Eligible Subject Matter at the Patent Office: An Empirical Study of the Influence of Alice on Patent Examiners and Patent Applicants

The U.S. Supreme Court’s decision regarding patent-eligible subject matter in Alice Corp. v. CLS Bank has been in effect for more than five years, and it has made a significant impact on inventions involving software, information technology, and the life sciences. There is significant scholarly debate about whether current patent law addressing eligible subject matter after Alice creates significant uncertainties, and whether it fails to provide meaningful guidance to patentees so as to harm innovation in various industries. This work develops a causal empirical study (using difference-in-difference regressions) of Alice and carefully explores how this decision impacts patent examiners and patent applicants in different technology areas. We deploy and analyze patent application data between 2012 and 2016 for all the U.S. Patent and Trademark Office (“PTO”) office actions, a total of 4.48 million patent office actions and patentee responses. Our analysis concentrates on three technology areas, namely software, business methods and bioinformatics, including broad and narrow definitions for these technology categories. We find that Alice increases the transaction costs associated with patent prosecution and creates uncertain outcomes in patent allowance. Patent applicants employed different strategies (e.g., filing amended patent claims, filing new patent applications or choosing to abandon or never pursue patent protection) to overcome PTO rejections for ineligible subject matter and attempt to comply with the jurisprudence of Alice. We also find that Alice impacts patent eligibility in different technology areas at the PTO to varying degrees. The implementation of the Alice decision by the PTO also strengthened the effects of this decision. In the three technology areas that we studied, applicants received more Alice-based rejections and Sec. 101 rejections after Alice, and they are positively associated with each other. Alice rejections are not always positively associated with other types of statutory rejections (i.e., Sec. 102, Sec. 103, and Sec. 112 rejections). Moreover, patent applicants in all three technology areas filed fewer patent applications, compared to the time period before Alice with the greatest reduction in patent applications being in bioinformatics. In addition, patentees in some technology areas were successful in overcoming Sec. 101 rejections after Alice, but patentees in other areas were not as successful in overcoming Alice-based rejections. Alice imposes the highest costs of patenting on bio-informatics. Applications in bio-informatics received many more Sec. 101 rejections based on Alice, but these applicants also faced difficulties in overcoming these rejections. Meanwhile, patent applications based on business methods also received more Sec. 101 rejections based on Alice. Average patent applicants in business methods learned from Alice and received fewer Sec. 101 rejections when they filed patent applications after Alice. Alice also imposed various degrees of patenting costs for different types of software innovation. Our data and analysis suggest that some art units related to software faced higher costs of patenting after Alice, but Alice might not be a direct and significant reason for the increasing uncertainties in other software-related art units. Given the current eligibility jurisprudence of the Federal Circuit and the reluctance of the Supreme Court to consider eligibility cases, our empirical study of the nature and extent of the uncertainties at the PTO caused by Alice concludes that legislation by Congress is the best hope to bring more certainty to this area of patent law.