.”  It found the claim simply required the abstract idea to be performed on a generic computer, which did not improve the function of the computer or other technology or field.

Things get (more) murky

Over the past year, courts and the US Patent and Trademark Office (USPTO) have attempted to implement the Alice Corp. decision with mixed results.  Many patents were held invalid and examination of pending software applications slowed.  The USPTO issued a 2014 interim guidance and requested feedback from the public.

What does the new guidance say?

The new guidance responds to many comments from the public, including examples from case law, along with how to identify abstract ideas, and guidelines for examiners and the examination process. 

The USPTO found four overall themes of ineligible subject matter from the past year:

  1. Fundamental economic practices (e.g.: exchanging money like Alice)
  2. Certain methods of organizing human activity (e.g.: playing Bingo between two people using a computer)
  3. An idea “of itself” (e.g.: comparing two sets of data)
  4. Mathematical relationships or formulas (e.g.: converting binary coded decimal to pure binary)

While subject matter eligibility is still not crystal clear, the new guidance helps practitioners find paths to claims that are a bit less muddy. 

DISCLAIMER: The information provided is for general informational purposes only. This post is not updated to account for changes in the law and should not be considered tax or legal advice. This article is not intended to create an attorney-client relationship. You should consult with legal and/or financial advisors for legal and tax advice tailored to your specific circumstances.

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