The long reach of Alice and a potential solution to abstract idea rejections
The current status of Alice abstract idea rejections, specifically with respect to the sub-category of “fundamental economic practices or principles” under the category of “certain methods of organizing human activity” has caused a great deal of discussion. After the Alice decision, many predicted that the pendulum would swing back to a more reasonable middle position, rather than an extreme position in which every patent claim related to an economic practice was rejected easily. However, as a prosecutor, I still see broad application of the Alice framework, as guided by the USPTO. I propose a reason why so many rejections remain in this sub-category and suggest a solution to tighten up the analysis in Step 2A, Prong One of the Patent Office Alice framework, in which the question of whether the claim is directed to an abstract idea is evaluated.
The Alice decision determined that the claims were directed to the abstract idea of “intermediated settlement”. This idea covers two words, and is quite broad. I have seen Section 101 rejections under this framework with six method steps that have detailed requirements for each step deemed to be an abstract idea simply because they covered an economic practice. Here is what has happened.
In Alice, the Supreme Court judged the concept of intermediated settlement to be a “fundamental economic practice long present in our system of commerce”, citing Bilski. Multiple references, including a textbook from the 1800s, were cited as evidence of how the concept of intermediated settlement was both old (the historical textbook) and “long prevalent in our system of commerce” (citing another textbook outlining the common use of a ‘clearing house’). The court further concluded that a third-party intermediary is a “building block of the modern economy”. Alice outlines a three-part test for whether an economic practice or principle is an abstract idea. First, it is a question of fact whether intermediated settlement is a fundamental economic practice. Second, it is a question of fact whether the abstract idea is long prevalent, as in ‘old’ and at least pre-Internet. Third, it is a question of fact whether this old concept of intermediated settlement actually was considered a building block of the modern economy or “long prevalent in our system of commerce”. The Supreme Court determined, based on the analysis, that the invention was fundamental, was used for a long time as well as being a prevalent economic practice, and was implemented by a generic computer. Applying each of these three questions to Step 2A, Prong One, would be entirely appropriate. However, such a tight framework was lost in the translation of the Alice decision to USPTO Guidelines.
The October 2019 Update: Subject Matter Eligibility eliminated the rigour of the Alice analysis in several ways. First, it does not require any factual evidence of the abstract idea being fundamental as an economic practice or principle. The update simply defines any subject matter “relating to the economy and commerce” under this category. The term ‘fundamental’ is held to mean “not used in the sense of necessarily being ‘old’ or ‘well known,’ although being old or well known may indicate that the practice is ‘fundamental’. The question arises - what does fundamental mean? The dictionary definition of this term is “forming a necessary base or core, of central importance”. It is also defined as “serving as a basis supporting existence or determining essential structure or function”. One would assume that economic practices that are fundamental, according to the traditional use of the term, would be well known or would have to be well known to be of central importance to our economy. But many rejections are made for abstract ideas that are merely related to the economy in general, with no thought as to whether they are truly fundamental.
Next, there is no requirement in the 2019 Update that the economic practice or principle be long prevalent or even pre-Internet. Indeed, the discussion about what is fundamental expressly eliminates the idea that it has to be long prevalent by stating that a fundamental economic practice does not have to be old.
Further, the 2019 Update makes no mention of the economic practice being long prevalent in our system of commerce. Removing this requirement opens up the floodgates to any economic principle being found to be an abstract idea. I have not seen any evidence cited by the USPTO establishing in some cases a very specific invention that can be regarded as an abstract idea, even though what is described as the abstract idea has never been used in commerce, let alone actually being prevalent in commerce. Thus, the 2019 Update, by eliminating this framework, has simplified the analysis required by examiners to reject any economic-related invention as simply fundamental, in which that term does not even carry its natural meaning.
The solution to this problem is to bring back the Alice requirement that an abstract idea articulated under Step 2A, Prong One should be proven, with evidence, to be a “fundamental economic practice long prevalent in our system of commerce”. In other words: simply apply the requirement from Alice as written and request factual evidence for the three requirements under this language for Step 2A, Prong One:
- whether the abstract idea is fundamental;
- whether the abstract idea has long been used in our system of commerce; and
- whether the abstract idea has long been prevalent in our system of commerce.
Doing so would bring the USPTO analysis back in line with the Alice decision and be fairer and more predictable for inventors in the important space of our system of commerce. Further, patents that are issued under the factual three-part Alice test would likely also be more stable and withstand later challenges, as long as the same three-part test is applied.
This is the first article in a two-part series. The second part will be published on IAM on a future date.
This is an insight article whose content has not been commissioned or written by the IAM editorial team, but which has been proofed and edited to run in accordance with the IAM style guide.
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