[Ip-health] Comments by USPTO Director Andrei Iancu on standards for granting patents

James Love james.love at keionline.org
Mon Sep 24 09:42:25 PDT 2018


Pretty important initiative at the USPTO on providing new guidance on what
can be patented.  Others may want to provide their thoughts on the
proposals USPTO Director Iancu describes in his talk today at an IPO
meeting in Chicago.

Jamie

-----------
*  "I’ll focus my remarks on a specific proposal for Section 101—patentable
subject matter."

* 'Let me put this in my own words: How can a claim be novel enough to pass
102 and nonobvious enough to pass 103, yet lack an “inventive concept” and
therefore fail 101? Or, how can a claim be concrete enough so that one of
skill in the art can make it without undue experimentation, and pass 112,
yet abstract enough to fail 101? How can something concrete be abstract?  .
. . These problems confound the most sophisticated practitioners in our
patent system. People simply don’t know how to draw these distinctions. If
something is not inventive, then invalidate it under 102 or 103. If
something is indefinite, or too broad to be fully enabled or described,
then invalidate it under 112."

*  "So at the USPTO we are contemplating revised guidance to help
categorize the exceptions—and indeed to name them—and instruct examiners on
how to apply them.   More specifically, the contemplated guidance would do
two primary things: First, it would categorize the exceptions based on a
synthesis of the case law to date. And second, if a claim does recite a
categorized exception, we would instruct examiners to decide if it is
“directed to” that exception by determining whether such exception is
integrated into a practical application. "



https://www.uspto.gov/about-us/news-updates/remarks-director-iancu-intellectual-property-owners-46th-annual-meeting

Remarks by Director Iancu at the Intellectual Property Owners Association
46th Annual Meeting
September 24, 2018

Chicago, Illinois

As prepared for delivery

Good morning everyone, and thank you, Henry [Hadad] for that generous
introduction. And thank you for inviting me. It’s a pleasure to be with all
of you this morning and to have this opportunity to kick off IPO’s Annual
Meeting. Much to the benefit of the U.S. innovation community, our two
organizations—the USPTO and IPO—have had a wonderful, longstanding
relationship—a relationship that I hope will continue for many years to
come.

We have been quite busy at the USPTO.  Among other things, we are
addressing some of the thorniest issues surrounding the patent system,
attending to important trademark developments, and dealing with challenges
posed by our legacy IT systems. And all while maintaining our high
standards and pendency goals.

On the trademark side, in fact, we have been consistently meeting or
exceeding our goals for the past 12 years. That has not changed, despite a
very significant growth in the number of applications. That growth has
required us to hire, train, and integrate more trademark examiners, while
maintaining our culture of organizational excellence.

A significant part of the growth in applications has come from China. In
fact, over the past 6 years, the number of trademark applications from
China has risen almost 1100 percent. This has presented increased issues
with the unauthorized practice of law from individuals outside the U.S. In
light of this and other issues, we are considering a possible notice of
proposed rulemaking that would require foreign trademark applicants and
registrants to be represented by a U.S. licensed attorney to file trademark
documents with the USPTO.

We are also taking a look at various options for decluttering our
Trademarks register, and we have also recently launched a campaign aimed at
reducing counterfeiting. We are likewise taking action on a variety of
other IP issues.

We have played, for example, a leading role in the Music Modernization Act,
which passed the House earlier this year, and was amended and passed by the
Senate just last week. This major bipartisan legislation updates copyright
law to reflect the realities of music licensing in the digital age and
adequately compensate legacy artists and music producers for the fruits of
their labor.

There is indeed a lot of great work being done at the USPTO on all aspects
of intellectual property.

We’ve also been very busy with our IT systems. Some of you are no doubt
aware of the week-long outage the USPTO experienced last month, affecting
some patent filings systems, among other things. The immediate culprit was
a corruption of some tables in the PALM database. We were able to restore
the system without loss of data, and in the process we upgraded the servers
on which this particular database resides. However, a lot more work remains.

As a general matter, our legacy systems are old and it is time—indeed, well
beyond time—to undertake a fundamental modernization effort. And so, we are
taking a broad, fresh look at our IT systems. To that end, we have
assembled a task force of USPTO leaders, and we are also working with
outside consultants, to tackle this issue head-on and as quickly as
possible. No options are off the table when it comes to modernizing these
vital IT systems.

We’ve also posted a job opening to fill our vacant Chief Information
Officer position, and are looking for the very best applicants, both from
inside the government, as well as from industry. So I encourage you to ask
the highest qualified IT leaders that you might know to apply. Information
is available at the USPTO website. This is a unique opportunity to help us
fundamentally transform our IT systems and transition to state-of-the-art
technology.

Now as to patents: Discussing everything we are doing on the patents front
would probably take the rest of this conference, something Henry would
probably not be happy about. So in the interest of time, I’ll focus my
remarks on a specific proposal for Section 101—patentable subject matter.

As many of you know, we recently issued to our examiners two new guidance
memos on Section 101: the first dealing with the “conventionality” step in
the Mayo/Alice framework, and the second on “methods of treatment” claims.
Our data shows that these two memos have already improved the 101 analysis
during examination.

But significantly more work needs to be done, especially on the “abstract
idea” exception.

I know that IPO committees have been hard at work on a legislative fix to
Section 101. Indeed, IPO and AIPLA have joined forces recently and proposed
new statutory language. Should Congress be interested in moving forward
with hearings or legislation, the USPTO would be very happy to help. As we
all know, however, any legislative effort takes a long time, and the result
is uncertain.

In the meantime, the USPTO cannot wait. We have thousands of examiners who
struggle with these issues on a daily basis. Our examiners need additional
guidance now. And so do patent applicants, patent owners, and the public.
Whether through legislation or otherwise, there is a growing consensus that
the issue must be promptly addressed.

In fact, several Federal Circuit judges have recently filed concurrences or
dissents explaining the uncertain nature of the law and calling for change.

In order to “work its way out of what so many in the innovation field
consider are §101 problems,” Judge Lourie—in an opinion joined by Judge
Newman—appealed to a higher authority. “Resolution of patent-eligibility
issues requires higher intervention, hopefully with ideas reflective of the
best thinking that can be brought to bear on the subject.”

Judge Plager, in another case, noted that “the state of the law is such as
to give little confidence that the outcome is necessarily correct.” He
explained that, given current §101 jurisprudence, it is “near impossible to
know with any certainty whether the invention is or is not patent
eligible.” And he concluded that we currently have an “incoherent body of
doctrine.”

And Judge Linn explained that the abstract idea test is “indeterminate and
often leads to arbitrary results.”

I agree with all these sentiments.

Judge Giles Rich, an icon of patent law with an unparalleled understanding
of—and impact on—our system, stated, in 1979, the crux of the problem with
respect to §101 jurisprudence. He said at the time that problems can arise
due to the “unfortunate… though clear commingling of distinct statutory
provisions which are conceptually unrelated, namely, those pertaining to
the categories of invention in §101 which may be patentable, and to the
conditions for patentability demanded by the statute…”

This was almost 40 years ago! How perceptive and prescient Judge Rich was.

Let me put this in my own words: How can a claim be novel enough to pass
102 and nonobvious enough to pass 103, yet lack an “inventive concept” and
therefore fail 101? Or, how can a claim be concrete enough so that one of
skill in the art can make it without undue experimentation, and pass 112,
yet abstract enough to fail 101? How can something concrete be abstract?

These problems confound the most sophisticated practitioners in our patent
system. People simply don’t know how to draw these distinctions. If
something is not inventive, then invalidate it under 102 or 103. If
something is indefinite, or too broad to be fully enabled or described,
then invalidate it under 112.

We have decades of case law from the courts and millions of examinations at
the PTO which guide us in our 102, 103, and 112 analyses. People know these
standards and how to apply these well-defined statutory requirements.

The genius of the 1952 Patent Act, of which Judge Rich is widely viewed as
a principal author, was that it categorized the bases for patentability.
Our recent §101 case law mushes them all up again. As Judge Rich said, this
“may lead to distorted legal conclusions.” And it has. And it must end.

So I propose that we go back and heed Judge Rich’s direction, and keep
rejections in their own distinct lanes—as directed, in fact, by the 1952
Act.

Let’s stop commingling the categories of invention on one hand, with the
conditions for patentability on the other. Section 101 is about subject
matter. It is meant to address categories of matter that are not ever
eligible on their own, no matter how inventive or well-claimed they are.

Here is a hint: If the claims can be fixed by slightly different claiming,
by narrower claiming, or by more definite claiming, this is likely a
“conditions” problem—not a subject matter problem. A pure discovery of
nature, like gravity for example, is not eligible no matter how new, how
brilliant, and how carefully the claims are written. This is an example of
a subject matter issue. The category itself is problematic.

Alright, but what are these problematic categories? I ask because I believe
that we must define the categories for these exceptions clearly, lest—in
Justice Clarence Thomas’s words—we “swallow all of patent law.”
Because—again quoting Justice Thomas—“at some level, ‘all
inventions…embody, use, reflect, rest upon, or apply laws of nature,
natural phenomena, or abstract ideas.’” Clearly, though, not all inventions
are subject to a judicial exception. So what is the specific subject matter
that is problematic and we must exclude? We must be clear, lest we
perpetuate the current state. People should know up front. If nothing else,
for the sake of a predictable ecosystem, let’s be transparent.

And in particular, the issue needing most attention is, what precisely is
the meaning of the “abstract idea” exception? Section 101 itself lists four
categories: process, machine, manufacture, and composition of matter. The
judicial exceptions should likewise be clearly categorized. As Judge Rich
explained, when we deal with §101, “the sole question…is whether the
invention falls into a named category, not whether it is patentable...”

So at the USPTO we are contemplating revised guidance to help categorize
the exceptions—and indeed to name them—and instruct examiners on how to
apply them.

More specifically, the contemplated guidance would do two primary things:
First, it would categorize the exceptions based on a synthesis of the case
law to date. And second, if a claim does recite a categorized exception, we
would instruct examiners to decide if it is “directed to” that exception by
determining whether such exception is integrated into a practical
application. These two clarifications would help drive more predictability
back into the analysis while remaining true to the case law that gave rise
to these judicial exceptions in the first place.

So first, what exactly should be captured by the judicial exceptions to
§101? In essence, and because we no longer want to mush subject matter with
the conditions of patentability, the exceptions should capture only those
claims that the Supreme Court has said remain outside the categories of
patent protection, despite being novel, nonobvious, and well-disclosed. And
what are the categories of inventions that the court told us that we should
not patent even where the applicant demonstrates full compliance with
Sections 102, 103 and 112? The Supreme Court gave us the answer: the “basic
tools of scientific and technological work.”

And what are these “basic tools?” I believe that the Supreme Court has also
told us that, at least through their examples. For example, they certainly
include pure discoveries of nature, such as gravity, electromagnetism, DNA,
etc.—all natural and before human intervention. So, no matter how brilliant
the discovery of a certain DNA sequence in nature might have been, the
court said we should not issue a patent in the absence of more. The Myriad
case is a recent example.

Also, fundamental mathematics like calculus, geometry, or arithmetic per
se. That is, no matter how novel and well-described Newton’s calculus may
have been, it is still not patentable by itself. It can be thought of as
abstract no matter what. Perhaps “inherently” ineligible, some might say.
The Benson case is an example.

Some basic “methods of organizing human activity,” such as fundamental
economic practices like market hedging and escrow transactions, have also
been excluded by the Supreme Court in Bilski and Alice.

And the court has also warned against pure mental processes such as forming
a judgment or observation. Again, by itself, something performed solely in
the human mind can be thought of as abstract no matter how it is claimed.

The Supreme Court has been interpreting this statute for the past 200 years
or so, and throughout that time has given only a limited number of examples
of these “basic tools of scientific and technological work”—and arguably
they can all generally fit into the categories I just mentioned. So let’s
turn now and ask in a bit more detail, what do the various exceptions
articulated by the Supreme Court really encompass? There is less difficulty
with understanding the categories for laws of nature and natural phenomena.

Folks can arguably identify things like gravity or DNA in a claim. Abstract
ideas, on the other hand, have proven more challenging to define. But a
thorough review of the relevant case law helps us draw more clear lines. At
the USPTO we have undertaken just such a review and have studied every
relevant case in detail.

And so, the proposed PTO guidance would synthesize “abstract ideas” as
falling into the following three categories:

*  Mathematical concepts like mathematical relationships, formulas, and
calculations

*  Certain methods of organizing human interactions, such as fundamental
economic practices commercial and legal interactions; managing
relationships or interactions between people; and advertising, marketing,
and sales activitie

*  Mental processes, which are concepts performed in the human mind, such
as forming an observation, evaluation, judgment, or opinion

Under the first step of the proposed guidance, we would first look to see
if the claims are within the four statutory categories: process, machine,
manufacture, or composition of matter. This is not new—we always do this.
If statutory, we would then check to see if the claims recite matter within
one of the judicial exceptions, categorized as I just mentioned. This is
the new approach.

If the claims at issue do not recite subject matter falling into one of
these categories, then the 101 analysis is essentially concluded and the
claim is eligible. This alone would resolve a significant number of cases
currently confounding our system. If an examiner does not find matter
within the disallowed categories, he or she can move on.

Now, on the other hand, if the claims do recite subject matter in one of
the excluded categories, the Supreme Court has instructed that we need to
do more analysis. Specifically, the court instructed us that in such cases
we need to decide whether the claims are “directed to” those categories.

To that end, we must first understand what the line is that the court wants
us to draw to decide whether the claim is “directed to” an excluded
category or not. The proposed new guidance would explain that Supreme Court
jurisprudence taken together effectively allows claims that include
otherwise excluded matter as long as that matter is integrated into a
practical application. The line, in other words, delineates mere
principles, on one hand, from practical applications of such principles, on
the other.

For example, in Le Roy v. Tathem, the court said in 1853 that “a new
property discovered in matter, when practically applied in the construction
of a useful article of commerce or manufacture, is patentable.” Then 128
years later, in Diamond v. Diehr, the court repeated that “an application
of a law of nature or mathematical formula to a known structure or process
may well be deserving of patent protection.” And recently, in Mayo, the
court explained that “applications of such concepts to a new and useful end
… remain eligible for patent protection.”

And so, if the claim integrates the exception into a practical application,
then the claim is not “directed to” the prohibited matter. In such cases,
the claim passes 101 and the eligibility analysis would conclude.
Otherwise, we would move to step 2 of Alice, for example as explained in
the Office’s Berkheimer memo from earlier this year.

It is important to note that the first step of our analysis does not
include questions about “conventionality,” which are addressed in Alice
Step 2. That is, it does not matter if the “integration” steps are arguably
“conventional”; as long as the integration is into a practical application,
then the 101 analysis is concluded. This helps to ensure that there is a
meaningful dividing line between 101 and 102/103 analysis.  A fully
“conventional” yet patent-eligible claim may still be unpatentable as
obvious. But it is better to address such a claim with obviousness law that
has been developed over 65 years of practice.

The analysis also does not deny claims as ineligible merely because they
are broad or functionally-stated or result-oriented. I understand the
concern with certain types of broad, functionally defined claims that do
not have sufficient support in the specification. But for these cases,
USPTO examiners know, and will receive further guidance and training on,
how to apply well-defined Section 112 principles.

Put another way, the examination does not conclude merely because we
overcome Section 101; we must still examine for patentability under
sections 102, 103 and 112. And so for claims that pass 101 because they do
not articulate matter in a defined category, or that integrate the matter
into a practical application, we can rest assured that other sections of
the code should still prevent a patent if the claim is not inventive or is
merely on a non-enabled or undescribed or indefinite idea.

In sum, the proposed guidance for Section 101, which addresses step 1 of
Alice, would explain that eligibility rejections are to be applied only to
claims that recite subject matter within the defined categories of judicial
exceptions. And even then, a rejection would only be applied if the claim
does not integrate the recited exception into a practical application. This
provides significantly more clarity for the great bulk of cases.

Sure, there will be a number of cases that would still be difficult to
resolve when we ask whether a claim is within one of the excluded
categories, or whether it is a practical application of it. But for the
vast majority of cases in the big middle, I suspect that the proposed
approach would be significantly simpler.

And we are certainly in need for some simplification.

For many claims right now, we have an option to reject or invalidate, for
violations of patentability conditions, under either: A patentability
condition such as 102, 103 or 112, or Section 101 subject matter.

Judge Rich was again perceptive, when he noted 40 years ago that “To
provide the option of making such a rejection under either 101 or [a
condition for patentability] is confusing and therefore bad law.” Just as
Judge Rich warned, we have gotten ourselves into a rut when it comes to
Section 101 analysis. With the proposed new guidance, the USPTO is trying
to navigate our examiners out of that rut given the current statute and
judicial precedent.

And I hope other authorities will join in helping us get out of the rut, at
least by keeping rejections in their lane and by clearly categorizing the
subject matter of any exception. Please note that if we are to issue such
revised new guidance, it would take some time to finalize. During that
time, I welcome your comments and thoughts on this and any other proposal.

In the end, we all have the same goal in mind. Born of our Constitution and
steeped in an inspiring history of world-changing innovation, the American
patent system is a crown jewel, a gold standard. Working together, we can
ensure increased clarity in the patent system, and thus ensure that the
United States will continue to lead the world in innovation and
technological development.

Thank you again for the opportunity to be with you here today. I would be
happy to answer any questions you might have.

-- 
James Love.  Knowledge Ecology International
http://www.keionline.org
twitter.com/jamie_love


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