INTRODUCTION
Blockchain is turning into central to extra FinTech patent portfolios than ever – nevertheless it’s tougher to acquire safety on blockchain than most different applied sciences. The US Supreme Court docket’s determination in Alice v. CLS Financial institution (2014) strengthened limits on what material is eligible for patent safety underneath 35. U.S.C. §101. In the present day’s software-based applied sciences don’t at all times go Alice’s multi-part take a look at for excluding “summary concepts” from patentability. Enterprises creating blockchain expertise are sometimes left with questions as as to if their core innovations could be protected. This text explains our method to answering these questions.
The excellent news is that well-drafted blockchain patent purposes can and do go muster at the US Patent & Trademark Workplace (USPTO). Within the final ten years, nearly 14,000 blockchain-based patent purposes have been filed, and nearly 10,000 blockchain-based patents have been issued.
We’ll start with a “deep dive” into the Alice-Mayo take a look at outlined in USPTO’s 2019 Revised Patent Topic Matter Eligibility Steerage because it applies to blockchain claims. In Part II we analyze the present blockchain patent panorama to determine traits within the submitting and issuance of blockchain patents. Lastly, in Part III we offer some sensible ideas for drafting patent purposes which might be more likely to yield robust safety and increase the worth of a FinTech enterprise creating blockchain expertise.
I. ALICE-MAYO TEST OF PATENT ELIGIBILITY
Alice rendered summary concepts carried out on a generic pc to be patent ineligible and created obstacles to acquiring patent safety on pc software program reminiscent of blockchain. Within the wake of the choice, the USPTO issued a number of examination steerage paperwork together with the 2019 Revised Patent Topic Matter Eligibility Steerage (“Steerage”). The Steerage offered clarification on patent eligibility of sure teams of summary concepts, reminiscent of “mathematical ideas,” “sure strategies of organizing human exercise” and “psychological processes.” These are examples of classes excluded from patentability by courts and are generally known as “judicial exceptions” to patentability. The Steerage outlined the Alice-Mayo take a look at (based mostly on Supreme Court docket’s determination in Alice and the associated Mayo Collaborative Companies v. Prometheus Laboratories, Inc.) which included a two-prong inquiry for figuring out whether or not a declare is “directed to” a judicial exception.
Step one of the Alice-Mayo take a look at (Step 1) of the patent eligibility evaluation is an inquiry as as to if the declare of the patent utility is directed to a course of, machine, manufacture or composition of matter. If the reply is not any, the declare is taken into account patent ineligible. If the reply is within the affirmative, then the take a look at proceeds to the second step (Step 2) of patent eligibility.
Step 2 contains two sub-steps, step 2A and step 2B. Step 2A is an inquiry as as to if the declare is directed to one of many patent-ineligible judicial exceptions — within the case of software program innovations, an “summary concept”. If the declare is not directed to an summary concept, the declare qualifies as a patent eligible material. Nevertheless, simply being “directed to” an summary ideadoes not doom declare eligibility. As a substitute, Step 2B is an inquiry as as to if the declare recites extra parts that quantity to “considerably extra” than the summary concept. In different phrases, step 2B is an inquiry as as to if the declare supplies for an ingenious idea by including limitations past an summary concept that’s not well-understood, routine, standard. If the declare recites extra parts that quantity to considerably greater than the summary concept, then the declare qualifies as patent eligible.
The primary clarification offered by the Steerage is to set forth a two-pronged evaluation underneath step 2A. Prong 1 asks whether or not the declare recites an “summary concept.” Prong 2 is an inquiry as as to if the declare recites extra parts that combine the summary concept right into a sensible utility. The rationale behind prong 2 is to find out whether or not the declare applies, depends on, or makes use of the summary concept in a way that imposes a significant limitation on the summary concept, such that the declare is greater than a drafting effort designed to monopolize the summary concept. It ought to be famous that in accordance with the Alice-Mayo take a look at, “reciting” an summary concept is completely different from being “directed to” an summary concept. A declare that recites an summary concept merely contains an summary concept. However to be able to be “directed to” an summary concept, the declare should fail each prong 1 and prong 2 of step 2A.
Figuring out whether or not the declare recites extra parts that combine the summary concept right into a sensible utility underneath prong 2 includes (a) figuring out whether or not the declare contains extra parts reciting parts past the summary concept, and (b) evaluating the extra parts each individually and collectively to find out whether or not they combine the exception right into a sensible utility, or makes use of the summary concept in a way that imposes a significant restrict on the summary concept, such that the declare is greater than a drafting effort designed to monopolize the summary concept.
II. BLOCKCHAIN PATENT LANDSCAPE ANALYSIS
13,854 patent purposes on blockchain expertise had been filed & printed on the USPTO between January 2013 and October 2023. Throughout this time, 9,442 blockchain patents had been granted.
Within the interval between 2015 and 2019, there was a rise in each the variety of filed blockchain patent purposes and the variety of issued blockchain patents. The primary interval was adopted by a second interval between 2019 and 2022 the place the variety of filed purposes plateaued whereas the variety of issued patents decreased. About 1160 filed purposes had been deserted throughout the second interval, and 560 of the 1160 deserted purposes confronted rejections based mostly on §101 by the USPTO (as proven in FIG. 2).
When it comes to patent candidates, Superior New Applied sciences has been issued the best variety of blockchain patents within the US (1311 patents), adopted by IBM (790 patents), Financial institution of America (198 patents), Ant Group Co. Ltd.[1]/ (188 patents), Mastercard Inc. (137 patents) and One Belief LLC (123 patents).
The highest three U.S. blockchain patent holders are Superior New Applied sciences, IBM and Financial institution of America. For patent purposes filed between 2016 and 2019, IBM was issued the best variety of blockchain patents. The variety of blockchain patents issued to Superior New applied sciences based mostly on purposes filed since 2017 has exceeded IBM.
Blockchain patent purposes filed since 2021 are nonetheless possible present process prosecution earlier than the USPTO, and due to this fact many of those purposes haven’t been issued but.
III. PRACTICAL TIPS FOR PROSECUTING BLOCKCHAIN APPLICATIONS
Though the Alice-Mayo take a look at initially rendered many software-related innovations as unpatentable, the outlook for patentability of blockchain patent purposes has improved in recent times. Within the final decade, near 10,000 blockchain-related patents have been issued. Nevertheless, we advise candidates looking for safety for his or her blockchain expertise that the claims and specification of their patent purposes ought to be drafted with the Alice-Mayo take a look at in thoughts.
Tip 1: Resolve 101 points with the Examiner.
The primary key takeaway from our findings is that the candidates are higher off resolving an Alice/§101 rejection with the patent examiner reasonably than interesting to the Patent Trial and Attraction Board (PTAB). We recognized a complete of 38 blockchain-related patent purposes during which an applicant appealed an examiner’s §101 rejection. The search resulted in 38 appeals. In solely 4 of the 38 appeals, the PTAB reversed the examiner’s §101 rejection — put one other means, the PTAB affirmed the examiner’s §101 rejection about 90% of the time. In three of the 4 reversals, the PTAB issued new grounds for a §101 rejection. In consequence, solely oner of the 38 appeals succeeded in overcoming a §101 rejection on the PTAB — a failure price of 97.3%. We observe that of the 37 appeals that failed to beat the §101 rejection, 5 purposes had been later allowed based mostly on declare amendments earlier than the examiner. It’s clear {that a} technique of working with the examiner to resolve an Alice/§101 rejection in a blockchain patent utility is way extra more likely to lead to an issued patent.
Tip 2: Don’t concede {that a} blockchain declare is “directed to” an summary concept.
The second key takeaway is that purposes ought to be drafted with a watch on prong 2 of step 2A as a result of it’s extremely unlikely that blockchain claims will probably be thought-about patentable underneath prong 1 of step 2A (i.e., discovered to not “recite” an summary concept). Of the 38 appeals that we analyzed, the declare was discovered to recite an summary concept (e.g., strategies of organizing human exercise reminiscent of industrial actions that may be carried out within the thoughts) in each case. Inside the prong 2 evaluation, the PTAB usually asks two separate questions: 1) Does the declare embody extra parts in addition to the summary concept? 2) Do the extra parts combine the summary concept to a sensible utility? If the PTAB finds that there are not any extra parts in addition to the summary concept, the declare usually will probably be deemed ineligible underneath the Alice-Mayo take a look at.
To make sure that the declare recites extra parts with the which means of prong 2 of step 2A, patent candidates are strongly suggested to incorporate substantial particulars concerning the technical operations of their invention within the claims. Whereas this will make the claims longer and doubtlessly narrower in scope, it is going to possible enhance the probabilities of overcoming the primary query underneath the prong 2 evaluation. This recommendation is supported by the 5 appeals (of the 38 appeals famous above) during which the PTAB affirmed an examiner’s 101 rejection, however the corresponding purposes had been later issued based mostly on declare amendments made by the applicant. In these 5 circumstances, the typical size of claims discovered patent ineligible by PTAB was 150 phrases, whereas the typical size of claims in the end allowed was 319 phrases.[2]/
Tip 3: Combine blockchain ideas right into a sensible utility.
Lastly, candidates ought to be sure that the extra technical parts combine the summary concept to a sensible utility. The PTAB has deemed enhancements in expertise reasonably than enhancements within the summary concept to represent integration of an summary concept right into a sensible utility. For instance, PTAB has deemed {that a} novel summary concept carried out on a generic pc remains to be an summary concept.[3] Candidates ought to take into account implementing performance into their claims that can’t be carried out by the human thoughts even when hypothetically given a considerable period of time.[4] In blockchain claims, this will embody including declare limitations that relate to technical ideas reminiscent of hashing or verifying digital signature which might be unimaginable for a human thoughts to perform.
CONCLUSION
The information present that blockchain innovations make up a large portion of expertise patent portfolios, and a patent utility referring to blockchain expertise could be positioned for fulfillment on the patent workplace by following our method outlined above. We at Mintz are prepared to help your enterprise in evaluating the most effective IP technique on your blockchain innovations.
Co-authored by Siddharth Bhardwaj, Summer time Affiliate 2024.
[1]/ Ant Group Co. Ltd is an affiliate of Superior New Applied sciences.
[2]/ In a future article, we’ll focus on appeals to the PTAB: one the place the PTAB reversed a patent examiner’s §101 rejection and the opposite the place the PTAB affirmed patent examiner’s §101 rejection however the rejected claims had been later allowed after declare modification.
[3] See p. 11, Attraction Determination dated November 4, 2021 of ‘0030 Software (citing Synopsys, Inc. v. Mentor Graphics Corp., 839 F.3d 1138, 1151 (Fed. Cir. 2016))
[4] See p. 18, Attraction Determination dated August 19, 2020, of U.S. Software No. 14/719,030.
