In part one of this two-part series, I proposed that the Patent Office Guidelines should be more aligned with the Alice decision regarding patent eligibility, specifically with respect to the category of fundamental economic practices. In that decision, the concept of mitigating risk (under Step 2A, Prong One, which asks whether a claim is directed to an abstract idea) was found to be a “fundamental economic practice long prevalent in our system of commerce”.  In sum, whether an abstract idea is a fundamental economic practice long prevalent in our system of commerce involves answering three fact questions: first, whether an economic practice is fundamental; second, whether the economic practice has been around for a long time; and third, whether it is prevalent in our system of commerce. The Alice decision included evidence, such as a textbook from the 1800s, showing how mitigating settlement risk is old, prevalent and fundamental. The abstract idea of mitigating settlement risk had been well known for many years prior to the Internet, and the analysis deemed this old idea simply to be implemented via a generic computer.  The Patent Office Guidance currently only requires the economic practice or principle to be fundamental. This term was further watered down in the October 2019 Update: Subject Matter Eligibility, in that, for the economic practice to be deemed fundamental, it does not even have to be old or well-known. The examiner is not required to cite any facts. In my experience of prosecuting economic-related inventions before the Patent Office, anything can be deemed to be fundamental. The exception is swallowing up the patent law in this category.  Many court cases have abandoned the more stringent framework of Alice.  As it currently stands, if a claim is determined to include an economic practice, it can automatically be deemed a fundamental economic practice and thus an abstract idea. 

As additional support for my proposal above to adjust Step 2A, I reference to the analysis of the Patent Office Guidance under Step 2B.  Step 2B asks whether, given the abstract idea or judicial exception recited in the claim, there are additional elements that integrate the judicial exception into a practical application that imposes a meaningful limit on it. For a time, an examiner could conclude that the additional elements recite well-understood, routine, conventional activity in the relevant field and thus determine that the claims were not patent-eligible. However, this conclusion would be reached without any supporting evidence. The Berkheimer decision from the Federal Circuit changed the analysis to require evidence showing that additional elements are well-understood, routine and conventional activity. The Patent Office accordingly changed their rules in the Berkheimer Memorandum of 19 April 2018, which analysed the Berkheimer decision. The Patent Office established that whether the additional elements to the judicial exception are “well-understood, routine, conventional activity in the relevant field” is a “factual determination”. Thus, the examiner must cite facts or readily be able to conclude that “the element(s) is widely prevalent or in common use in the relative industry.”  This conclusion is harder to establish than a prior art rejection, because some obscure reference to an idea might be applicable under Sections 102/103, but that is different from the idea being widely prevalent or common in the industry. 

The Patent Office article, “Adjusting to Alice”, dated April 2020, highlights how the Berkheimer Memorandum immediately had an impact by reducing the number of Alice-based rejections. In other words, it was a positive result that the examiners had to support the Step 2B conclusion with factual evidence.

Enhanced clarity and decreased uncertainty could exist in the category of economic practices and principles if the Step 2A, Prong One analysis under Alice was tightened up in the exact same manner as the Step 2B analysis under Berkheimer. Note the similarity in whether something is well-understood, routine, conventional activity in the relevant field under Step 2B and the Step 2A, Prong One question (that I propose) of whether the abstract idea is a fundamental economic practice long prevalent in our system of commerce.  The Step 2B questions further ask whether the element was “widely prevalent or in common use”, using language from the Berkheimer Memorandum. There are several commonalities between the Alice Step 2A, Prong One approach and the Step 2B approach. If an abstract idea is fundamental, it would likely be well-understood and routine. If a practice is long prevalent in a system of commerce, it would also have to be widely prevalent or in common use. If it is in common use and widely prevalent, it would very likely have been around for a long time, rather than immediately or recently made prevalent and in common use. As a note to any litigators, the smart attorneys representing Berkheimer argued successfully that summary judgment in that case was improper because whether steps employ well-understood, routine and conventional computer functions is a question of fact for which no evidence was presented. The Federal Circuit agreed with respect to some of the asserted patent claims, vacated the summary judgment and remanded for further proceedings.   

The Berkheimer decision, and the subsequent Patent Office Memorandum that was based on it, decreased uncertainty in patent examination with respect to Step 2B. In the same manner, and given the multiple similarities in the analysis between Berkheimer and Alice, enhanced clarity and structure in the patent examination process could exist in Step 2A, Prong One for innovative economic practices. All it would take is the requirement of factual evidence for the three questions found in the Alice decision. Examiners would simply have to provide evidence that what is characterised as an abstract idea is actually a fundamental economic practice long prevalent in our system of commerce. This would ensure some harmonisation of the structure of the analysis for Step 2A, Prong One and Step 2B when it comes to economic principles or practices.