Section 101 Analysis

Background

• After Alice (2014), USPTO examiners applied the Alice/Mayo two-step test inconsistently
• Applicants complained of over-broad rejections
• The Revised Guidance was intended to provide more structured and predictable examination

Step 1

• Confirm the claimed subject matter falls within one of the four statutory categories (process; machine; manufacture; composition of matter)
• If not in any category, reject under § 101
• If in a statutory category, proceed to Step 2A
• STEP 2A, PRONG 1 — RECITES A JUDICIAL EXCEPTION?: ask whether the claim recites (explicitly or inherently) a law of nature
• A natural phenomenon
• Or an abstract idea
• ABSTRACT IDEA GROUPS (Prong 1): (a) Mathematical concepts: mathematical relationships
• Mathematical formulas or equations
• Mathematical calculations
• (b) Certain methods of organizing human activity: fundamental economic principles/practices (e.g., hedging, intermediated settlement)
• Commercial or legal interactions (contracts, sales, legal relationships)
• Managing personal behavior/relationships
• (c) Mental processes: concepts performed in the human mind (observation, evaluation, judgment, opinion)
• If the claim does NOT recite a judicial exception, it is patent-eligible — STOP
• STEP 2A, PRONG 2 — PRACTICAL APPLICATION?: even if the claim DOES recite a judicial exception, ask whether the claim as a whole integrates the recited exception into a PRACTICAL APPLICATION

Practical Application Indicators

• Reflects a specific, particular way of implementing or applying the exception
• Applies the exception with or by a specific machine (not generic)
• Results in a particular transformation or reduction of an article to a different state or thing
• Applies the exception in some other way that imposes a meaningful limit
• If YES to practical application, claim is patent-eligible — STOP
• STEP 2B — SIGNIFICANTLY MORE?: if claim does NOT integrate into practical application, ask: do the additional elements (beyond the judicial exception) amount to significantly more than the exception?
• This is the traditional Alice/Mayo Step 2 inquiry
• If YES, eligible
• If NO, reject under § 101.

Prong 2 is the Key Addition

• The Alice/Mayo Step 2 was a single question — 'significantly more'
• The 2019 Guidance split this into two prongs: Prong 2 (practical application integration) and Step 2B (significantly more)
• Prong 2 gives applicants a new argument even if their invention doesn't rise to 'significantly more' — arguing that the claim as a whole integrates the abstract concept into a practical application

Courts Are not Bound by USPTO Guidance

• The Federal Circuit has explicitly said that it is not bound by the USPTO's Revised Guidance
• Courts still apply the Alice/Mayo framework directly from the Supreme Court decisions
• The practical effect: a claim may survive examination under the 2019 Guidance but still face § 101 invalidity challenges in court

Narrower Abstract Idea Definition

• The 2019 Guidance listed specific groups of abstract ideas
• This is narrower than the Supreme Court's approach (which has never defined abstract ideas exhaustively)
• If a claim's abstract concept doesn't fit neatly into one of the three groups, examiners should give the applicant benefit of the doubt

Consistency in Prosecution

• The Guidance has generally reduced the rate of § 101 rejections during prosecution
• Applicants are more likely to get claims allowed with specific technical elements
• The percentage of final § 101 rejections decreased after 2019

Subject Matter Eligibility Examples (SMEQ)

• The USPTO publishes Subject Matter Eligibility Examples (SMEQ) to help examiners and applicants understand how the guidance applies to specific technology areas (AI, personalized medicine, data analytics)
• These examples are extremely useful for prosecution strategy.

Initial Review

• Confirm the rejection is properly framed: which judicial exception does the examiner identify?
• Which step of the analysis (Prong 1, Prong 2, Step 2B) does the examiner rely on?
• A poorly framed rejection can be challenged procedurally

Prong 2 Argument — Practical Application

• Argue that the claim as a whole integrates the recited exception into a practical application
• Identify a specific way the claim applies the exception with particular technical details
• Compare to USPTO SMEQ examples where similar claims were found to integrate into a practical application
• Show that the claim results in a particular transformation or improvement to a technological process

Step 2B Argument — Significantly More

• Identify specific additional elements in the claim beyond the abstract idea
• Argue these elements are not 'well-understood, routine, and conventional'
• Cite specification support showing what makes the claimed implementation non-conventional
• Compare to Enfish, McRO, Core Wireless — cases where technical improvements were found sufficient

Claim Amendments to Overcome § 101

• Add specific technical elements that anchor the claim to a concrete implementation
• Add specific hardware components (specific processors, memory configurations, network interfaces)
• Add specific algorithmic steps that reflect a non-conventional technical approach
• Add system claims that emphasize the specific machine configuration

Key Cases to Cite in Prosecution

• Enfish (self-referential database table — specific technical improvement)
• McRO (specific unconventional ordered combination — animation rules)
• Core Wireless (specific improved UI structure)
• SRI International (hierarchical network monitors — specific technical architecture)

Expert Declarations

• A declaration under 37 C.F.R. § 1.132 from a technical expert can address whether the claimed elements were well-understood, routine, and conventional at the time of filing
• Useful when the specification alone doesn't clearly establish the non-conventional nature of the claim.

District Court — § 101 as Invalidity Defense

• Patent defendants can challenge § 101 eligibility as an invalidity defense in district court
• Clear and convincing evidence standard applies to invalidity generally
• § 101 eligibility is a QUESTION OF LAW — decided by the judge, not the jury
• This means § 101 challenges can be resolved on: motion to dismiss (Rule 12(b)(6)) — if the claim is facially ineligible
• Motion for judgment on the pleadings (Rule 12(c))
• Summary judgment (Rule 56)

Early Case Resolution

• Because § 101 is a question of law, it can be resolved before trial
• Defendants routinely file early § 101 motions to dismiss in patent cases
• Successful § 101 challenges before discovery save millions in litigation costs
• Courts often resolve § 101 before or alongside Markman claim construction

Critical Limitation

• 35 U.S.C. § 311(b): IPR petitions can only challenge claims based on § 102 (novelty) and § 103 (obviousness) prior art grounds
• § 101 eligibility CANNOT be raised in IPR
• PGR can raise § 101 (within 9 months of grant) — but § 101 is explicitly listed as a ground for PGR challenge (§ 321(b))

The Mayhem

• Since § 101 challenges can only be raised in district court, § 101 litigation remains in federal courts and ITC (not PTAB)
• Costs remain high

ITC Section 337 Investigations

• § 101 challenges can be raised in ITC investigations as a defense to exclusion orders
• ITC has increasingly addressed § 101 in the context of software/tech patents.

Current Landscape (2024-2026)

• Alice and Mayo remain binding Supreme Court precedent
• Congress has not yet passed § 101 reform legislation despite multiple attempts
• The Federal Circuit continues to apply Alice/Mayo with inconsistent results across technology areas
• COREPHOTONICS v.

Apple (Fed. Cir. 2023)

• Camera control methods found eligible — emphasis on specific technical improvement to camera functionality
• BAXALTA v.

Congressional Reform Proposals

• Patent Eligibility Restoration Act (PERA): introduced 2023
• Would eliminate all judicial exceptions
• Replace with a specific list of excluded subject matter (mathematical formulas; mental processes; standalone data presented without technical effect)
• Would effectively reverse Alice and Mayo
• Has bipartisan support in some committee but not passed
• Opposition: large tech companies argue PERA would revive troll patents

Biotech/diagnostics

• Mayo/Alice remain most damaging here
• Personalized medicine and diagnostic correlation patents difficult to obtain
• Post-Amgen (2023) enablement further limits broad functional claims

Software

• § 101 challenges remain common in software litigation
• But Enfish/McRO principles allow many technical software patents to survive

Fintech

• Still the most hostile environment for § 101
• Fundamental economic practice claims routinely rejected

AI Patents

• New frontier
• Specific technical improvements to AI systems more likely eligible than 'apply AI to problem X'
• USPTO issued AI-specific guidance