U.S. Patent and Trademark Office Director Andrew Iancu gave the introductory keynote address at the 46th Annual Meeting of the Intellectual Property Owners (IPO) Association on Monday, and his talk provided the prospect of a Patent Office administration dedicated, as former Solicitor Nancy Linck advocated several years ago at a Biotechnology Innovation Organization annual meeting, to adopt policies aimed at helping the courts (including the Supreme Court) come to the correct decisions regarding questions such as patent subject matter eligibility.

While discussing other aspects of the Office's policymaking (including improvements in the Trademark Office and participation in the Music Modernization Act) and infrastructure efforts (noting the "legacy" nature of the Office's IT infrastructure and the week-long outage of the Electronic Filing System and Patent Application Information Retrieval portal a few weeks ago), the bulk of Director Iancu's remarks had to do with subject matter eligibility.  The Director noted (and quoted) Federal Circuit judges to the effect that subject matter eligibility was an uncertain area of the law that needed change.  The Director noted the efforts of IPO, and the American Intellectual Property Lawyers Association (AIPLA) in proposing draft legislation to remove the uncertainty in the law (stemming unmentioned from Supreme Court cases of dubious sagacity).  But Director Iancu noted that legislation can "take[] a long time" and the results cannot be certain.

"[T]he USPTO cannot wait," he said, noting that there are "thousands of examiners who struggle with these issues on a daily basis" and who "need additional guidance now" (as well as "patent applicants, patent owners, and the public").

He then harkened back to Judge Giles Sutherland Rich and his "prescient" thoughts of almost 40 years ago, when in In re Bergy the Judge noted that there was an "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 . . . ."  Restating the point, Director Iancu asked:

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 are not simple problems, insofar as they "confound the most sophisticated practitioners in our patent system" because "[p]eople simply don't know how to draw these distinctions."  Echoing many, the Director advocated using the other statutory sections (specifically, §§ 102, 103, and 112) as more appropriate tools for preventing unpatentable (in contradistinction to patent-ineligible) claims from being allowed.

The appropriateness of these statutory sections is illustrated by "decades of case law from the courts and millions of examinations at the PTO" to "guide us in our 102, 103, and 112 analyses."  The Director characterized that "the genius of the 1952 Patent Act" was that it provided categories of patent-eligible subject matter.  The problem, according to Director Iancu (and in this sentiment he is not alone) is that recent case law "mushes them all up again."  This "may [indeed, demonstrably does] lead to distorted legal conclusions," according to the Director, stating dramatically:  "And it has.  And it must end."

How to achieve this goal so fervently to be hoped?  The Director proposes that by going back to Judge Rich, "and keep[ing] rejections in their own distinct [statutory] lanes."  The standard the Director proposes is that, "[i]f 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."  He recognizes that some things, like gravity or DNA, are not patent eligible -- he is not an extremist or absolutist.  But he proposes to provide categories of patent ineligible subject matter like the statute provides patent eligible subject matter categories.

His discussion of providing more certain and defined (cabined, dare we say?) categories of ineligible subject matter focused on abstract ideas, which he believes is "the issue needing most attention."  To that end, the Director announced that "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."  He then explained his vision:

[T]he 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.

This calculus would provide categories of patent-ineligible subject matter that satisfy the criterion set forth by the Supreme Court:  the "basic tools of scientific and technological work."  These include examples such as "gravity, electromagnetism, DNA"; "fundamental mathematics like calculus, geometry, or arithmetic per se"; "basic 'methods of organizing human activity,' such as fundamental economic practices like market hedging and escrow transactions"; and "pure mental processes such as forming a judgment or observation . . . by itself, something performed solely in the human mind."

Despite the Supreme Court having been "interpreting this statute for the past 200 years or so," the Director recognizes that the Court has only provided a "limited number of examples" of subject matter that encompasses the "basic tools of scientific and technological work."  The Director finds that what constitutes "natural phenomena" or "laws of nature" present less difficulty in defining their metes and bounds than abstract ideas.  To address this question, the PTO is performing "a thorough review of the relevant case law helps us draw more clear lines," "stud[ying] every relevant case in detail."  As a consequence, the Director informed his audience that "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 activities
• Mental processes, which are concepts performed in the human mind, such as forming an observation, evaluation, judgment, or opinion.

Under the new guidance, Examiners would first look at whether the claims were directed to one of the four statutory categories.  If yes, the Examiner would then "check to see if the claims recite matter within one of the judicial exceptions," categorized as set forth in the Director's talk; he said this was the Office's "new approach."  What seems to be the actual new approach was his next statement:  "[i]f the claims at issue do not recite subject matter falling into one of these categories [of patent-ineligible subject matter], then the 101 analysis is essentially concluded and the claim is eligible."  The Director predicted that "[t]his alone would resolve a significant number of cases currently confounding our system" because "[i]f an examiner does not find matter within the disallowed categories, he or she can move on."

However, if the subject matter falls within a patent-ineligible subject matter categories, then (but only then) must the Examiner move on to consider "whether the claims are 'directed to' those categories."  What the Director believes this means, and what the new guidance will specify, is "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," according to the Director's description of the new guidance.  This methodology is supported, according to the Director, by Supreme Court precedent including Le Roy v. Tathem (1853), and Diamond v. Diehr (1980), and even Mayo v. Prometheus (which the Director cited for the teaching that "applications of such concepts to a new and useful end . . . remain eligible for patent protection" ).  In practice, the Director says that this means that "if the claim integrates the exception into a practical application, then the claim is not 'directed to' the prohibited matter[, ]passes 101 and the eligibility analysis would conclude."

If this is not the case, then the Examiner must move on to step 2 of the Mayo/Alice test to determine whether the "something more" in the claim is conventional, routine or well-understood according to the Berkheimer memo already set forth by the Office.  The difference with current practice, according to the Director, is that "the first step of our analysis does not include questions about 'conventionality,'" meaning that "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."  The benefits of this change:  it "helps to ensure that there is a meaningful dividing line between 101 and 102/103 analysis," wherein "[a] fully 'conventional' yet patent-eligible claim may still be unpatentable as obvious [under §103]."  The Director also noted that this analysis would also permit claims that are overbroad or "functionally-stated or result-oriented" could be examined under Section 112, and that "USPTO examiners know, and will receive further guidance and training on, how to apply well-defined Section 112 principles."  Under the Director's proposed guidance:

[T]he 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.

Charitably, the Director asserts that "we have gotten ourselves into a rut when it comes to Section 101 analysis" and that the proposed new guidance "is trying to navigate our examiners out of that rut given the current statute and judicial precedent."  He concluded with his hope that "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" and warning that it may take some time before the guidance is finalized.

Despite the hope Director Iancu's remarks may have engendered, within them lie a major disadvantage of the U.S. patent system.  During the twenty-year life of a patent there will be at least two and perhaps many more changes in administration.  The past 18 years have seen Directors as varied as Rogan, Dudas, Kappos, Lee, and Iancu, each not just imposing their own nuance to the Office but in almost every case changing the standards under which patents were granted (and more recently, re-examined).  This intrinsic uncertainty makes it a certainty that for every Director Kappos or (perhaps) Iancu we will have a Director Dudas or Lee.  Uncertainty makes investment more difficult and risky and at best undervalues and at worst inhibits development of new technologies.  During times when there is a consensus that patents encourage innovation, the effects of a new Director have historically minimal.  But when, as is the case with so much policy debates, the fundamental soundness of strong patent policy is debated on the grounds that patents are an impediment to innovation or that "efficient infringement" is good business practice, there is a risk that the changing tides of patent policy with contravene the constitutional purpose to "promote progress of the useful arts."  Director Iancu promises to promote the yin of pro-patent policy; but what will be the consequence when the next director promotes the yang?