Patent Subject Matter Eligibility Six Months after Berkheimer v. HP Inc.

By: James Carlson


In February 2018, the U.S. Court of Appeals for the Federal Circuit issued an opinion in Berkheimer v. HP Inc., 881 F.3d 1360 (Fed. Cir. 2018) (hereinafter “Berkheimer decision”).  The Berkheimer decision may prove to be the most important U.S. court case regarding patent subject matter eligibility since the Supreme Court’s opinion in Alice Corp. v. CLS Bank Int’l., 134 S.Ct. 2347 (2014) (hereinafter “Alice”).  Following the Berkheimer decision, the USPTO issued a memorandum on patent subject matter eligibility titled “Changes in Examination Procedure Pertaining to Subject Matter Eligibility, Recent Subject Matter Eligibility Decision (Berkheimer v. HP, Inc.),” dated April 20, 2018 (hereinafter “Berkheimer Memorandum”).

Accordingly, this article is intended to provide a brief summary of various issues at the USPTO regarding patent subject matter eligibility.  In particular, both positive and negative elements are highlighted based on the past issues relating to practice before the USPTO and the aftermath of the Berkheimer decision.  However, it is important to note that many difficulties exist in administering a patent system for a diverse range of technologies within a complicated, ever-changing body of judicial case law.  Accordingly, constructive and respectful criticism is being offered regarding the USPTO’s patent examination process.

  1. USPTO Must Improve Implementation of the Berkheimer Memorandum by the USPTO Examining Corps

The Berkheimer Memorandum changed the examination procedure for subject matter eligibility by the USPTO’s Examining Corps.  Specifically, the Berkheimer Memorandum requires examiners to put forth evidence, e.g., by citing to patent specifications, court cases, and publications, that claim elements and combinations of claim elements are well-understood, routine, and conventional under the Alice test.  However, many examiners and their supervisors remain unaware of these changes and continue to issue Office actions with conclusory rejections.  In particular, few office actions have any actual mention of the Berkheimer decision and examiners are finding claims to be patent ineligible without providing the necessary support specified in the Berkheimer Memorandum as being required.

Moreover, when this matter is brought to the attention of most examiners, a positive response is often received.  Most examiners and their supervisors have volunteered to vacate pending office actions and issue new office actions based on the guidance in the Berkheimer Memorandum upon learning of its existence.  Still, almost four months have passed since the USPTO issued the Berkheimer Memorandum, and many examiners remain oblivious to the subsequent changes in examination procedure and subject matter eligibility case law.

Accordingly, this situation further illustrates many problems that exist among patent applicants and patent practitioners in determining patent eligible subject matter with any certainty. Over the past twenty years, the USPTO’s stance on patent eligible subject matter has evolved from the time before Bilski v. Kappos, 130 S.Ct. 3218 (2010), through the immediate aftermath of Alice, and continuing through the Berkheimer decision.  For example, Osha Liang LLP has decades of experience overcoming these issues for inventions focused on, inter alia, business methods, pure software applications, biotechnology, and the chemical arts.  However, most inventors, new patent applicants, and many patent practitioners who are focused primarily on hardware technologies lack substantial experience with respect to the many and varied patent eligibility issues.  Thus, rather than promoting a patent system that supports small inventors and protects all scientific discoveries alike, the current patent system only rewards clients who have the best legal representation, to the detriment of many other patent applicants.

Accordingly, the focus of the current patent system is directed toward a patent practitioner’s skill at practicing before the USPTO.  Specifically, the current patent system fosters gamesmanship where avoiding certain unfavorable art units and examiners is almost as important as the actual subject matter of the claimed invention. Accordingly, the Berkheimer Memorandum is a valuable and important step forward.  Unfortunately, far more remains to be done to bring uniformity to the USPTO that would allow both examiners and patent applicants to be confident on what subject matter qualifies for the eligibility of a patent.

  1. USPTO Must Be Proactive in Confirming Past and Future Effects of Berkheimer v. HP, Inc. on USPTO Proceedings

The Berkheimer decision opened a Pandora’s box that results in many new questions, while providing few actual answers to past questions. For example, by introducing issues of fact under Step 2B of the Subject Matter Eligibility Test, patent applicants must now determine how much of the previous subject matter guidance and the MPEP remains applicable to future proceedings before the USPTO.  In particular, the USPTO has previously provided analyses of hypothetical claims and claims drawn from case law, e.g., in the 2014 Interim Guidance on Patent Subject Matter Eligibility, the July 2015 Update, and the May 2016 Update.  However, the Berkheimer Memorandum fails to address which past guidance remains applicable after the Berkheimer decision.  Where there is confusion and uncertainty concerning a relevant legal authority, most examiners tend to err on the side of caution and ignore arguments from the patent applicant that lack clear support from the USPTO and the courts.

Furthermore, the USPTO guidance has typically been reactive with respect to court decisions.  When a relevant precedential case issues, the USPTO sometimes responds by issuing a memorandum.  However, many questions presented by the Berkheimer decision may remain unanswered for years to come.  For example, it remains unclear precisely who is the hypothetical trier of fact under the Berkheimer decision, e.g., an ordinary judge, a person having ordinary skill in the art, or an ordinary member of the public?  What level of deference should be given to an examiner’s findings of fact under 35 U.S.C. § 101?  Likewise, are claims still analyzed for subject matter eligibility under the broadest reasonable interpretation for subject matter eligibility, or by using the Phillips’ standard used by district courts in litigation, or under a standard generally more favorable to patent applicants as demonstrated in Amdocs, Ltd. v. Opennet Telecom, Inc. 841 F.3d 1288, 1299 (Fed. Cir. 2016)?  Likewise, examiners typically determine patentability based on a preponderance of the evidence.  Does this standard of review still apply to Alice rejections under 35 U.S.C. § 101?

  1. USPTO Must Provide Subject Matter Eligibility Guidance for Patent Trial and Appeal Board Judges

One issue unaddressed by the Berkheimer Memorandum and past USPTO memoranda is the scope of subject matter eligibility guidance for Patent Trial and Appeal Board (hereinafter “PTAB”) judges.  This is an important issue for both ex parte patent applications and AIA trial proceedings, i.e., post grant review and the transitional program for covered business method patents, as patent subject matter eligibility can form the basis for invalidity.

Since the Berkheimer decision, the amount of weight given to past subject matter eligibility guidance continues to vary dramatically from panel to panel at the PTAB.  Some PTAB decisions emphasize that the legal issues are limited to Supreme Court and Federal Circuit case law.  Other PTAB decisions rely on concepts introduced by the USPTO’s Subject Matter Guidance, e.g., the “reasoned rationale” described in the July 2015 Update. By knowing in advance whether a PTAB panel will consider arguments based on the USPTO guidance, patent professionals and patent applicants can tailor their arguments and amendments for better consideration before the USPTO.

Secondly, without any USPTO guidance, many PTAB judges continue to treat novel arguments as ones of first impression.  Accordingly, such arguments are routinely decided against the patent applicant with very little support in judicial precedent.  For example, given the expense of ex parte appeals to the Federal Circuit, the role of the prima facie case of unpatentability with regard to 35 U.S.C. § 101 rejections lacks a significant body of precedential case law.  Thus, many PTAB panels ignore those arguments on the basis that they are exclusive to novelty and nonobviousness.

  1. Conclusion

There has been considerable improvement in the patent examination process by the USPTO’s Examining Corps and the PTAB since the Berkheimer decision.  However, much work remains to be done before patentees and patent applicants reach the same level of certainty found in many European and Asian countries regarding patent subject matter eligibility.  A strong statement from the USPTO leadership in the form of further guidance would be a significant step in the right direction.