The Patent Trial and Appeal Board (PTAB) has issued a decision in an ex parte appeal reversing an examiner’s final rejection under 35 U.S.C. § 101 of claims directed to artificial intelligence (AI) based business methods. Ex parte Carmody, Appeal 2025-002843, (PTAB Dec. 30, 2025). While the panel found that the claims at issue recited an abstract idea at Alice Step 2A, Prong One, it held that they recited additional elements that integrated the judicial exception into a practical application at Alice Step 2A, Prong Two, thus finding the claims patent-eligible under § 101. The panel notes that its decision follows the reasoning of Ex parte Desjardins, Appeal 2024-000567 (PTAB Sept. 26, 2025, designated precedential Nov. 4, 2025), in which U.S. Patent and Trademark Office (USPTO) Director John Squires directed PTAB panels to consider Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016), when evaluating whether claims are directed to improvements to the functioning of a computer or other technology or technical field.1
Key point
- The PTAB is considering the precedential nature of Desjardins, having reversed a § 101 rejection after finding a software-related technological improvement to AI-based business method claims.
Digging deeper
In Desjardins, the USPTO’s Appeals Review Panel noted that, under Enfish, software can make non-abstract improvements to computer technology just as hardware can and directed PTAB panels to incorporate Enfish’s reasoning into their § 101 analyses. In early December 2025, the USPTO incorporated Desjardins into the Manual of Patent Examining Procedure, with Director Squires noting in an accompanying memo that examiners are expected to consider Enfish when assessing patent eligibility, especially for claims related to AI or machine learning.2 It appears that the PTAB is implementing Director Squires’ directives; in Ex parte Carmody, the panel emphasized the similarity of the instant technological improvement to that of Desjardins, concluding that, “[f]aced with a similar situation here, we follow the Director’s guidance and do not sustain the § 101 rejection.”
Takeaways
Ex parte Carmody is yet further evidence that the PTAB is following Director Squires’ lead in expanding subject matter eligibility, particularly for AI-related innovations. It is also a reminder to applicants of the importance of stating a technical advantage in the specification, as the panel considered the applicant-stated technical advantage achieved by the claims as sufficient to find that the claims integrate the judicial exception into a practical application. That the application at issue concerned business methods was not a bar to establishing patent eligibility.
