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This article is the first of a five-part series of articlesdealing with what patentability of machine learning looks like in2019. This article begins the series by describing the USPTO's2019 Revised Patent Subject MatterEligibility Guidance (2019 PEG) in the context of the U.S.patent system. Then, this article and the four followingarticles will describe one of five cases in whichExaminer's rejections under Section 101 were reversed bythe PTAB under this new 2019 PEG. Each of the five cases discusseddeal with machine-learning patents, andmay provide some insight into how the 2019 PEG affects the patentability ofmachine-learning, as well as software more broadly.
The US patent laws are set out in Title 35 of the United StatesCode (35 U.S.C.). Section 101 of Title 35 focuses on severalthings, including whether the invention is classified aspatent-eligible subject matter. As a general rule, an invention isconsidered to be patent-eligible subject matter if it "fallswithin one of the four enumerated categories of patentable subjectmatter recited in 35 U.S.C. 101 (i.e.,process, machine, manufacture, or composition of matter)."1 This,on its own, is an easy hurdle to overcome. However, there areexceptions (judicial exceptions). These include (1) laws of nature;(2) natural phenomena; and (3) abstract ideas. If the subjectmatter of the claimed invention fits into any of these judicialexceptions, it is not patent-eligible, and a patent cannot beobtained. The machine-learning and software aspects of a claim face101 issues based on the "abstract idea" exception, andnot the other two.
Section 101 is applied by Examiners at the USPTO in determiningwhether patents should be issued; by district courts in determiningthe validity of existing patents; in the Patent Trial and Appeal Board(PTAB) in appeals from Examinerrejections, in post-grant-review (PGR)proceedings, and in covered-business-method-review(CBM) proceedings; and in the Federal Circuit on appeals. ThePTAB is part of the USPTO, and may hear an appeal of anExaminer's rejection of claims of a patent application when theclaims have been rejected at least twice.
In determining whether a claim fits into the "abstractidea" category at the USPTO, the Examiners and the PTAB mustapply the 2019 PEG, which is described in the following section ofthis paper. In determining whether a claim is patent-ineligible asan "abstract idea" in the district courts and the FederalCircuit, however, the courts apply the "Alice/Mayo" test;and not the 2019 PEG. The definition of "abstract idea"was formulated by the Alice and Mayo Supreme Court cases. Thesetwo cases have been interpreted by a number of Federal Circuitopinions, which has led to a complicated legal framework that theUSPTO and the district courts must follow.2
The USPTO, which governs the issuance of patents, decided thatit needed a more practical, predictable, and consistent method forits over 8,500 patent examiners to apply when determining whether aclaim is patent-ineligible as an abstract idea.3 Previously, theUSPTO synthesized and organized, for its examiners to compare to anapplicant's claims, the facts and holdings of each FederalCircuit case that deals with section 101. However, the large andstill-growing number of cases, and the confusion arising from"similar subject matter [being] described both as abstract andnot abstract in different cases,"4 led to issues.Accordingly, the USPTO issued its 2019 Revised Patent SubjectMatter Eligibility Guidance on January 7, 2019 (2019 PEG), whichshifted from the case-comparison structure to a new examinationstructure.5 The new examination structure,described below, is more patent-applicant friendly than the priorstructure,6 thereby having the potential toresult in a higher rate of patent issuances. The 2019 PEG does notalter the federal statutory law or case law that make up the U.S.patent system.
The 2019 PEG has a structure consisting of four parts: Step 1,Step 2A Prong 1, Step 2A Prong 2, and Step 2B. Step 1 refers to thestatutory categories of patent-eligible subject matter, while Step2 refers to the judicial exceptions. In Step 1, the Examiners mustdetermine whether the subject matter of the claim is a process,machine, manufacture, or composition of matter. If it is, theExaminer moves on to Step 2.
In Step 2A, Prong 1, the Examiners are to determine whether theclaim "recites" a judicial exception includinglaws of nature, natural phenomenon, and abstract ideas. Forabstract ideas, the Examiners must determine whether the claimfalls into at least one of three enumerated categories: (1)"mathematical concepts" (mathematical relationships,mathematical formulas or equations, mathematical calculations); (2)"certain methods of organizing human activity"(fundamental economic principles or practices, commercial or legalinteractions, managing personal behavior or relationships orinteractions between people); and (3) "mental processes"(concepts performed in the human mind: encompassing acts people canperform using their mind, or using pen and paper). These threeenumerated categories are not mere examples, but arefully-encompassing. The Examiners are directed that "[i]n therare circumstance in which they believe[] a claim limitation thatdoes not fall within the enumerated groupings of abstract ideasshould nonetheless be treated as reciting an abstract idea,"they are to follow a particular procedure involving providingjustifications and getting approval from the Technology CenterDirector.
Next, if the claim limitation "recites" one of theenumerated categories of abstract ideas under Prong 1 of Step 2A,the Examiner is instructed to proceed to Prong 2 of Step 2A. InStep 2A, Prong 2, the Examiners are to determine if the claim is"directed to" the recited abstract idea. In this step,the claim does not fall within the exception, despite reciting theexception, if the exception is integrated into a practicalapplication. The 2019 PEG provides a non-exhaustive list ofexamples for this, including, among others: (1) an improvement inthe functioning of a computer; (2) a particular treatment for adisease or medical condition; and (3) an application of "thejudicial exception in some other meaningful way beyond generallylinking the use of the judicial exception to a particulartechnological environment, such that the claim as a whole is morethan a drafting effort designed to monopolize theexception."
Finally, even if the claim recites a judicial exception underStep 2A Prong 1, and the claim is directed to the judicialexception under Step 2A Prong 2, it might still be patent-eligibleif it satisfies the requirement of Step 2B. In Step 2B, theExaminer must determine if there is an "inventiveconcept": that "the additional elements recited in theclaims provide[] 'significantly more' than the recitedjudicial exception." This step attempts to distinguish betweenwhether the elements combined to the judicial exception (1)"add[] a specific limitation or combination of limitationsthat are not well-understood, routine, conventional activity in thefield"; or alternatively (2) "simply append[]well-understood, routine, conventional activities previously knownto the industry, specified at a high level of generality."Furthermore, the 2019 PEG indicates that where "an additionalelement was insignificant extra-solution activity, [the Examiner]should reevaluate that conclusion in Step 2B. If such reevaluationindicates that the element is unconventional . . . this finding mayindicate that an inventive concept is present and that the claim isthus eligible."
In summary, the 2019 PEG provides an approach for the Examinersto apply, involving steps and prongs, to determine if a claim ispatent-ineligible based on being an abstract idea. Conceptually,the 2019-PEG method begins with categorizing the type of claiminvolved (process, machine, etc.); proceeds to determining if anexception applies (e.g., abstract idea); then, if an exceptionapplies, proceeds to determining if an exclusion applies (i.e.,practical application or inventive concept). Interestingly, thePTAB not only applies the 2019 PEG in appeals from Examinerrejections, but also applies the 2019 PEG in its other Section-101decisions, including CBM review and PGRs.7 However, the 2019PEG only applies to the Examiners and PTAB (the Examiners and thePTAB are both part of the USPTO), and does not apply to districtcourts or to the Federal Circuit.
Case 1: Appeal 2018-0074438 (Decided October 10,2019)
This case involves the PTAB reversing the Examiner's Section101 rejections of claims of the 14/815,940 patent application. Thispatent application relates to applying AI classificationtechnologies and combinational logic to predict whether machinesneed to be serviced, and whether there is likely to be equipmentfailure in a system. The Examiner contended that the claims fitinto the judicial exception of "abstract idea" because"monitoring the operation of machines is a fundamentaleconomic practice." The Examiner explained that "thelimitations in the claims that set forth the abstract idea are:'a method for reading data; assessing data; presenting data;classifying data; collecting data; and tallying data.'"The PTAB disagreed with the Examiner. The PTAB stated:
Specifically, we do not find 'monitoring the operation ofmachines,' as recited in the instant application, is afundamental economic principle (such as hedging, insurance, ormitigating risk). Rather, the claims recite monitoring operation ofmachines using neural networks, logic decision trees, confidenceassessments, fuzzy logic, smart agent profiling, and case-basedreasoning.
As explained in the previous section of this paper, the 2019 PEGset forth three possible categories of abstract ideas: mathematicalconcepts, certain methods of organizing human activity, and mentalprocesses. Here, the PTAB addressed the second of these categories.The PTAB found that the claims do not recite a fundamental economicprinciple (one method of organizing human activity) because theclaims recite AI components like "neural networks" in thecontext of monitoring machines. Clearly, economic principles and AIcomponents are not always mutually exclusive concepts.9 Forexample, there may be situations where these algorithms are applieddirectly to mitigating business risks. Accordingly, the PTAB waslikely focusing on the distinction between monitoring machines andmitigating risk; and not solely on the recitation of the AIcomponents. However, the recitation of the AI components did notseem to hurt.
Then, moving on to another category of abstract ideas, the PTABstated:
Claims 1 and 8 as recited are not practically performed in thehuman mind. As discussed above, the claims recite monitoringoperation of machines using neural networks, logic decision trees,confidence assessments, fuzzy logic, smart agent profiling, andcase-based reasoning. . . . [Also,] claim 8 recites 'an outputdevice that transforms the composite prediction output intohuman-readable form.'
. . . .
In other words, the 'classifying' steps of claims 1 and'modules' of claim 8 when read in light of theSpecification, recite a method and system difficult and challengingfor non-experts due to their computational complexity. As such, wefind that one of ordinary skill in the art would not find itpractical to perform the aforementioned 'classifying' stepsrecited in claim 1 and function of the 'modules' recited inclaim 8 mentally.
In the language above, the PTAB addressed the third category ofabstract ideas: mental processes. The PTAB provided that the claimdoes not recite a mental process because the AI algorithms, basedon the context in which they are applied, are computationallycomplex.
The PTAB also addressed the first of the three categories ofabstract ideas (mathematical concepts), and found that it does notapply because "the specific mathematical algorithm or formulais not explicitly recited in the claims." Requiring that amathematical concept be "explicitly recited" seems to bea narrow interpretation of the 2019 PEG. The 2019 PEG does notrequire that the recitation be explicit, and leaves the mathcategory open to relationships, equations, or calculations. Fromthis, the PTAB might have meant that the claims list a mathematicalconcept (the AI algorithm) by its name, as a component of theprocess, rather than trying to claim the steps of the algorithmitself. Clearly, the names of the algorithms are "explicitlyrecited"; the steps of the AI algorithms, however, are notrecited in the claims.
Notably, reciting only the name of an algorithm, rather thanreciting the steps of the algorithm, seems to indicate that theclaims are not directed to the algorithms (i.e., the claims have apractical application for the algorithms). It indicates that theclaims include an algorithm, but that there is more going on in theclaim than just the algorithm. However, instead of determining thatthere is a practical application of the algorithms, or an inventiveconcept, the PTAB determined that the claim does not even recitethe mathematical concepts.
Additionally, the PTAB found that even if the claims hadbeen classified as reciting an abstract idea, as the Examiner hadcontended the claims are not directed to that abstractidea, but are integrated into a practical application. The PTABstated:
"Appellant's claims address a problem specificallyusing several artificial intelligence classification technologiesto monitor the operation of machines and to predict preventativemaintenance needs and equipment failure."
The PTAB seems to say that because the claims solve a problemusing the abstract idea, they are integrated into a practicalapplication. The PTAB did not specify why the additional elementsare sufficient to integrate the invention. The opinion actuallydoes not even specifically mention that there are additionalelements. Instead, the PTAB's conclusion might have been that,based on a totality of the circumstances, it believed that theclaims are not directed to the algorithms, but actually just applythe algorithms in a meaningful way. The PTAB could have fit thisreasoning into the 2019 PEG structure through one of the Step 2A,Prong 2 examples (e.g., that the claim applies additional elements"in some other meaningful way"), but did not expressly doso.
This case illustrates:
(1) the monitoring of machines was held to not be an abstractidea, in this context;(2) the recitation of AI components such as "neuralnetworks" in the claims did not seem to hurt for arguing anyof the three categories of abstract ideas;(3) complexity of algorithms implemented can help with the"mental processes" category of abstract ideas; and(4) the PTAB might not always explicitly state how the rule for"practical application" applies, but seems to apply itconsistently with the examples from the 2019 PEG.
The next four articles will build on this background, and willprovide different examples of how the PTAB approaches reversingExaminer 101-rejections of machine-learning patents under the 2019PEG. Stay tuned for the analysis and lessons of the next case,which includes methods for overcoming rejections based on the"mental processes" category of abstract ideas, on anapplication for a "probabilistic programming compiler"that performs the seemingly 101-vulnerable function of"generat[ing] data-parallel inference code."
Footnotes
1 MPEP 2106.04.
2Accordingly, the USPTO must follow both the Federal Circuit'scase law that interprets Title 35 of the United States Code, andmust follow the 2019 PEG. The 2019 PEG is not the same as theFederal Circuit's standard the 2019 PEG does notinvolve distinguishing case law (the USPTO, in its 2019 PEG, hasdeclared the Federal Circuit's case law to be too clouded to bepractically applied by the Examiners. 84 Fed. Reg. 52.). The USPTOpractically could not, and actually did not, synthesize theholdings of each of the Federal Circuit opinions regarding Section101 into the standard of the 2019 PEG. Therefore, logically, theonly way to ensure that the 2019 PEG does not impinge on thestatutory rights (provided by 35 U.S.C.) of patent applicants, asinterpreted by the Federal Circuit, is for the 2019 PEG to definethe scope of the 101 judicial exceptions more narrowly than theStatutory requirement. However, assuming there are instances wherethe 2019 PEG defines the 101 judicial exceptions more broadly thanthe statutory standard (if the USPTO rejects claims that theFederal Circuit would not have), that patent applicant may haveadditional arguments for eligibility.
3 84 Fed.Reg. 50, 52.
4Id.
5 TheUSPTO also, on October 17 of 2019, issued an update to the 2019PEG. The October update is consistent with the 2019 PEG, and merelyprovides clarification to some of the terms used in the 2019 PEG,and clarification as to the scope of the 2019 PEG. October 2019 Update: Subject MatterEligibility (October 17, 2019), https://www.uspto.gov/sites/default/files/documents/peg_oct_2019_update.pdf.
6See "Frequently Asked Questions (FAQs) on the 2019Revised Patent Subject Matter Eligibility Guidance ('2019PEG')", C-6 (https://www.uspto.gov/sites/default/files/documents/faqs_on_2019peg_20190107.pdf)("Any claim considered patent eligible under the currentversion of the MPEP and subsequent guidance should be consideredpatent eligible under the 2019 PEG. Because the claim at issue wasconsidered eligible under the current version of the MPEP, theExaminer should not make a rejection under 101 in view ofthe 2019 PEG.").
7See American Express v. Signature Systems, CBM2018-00035(Oct. 30, 2019); Supercell Oy v. Gree, Inc., PGR2018-00061 (Oct.15, 2019).
8 https://e-foia.uspto.gov/Foia/RetrievePdf?system=BPAI&flNm=fd2018007443-10-10-2019-0.
9Notably, the "mental process" category and notthe "certain methods of organizing human activity"category is the one that focuses on the complexity of theprocess. Furthermore, as shown in the following paragraph, the"mental process" category was separately discussed by thePTAB, again mentioning the algorithms. Accordingly, the PTAB islikely not mentioning the algorithms for the purpose of describingthe complexity of the method.
The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circumstances.
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Machine Learning Patentability In 2019: 5 Cases Analyzed And Lessons Learned Part 1 - Mondaq News Alerts
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