Gray-Le Coz and Duan: USPTO’s Immediate Implementation Alice v. CLS Bank

In our newest Patently-O Patent Law Journal article, Charles Duan and Tristan Gray-Le Coz of Public Knowledge provide details of the USPTO’s recent implementation of Alice Corp. Pty. Ltd. v. CLS Bank International.  In particular, the pair used a FOIA request to obtain information on applications withdrawn from issuance and analyzed the 800+ cases whose allowances were withdrawn following Alice.  The pair writes:

Unsurprisingly, we found that business methods patents were particularly vulnerable to rejection. However, the diversity of USPTO classifications in the withdrawn allowance data set indicates the range of subject matter that is suspect under Alice. In many fields it is apparently common to draft “computer-plus” patents that inappropriately try to take a monopoly on abstract ideas, fundamental economic practices, or methods of organizing human behavior by carrying out bare concepts on a generic computer, at least in the interpretation of USPTO examiners.

Read the Article: Tristan Gray–Le Coz and Charles Duan, Apply It to the USPTO: Review of the Implementation of Alice v. CLS Bank in Patent Examination, 2014 Patently-O Patent Law Journal 1.

61 thoughts on “Gray-Le Coz and Duan: USPTO’s Immediate Implementation Alice v. CLS Bank

  1. Hi! Thought I’d jump in with a few responses and thoughts.

    #4: I would love to do some further analysis on assignee data using the actual database rather than the patent publication cover sheets. Among other things, it might answer some questions about prevalence of NPEs in this set, since they tend to buy patents on the secondary market and thus would not be named on the publication. The assignment database is somewhat difficult to analyze empirically, though, because there are all sorts of odd things recorded (e.g., security interests), and because often one must look back in the priority chain to find all the relevant assignments. So it would still be a fair amount of work.

    #1.3, #6: we mention in the article that comparison against a baseline dataset would be a useful next step. This is why we focused on conclusions about the nature of the rejected applications, conclusions that could be drawn from our dataset alone.

    The “1% of applications were withdrawn” (#1.3.2) statistic is very interesting. I did a search for patents issued in class 705 that issued each month in the last 12 months. Up through July, there were about 600 to 900 class-705 patents issuing every month. In August, 584 such patents issued; in September, 443 patents; and in October, 313. I’m wary to draw too many conclusions out of that, but it is a pretty striking difference.

    #3: absolutely correct; the USPTO will not release information on unpublished applications, by FOIA or otherwise. (I thought I’d mentioned that in the article, but must have forgotten.) But there is an oblique way of getting at that information, by computing the dip in unpublished applications, using the same sort of methodology as in the above paragraph. That would not reveal information about the rejected applications, but would at least give a count estimate.

    My gut instinct is that the unpublished applications will qualitatively not be far off from the published ones in terms of classes rejected, assignees, and other data we considered, with the possible exception of priority claims. Perhaps more small entities will be represented among the unpublished applications (my practice experience suggests that would be so).

    1. The “1% of applications were withdrawn” (#1.3.2) statistic is very interesting. I did a search for patents issued in class 705 that issued each month in the last 12 months. Up through July, there were about 600 to 900 class-705 patents issuing every month. In August, 584 such patents issued; in September, 443 patents; and in October, 313. I’m wary to draw too many conclusions out of that, but it is a pretty striking difference.

      That’s fantastic news.

      1. It’s neither good nor bad, unless you have a bias against a particular subject matter that likely you don’t understand with the depth of PHOSITA. The statistics alone provide no insight into whether the decisions correspond a net public benefit, whether the decisions are procedurally fair, whether the decisions follow current law, etc.

        1. MM spends 10 hours a day (from what I can see) blogging with virulently anti-information processing patent propaganda.

          Draw your own conclusions.

          1. No – the frequency of your posts is more spread out than his. Most of his are bunched in the evening, with singles scattered out.

            Yours takes a vacation for a day or two, then is fairly consistent for the next couple of days.

            1. And yours are very consistent: at least one response for everyone of my posts. Also, as to factually being correct are also very consistent. You are batting ZERO for all of your posts so far.

              I am hoping that you will slowly mature….and will turn.

    2. Perhaps more small entities will be represented among the unpublished applications (my practice experience suggests that would be so).

      That’s also consistent with my understanding of how many small entities in the Alice-impacted “fields” operate.

  2. Thanks JM. Had someone not made this rather important factor and consideration, I would have.

    Perhaps the authors could help us out with this.

  3. Why should any business method patent application be “vulnerable” in light of the “Integration Analysis” from Mayo and Alice? Providing of course the application was prepared after Mayo with a legally “Integrated” concept, the claimed business method is not only statutory, its 101 bullet proof all the way to the Supreme Court of the United States of America. Whenever I have presented the Courts Integration Analysis on this blog no anti patent commentator on this blog has been able to overcome it with any “legal” argument.
    For example, let’s assume a claim is clearly an “Integrated” technological process.  At this point there is no need to even proceed to step two of the Alice two step test.   However, for the sake of argument let’s assume one of the District Court Judges distills the invention down to the gist, as is their trend, and then declares the invention directed to the abstract idea of something like verifying a transaction.  

    Even then the Supreme Court in Mayo made it explicitly clear that the exception,  (in this example an abstract idea of verifying a transaction)  “must” be “Integrated” {to the point} it no longer covers/pre-empts the exception itself. ( See Alice, Mayo)

    According to the Supreme Court in Mayo the Judge “must” proceed with the Integration Analysis and determine if the claims pre-empt.  If it does not appear the claims pre-empt, the claims are legally Integrated and are patent eligible subject matter. And that’s the law.

    1. Providing of course the application was prepared after Mayo with a legally “Integrated” concept, the claimed business method is not only statutory, its 101 bullet proof all the way to the Supreme Court of the United States of America. Whenever I have presented the Courts Integration Analysis on this blog no anti patent commentator on this blog has been able to overcome it with any “legal” argument.

      Did you believe that the claims before the Supreme Court in Alice were “integrated” (whatever that means)? What did you tell everybody here about the eligibility of “do it on a computer” type claims prior to that decision?

      1. “What did you tell everybody here about the eligibility of “do it on a computer” type claims prior to that decision?”
        Here we go with the personal inquiry, ( which leads to the attempt at personal attack and impugning of my credibility ) as opposed to presenting a “legal” argument that can overcome, disprove, or debunk the legal analysis I have presented at 5, on the Supreme Court’s Integration Analysis. For example, can you or anyone in the world, cite any Supreme Court holding, statue, or section of the Constitution that would make the “Integration Analysis” I presented at 5, legally incorrect?

          1. Also, since you claim ignorance on the definition of “Integrated”, here is the ordinary, contemporary definition of the term according to dictionary.reference.com:
            1.combining or 
            coordinating separate 
            elements so as toprovide a  harmonious, interrelated  whole.
            2.organized or  structured so that constituent units function  cooperatively.

            Now, the claim in Alice was an integrated
             process, according to the dictionary definition. However according to the Supreme Court, the claim “must” also overcome the Courts preemption inquiry, which is part of the Integration analysis required at 101. ( which I demonstrate at 5 )

            Thus, even if a claim is “Integrated” as a matter of fact, it must also be, “Integrated” as a matter of law. If the claim wholly preempts a Court created exception it will not be statutory.

            Now that the Court cleared these matters up most of these problems at 101 can be overcome at the writing of the Specification and claims. I know for a fact that smart patent attorneys and their clients are diligently making the necessary adjustments in post Mayo applications and in a couple of years we will evidence of that.
            Well, I hope this helps you understand. Just remember the inquiry at 101, is a matter of law and not hype.

            1. Thus … a claim … must .. be …“Integrated” as a matter of law.

              Wow. No kidding? Your next sentence:

              If the claim wholly preempts a Court created exception it will not be statutory.

              Is that the “legal” definition of “integration”?

              1. A claim is legally Integrated when it falls squarely within a process, manufacture, machine, or composition of matter. However the
                Analysis does not stop there. They’re exceptions to the statute. Again, the preemption inquiry is what leads to the correct answer as to if one is claiming for example, an abstract concept or an application of that concept that does not in effect take away the building blocks of future innovation and human ingenuity. Thus preemption is an important component of the Supreme Court’s 101 Integration Analysis.

          1. Thank you NWPA. Obviously the Courts 101 Integration Analysis is a real threat to the anti software and business method lobby.

        1. impugning of my credibility

          How dare I impugn the credibility of a self-proclaimed “expert!”

          LOL.

          Why not just answer the question instead of whining?

          1. I did answer the question at 5.1.1.1.1. And I do believe there is not any whining in that answer. However, it does require a certain level of comprehension to appreciate.

            I am sorry you are having such a hard time but these concepts can be difficult to grasp and apply. If you are feeling up to the challenge, how about answering my question from above. Can you or anyone in the world, cite any Supreme Court holding, statute, or section of the Constitution that would make the “Integration Analysis” I presented at 5, legally incorrect?

            If yes please do so now.

        2. He’s a gadfly with blinders, but I’ll give Mr. Mooney credit for this. His many posts got me thinking, years ago, about the quality of software-related patents, and, honestly, some practical problems with patent quality over the last ~20 years. Unfortunately lack of objectivity make it difficult for some of the valid points he makes to come through.

  4. Some suggested follow-up easy work – article mentions, “…we were able to obtain the names of the assignee listed on the cover of the publication. Of the 830 applications in our dataset, 541 (65%) listed an assignee”

    I just did a quick check against the spreadsheet provided, and of the first 20 pubs I checked having no assignee info, I saw that 90% of them have assignment information in the assignments database even though they may not have been recorded at the time the app went to pubs.

    Assuming a similar run rate (yes, assumptions are always dangerous), you could end up with over 95% of your dataset identified by assignee.

    I suggest this is not a lot of work to at least try to better answer the question.

  5. Note that the data set is not comprehensive since it is limited to only those files open to public inspection. Our firm handles a case that was withdrawn and it was not published by the Office and is not represented in the data set. Does it matter to the conclusions? Probably not, just pointing out that there is a blind spot no one has acknowledged. I didn’t see it mentioned in the article.

    1. Thanks for this. Although the vast majority of applications are now public and published, Znutar’s remark is especially pertinent here because business method and data-processing patents are relatively more likely to be unpublished.

      1. business method and data-processing patents are relatively more likely to be unpublished.

        Any theories as to why that might be?

        The obvious explanation is that the number of wanna-be patent trolls doing the submarine thing is certain to be highest in the art units where the fruit hangs lowest.

          1. Most countries don’t allow business method patents

            Most countries are smarter than the US when it comes to patents.

            Of the patents granted to the top companies in this article (i.e., those with the most withdrawn patents under Alice), what percent do you suppose derive from applications accompanied by a request for non-publication?

            I’ll be it’s a very, very tiny number, even small compared to the percentage of their pending applications that were just withdrawn.

            1. Most countries are smarter than the US when it comes to patents.

              Because the US leads the world in innovation…

              Um wait, that’s the opposite of the logic of Malcolm.

              (Yep)

              1. That is no longer true.

                The EU is now the center of physics research.

                China has some of the largest supercomputers, and is doing most of the high tech manufacturing for the US.

                Many of the high tech design is now being done in India.

                1. What exactly is “high tech manufacturing”. Is it manufacture of “high tech” products, or is it “high tech” manufacturing of anything?

                2. Designing and building machines to make memory chips.
                  making memory chips.
                  Designing integrated circuits.
                  Building integrated circuits.

                  Designing and building the PCs, phones, motherboards, supercomputers…

                  There are other fields also known as high tech such as genetics, biochemistry, … But those I’m less familar with.

                  The most advanced CPUs are now being designed in the EU (I can’t say about the Chinese/Korean/Japanese designs, not having direct experience with them). Intel has been coasting refining some designs for about 10 years. Their last major attempt was the Itanium.

              2. Because the US leads the world in innovation…

                No doubt the USA is the #1 undisputed absolute world leader in bingo management, contract risk minimization, meal planning, and dividing up your credit card number in two emails.

                GOD BLESS AMERICA!

          2. The form “most countries” reminds me of the days when the USA was First to Invent and its patent attorneys would always cautiously write that “most countries” have a First to File patent law.

            I don’t know about “most countries” of the world not allowing patents for business methods as such. It’s “all countries of the world”, isn’t it? So, yes, why would any Applicant at the USA keep open the option to file abroad?

            1. MD: I don’t know about “most countries” of the world not allowing patents for business methods as such. It’s “all countries of the world”, isn’t it? So, yes, why would any Applicant at the USA keep open the option to file abroad?

              There’s other reasons that applicants might wish to publish.

              Provisional rights is one obvious reason. Uniformity and simplicity in portfolio management is another.

              But there may be overriding considerations that inspire certain applicants to keep their patent-seeking activities “secret” until the last possible moment.

              And the US system encourages that behavior. Why? Because the people who like that “secrecy” are super dooper important! How do we know that? Because they say so all the time! Can you think of any other reason?

  6. This was a very interesting, thoughtfully written article. I look forward to more.

    The identities of the corporate assignees affected by this action was revealing about the state of patenting activity today. … [T]he presence of numerous diverse industries and companies in the list of affected assigness speaks both to the breadth of the Alice ruling and, perhaps more importantly, [to] the attractiveness of business methods patents that lured all sorts of companies into that field of applications.

    Not only “all sorts of companies” but all sorts of people, particulary patent lawyers and other “insiders” dreaming of compounding their existing wealth and “getting rich of the Internet” by exploiting the gaping failures of our broken patent system.

    Our data suggest that the USPTO did not simply focus on a small group of classes but instead set the business methods class as the starting point of their investigation, discovering other relevant fields of art such as gaming and education. This again suggests that the problems brought to light by Alice, namely the erroneous patenting of abstract ideas tied to generic technologies, was widespread across many different fields and industries.

    That problem was widespread and it surely remains widespread.

    There are a lot of granting applications and a lot of pending applications that are as bad or worse than the claims that were tanked in Alice. Why? Because there is nothing easier to “innovate” than a claim that protects abstractions and/or information and/or information processing, where that claim is couched in “generic technology.” Such claims are all invalid and unenforceable and many of them — thousands of them — will be shot down by the PTO and the courts if the applicant/patentee insists on pressing forward.

  7. Top ten applicants receiving Post-Alice Notice of Allowance Withdrawals:

    IBM, eBay, Microsoft, IGT, JPMorgan, American Express, Oracle, Bank of America, WMS Gaming, Google

    Clearly the system is totally biased against “the little guy” because Wells Fargo got a patent allowed.

    LOL

    1. “IBM,”

      Woulda thunk it?

      “WMS”

      Definitely. I will say this though for WMS, they are very gracious in terms of taking their 101’s “on the chin”. They know they’re skirting the edges in their apps and they’re just glad for the ones they get.

        1. 6, you just outed yourself!

          I used to dabble in the slot machine art units at my old firm. Based on his history of comments I’m confident that I can list 3 or so Examiners and that 6 would be on that list. If I was a betting man (zing!) I know who I’d put my money on, too.

          1. You guys, so funny. I’ve been outted for years for a whole lot of people. But I don’t recall working in the “slot machine arts”. WMS has lots of apps outside of “the slot machine arts” from what I recall, card playing etc.

      1. IBM has consistently backed software patents, diverting attention by referencing encryption and the use of computers to control tools. Their main objective is now revealed: business method patents.
        They should have no further credibility on this topic as they are not telling us the truth about why they are so interested.

        1. Idk if I’d call that their “objective”. They simply saw opportunity granted to them by the courts, were some of the most sophisticated patent users around, and took advantage of what was being gifted to them via government entitlement. It doesn’t take tomschemery to make that happen.

          1. 6, the point I am making is that they were not entirely honest in their amicus brief to the Supreme Court when they argued that simply reciting a computer in a claim would be sufficient to pass 101.

        2. “IBM has consistently backed software patents”

          Consistently?

          IBM was cited by J Wm Douglas in Gottschalk v. Benson for its brief urging that software remain unpatentable.

          1. True. In the 60’s and 70’s, IBM was still big iron and it viewed software patents as dangerous. During the ’80s and ’90s, their business transitioned to integration where software was important. Their patent strategy transitioned as well.

            I had many a good conversation with Maury Klitzman (IBMer who was there at the time) about IBM’s position in Benson. He would rail that a programmed computer was not “new.”

            Seems he understood the something about this issue that I frankly did not understand at the time, but have come to more fully appreciate.

            1. Ned,

              The old IBM view was strictly based on a business model view of the world – one which almost capsized the company.

              You show an amazing level of naïveté on these historical matters.

              1. really???

                I believe the IBM view is still based on a business model view of the world.

                Very likely IBM only started taking software patents just to prevent others from attacking them.

    2. You are missing the point Malcolm – where on your list are these ‘scourges?’

      That you are missing the point is one thing – that you are attempting to misguide the discussion with an implicit accusation that “my logic” serves some defense of any particular entities is quite another.

      Try less dust-kicking please.

        1. Of course you don’t (cue the Vinnie Barbarino [shrug] mechanism)

          …as to what my ‘clue status’ is, kindly refrain from your usual spin – thanks.

      1. Anon brosef, the “scourge” is mostly made up of a bunch of small time entities, not the big players that are filing lots under one name. Not that these big players are not contributing to the filing of such apps.

    3. To investigate bias it is necessary to normalize the number of grants withdrawn for 101 reasons by the total number of patent applications submitted.

        1. The 820 reported here is thus a little under 1% of similarly situated applications.

          Wow, so the PTO really did go completely draconian bonkers in the wake of Alice.

          Not.

          I wonder how many thousands of “lucky” applicants with invalid claims escaped the net that was cast by the PTO? Oh well. Bygones.

      1. My rough normalization:

        The cases we’re talking about here were all about to issue (had received a notice of allowance) but were withdrawn from issue.

        The average time from NOA to Issue is about 20-weeks. And so, at the time of the mass-withdrawal, about 110,000 applications were likely sitting in the post-NOA queue. The 820 reported here is thus a little under 1% of similarly situated applications.

Comments are closed.