1. 1 1 AIPLA Firm Logo American Intellectual Property Law Association More Fun with 101 - A Prosecution Perspective on the Protection of Computer Implemented Inventions Under the USPTO’s December 2014 101 Guidelines IP Practice in Japan – Pre-Meeting at AIPLA Mid- Winter Institute, Orlando, Florida January 27, 2015 Michael P. Dunnam Chair, Electronic and Computer Law Committee

2. 2 2 AIPLA Firm Logo A PROSECUTION PERSPECTIVE ON THE PROTECTION OF COMPUTER IMPLEMENTED INVENTIONS UNDER THE USPTO’S DECEMBER 2014 101 GUIDELINES  CLS Bank Supreme Court Decision – June 19, 2014  USPTO Preliminary Examination Instructions – June 25, 2014  USPTO Interim Guidance on Patent Subject Matter Eligibility – December 16, 2014  Recommendations for Responding to Rejections Under new 101 Guidelines  Take Action - Submit Comments to Guidelines

3. 3 3 AIPLA Firm Logo CLS BANK SUPREME COURT DECISION  The Court unanimously held that all claims are drawn to the abstract idea of intermediated settlement and merely requiring a generic computer implementation fails to transform that abstract idea into a patent-eligible invention.  The Court viewed the claims as “Bilski on a computer.”  The opinion took a narrow approach, not answering the toughest questions.  The ruling confirmed that the framework of Mayo applies equally to computer-implemented inventions and is not limited to medical diagnostics.  The Mayo approach has two steps:  1. Identify (ineligible) abstract idea within claims.  2. If abstract idea present, does the remainder of the claim ensure that claim amounts to “significantly more” than a patent on the ineligible abstract idea itself.

4. 4 4 AIPLA Firm Logo CLS BANK SUPREME COURT DECISION  On CLS Bank facts, Step 1:  The abstract idea was “intermediated settlement,” which is a high-level generalization of the business methodology in the claims (use of third party to mitigate settlement risk). Such an abstract idea is a long prevalent “fundamental economic practice.”  The Court provided no general guidance on how to decide whether a claim includes an abstract idea or the scope of an abstract idea for the §101 analysis. Rather, the Court said identifying the abstract idea here was “straightforward” by analogy to Bilski’s abstract idea of “hedging.”  The Court did reject that an abstract idea had to be a special truth about the natural world that always existed. For example, an abstract idea may be method of organizing human activity.

5. 5 5 AIPLA Firm Logo CLS BANK SUPREME COURT DECISION  On CLS Bank facts, Step 2 (whether computer-related limitations render claims eligible):  The Court walked through various functions performed in method claim and various pieces of hardware in system claim.  The Court pronounced all features to be “conventional” – well-known generic computer performing generic computer functions.  The Court then considered the claim as a whole.  Since the claims only apply the abstract idea using an “unspecified” and “generic” computer, with conventional steps, specified at a high level of generality, to a method already known in the art, is not “enough” to add the “something more” required for patent eligibility.  Like in Mayo, Court felt Alice’s claims took abstract idea (“intermediated settlement”) and said “apply it with a generic computer,” which, like in Mayo, was not “enough” for patent eligibility.

6. 6 6 AIPLA Firm Logo CLS BANK SUPREME COURT DECISION  As with Step 1 (identifying abstract idea), Court did not provide much guidance for determining when computer features would lend eligibility to claim as a whole.  Clearly, generic computer implementation not generally the sort of “additional feature” to add something more.  Form of claim is irrelevant; system claims no different in substance.  Court did observe that Alice’s claims did not “improve the functioning of the computer itself” or “effect an improvement in any other technology or technical field” as argued by USPTO.  Also, when distinguishing Diehr, the Court said that the “claims in Diehr were patent eligible because they improved an existing technological process, not because they were implemented on a computer.”

7. 7 7 AIPLA Firm Logo USPTO PRELIMINARY EXAMINATION INSTRUCTIONS – 6/25/14  Established two-part test for determining subject matter eligibility under 35 U.S.C. §101.  1. Determine whether the claim is directed to one of the four statutory categories of invention (process, machine, manufacture, or composition of matter). If not, the claim is rejected as being directed to non-statutory subject matter.  2. If the claim does fall within one of the statutory categories, determine whether the claim is directed to a judicial exception (law of nature, natural phenomenon, or abstract idea) and, if so, to determine whether the claim is a patent-eligible application of the judicial exception.

8. 8 8 AIPLA Firm Logo USPTO PRELIMINARY EXAMINATION INSTRUCTIONS – 6/25/14  Established two-part test for abstract ideas:  1. Determine whether the claim is directed to an abstract idea. Examples of abstract ideas identified in the instructions include fundamental economic practices, certain methods of organizing human activities, an idea itself, and mathematical relationships/formulas.  2. If an abstract idea is present in the claim, determine whether any element, or combination of elements, in the claim is sufficient to ensure that the claim amounts to significantly more than the abstract idea itself. In particular, are there other limitations in the claim that indicate more than a mere instruction to apply the abstract idea?  The examiner is to consider the claim as a whole by considering all claim elements, both individually and in combination.

9. 9 9 AIPLA Firm Logo USPTO PRELIMINARY EXAMINATION INSTRUCTIONS – 6/25/14  Examples of “significantly more” when recited in a claim with an abstract idea identified in the Instructions include:  improvements to another technology or technical field;  improvements to the functioning of a computer itself; and  meaningful limitations beyond generally linking the use of an abstract idea to a particular technological environment.  Examples that are not enough to qualify as “significantly more” when recited in a claim with an abstract idea identified in the Instructions include:  adding the words “apply it” or an equivalent with an abstract idea;  mere instructions to implement an abstract idea on a computer; and  requiring no more than a generic computer to perform generic computer functions that are well-understood, routine, and conventional activities known in the industry.

10. 10 AIPLA Firm Logo USPTO INTERIM GUIDANCE ON PATENT SUBJECT MATTER ELIGIBILITY – 12/19/14  Combined Myriad/Mayo and Alice guidance to establish a two-part test for determining subject matter eligibility under 35 U.S.C. §101 for all judicial exceptions (including abstract ideas):  1. Determine whether the claim is directed to a judicially recognized exception (law of nature, natural phenomenon, or abstract idea).  2. If a judicially recognized exception is present in the claim, determine whether any element, or combination of elements, in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exception.  The examiner is to establish the broadest reasonable interpretation of the claim and to consider the claim as a whole when evaluating for patentability.

11. 11 AIPLA Firm Logo USPTO INTERIM GUIDANCE ON PATENT SUBJECT MATTER ELIGIBILITY  To determine whether the claim is “directed to” a judicial exception, one must determine whether the judicial exception is “set forth or described” in the claim.  The USPTO is concerned about whether the claim will “tie up” the excepted subject matter and pre-empt others from using the law of nature, natural phenomenon, or abstract idea.  To properly interpret the claim, the examiner should determine what the applicant has invented and is seeking to patent.

12. 12 AIPLA Firm Logo USPTO INTERIM GUIDANCE ON PATENT SUBJECT MATTER ELIGIBILITY  Abstract ideas are identified as including “fundamental economic practices, certain methods of organizing human activities, an idea ‘of itself,’ and mathematical relationships/formulas.”  Provided examples of abstract ideas include:  Mitigating settlement risk (Alice);  Hedging (Bilski);  Creating a contractual relationship (buySAFE);  Using advertising as an exchange or currency (Ultramercial);  Processing information through a clearinghouse (Dealertrack);  Comparing new and stored information and using rules to identify options (SmartGene);  Using categories to organize, store, and transmit information (Cyberfone);  Organizing information through mathematical correlations (Digitech);  Managing a game of bingo (Planet Bingo);  The Arrhenius equation for calculating the cure time of rubber (Diehr);  A formula for updating alarm limits (Flook);  A mathematical formula relating to standing wave phenomena (Mackay Radio); and  A mathematical procedure for converting one form of numerical representation to another (Benson).

13. 13 AIPLA Firm Logo USPTO INTERIM GUIDANCE ON PATENT SUBJECT MATTER ELIGIBILITY  Search for “significantly more” characterized as search for an “inventive concept” – “additional features to ensure that the claim describes a process or product that applies the exception in a meaningful way, such that it is more than a drafting effort designed to monopolize the exception.”  Provided examples of “significantly more” include:  Improvements to another technology or technical field (e.g. Diehr);  Improvements to the functioning of the computer itself;  Other meaningful limitations beyond generally linking the use of the judicial exception to a particular technological environment;  Applying the judicial exception with, or by use of, a particular machine;  Effecting a transformation or reduction of a particular article to a different state or thing;  Adding a specific limitation other than what is well-understood, routine and conventional in the field, or adding unconventional steps that confine the claim to a particular useful application; or  Claim specific way to automate a function incorporating elements from multiple sources to solve a problem faced by websites on the Internet (DDR Holdings).

14. 14 AIPLA Firm Logo USPTO INTERIM GUIDANCE ON PATENT SUBJECT MATTER ELIGIBILITY  Examples that are not enough to qualify as “significantly more” when recited in a claim with an abstract idea include  adding the words “apply it” or an equivalent with an abstract idea;  mere instructions to implement an abstract idea on a computer;  appending well-understood, routine, and conventional activities previously known to the industry, specified at a high level of granularity, to the abstract idea (e.g., a claim to an abstract idea requiring no more than a generic computer to perform generic computer functions that are well-understood, routine, and conventional activities known in the industry);  adding insignificant extra-solution activity to the abstract idea (e.g., mere data gathering in conjunction with an abstract idea); or  generally linking the use of the abstract idea to a particular technological environment or field of use.

15. 15 AIPLA Firm Logo USPTO INTERIM GUIDANCE ON PATENT SUBJECT MATTER ELIGIBILITY  Streamlined eligibility analysis can be used for efficiency in examination for a claim that may or may not recite a judicial exception if, when viewed as a whole, the claim “clearly does not seek to tie up any judicial exception such that others cannot practice it.”  Such claims do not need to proceed through the full analysis as their eligibility will be “self-evident.”  Example provided:  A robotic arm assembly having a control system that operates using certain mathematical relationships is “clearly not an attempt to tie up use of the mathematical relationships and would not require a full analysis to determine eligibility.”

16. 16 AIPLA Firm Logo RECOMMENDATIONS FOR RESPONDING TO REJECTIONS UNDER NEW 101 GUIDELINES  Part 1 of test (abstract idea):  Argue that claim “clearly does not seek to tie up any judicial exception such that others cannot practice it.” Provide arguments that claim does not preempt a judicial exception.  If examiner does not identify an abstract idea, argue rejection is improper. The only recognized categories of “abstract ideas” are:  fundamental economic practices  certain methods of organizing human activities  an idea ‘of itself’  mathematical relationships/formulas  As appropriate, argue that abstract idea is not present.

17. 17 AIPLA Firm Logo RECOMMENDATIONS FOR RESPONDING TO REJECTIONS UNDER NEW 101 GUIDELINES  Part 2 of test (“significantly more”):  Argue that claims include “additional features to ensure that the claim describes a process or product that applies the exception in a meaningful way, such that it is more than a drafting effort designed to monopolize the exception.” In other words, argue that claims are limited and do not preempt the abstract idea (e.g., there are other ways to perform the abstract idea).  Argue that claims include features that are far from simple, conventional, or well-understood (particularly useful if claims have been allowed over prior art).  As appropriate, refer to acceptable “significantly more” examples from guidelines (see above).

18. 18 AIPLA Firm Logo RECOMMENDATIONS FOR RESPONDING TO REJECTIONS UNDER NEW 101 GUIDELINES  Examiner is obligated to provide logic and reasons for rejection and why your arguments are inadequate to overcome 101 rejection. If reasons are not provided, PTO leadership has encouraged us to forcefully traverse the rejection and contact the supervisor as necessary. Do not accept “response is not persuasive.”  Contrary to widespread rumors, the issue of subject matter eligibility is not subject to “secret memos” and is ultimately decided by primary examiner/SPE – not by “101 gurus” or “101 panels” in each technology center. The “101 gurus” are provided for consultation only as examiners have not yet been trained on new guidelines. Do not let examiners hide behind “101 gurus!”  Make sure primary examiner is involved in interviews when discussing 101 issues!

19. 19 AIPLA Firm Logo TAKE ACTION - SUBMIT COMMENTS TO GUIDELINES  USPTO has been criticized for summarizing case law but not providing examples (other than applying guidelines to claims of published cases).  USPTO noted in the guidelines and in subsequent discussions that the guidelines are part of an iterative process and the guidelines will be “tweaked” as each new 101 case comes out of Federal Circuit and Supreme Court. Guidelines will thus change on case by case basis.  USPTO is preparing examples for posting on PTO website for public comment; however, first examples were delayed by issuance of Content Extraction case by Federal Circuit. USPTO has requested suggestions for claim examples under guidelines to be posted for public consideration.  USPTO held a public forum on guidelines on January 21, 2015 and expects to have more in the future.  Information will be made public as it becomes available, so regularly check www.uspto.gov/patents/law/exam/examguide.jsp for latest rules updates and 101 examples.  USPTO is urging our patience until it can train the examiners.  In the meantime, we must force the examiners to be thorough – we are encouraged to report egregious actions by examiners to USPTO management.  PLEASE SUBMIT YOUR COMMENTS TO GUIDELINES BY MARCH 16, 2015 DEADLINE.

20. 20 AIPLA Firm Logo Final thought: Judge Moore asked at oral argument of CLS Bank how one can take an eligible invention (a computer) and simply add functionality yet cause the otherwise eligible invention to become ineligible for patent. Indeed! Legislative fix is under consideration but will take years to implement, if at all! Thank you! Michael P. Dunnam Michael P. Dunnam BakerHostetler LLP BakerHostetler LLP