Post-Alice, Allowances are a Rare Sighting in Business-Method Art Units

In June of 2014, the Supreme Court held, in Alice Corporation Pty. Ltd. v. CLS Bank International (“Alice Corp.”), that claims directed to a technique for mitigating settlement risk failed to comply with the patentable-subject-matter requirement of 35 U.S.C. 101 (“101”). Alice Corp. involved four patents that had been assigned to business-method art units (characterizing business-method art units as 3621-29, 3681-89, 3691-95 and those in former technology center 2700). The Court found that the claims at issue were directed to an abstract idea and did not sufficiently transform the idea to become a patentable invention.

One question is whether Alice Corp., in essence, strips patent prospects from business-method inventions. Another question is whether the analysis in Alice Corp. will invalidate patents in other areas under 101. The author thus examined all cases citing and/or including Alice Corp. and identified outcomes of analyses of compliance with 101. Further, the patents at issue were segregated based on the technology center to which the corresponding patent application had been assigned and/or whether it was assigned to a business-method art unit.

This summer, the United States Patent and Trademark Office (PTO) responded t0 Alice Corp. by issuing Preliminary Examination Instructions in view of the case, and impact on examination of business-method patent applications was essentially immediate. Using LexisNexis PatentAdvisor, data was collected for a January time period (January 13-27, 2014) and July time period (July 13-27, 2014) that identified, for each Office Action issued during the time period, whether the Action included a 101 rejection and the corresponding art unit.

In FIG. 1, each art unit is represented by a data point. The y-value shows the percentage of Office Actions issued for that art unit within the July time period that included a 101 rejection, and the x-value shows the percentage of Office Actions issued within the January that included a 101 rejection. Business-method art units are represented in red. As shown, the prevalence of 101 rejections dramatically increased for business-method art units but not for other art units.

LexisNexis PatentAdvisor was also used to identify an art-unit-specific allowance prevalence. More specifically, a count of a number of Office Actions and a count of a number of Notices of Allowances was identified, an allowance prevalence was defined as the number of Notices of Allowances defined by the sum of the number of Office Actions and number of Notices of Allowances.

As shown in FIGS. 2 and 3, the allowance prevalence in business-method art units plummeted after Alice Corp. During the January time period, the average across the business-method art units of the percentage of issued actions that were notices of allowances was 24%. During the July time period, the average percentage dropped to 5%. As shown in FIG. 3, that percentage continued to decrease: when examining actions issued between October 1, 2014 and October 31, 2014, the average percentage of actions that were notices of allowances dropped to 3%.

However, an analysis of appeal data suggests that many 101 rejections in business-method art units may be erroneous. Decisions from the Patent Trial and Appeal Board (PTAB) involving contentions with respect to 35 U.S.C. 101 within each of two periods (pre-Alice: January 1, 2014 to June 19, 2014 and post-Alice: June 20, 2014 to December 10, 2014) pertaining to applications assigned to art units within each of: technology center 2100, technology center 2400 and business method art units (3621-29, 3681-89, 3691-95) were evaluated to determine whether a 101 rejection with regard to at least one claim was reversed by the Board. As shown in FIG. 4, both pre- and post-Alice, the reversal rate corresponding to business-method art units was higher than that for technology centers 2100 or 2400.

Notably, these PTAB decisions involved rejections made pre-Alice. Thus, it might be expected that the post-Alice percentage of 101 business-method reversals will increase in view of the dramatic increase of 101 rejections in the business-method art units.

In sum, since the Alice Corp. decision, rejections under 35 U.S.C. 101 have become substantially more common in business-method art units, and notices of allowance have become substantially more rare in these art units. Meanwhile, 101 rejections made even pre-Alice were amongst the poorest quality for business-method art units as compared to those from other computer-oriented art units. Thus, it appears as though the patent prospects for applications assigned to business-method art units are grim.

Given that the United States has traditionally been a leader in software and that software applications are frequently assigned to business-method art units, it seems unfortunate that the patent office is so unwilling to grant protection to innovation in this area. Software is becoming an integral component of every aspect of life. Should we cease to provide entities with the exclusivity motivation for developing creative software solutions, we may encounter a reality in which companies actively decide to forego investment in responding to technological advancement.


Warning & Disclaimer: The pages, articles and comments on do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of

Join the Discussion

3 comments so far.

  • [Avatar for Paul Cole]
    Paul Cole
    December 17, 2014 06:31 am

    One of the major problems at the USPTO is a lack of legally qualified people skilled in the interpreting and analysis of opinions, whether from the Supreme Court or from an inferior court. From time to time that shows in the eligibility guidance and in the biotech examples which have recently appeared. Anon does not agreement from me that a concurring opinion of the Supreme Court gaining only three votes cannot be relied on for any rule of law binding on later cases.

    Another matter of concern is a lack of apparent technical knowledge within certain parts of the USPTO. Earlier this year it was persuaded that gunpowder was a naturally occurring substance, or (more charitably) a mere mixture of naturally occurring substances. It has now persuaded itself that Amazonic acid occurring naturally in leaves has the same activity as a purified preparation, changing the technical facts to suit a desired outcome rather than changing the outcome to fit the technical facts. Even more strangely it has been persuaded, counter-factually, that antibiotics occur in microorganisms in crystalline form, ready to be harvested. How could such a strange and misleading scenario find its way past a committee of people with scientific training to a degree or doctorate level? Even if written solely from a training standpoint, such crass suppositions undermine public confidence.

    It gives me no pleasure to make such criticisms. I and many other individuals and organizations have put in much time and effort towards improved guidance. The public comments filed at the USPTO provide useful examples, more of which could have been developed in the amended guidance e.g. of a real-world antibiotic genuinely isolated in purified and crystalline form with a defined melting point and claimed as such. If the examples quoted by the public were unsuitable, then given the resources of the USPTO it would not have been a major exercise to trawl through expired patents on well-known drugs that are natural products to find better ones.

    The same exercise needs to be done in the software and business method field. In particular we need to find positive examples of business methods that clearly and truly deserve eligibility. Unfortunately there is a legacy of cases based on an optimistic reading of State Street combined with acceptance of hand-waving disclosures from the inventors but nothing more, andn as Kate notes, these do not fly nowadays.

  • [Avatar for Anon]
    December 16, 2014 12:20 pm

    Sotomayor’s “concurrence” in Alice obtained a total of 3, not 4, agreements.

    It has no force of law.

  • [Avatar for JNG]
    December 16, 2014 11:32 am

    The PTO (at least until recently) was overclassifying and citing a “prohibition on patents on organizing human activity” on many cases, all of which fall more heavily on biz method applications. They get this from the concurring Sotomayor opinion/dicta in Alice, which they’ve now eagerly interpreted as 4=5, meaning a plurality opinion. It is not.

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