Under the direction of President Biden’s executive order on artificial intelligence (AI), the United States Patent and Trademark Office (USPTO) issued a guidance update on the subject matter eligibility analysis “to promote clarity, consistency, and address innovation in AI and critical and emerging technologies.”1The 2024 Guidance Update primarily focuses on two issues: whether AI-related inventions are patentable and the applicability of the subject matter eligibility for AI inventions.
The 2024 Guidance Update confirms that AI inventions are indeed patentable and clarifies that the question of inventorship for inventions created with AI assistance is not an issue as long as “one or more persons made a significant contribution to the claimed invention."2 As for the subject matter eligibility analysis under 35 U.S.C. § 101, the 2024 Guidance Update emphasizes that the key inquiry for overcoming section 101 rejections lies in the practical applicability analysis of Step 2A, Prong Two.In particular, the 2024 Guidance Update states that a strong argument under Prong Two often involves demonstrating that the claims are directed to a specific, concrete technological advancement or solution to a technical problem.3
This paper offers practical tips for crafting and presenting effective arguments under Prong Two, highlighted by the 2024 Guidance Update as critical for AI inventions facing section 101 rejections at the Patent Office.
The two-pronged framework
As a way of brief background, the Patent Office has issued a number of guidelines over the years in an attempt to provide patent examiners and practitioners with clarity regarding the test for patent subject matter eligibility under 35 U.S.C. § 101 in the Patent Office, including the 2019 Revised Patent Subject Matter Eligibility Guidance (“2019 PEG”). With the 2019 PEG, the Patent Office introduced a new two-pronged approach that separated out the first step (Step 2A) of the two-step Alice/Mayo framework.4,5
Prong One of Step 2A focuses on whether at least one claim element recites one of the enumerated groupings of abstract ideas: mathematical concepts, certain methods of organizing human activity, and mental processes.6 A claim not reciting an abstract idea is patent-eligible, whereas a claim reciting an abstract idea is evaluated again for eligibility at the Patent Office in Prong Two. In Prong Two, the Patent Office will find a claim eligible if the claim elements beyond those corresponding to the alleged abstract idea (i.e., the “additional elements”7) integrate the alleged abstract idea into a practical application of the abstract idea, which can be demonstrated by showing that the claims reflect an improvement in the functioning of a computer or an improvement to other technology or technical field.8
Know your examiner
When facing section 101 rejections at the Patent Office, the most important step in developing a successful strategy requires understanding how the assigned patent examiner applies the subject matter eligibility analysis. Despite the Patent Office’s numerous attempts to organize the seemingly scattershot of rulemaking court decisions into a structured framework, in practice, different patent examiners apply the framework differently based on their understanding of the subject matter eligibility analysis. For example, some examiners may insist that, to be eligible under Prong Two, claims must recite an improvement to the functioning of a computer (e.g., data processing speed/efficiency, memory capacity, etc.) while overlooking applicant’s assertion that the claims are eligible because they recite an improvement to some another technical field (e.g., ecommerce fraud detection).9 Other examiners may insist that the claimed improvement must be reflected in a physical component and suggest, for example, amending the claims to include a display or interface to output the result of the claimed processes. The reality is that not all examiners are fully versed in the nuances of the subject matter eligibility analysis, and practitioners may disagree with some examiners’ interpretation of the subject matter eligibility analysis. While practitioners may be driven to challenge incorrect interpretations of the law and advocate for broader claims, persuading the examiners to change their stance is often difficult and time-consuming, leading to increased costs.10 Instead, in many situations, opting for a compromise may be a more strategic approach that better aligns with the client’s needs.
Securing the best possible protection for an invention often involves balancing ideal outcomes with practical realities. Engaging in lengthy arguments or appeals to traverse section 101 rejections can easily add years to the patent examination process.The prolonged process will not only incur additional costs but also risk potential loss of market opportunity for the client. More often than not, a practitioner’s best course of action is to seek a compromise, to preserve goodwill, and to work with the examiner to formulate the least limiting claim amendment that addresses what the examiner believes is required to overcome the section 101 rejections. A key component with this strategy is to interview the examiner early in the process.By discussing the rejections directly with the examiner, practitioners can gain insights into the examiner’s specific concerns and work collaboratively to find a mutually agreeable solution.
However, when a mutually agreeable solution cannot be reached, practitioners must shift their focus to crafting a persuasive argument and presenting it in the most impactful manner.
Skip the first prong
Finding success in Prong One is difficult, particularly for AI inventions. Under Prong One, the burden is on the patent examiner to identify at least one claim element that appears to recite an abstract idea. This, however, is not a difficult burden to satisfy, especially for AI-related inventions. At a certain level of generality, all AI inventions involve one of the enumerated abstract ideas, whether it is the mathematical relationships inherent in the building blocks of the AI models (e.g., linear regression models or non-linear functions and the weighted parameters of such functions) or certain applications of AI relating to organizing human activity or mental processes (e.g., location tracking, fraud detection, predicting medical conditions, or more recently, generative AIs that can analyze and summarize an article). Notably, none of the three new subject matter eligibility examples issued with the 2024 Guidance Update has claims that are allowable under Prong One.11
Absent legal authority directly on point under Prong One, practitioners may find more success in overcoming section 101 rejections by skipping the analysis under Prong One and leading the argument with Prong Two.12 Crafting a well-founded argument for Prong One often involves detailing the complex legal framework along with substantive points, which can result in pages of lengthy responses.Due to the Patent Office’s productivity requirements, examiners have limited time and attention to thoroughly review each applicant’s response.A lengthy argument under Prong One can consume a significant portion of the examiner’s available attention, potentially leaving less focus for Prong Two.This shift in attention may also diminish the impact of the more persuasive arguments related to the technological improvement and practical application, key elements for overcoming section 101 rejections at the Patent Office. Furthermore, if the examiner remains unconvinced by the Prong One arguments, they may be predisposed to approach Prong Two with skepticism and a negative bias.
Instead, practitioners should consider leading their arguments with Prong Two.As the 2024 Guidance Update emphasizes, the critical inquiry for overcoming subject matter eligibility analysis for AI inventions is found in the practical applicability step of Prong Two. By presenting the Prong Two argument first, practitioners can maximize its impact and direct the examiner’s focus to the strongest and most persuasive points upfront. This strategy increases the chances of a favorable outcome by showcasing the claimed novelty and technological improvement in the most compelling way from the outset.
Prong Two: create a compelling narrative
Under Prong Two, a claim is patent eligible if the alleged abstract idea is integrated into a practical application of the abstract idea.13 This can be demonstrated by showing that the claimed invention improves the functioning of a computer or improves another technology or technical field.14 Evaluating whether the claim as a whole includes an improvement to a computer or a technological field requires examining the specification for technical explanations of the asserted improvement and evaluating whether the claim accurately reflects that improvement.15
Formulating a convincing argument under Prong Two requires building a compelling narrative around the main novelty of the claimed invention, carefully crafting the argument to highlight how the claimed innovation is distinguishable from mere abstract ideas or conventional practices. This involves not only identifying the unique aspects of the invention but also framing them within a broader context that emphasizes their practical utility and real-world impact. The narrative needs to be supported by the specification and should guide the examiner through a clear and logical progression from the technical problem to the claimed innovation.
Practitioners should consider presenting the narrative from the inventors’ perspective during an examiner interview. By explaining how the inventors faced a specific challenge, worked to overcome it, and ultimately developed the claimed solution, the arguments can be framed around the inventors’ journey. This approach makes the technical aspects of the invention more relatable and tangible and also highlights the practical benefits and advancements the invention brings to the field, thereby making the argument more compelling and convincing.
Crafting a compelling narrative is the crux of a successful Prong Two argument. A compelling narrative will convince the patent examiner that the claimed novelty and inventive concept are improvements with practical impact to real-world problems faced by the inventors. While the other aspect of Prong Two—ensuring that the claim language accurately reflects the technical improvement—is important, this aspect can be addressed with simple amendments if the examiner is already convinced of the claimed novelty. For example, practitioners can address this by amending the claims to include specific steps, components, or processes that embody the innovation. The true challenge in Prong Two lies in convincing the examiner of the claimed invention’s innovative value. Patent applications that fail to overcome section 101 rejections often do so because they fall short in effectively conveying the novel aspects of the invention.
Conclusion
The 2024 Guidance Update highlights that, for AI inventions, the key to overcoming subject matter eligibility rejections lies in the analysis under Prong Two. Practitioners should conduct an early interview with the assigned examiner to gain a clear understanding of how the examiner applies Patent Office’s framework for the subject matter eligibility. Practitioners should consider leading their arguments with Prong Two, focusing on crafting compelling narratives that emphasize the invention’s real-world impact. Success in this area hinges on the ability to clearly demonstrate the innovation’s contribution to the technological field and its practical applicability, making Prong Two the critical focus for overcoming section 101 rejections.
[1] 2024 Guidance Update on Patent Subject Matter Eligibility, Including on Artificial Intelligence, 89 Fed. Reg. 58128, 58130 (July 17, 2024) (“2024 Guidance Update”).
[2] Id. at 58138.
[3] Id. at 58136–58138.
[4] See 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. 4, 50 (January 7, 2019) [hereinafter “2019 PEG”]; Alice Corp. Pty. v. CLS Bank Int’l, 573 U.S. 208 (2014); Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66 (2012).
[5] Notably, the USPTO’s two-pronged framework has not been adopted by the legislators or the judicial branch.On the contrary, the Federal Circuit has warned that the Patent Office’s guidance “is not, itself, the law of patent eligibility, does not carry the force of law, and is not binding on our patent eligibility analysis.” "And to the extent the guidance ‘contradicts or does not fully accord with our caselaw, it is [Federal Circuit’s] caselaw, and the Supreme Court precedent it is based upon, that must control.’”In re Rudy, 956 F.3d 1379, 1382–83 (Fed. Cir. 2020).Nonetheless, the two-pronged framework is the framework applied by the patent examiners at the Patent Office, and thus is a necessary analysis for any applicants facing section 101 rejections.
[6] 2019 PEG at 52.
[7] The term “additional elements” refers to a particular element or a combination of elements in the claims besides those identified as being directed to a judicial exception under Prong One. The 2019 PEG explains that “whether an additional element or combination of elements integrate the exception into a practical application should be evaluated on the claim as a whole.” Id. at 55, n.24.
[8] Id. at 54.
[9] See Alice, 573 U.S. at 221 (holding that the improvement can be reflected in the computer functionality or other technology or technical field).
[10] Furthermore, in some cases, the primary examiner may not be the main driving force behind the issuance of a section § 101 rejections.Instead, the examiner may be acting under the direction of their supervisory patent examiner (SPE) or a section 101 specialist, who instructs them to issue the rejection. This situation poses a greater challenge for applicants, as they must craft arguments that are persuasive to a decision-maker they cannot directly engage with.
[11] See 2024 AI Examples 47 through 49 (effective July 17, 2024),https://www.uspto.gov/patents/laws/examination-policy/subject-matter-eligibility (examples directed to anomaly detection, speech separation, and fibrosis treatment).
[12] Unless preparing for a potential appeal, in which case, practitioners should provide a thorough response addressing all aspects of the rejections.
[13] 2024 Guidance Update, at 58137.
[14] Id. at 58136.
[15] Id. at 58136–58137
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