The Unforeseen Impact of Alice

It’s unlikely anyone in the patent community has forgotten about Alice v. CLS Bank. Nearly everyone I know is concerned by the fact that the Supreme Court’s decision left uncertain the scope of patent-eligible subject matter as it relates to computer implemented inventions. And yes, I have seen the many articles predicting doomsday scenarios about the decision’s potential impact on patent portfolios, streams of royalty income, protection from infringers, company value, innovation, and more.

There’s another impact of Alice on the daily operation of the US Patent & Trademark Office (USPTO) that is mentioned far less often, if at all. The fact is, patent examiners are struggling with the application of 35 USC 101 in light of the Alice decision just as much as everyone else. Greater uncertainty among both patent applicants and patent examiners surely increases the likelihood of disagreement between them. Thus, the Alice decision will not just increase the number of rejections under 35 USC 101, but is also likely to result in more rebuttals by applicants and more appeals of examiner decisions.

Let’s just consider rejections and rebuttals. The additional content relevant to 35 USC 101 will increase the volume of patent examiner actions and applicant responses. How much more time will be consumed? A conservative approach might assume a patent examiner will need about 15 minutes more per rejection to deal with the new uncertainties of patentable subject matter. Assume just 10,000 of the 500,000 or so utility patent applications are affected. Simple arithmetic indicates 2,500 more hours would be needed for patent examiners to address the affected applications.

What if a patent examiner needs an additional 60 minutes per rejection and for a greater set of patent applications? A few years ago a Government Accountability Office report indicated that more than half of all patents cover software inventions. Surely not all such patent applications will endure rejections under 35 USC 101. Suppose 50% do. In this scenario, the arithmetic would necessitate 125,000 additional hours of effort for patent examiners – that’s equivalent to 60 patent examiners. And that does not include time for additional examiner actions on the same patent application, or for appeals. To put this in perspective, at $100,000 per examiner, the expense would total $6M per year.

Now consider the boundary conditions another way. Approximately 2,000 hours per year for 8,000 patent examiners totals 16 million examination hours. The first set of assumptions results in the use of less than two one-hundredths of a percent of total examining time. The second set of assumptions results in the use of about three quarters of a percent of total examining time. Still small, but not insignificant. Additional variables must also be considered including, the potential for change in the number of patent examiner actions per disposal, the impact on appeals, and fields beyond computer implemented inventions where patentable-eligible subject matter has been impacted by other recent Supreme Court decisions. Where reality lies is unknown.

In recent years, the USPTO has been touting reductions in patent pendency. Reducing patent pendency is a worthy objective so long as patent quality is maintained. A loss in patent examination efficiency, even if small, will act as a headwind against further reductions in patent pendency. So, I am hopeful that courts and policymakers will add patent pendency to the long list of reasons we should all support a path to improving clarity with respect to patent-eligible subject matter.