Blockchain Legal Resource

On January 7, 2019, the United States Patent and Trademark Office (USPTO) issued further guidance on patent subject matter eligibility, which should ease some of the burden placed on patent applicants seeking to obtain U.S. patents on certain technology, including blockchain technology.

Among the requirements for obtaining a U.S. patent is that the subject matter of a patent application must, according to statute, be directed to a “process, machine, manufacture, or composition of matter, or [an] improvement thereof.” Implicitly excluded from these statutory categories are laws of nature, natural phenomena, and abstract ideas. The USPTO has struggled with providing consistent and predictable results across applications, art units, and technology fields and has repeatedly issued guidance over the course of the past decade in an effort to assist inventors, businesses, and other patent stakeholders to reliably and predictably determine what subject matter is patent-eligible.

Under the latest guidance, the USPTO is restricting the abstract idea exception to claims that recite on their own or per se: (a) mathematical concepts (e.g., mathematical relationships, mathematical formulas or equations, and mathematical calculations); (b) certain methods of organizing human activity (e.g., fundamental economic principles or practices (including hedging, insurance, mitigating risk), commercial or legal interactions (including agreements in the form of contracts, legal obligations, advertising, marketing or sales activities or behaviors, and business relations), managing personal behavior or relationships or interactions between people (including social activities, teaching, and following rules or instructions)); and (c) mental processes (e.g., concepts performed in the human mind (including an observation, evaluation, judgment or opinion)).

The USPTO’s latest guidance finds is roots in two Supreme Court decisions, one issued in 2012 (Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66 (2012)) and the other issued on 2014 (Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208 (2014)). According to the so-called “Alice/Mayo” test, the first step is to determine whether the application’s claims are directed to one of the four statutory categories: process; machine; manufacture; or composition of matter. If not, the inquiry ends, concluding that the patent claims are not patent-eligible. On the other hand, if the claims are directed to one of the four statutory categories, the second part of the Alice/Mayo test focuses on whether the application’s claims wholly embrace a judicially recognized exception, e.g., laws of nature, natural phenomena, and abstract ideas.

The difficulty, in practice, has been the consistent and predictable application of this two-part test, particularly in light of the Supreme Court’s own recognition that “[a]t some level, all inventions embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas” and it’s caution “to tread carefully in construing this exclusionary principle lest it swallow all of patent law.”

In view of the latest guidance, patent applicants in the U.S. (including those involving blockchain) that present claims that clearly fall within the statutory categories enumerated above and that avoid claiming mathematical concepts, methods of organizing human activity, or mental processes on their own or per se should find themselves in a safe harbor of patent-eligible subject matter. Of course, all of the other statutory and regulatory requirements must be satisfied before an applicant can be expected to be awarded a patent.

As the law on patent-eligible subject matter continues to evolve, one can expect the USPTO to continue issuing guidance on this topic.