New guidance from the USPTO on patent-eligible subject matter

Continuing its efforts to ensure the examining practices of the United States Patent and Trademark Office (“USPTO”) keep pace with the rapidly changing US law in the area of patent-eligible subject matter, the USPTO on April 19, 2018, issued new guidance to examiners on how to determine when claim elements are directed to “well-understood, routine, conventional activities.”  Consistent with the recent Berkheimer decision of the United States Court of Appeals for the Federal Circuit (“Federal Circuit”), the new guidance (“the Berkheimer memo”) imposes on examiners a heightened duty to provide factual support for assertions made under “step 2B” of the USPTO’s subject matter eligibility framework.  Further, the guidance clarifies the difference between “well-understood, routine, conventional activities” and prior art under §§ 102 and 103.   By providing stricter standards for examination clarity and placing the initial burden of proof on the examiner, the guidance provides a rare bit of clarity in this murky area of U.S. law.

Background

The USPTO’s basic subject matter eligibility framework is set forth in detail in the Manual of Examining Procedure (“MPEP”) § 2106.  Under this framework, on a claim-by-claim basis, the examiner determines if the claim is directed to one of the four statutory categories (processes machines, manufactures, and compositions of matter).  This is “step 1.”  If the answer to step 1 is yes, then the examiner must determine whether the claim is directed to one of the “judicial exceptions”: abstract ideas, law of nature, and natural phenomena.  This is “step 2A.”  If the answer to step 2A is yes, then the examiner must determine if the claim recites an additional element (or combination of elements) that amounts to “something significantly more” than the judicial exception.  This is “step 2B.”[1]  A flowchart of this analysis from MPEP § 2106 is copied below for ease of understanding.

During the step 2B analysis, claim elements that recite only that which is “well-understood, routine and conventional” to the skilled artisan are insufficient to add “something significantly more” to the abstract idea.  Thus, in making a subject matter ineligibility rejection, examiners will typically dissect the claim into the elements asserted to be directed to an abstract idea, and then characterize the remaining elements as being “well-understood, routine and conventional.”  It has been the author’s experience that USPTO examiners commonly assert elements are “well-understood, routine and conventional” without clear evidentiary support – or in some cases without any support at all.  In fact, the January 2018 update to the MPEP explicitly allows this: “…courts have not required evidence to support a finding that additional elements were well-understood, routine, conventional activities, but instead have treated the issue as a matter appropriate for judicial notice.”  MPEP  § 2106.05(d). While the MPEP correctly states that the initial burden of showing lack of subject matter eligibility is on the examiner, the practice of allowing examiners to “take notice” of facts rather than cite to prior art has had the effect of shifting the burden of proof on “well-understood, routine and conventional” to the applicant.

However, merely weeks after the January, 2018, update to the MPEP that introduced this language, the Federal Circuit issued the Berkheimer decision, finding, inter alia, “[t]he question of whether a claim element or combination of elements is well-understood, routine and conventional to a skilled artisan in the relevant field is a question of fact . . . [and] must be proven by clear and convincing evidence [for an issued patent].”  See Berkheimer v. HP Inc., 881 F.3d 1360 (Fed. Cir. Feb. 8, 2018).  Thus, the update to the MPEP was out of date almost as soon as it was published.  This latest guidance from the USPTO addresses this issue and indicates a further update to the MPEP will be forthcoming.

Readers not intimately familiar with the shifting sands of the U.S. law on patent-eligible subject matter (and the USPTO’s valiant attempts to keep pace) might rightly be confused at this point.  What is a prior art-like analysis doing in the middle of a subject matter eligibility test?  Said another way, why has the determination of whether something is, from a policy standpoint, the sort of thing we want to allow to be patented been conflated with the determination of whether that something is known to the skilled artisan?  Why are the claims being dissected and considered on an element by element basis, instead of being considered as a whole?  And further, if these concepts must be conflated, then why have we introduced a third standard (well-understood, routine and conventional) in addition to the well-established concepts of novelty and non-obviousness?  Alas, only the U.S. Supreme Court can answer these questions.  The best we as users and rights-holders can do is work within the current framework as effectively as possible.  The Berkheimer memo is at least a positive step in that regard.

The Federal Circuit decisions

The patent at issue in Berkheimer was directed to processing and archiving files in a digital asset management system.  Mr. Berkheimer sued HP Inc. alleging infringement of claims 1-7 and 9-19.  HP moved for summary judgement that claims 1-7 and 9 are patent ineligible under § 101, and the court granted that motion.  The district court found the claims to be directed to the abstract idea of “using a generic computer to collect, organize, compare, and present data for reconciliation prior to archiving” and found the first step of the Alice test (step 2A of the USPTO framework) to be satisfied.  The district court also found the second step of the Alice test (step 2B of the USPTO framework) to be satisfied because the additional elements describe “steps that employ only ‘well-understood, routine, and conventional’ computer functions” and are claimed “at a relatively high level of generality.”  Mr. Berkheimer appealed arguing, with respect to this last determination, that the determination of “well-understood, routine, and conventional” is an underlying fact question on which no evidence had been presented, and thus summary judgement was improper.

The Federal Circuit partially agreed with Mr. Berkheimer on this point, vacating the district court’s decision as to claims 4-7 and remanding for further proceedings.  In so doing, the Federal Circuit clarified the necessary factual basis for the second step of the Alice test (step 2B of the USPTO framework), and also drew a line of distinction between “prior art” and “well-understood, routine, and conventional”:

While patent eligibility is ultimately a question of law, the district court erred in concluding there are no underlying factual questions to the § 101 inquiry. Whether something is well-understood, routine, and conventional to a skilled artisan at the time of the patent is a factual determination. Whether a particular technology is well-understood, routine, and conventional goes beyond what was simply known in the prior art. The mere fact that something is disclosed in a piece of prior art, for example, does not mean it was well-understood, routine, and conventional. (Citations omitted).

Six days later, the Federal Circuit issued another opinion (Aatrix Software, Inc. v. Green Shades Software, Inc.)[2] considering this same issue in the context of a motion to dismiss.  Aatrix had sued Green Shades for infringement of two patents.  Green Shades filed a motion to dismiss under Rule 12(b)(6), arguing all claims in the asserted patents were directed to ineligible subject matter.  The district court granted that motion in full, and denied Aatrix’ request for leave to file an amended complaint providing additional allegations and evidence.  On appeal, the Federal Circuit vacated the dismissal and reversed the denial of motion for leave to file the amended complaint.  In so doing, the Federal Circuit again emphasized the underlying factual nature of the second step of the Alice test inquiry:

While the ultimate determination of eligibility under § 101 is a question of law, like many legal questions, there can be subsidiary fact questions which must be resolved en route to the ultimate legal determination. Relevant to this case, the second step of the Alice/Mayo test requires examining “the elements of the claim to determine whether it contains an ‘inventive concept’ sufficient to ‘transform’ the claimed abstract idea into a patent-eligible application.” If the elements involve “well-understood, routine, [and] conventional activity previously engaged in by researchers in the field,” they do not constitute an “inventive concept.” We have explained that the second step of the Alice/Mayo test is satisfied when the claim limitations “involve more than performance of ‘well-understood, routine, [and] conventional activities previously known to the industry.’” … Whether the claim elements or the claimed combination are well-understood, routine, conventional is a question of fact.  And in this case, that question cannot be answered adversely to the patentee based on the sources properly considered on a motion to dismiss, such as the complaint, the patent, and materials subject to judicial notice.  There are concrete allegations in the second amended complaint that individual elements and the claimed combination are not well-understood, routine, or conventional activity.  There are also concrete allegations regarding the claimed combination’s improvement to the functioning of the computer.  We have been shown no proper basis for rejecting those allegations as a factual matter.  (Citations omitted).

The Berkheimer memo

The Berkheimer memo was issued by the USPTO on April 19, 2018, to bring USPTO examining practice into line with these decisions of the Federal Circuit.[3]  The memo notes that while the Berkheimer decision did not change the basic subject matter eligibility framework discussed in MPEP  §  2106, it does “provide clarification as to the inquiry into whether an additional element (or combination of additional elements) represents well-understood, routine, conventional activity.”  Quoting from page 3 of the memo:

As set forth in MPEP § 2106.05(d)(I), an examiner should conclude that an element (or combination of elements) represents well-understood, routine, conventional activity only when the examiner can readily conclude that the element(s) is widely prevalent or in common use in the relevant industry. This memorandum clarifies that such a conclusion must be based upon a factual determination that is supported as discussed in section III below. This memorandum further clarifies that the analysis as to whether an element (or combination of elements) is widely prevalent or in common use is the same as the analysis under 35 U.S.C. § 112(a) as to whether an element is so well-known that it need not be described in detail in the patent specification.

The question of whether additional elements represent well-understood, routine, conventional activity is distinct from patentability over the prior art under 35 U.S.C. §§ 102 and 103. This is because a showing that additional elements are obvious under 35 U.S.C. § 103, or even that they lack novelty under 35 U.S.C. § 102, is not by itself sufficient to establish that the additional elements are well-understood, routine, conventional activities or elements to those in the relevant field. See MPEP § 2106.05. As the Federal Circuit explained: “[w]hether a particular technology is well-understood, routine, and conventional goes beyond what was simply known in the prior art. The mere fact that something is disclosed in a piece of prior art, for example, does not mean it was well-understood, routine, and conventional.” Berkheimer, 881 F.3d at 1369.

The impact of this on examination practice is significant.  First, in performing a step 2B (Alice step 2) analysis, the memo states that an additional element (or combination of elements) is not well-understood, routine or conventional unless the examiner finds, and expressly supports a rejection in writing with, one or more of the following:

1. A citation to an express statement in the specification or to a statement made by an applicant during prosecution that demonstrates the well-understood, routine, conventional nature of the additional element(s).
2. A citation to one or more of the court decisions discussed in MPEP § 2106.05(d)(II) as noting the well-understood, routine, conventional nature of the additional element(s).
3. A citation to a publication that demonstrates the well-understood, routine, conventional nature of the additional element(s). An appropriate publication could include a book, manual, review article, or other source that describes the state of the art and discusses what is well-known and in common use in the relevant industry. It does not include all items that might otherwise qualify as a “printed publication” as used in 35 U.S.C. § 102. Whether something is disclosed in a document that is considered a “printed publication” under 35 U.S.C § 102 is a distinct inquiry from whether something is well-known, routine, conventional activity. A document may be a printed publication but still fail to establish that something it describes is well-understood, routine, conventional activity. … For example, while U.S. patents and published applications are publications, merely finding the additional element in a single patent or published application would not be sufficient to demonstrate that the additional element is well-understood, routine, conventional, unless the patent or published application demonstrates that the additional element are widely prevalent or in common use in the relevant field.
4. A statement that the examiner is taking official notice of the well-understood, routine, conventional nature of the additional element(s). This option should be used only when the examiner is certain, based upon his or her personal knowledge, that the additional element(s) represents well-understood, routine, conventional activity engaged in by those in the relevant art, in that the additional elements are widely prevalent or in common use in the relevant field, comparable to the types of activity or elements that are so well-known that they do not need to be described in detail in a patent application to satisfy 35 U.S.C. § 112(a).

The Berkheimer memo also provides more stringent requirements for responding to a traversal by applicant.  Specifically:

If an applicant challenges the examiner’s position that the additional element(s) is well-understood, routine, conventional activity, the examiner should reevaluate whether it is readily apparent that the additional elements are in actuality well­ understood, routine, conventional activities to those who work in the relevant field. If the examiner has taken official notice per paragraph (4) of section (III)(A) above that an element(s) is well-understood, routine, conventional activity, and the applicant challenges the examiner’s position, specifically stating that such element(s) is not well-understood, routine, conventional activity, the examiner must then provide one of the items discussed in paragraphs (1) through (3) of section (Ill)(A) above, or an affidavit or declaration under 37 CFR 1.104(d)(2) setting forth specific factual statements and explanation to support his or her position. As discussed previously, to represent well-understood, routine, conventional activity, the additional elements must be widely prevalent or in common use in the relevant field, comparable to the types of activities or elements that are so well-known that they do not need to be described in detail in a patent application to satisfy 35 U.S.C. § 112(a).

In summary, the examiner now has a higher burden to meet if he or she wishes to find claims patent ineligible under the USPTO step 2B analysis.  In addition, it is now clear that “well­-understood, routine, conventional activities” means widely prevalent or in common use and mere “prior art” status of such activities is not sufficient.

[1] Confusingly, the “step” nomenclature differs between the USPTO subject matter eligibility framework and the Alice/Mayo analysis used by the federal courts.  Alice/Mayo step 1 = USPTO step 2A; Alice/Mayo step 2 = USPTO step 2B.

[2] Aatrix Software, Inc. v. Green Shades Software, Inc., 882 F.3d 1121 (Fed. Cir. 2018)

[3] The memo is available here:  https://www.uspto.gov/sites/default/files/documents/memo-berkheimer-20180419.PDF .