The Most Likely Art Units for Alice Rejections

Since Alice Corporation Pty. Ltd. v. CLS Bank International, 573 U.S. ___ (2014) was handed down over a year ago, there has been intense speculation about the future of software and business methods patents and heavy scrutiny of the courts in their application of the Alice framework. The case sent shockwaves not just across the courts, but across the USPTO as well, with many alleging that the decision provided too little guidance to patent examiners on how to evaluate software and business methods claims. Some patent attorneys even believe that certain examiners simply reject everything that may present an Alice issue, preferring that the PTAB or the courts handle the issue instead.

The Supreme Court held in Alice that claims directed to abstract ideas must have additional elements that are capable of rendering them “significantly more” than the abstract ideas themselves and that recitation of implementation on a generic computer is not sufficient for this purpose. This decision has had a particularly strong effect on software and business method patents, many of which, like those at issue in Alice, concern economic activities implemented on computers. These patents are still being granted after Alice, but are being granted at lower rates than before, and some assignees are better at obtaining them than others.

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Because Alice concerned abstract ideas implemented on general-purpose computers, tech centers and art units touching on business methods patents have been particularly affected by Alice, most notably TC 3600, home to the e-commerce art units. As we reported in August, Alice has already had a profound effect on assignees operating in the 3600s, with the overall average allowance rate dropping from 79.8% before Alice to 44.7% since Alice. However, the 3600s are not the exclusive province of Alice rejections, as they can be found with varying frequency across almost all tech centers at the USPTO. In fact, the only technology center with no Alice rejections is 2900, which handles design patents. See Figure 1 for a breakdown of Alice rejections across the USPTO.

While Alice rejections can be found all over the USPTO, roughly two-thirds of them are found in TC 3600. As the home of art units covering business methods, Alice hit this technology center particularly hard. Looking further into the 3600s, the vast majority of Alice rejections (92.4%) are in the 3620s, 3680s, and 3690s e-commerce art units, with almost half (40.4%) being found in the 3620s alone. See Figure 2 for a breakdown of the distribution of Alice rejections in the 3600s.

Looking deeper into the 3620s, 3680s, and 3690s, the reach of Alice becomes apparent. Using Juristat’s data, we counted all rejections in these art units since June 19, 2014, the date Alice was decided. We then calculated the percentage of those rejections that cited Alice, focusing only on examiners that have issued at least ten rejections since the Alice decision. As shown in Figure 3, roughly three-quarters of all rejections in these art units are Alice rejections, with several examiners having a 100% Alice rejection rate. This data tends to confirm many patent attorneys’ suspicions that the decision is being applied to almost all software and business method patent applications.

While applicants throughout the 3620s, 3680s, and 3690s can likely expect an Alice rejection, the Alice rejection rate does vary by art unit. The average Alice rejection rate across all art units in the 3620s, 3680s, and 3690s is 75.2%. The art unit with the highest Alice rejection rate is 3625, at 85.8%. The art unit with the lowest Alice rejection rate is 3685 at 41.41%, which is quite a bit below the average for these art units. For a full ranking of the top 10 art units with the highest Alice rejection rates, see Figure 4.

As Figure 4 demonstrates, the reach of Alice is staggering, accounting for well over three-quarters of all rejections in the top 10 art units. The data becomes even more staggering when looking at the individual examiner level. Of examiners operating in the top 10 art units, seven have 100% Alice rejection rates, indicating that every rejection he or she has issued since June 19, 2014 has cited Alice, and many more have rates of over 95%. While no single art unit had a 100% Alice rejection rate, as some have suspected, the data indicates that most applicants in the above art units are almost guaranteed to get an Alice rejection.