New Patent Office Guidance and Blockchain-based Patents


By:  Thomas M. Isaacson and Stephen A. Rutenberg

            Recently, the Patent Office announced two new Guidance documents which although not targeted specifically to blockchain technology provide insight into strategies for the drafting and prosecuting of blockchain-based patents. A “Guidance” is a formal document issued by the United States Patents and Trade Mark Office to assist examiners in their review and is helpful to practitioners and inventors in filing patent applications.  The first Guidance document is entitled “2019 Revised Patent Subject Matter Eligibility Guidance” and the second Guidance document is entitled “Examining Computer-Implemented Functional Claim Limitations for Compliance with 35 U.S.C. 112”.   These documents each contain instructions relative to blockchain innovation. 

            The “2019 Revised Patent Subject Matter Eligibility Guidance” introduces new guidelines with respect to subject matter eligibility for patent protection.  The Supreme Court in the 2014 case entitled Alice Corp. v. CLS Bank International had described a two-step test for determining subject matter eligibility.  Previous Patent Office Guidance sought to provide instructions to examiners on how to apply the case law, but the previous Guidance caused a dramatic number of rejected claims as being abstract ideas.  The primary change in the new Guidance is to revise step 1 of the Alice evaluation process for determining whether a claimed invention is patent eligible.   Step 1 determines whether the claims are directed to an abstract idea as that term is defined by the courts.  The second part of the Alice test asserts that even if a claim is directed to an abstract idea, it could still be eligible for patent protection if there is significantly more recited within the claim beyond the abstract idea.  Previously, step 1 was essentially a single prong step that involved determining whether a claim recites or is directed to a judicial exception that would allow for patent eligibility.  The new Guidance adds an additional prong to step 1 by also requiring the Patent Examiner to determine whether or not the recited judicial exception is integrated into “a practical application.”  The Guidance explains that only when the claim recites a judicial exception and fails to integrate such an exception into a practical application, that the claim is directed to an abstract idea and thereafter is Step 2 of the Alice test even triggered. 

            Most importantly, the Guidance makes a clear distinction between claims that “recite” an abstract idea and claims that are “directed to” an abstract idea and which thus must be evaluated under Alice, step 2. For example, if a claim recites an abstract idea but nevertheless integrates the abstract idea into a practical application, such claims should be patent eligible under step 1.  In theory, this should reduce the number of rejections as most clients’ patent applications are only filed if they provide some practical application to a business.   This distinction between principles in the abstract and integration of those principles into a practical application is particularly relevant to blockchain technology.  

            Additionally, the first Guidance, on page 13, requires that when a claim recites a judicial exception, that the claim “as a whole” be considered to determine whether the claim integrates the recited judicial exception into a practical application of that exception. Although all applications should be written and claims should be drafted to clearly articulate the practical application of the claimed technology, this is particularly important in patent applications and claims that rely on or utilize blockchain technology.  Claims should be drafted to cover or describe the nature of the distributed database and the algorithm for continually reconciling the database.   Since many common concepts which could apply to the blockchain have been made public (general processes related to medical records, real estate records, cryptocurrencies, recording transactions, etc.)  it is critical that blockchain-related technologies that are novel and non-obvious include specific technical details which are distinguishable from prior blockchain based or pre-blockchain-based approaches.  These improvements, which can be characterized as implementing a practical application, must be included in the claims and explained in the patent application. Any blockchain application should describe a technical solution to a technical problem. 

Another important change in the Guidance requires that all Examiners ensure that they give weight to all the additional elements whether they are conventional or not when determining whether a judicial exception has been integrated into a practical application.  This express statement in the Guidance should help to improve the examination process since often, in step 1, the narrow, novel features of the claims are ignored and not given much weight.  The Guidance now forces the Examiners to consider all elements of the claim, which should provide an additional benefit to the Applicant. 

Unfortunately, with respect to software examples, the Guidance does not provide strong examples where an additional element or combination of elements may have integrated the exception to the practical application. Therefore, a challenge remains with respect to software inventions as they can nevertheless be found patent ineligible for reciting mathematical concepts, methods of organizing human activity or mental processes.  Footnote 14 of the Guidance explains, however, that under its broadest reasonable interpretation, a claim that covers performance in the mind but for the recitation of generic computer components, would still be in the mental processes category unless the claim cannot practically be performed in the mind. This principle also should guide drafters of blockchain-related patent applications to explain how the use of the distributed ledger differs from a generic computer component that performs processes which could be performed in the mind. For example, the application might explain that the distributed nature of the blockchain ledger requires a copy of the ledger to be stored on different nodes across the network. A person cannot do this simply in their mind and this fact should be made clear in the patent application and features associated with the underlying distributed nature of blockchain technology should be included within the claims.

The second Guidance document recently issued by the Patent Office relates to 35 U.S.C. 112 and provides some information which can be helpful with respect to blockchain-based patent applications.  We will only mention a small portion of this second Guidance document as it relates to blockchain-based patent applications.  The second Guidance document provides a comment with respect to the requirement that the patent application and claims are sufficiently definite (i.e., clear in terms of claim scope and meaning) under 35 U.S.C. Section 112(b).  More than simply describing a generic purpose computer or microprocessor, patent applications covering software  must disclose an algorithm for performing the claimed function.  The Guidelines explain that the corresponding structure for performing the specific computer function is not simply a general purpose computer by itself but a special purpose computer that is programmed to perform the disclosed algorithm. The important point here is that if sufficient details of an algorithm are provided, then the application can demonstrate that it is disclosing a special purpose computer that is programmed to perform a particular algorithm (blockchain related or otherwise).  Most blockchain innovations will include a software, algorithm component in connection with the use of a distributed ledger.  The more detailed and specific the algorithm is as well as description of the distributed technology, the stronger the argument will be that system or computer device-based claims recite a special purpose computer that is programmed to perform the disclosed algorithm.  The Guidance makes clear that the Applicant can express the algorithm in any understandable terms such as a mathematical formula, in prose, in a flowchart or any other manner that provide sufficient structure.

Combining the instructions from the first Guidance document and the second Guidance document can improve the preparation of blockchain-based patent applications and strengthen the probability that a blockchain-related invention will not get caught in the seemingly never-ending trap of subject matter eligibility rejections.

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