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Business Method Patent Applications


Most software patent applications, during examination, will receive an initial 35 U.S.C. § 101 abstract rejection based on AliceDepending on which art unit the application is assigned to, overcoming the rejection can be easy or can quickly become a nightmare.


Software applications that are classified as “business methods,” that is, a way to implement a business idea using technology (like advertisements, financial services, hotel reservation systems, etc.) generally get assigned to a group unit between 3622-3628 or 3681-3693. Every well known technology company, including Facebook, Google, Microsoft, Adobe, and Microsoft have applications pending in one of these art units.


However, unfortunately, these departments are notorious for maintaining Alice based abstract rejections and not allowing a patent to be granted. It seems like the unofficial policy of the above mentioned art units is to persist Alice based rejections until the applicant gives up all hope and abandons the patent application.


Let’s take art unit 3622 as an example with matters examined between the time period of January 1, 2015 and February 25, 2018 (the day of writing this post). According to publicly available USPTO data, this art unit has examined 2,661 applications in the last 3+ years. Out of these only 96 (there is no typo!) have been awarded a patent. That’s a mere 3.6% success rate!! While this is statistical data from only one art unit, all the above mentioned art units have similar patent grant rates.


Below is a list of a few sampled departments along with their success rates:

Results For Applications Examined Between Jan. 1, 2015 and Feb. 25, 2018
Art UnitApplications Examined* Patents Granted*Success Rate

*Methodology used for calculations:

  • Applications Examined: For each unit the total number of publicly available patent applications were determined between January 1, 2015 and February 25, 2018. Out of those, the ones  that are not currently examined, abandoned prior to examination, or not yet docketed were removed to determine the total number of applications examined.
  • Patents Granted: Includes patented matters, any application for which a notice of allowance has been transmitted, and for which the issue fee has been submitted.


With such low success rates, how can one obtain a patent from these group units?

A careful study of the applications that were awarded a patent in the above mentioned art units yields that each patent had some form of technical information related to the implementation of the invention.


Therefore, to avoid getting stuck in an Alice based black hole induced by one of the above departments, technical details in a software patent application disclosure are important; with such details it may be possible to draft an application that highlights a technical advantage even when a business advantage of using the technology is desired. 


Thus, while one may not be able to avoid the above mentioned art units (based on technology) the best option available to a patent attorney is to be proactive and draft the software patent application in such a manner that the invention highlights a technical aspect implementing the invention instead of a business advantage created by the use of technology.


The results above indicate that procuring a software based business method patent requires careful planning and a firm grasp of the underlying technology —  by your patent attorney — at the initial stages of drafting an application (which unfortunately doesn’t seem to be the case for most applications in the above listed departments). Furthermore, a well drafted patent application will also reduce your total costs in getting a patent awarded, instead of going through years and years of fruitless rejections (that may ultimately result in failure with no patent rights secured).


Further reading:

An analysis and example why software patent applications for mobile apps  land up in the  36xx departments and fail. More on this in our how to patent mobile apps post.


Can I protect my idea?

The simple answer is, not all ideas are patent-eligible. 


35 USC Section 101 states,”[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent … .”


Thus, to procure a patent, an idea should fall into one of the statutory defined categories —  (i) a process, (ii) machine, (iii) manufacture, or (iv) composition of matter.

Machine or Transformation Test

A process, or also known as a business method, that is either  be tied to a specific machine or transform physical matter is generally considered patent eligible. This is called the machine or transformation test. Please note, while this is not the sole test to determine patent eligibility of a process, in most cases, this remains the test followed by the USPTO, and challenging this assertion will be an uphill battle (although outliers do exist). 


1. Actions performed by a person

Generally actions performed by a person do not pass the machine or transformation test. However, if the actions are performed by an intermediary machine (for the person), then the process will pass the machine or transformation test.


2. Medical Procedures

While medical procedures are patentable, per se, they are not enforceable for the purposes of awarding damages, based on medical procedure exception of 35 USC Section 287 (c). However, if the patented procedure requires a process (passing the machine or transformation test), machine, manufacture or composition of matter to implement the procedure, then the medical procedure is enforceable.


3. Tasks that can only be performed by a computer

Since a computer, by definition, is a machine, software programs or tasks performed by a computer, are processes that will pass the machine or transformation test as long as those tasks cannot be performed without a computer (more on this follows below).


4. Tasks that are ordinarily performed by humans, but can be performed by computers as well

Tasks, like escrow systems, have been performed by humans for at least hundreds, if not thousands of years. And prior to the Alice case, tasks performed by humans, and that could also be performed by computers, were considered patentable. Thus, pre-Alice, while an escrow system performed by a person was considered abstract (failed the machine or transformation test), the same process, when performed by a computer was patent eligible. However, the Supreme Court in Alice stated that simply implementing an, otherwise, abstract idea on a computer was not sufficient to make the patent ineligible matter eligible. Thus, now computer software programs need to have a concrete implementation to provide a showing that the implementation is not one that can be performed without a computer. For more information on this, please read our post on the Alice case.

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Software Patents After Alice

Procuring software based intellectual property rights have become a complicated task in a post-Alice world.  In 2014, for the first time, the U.S. Supreme Court invalidated software patents in the matter of  Alice Corporation Pty. Ltd. v. CLS Bank International (June 19, 2014) (or simply Alice). This case has resulted in a fair amount of commotion among patent lawyers, so it may be important for an inventor to at least have a basic understanding of the case. I’ll also discuss the recent guidelines issued by the USPTO based on Alice. These guidelines are currently being used to reject software patent claims.

Tip: did you know — it may be advantageous to file design patent applications along with utility patent applications for a software based invention? Best of all — Alice does not apply to design patents. Check out our animated video tutorials to learn more.


Alice Corporation was formed by an Australian citizen, Ian Shepherd, after he successfully obtained a patent, issued in 1999 (filed in 1992), on performing escrow services using a general computer.  Alice Corporation then spawned many child applications from the original patent application. As such Alice Corporation obtained patents on an abstract idea implemented on a computer system. However, as most of us are aware (and as recognized by the U.S. Supreme Court),  escrow services have been around even before computers existed.

When Alice‘s patents were challenged, the Supreme Court had to deal with the question: Is implementing an (abstract) idea on a computer enough to claim novelty? As expected, the Court ruled against Alice. The  Court determined that Alice‘s claims were patent ineligible because “the claims … amount[ed] to ‘nothing significantly more’ than an instruction to apply the abstract idea of intermediated settlement using some unspecified, generic computer.” (Alice at p. 15).

Based on Alice, the USPTO has issued guidelines using which software claims are now being rejected.  However, as discussed below, a well drafted application should be able to overcome any Alice type rejection.


Earlier the USPTO would allow a software idea be patented using any computing device. However, Alice prompted the USPTO to update it’s guidelines on patent eligible subject matter. First we provide the official (confusing) guidelines, and then we provide some tips as to what do these mean, and how to overcome them.The guidelines are:


STEP I: Determine whether the claim is directed to a process, machine,
manufacture, or composition of matter.  If not, reject the claim. However, if the above is true then proceed to Step II A. Usually this step is a non-issue in a well drafted application.


STEP II A. If Step I is true, is the claim directed to an abstract idea, like:

  • Fundamental economic practices;
  • Methods organizing human activities;
  • An idea itself; or
  • Mathematical ideas or formulas.

If not, then no further analysis is needed. If however, step II A is true, then proceed to Step IIB. Caution: Examiners will always attempt to allege an invention is abstract to justify the rejection. To avoid such a rejection, the application should conclusively provide a disclosure that suggests that the invention is “directed to a specific implementation of a solution to a problem in the software arts.” (Enfish LLC V. Microsoft Corporation, slip. op. at 18.)


STEP II B. If, however, the claim is directed towards an abstract idea, does the claim provide details that “limits the claims in a significant manner?” For such a showing, the USPTO will be looking for a:

  1.  claim limitation that limits the implementation of an abstract idea with a particular technology;
  2.  claim limitation that improves another technology or technical field ; or
  3.  claim limitation  that improves the function of the computer itself.

If so, the matter cannot be held abstract.

But what do these guidelines mean?

To summarize, this means that software patent applications need to be more detailed than before. Here are some tips to keep in mind:

Tip 1: All that technicality matters. Software patent applications should at least disclose a particular way of doing something on a computer. You cannot claim  every way of doing something on the computer –the specification needs to be technical and detailed, explaining at least one implementation of the invention.


Tip 2: Greed may result in trouble. In view of Alice, the practice and mindset of attempting to monopolize an abstract idea needs to change.  Inventors need to be realistic in what they want to be claimed. Inventors should be mindful of the USPTO guidelines and brainstorm their invention with their attorneys considering what the USPTO is looking for in software claims. Failure to do so would only result in huge legal bills and/or a failure to secure your patent rights.


Tip 3: It’s all in the details.  Because software inventions often involve breakthrough ways of using a computer to perform a long wanted task on a computer more efficiently, it is important that at least some claims provide details on how the novelty was implemented. Based on Alice, it is clear the Supreme Court takes a negative view of computer related claims written with a high level of generality. Narrowing the scope of the claims while drafting  software patent applications would most likely overcome the issue.


Tip 4: I, Robot! Inventors involving robotics must be aware that at least some mechanical aspect of their invention is also described within the specification and claims of their software patent applications.  Thus, robotics based products with software-related inventions should have a combination of software and hardware elements in the claims.


Tip 5: Man v. Machine. Machine wins!  Inventors should emphasize on ways in which a computer is an integral unit to the claimed invention, emphasizing why a computer was needed to perform the task. If something can easily be performed by a human without the use of a machine, claiming patent eligibility based on implementation of the task on a machine may not be enough to pass muster.

About the author: Rohit is a software patent attorney and has assisted numerous clients in securing their software rights.



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USPTO Fee Schedule 2018

The fee schedule is provided below. The last time the USPTO issued a fee hike was in March 2013 when the America Invents Act became authoritative. According to the USPTO, “[t]he fee adjustments are needed to provide the Office with a sufficient amount of aggregate revenue to recover its aggregate cost of patent operations … while maintaining momentum towards achieving strategic goals.”


Tip: Check out our animated video tutorials to learn more about patent law. We promise we made them interesting!



Effective March 19, 2013, the USPTO fee structure has divided into three categories  — Micro Entity, Small Entity, and Large Entity. The requirements to qualify for each entity status is further explained below after the fee table.


Mobile device users may need to view the table in landscape mode
Patent Fee TypeLarge EntitySmall EntityMicro Entity
Initial Filing Fees
Provisional Application Filing Fee$280$140$70
Utility (Non-Provisional) Application Filing Fee $1,720$785$430
Design Application Filing Fee$960$480$240
Other Fees, if Applicable
Late Submission of Initial Fee or Declaration$160$80$40
Independent Claims in Excess of 3 (per claim)$460$230$115
Total Claims in Excess of 20 (per claim)$100$50$25
Track 1 (Prioritized) Examination$4,140$2,070$1,035
Unintentional Abandonment$2,000$1,000$500
RCE Fees
First Request for Continued Examination$1,300$650$325
Subsequent Request for Continued Examination$1,900$950$475
Extension of Time Fees
One Month Extension$200$100$50
Two Month Extension$600$300$150
Three Month Extension$1,400$700$350
Patent Issue Fees
Utility Issue Fee$1,000$500$250
Design Issue Fee$700$350$175
Patent Maintenance Fees
Due at 3 Years After Issue (1st)$1,600$800$400
Due at 7 Years After Issue (2nd)$3,600$1,800$900
Due at 11 Years After Issue (3rd)$7,400$3,700$1,850

Please note, these fees are government fees only and do not include legal fees.

Entity Status Explained:

1. Micro entity status: Entities or inventors that have less than (i) 4 prior patent application (excluding provisional applications or applications assigned to previous employer) (ii) have a gross income less than 3 times the median household income in the U.S. for the preceding calendar year ( currently at $177,117 (per the USPTO) (iii) have not assigned, licensed, or conveyed an interest in the invention to an entity that had a gross income of more than $177,117, and (iv) qualify for small entity (below).


2. Small entity status: Entities that have less than 500 employees and have not assigned, licensed, or conveyed an interest in the invention to an entity with more than 500 employees qualify for small entity status.


3. Large entity status: Those who do not qualify for micro or small entity status.



Other comments: Notably enough, the USPTO decided to reduce the ex-parte appeal fee (than originally planned). According to the register, regarding appeal fees, a commenter had expressed “concern over passing a large portion of the appeal unit costs as increased fee rates borne by an appellant[, and] [t]hus … suggested eliminating, or substantially reducing, the notice of appeal fee. Another commenter questioned whether increasing appeal fees would discourage meritorious appeals, noting that, the reversal rate by the PTAB indicates that a large number of appeals are pursued to correct invalid rejections.” Based on the comments, the USPTO reduced the fee increase for forwarding an appeal application to the board by $240, $120, and $60 for large, small and micro entities, respectively, instead of the proposed increase of $500, $250, and $125 for each respective entity.





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The Provisional Patent – Addressing Misconceptions


The first thing one needs to know is that there is no thing as a “provisional patent,” but provisional patentrather the correct terminology is a “provisional patent application.”

Why is this differentiation important? Because a patent, by itself, implies rights, and most people erroneously believe by submitting a provisional patent application they will automatically have the patent rights of their invention. It is called an application because such a filing does not grant you any patent rights, at least not at this stage of the process.



Indeed, a provisional patent application filing has some advantages. The benefits are:

1. It grants you a filing/ priority date that can be used to prevent the statutory bar “clock” from ticking.

2. It also also grants you permission to claim “patent pending.”

3. It reserves (and documents) the date of the filing of your invention, and when the provisional patent application is drafted correctly, it will prevent any later related filings by others from being used against your invention.


However, a provisional application, by itself, will:

1. not grant you the exclusive right to sell products/services related to the invention.

2. not grant you the right to send a cease and desist to another (although you may place them on notice about your “patent pending.”

3. not grant you the right to claim damages if someone else practices your invention without your permission.


To be granted the above rights you will need to have a patent granted which requires the filing of a non-provisional patent application, before the examination process begins.


You can learn more about the differences between a provisional and a non-provisional patent application filing here. As a reminder, the firm does not offer free consultations. Before contacting us you are strongly encouraged to refer to our FAQ section to determine if your query has already been answered.




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What is the Process to Obtain a Patent?

The process to obtain  a utility patent can be confusing for non-lawyers. While not all aspects (like international filings, applications made special, expedited examination, etc.) are covered, this post attempts to simplify a rather complicated process.

For patent protection in the US, an applicant can file a provisional utility patent application, a non-provisional utility patent application, or a design patent application. This post describes the process for utility applications. The difference between a utility and design patent is provided here.

In case a provisional application is filed, the application is not examined by the patent office until a non-provisional application is filed claiming a priority date of the filing date of the provisional application. If a provisional application is not filed, then the filing date of the non-provisional application becomes the application’s priority date.

Once a non-provisional application is filed, the total time to obtain a patent can be approximately 2-4 years. 18 months after filing of an application to which priority is claimed, the patent application is published by the patent office. As of writing this post,  approximately 1.5 – 2 years after filing the non-provisional application, the application is examined and a first non-final office action rejection is issued. Office Action rejections seem to become the “norm” as more than 99% of all utility non-provisional applications filed would result in some form of rejection. The rejection will outline the reasons why the examiner believes the claims  cannot be patented. In most situations, however, the examiner’s concerns can be addressed by making amendments to the claims.

After reviewing the submitted amendments, the examiner would may either allow the claims or may issue a first final office action rejection if they are not satisfied with the amendments submitted, or if the examiner found other references that prohibits patentability of the claims.

After a final office action rejection, a request for continued examination (RCE) can be filed if more amendments are made, or the matter can be appealed to the Patent Trial and Appeal Board (PTAB).  In most cases, a first RCE would be recommended by almost every patent attorney. This is because the appeal process can be very lengthy and expensive.

An RCE resets the office action rejections, and if the examiner is still not satisfied with the amendments, another non-final office action rejection is issued. In effect, an RCE allows the applicant to take “another bite of the apple,” as the office action issuing cycle is repeated. As of writing this post, government fee for filing a first RCE is $600 for a small entity.  Government fee for any subsequent RCE is $800 for a small entity.

Instead of an RCE, after a final rejection is issued, Applicant can also file amendments under the After-Final Consideration Pilot Program 2.0 (AFCP 2.0). There is no government fee  for filing amendments under the AFCP 2.0.  However, this can only be done under a limited circumstances and will be discussed in another post.

As you may have noticed, the government fee needs to be paid at each RCE. Also, attorney legal fee may vary for an office action as there is usually no way to predict in advance the complexity of the rejection listed in an office action. Therefore, to avoid potential issues in future, a good application should have a well written description with as much detail as possible. This will not only help in “fleshing out” your invention, but may also help in reducing the over all cost and time required to obtain a patent (as it can potentially lower the number of office actions issued in your matter).

That is why it is really important to choose a patent attorney or agent who will draft a detailed disclosure of your invention. Needless to say, the longer the disclosure (with more details), the more time is required to prepare the application.


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The PCT Patent Application

International patent applications for U.S. based inventions can be filed within one year (12 months) of filing a U.S. utility patent application (provisional or  non-provisional filing). The important thing to note, however, is that the one year clock starts from the earliest filing from which priority is claimed. Therefore, the one year clock starts from the date of filing the provisional application, if filed. If no provisional application is filed, then the one year clock starts from the non-provisional filing.US based applicants cannot directly file an international patent application. You must file a US application first and be granted a foreign filing license (which is automatically granted, unless the USPTO determines not to issue one — which is extremely rare).

Assuming a foreign filing license is granted by the USPTO, filing an international patent application can be achieved in two ways – direct filing or PCT filing.

  1. PCT filing: An international patent application can be filed under the Patent Cooperation Treaty (PCT). The PCT is a treaty between member states (countries) which recognizes the priority of an applicant’s US based filing. A PCT international patent application allows one to file a patent application with an International Bureau (IB) located in Geneva, Switzerland. Within 30 months of the priority document date (first US filing date), applicant then files national stage application at a member state’s patent office (e.g., China, Japan, Europe, etc.). The advantage of the PCT international patent application is that the applicant, initially, only needs to file one application, instead of filing at each member state. The PCT international patent application also “buys” the applicant extra time to pursue the patent invention at other countries (approximately 30-12 = 18 months) which would not be available if the international patent application is directly filed a member state without the PCT, as further discussed below. 
  2. Direct filing: Applicants have the choice to file directly at each member state under the Paris Convention. Under the Paris convention an international patent application can be filed at each country directly within 12 months of the priority document (first US filing). The advantage of direct filing is that no extra PCT fees needs to be paid. However, all direct international patent application filings need to be filed within 12 months of the US filing priority document.

international patent application: PCT or Direct filing?

PCT filing fees are significantly higher than direct filing in each member country (which needs to be paid anyway when entering national stage). So if the applicant wants to file the international patent application only in one or two countries, direct filing may be economical. However, if the applicant wishes to file in more than two countries, then a single PCT filing with the IB remains a convenient option, as it avoids the need to hire a local patent attorney at each country to perform the direct filing.  Another advantage of the PCT application is  the extra time allowed (18 months) to pursue the national stage. Since most international patent applications are filed before knowing the economical successful of an invention, the extra time helps the applicant in determining the commercial viability of the invention before pursuing patent applications at each foreign country.


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What is a Provisional and Non-Provisional Patent Application

A utility patent can be either be filed as a provisional patent application or as a non-provisional patent application.

How to Patent a Mobile App

Can you patent a mobile app based idea? of course. However, there are caveats involved.


Tip: did you know — it may be advantageous to file design patent applications along with utility patent applications for a mobile or web app? Check out our animated video tutorials to learn more.


Let’s consider a hypothetical (inspired by a real patent application, filed by a big law firm for a big technology company). You come up with an improved idea of a ride sharing mobile app (similar to Lyft or Uber), but your mobile app provides unique features not available to either — let’s say an enhancement on the Uber pool or Lyft line feature, where your app can automatically coordinate a shared ride with members of your favorite social group, all heading to the same destination (think a meet up at your favorite club in or near your hometown). Seems pretty cool, right? So you decide to file a patent on your idea.


You go to your patent attorney and provide him/her your disclosure:

The mobile app can match ride sharing users all heading to the same location. It does the following:

  1. It identifies each member of the social group and their an initial location. Thereafter it can estimate that the members of the social group are attempting to meet at a particular destination location.
  2. The mobile app then generates a proposed transportation route that extends from the initial location and terminates at the destination location. The app determines a proposed transportation route for a set of users.
  3. A first member is identified (from where the trip is to begin) and once the first member accepts the route, a notification is sent to the second member from the set (of users) informing him/her that the route has been initiated.
  4. If the second member accepts the route, the driver receives a notification to initiate a second stop, and so on.


Of course you provide other details and augment your disclosure with flow charts, etc.,  but you do not disclose the most important step —  that is —  how a computer performs the actions of identifying the users, estimating a route, informing the members of the route, etc.


The patent office rejects your application holding it to be an abstract idea that was implemented on a mobile device (a computer), as it did in the real patent application . Subsequently, just like the real Applicant ( the big technology company) you  abandon the application.


Unfortunately, in the land of Alice , such patent applications get rejected (and eventually abandoned) on a daily basis. Big technology companies (or big law firms) are not immune from the high standards the patent office expects from software patent applications.


The lesson here is: before attempting to file a patent (at least before pursuing a non-provisional filing) for a mobile app, please ensure you have a technical write-up on how a computer (not a human) performs the actions that you propose to be your invention. If you are unable to provide such information, you might be setting yourself up for failure.


The reader is also reminded to follow these tips when selecting a patent attorney.


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Can I refile a provisional patent application?

Yes, you may refile a provisional patent application as long as you have not publicly disclosed your invention and understand that you will not be able to take advantage of the previous provisional filing date. 


Let’s get into the details:

A provisional patent application is a temporary filing that holds your spot in time based queue called the priority date, which, in case of provisional applications, is the filing date. This is the date the USPTO recognizes as your invention date. Anyone who came up with a similar idea as yours after your invention’s priority date will have inferior rights – in other words, they won’t be patent the exact idea of your invention, as disclosed. 


Provisional patent applications are held in confidence at the USPTO. This means that unless you publicly disclose your invention, no one will know about its existence. So refiling a provisional application simply means discarding the previous application and filing a new one, and being awarded with a new priority date.


And this brings us to the main issue: since a refiled provisional application will now be awarded a new priority date, if anyone filed an application disclosing a similar invention after your first (original) provisional filing, but before the second (refiled) provisional filing, that person now holds superior rights over the invention than you.


Also keep in mind, statutorily, you have one year from publicly disclosing your invention to file a patent application. Thus, you may not be able to refile the provisional application if the refiling happens to be more than one year after your public disclosure. What constitutes as public disclosure is a complicated subject by itself and it is best that you contact your patent attorney before considering refiling the provisional application.


To summarize: Yes, you may refile a provisional application, but your invention’s priority date will change and your innovative rights may be affected.


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