Three years after the Alice Corp. v. CLS Bank case, software patenting had turned virulent. This decision has, in particular, wreaked havoc in the business method art units, where the statistical probability of securing a patent had been low (compared to other art units) even before the Supreme Court Alice decision. Afterwards, it was downright depressing: the probability that a PTO action was an allowance in these art units was in the low single digits.

Is tide actually turning?

So many years after Alice decisions, the examiners still feel their hands tied while issuing applications. Even if they had recommended an application for allowance, it was often sent back by quality review with an indication that a patent-eligibility rejection should be made or maintained. However, in early 2017 – at least with respect to a handful of applications – examiners’ perspectives seem to have changed, where they were more willing to work with the applicants to find eligible claim material and/or suitable arguments to be put on the record that would suffice for an allowance.

What Statistics has to say?

Specifically, we requested data from the USPTO that would identify – for each quarter since Q4 2013, the number of allowances issued by each art unit in the quarter and the number of office actions issued by each art unit in the quarter. We grouped the data by Technology Center, though we sub-divided Technology Center 3600 into the business method art units (art units 3621-3629, 3681-3689 and 3691-3696) and other 3600 art units. As expected, this data set similarly reflects our previously reported post-Alice plummeting of allowance prospects in the business method art units. However, we also observed a recent uptick in allowances in these art units. The Q1 2017 portion of the PTO actions that were allowances was over 8.2%, as compared to 3.5% in Q1 2016.

Why change occurred ?

In approximately December of 2016, the position of the Director of the 3620s and 3680s art units was identified as vacant on the PTO’s Patent Technology Center Management page. (Business method art units include all of the 3620 and 3680 art units and 3691-3696.) In early 2017, the Director had been identified as Tariq Hafiz, who had previously been a Director of the 2620s, 2670s and 2690s in the Communications technology center. Thus, potentially, the new Director has influenced the process such that examiners are less dismissive of applicants’ subject matter eligibility.
Such a tide-change would be significant to applicants. Other data of ours indicates that applicants have been adapting their patenting strategies, such that there are substantially fewer (>25%) recent filings classified in the business method class (Class 705) as compared to the time periods interest would translate into a decreased innovation/development interest.
We recognize that business method patents have experienced substantial scrutiny by the courts in a trend away from “no-tech” patents and functional claiming. One approach to respond to these decisions is to shut the gates and to essentially indicate that innovations unfortunate enough to be classified as a ‘business method’ (which includes innovations related to medical software, cryptography, anti-counterfeiting, fraud detection and electronic voting) are no longer patentable. However, the current case law still acknowledges that claims directed to software are not inherently abstract and can make “non-abstract improvements to computer technology just as hardware can”