NEWS
The Harsh Reality of § 101 Appeals: Why Fighting a Rejection at the PTAB Is an Uphill Battle
For inventors and patent practitioners, securing a patent has always been a challenge—but when it comes to overcoming a § 101 rejection, the odds are stacked against applicants. The latest data from 2023 confirms a troubling trend: the Patent Trial and Appeal Board (PTAB) upheld examiner § 101 rejections a staggering 91% of the time. This marks a steady increase from 87.1% in 2021 and 88.4% in 2022, making it increasingly clear that appealing a § 101 rejection is more likely to end in disappointment than success.
Why Is the PTAB So Tough on § 101 Appeals?
The high affirmance rate isn’t just a reflection of weak applications being weeded out—it’s a symptom of a broken system. Ever since the Supreme Court’s Alice Corp. v. CLS Bank decision, the framework for determining patent eligibility has been a mess. The Federal Circuit has issued conflicting rulings, and the PTAB itself often ignores the USPTO’s own guidelines. This inconsistency has led to bizarre decisions, including rulings that a diamond-encrusted drill bit and a camera phone were somehow “abstract ideas.”
In practice, this legal chaos means that applicants face unpredictable outcomes, with decisions often feeling arbitrary rather than based on sound legal principles.
Where Do § 101 Appeals Get Hit the Hardest?
Looking at the numbers, it’s clear that some USPTO Technical Centers (TCs) are far harsher than others when it comes to § 101 rejections.
- TCs 3600 & 3700 (Business Methods & Financial Tech): These have the worst outcomes, with affirmance rates exceeding 95%. Since business method patents frequently land in these TCs, inventors in these fields face particularly steep odds.
- TC2100 (Computing Technologies): The affirmance rate here climbed to 85% in 2023, up from 80% in 2022. This suggests that even general software patents—not just business method patents—are struggling more than ever.
- Other TCs: While some technical centers have lower affirmance rates, there isn’t enough data to draw strong conclusions. That said, TCs 2400 and 2600 may offer more favorable outcomes for software-related applications.
What Types of “Abstract Ideas” Get Rejected Most Often?
The PTAB’s reasoning for § 101 rejections usually falls into three main categories:
- Mathematics (17% of affirmances)
- Mental Processes (48%)
- Methods of Organizing Human Activity (68%)
The overlap in these categories means that some applications get rejected for multiple reasons. Mental processes are the most common issue in TC2100, while TC3600 predictably has the highest percentage of “organizing human activity” rejections due to its focus on business methods.
The Hidden Danger: PTAB’s Surprise § 101 Rejections
If you think your appeal is safe because your examiner didn’t issue a § 101 rejection, think again. The PTAB has the power to introduce a new § 101 rejection, even if it wasn’t raised during examination. In 10% of cases, the PTAB issued fresh § 101 rejections, catching applicants off guard. This risk is especially high in TC2100, where examiners tend to be more lenient with § 101, only for the PTAB to later step in and shut down applications.
What’s the Best Strategy Moving Forward?
With such daunting statistics, appealing a § 101 rejection is rarely the best course of action. Instead, applicants should:
- Work with the examiner to amend claims and find a path to allowance, rather than immediately pursuing an appeal.
- Use TC steering tools to predict where an application will be assigned. Avoiding TC3600 and TC3700 can dramatically improve chances of success.
- Be prepared for an uphill battle if a § 101 appeal is unavoidable, and consider all possible claim amendments before taking the risk.
Final Thoughts
The PTAB’s 91% affirmance rate for § 101 rejections in 2023 is a wake-up call for inventors and patent attorneys. The current system is unpredictable, inconsistent, and incredibly challenging to navigate. While legislative or judicial reform may be necessary to fix the problem, for now, the best approach is to strategize early in prosecution—because once an application lands at the PTAB, the chances of success are slim.
AI and Copyright: Court Rules Against Fair Use in Training AI Models
On February 11, 2025, the U.S. District Court for the District of Delaware delivered a landmark decision in Thomson Reuters Enterprise Centre GmbH v. Ross Intelligence Inc., ruling that the use of copyrighted materials to train AI models does not qualify as fair use. This ruling represents a significant development in the ongoing legal debate over AI and intellectual property rights.
Background of the Case
Thomson Reuters, the owner of the legal research platform Westlaw, provides users with legal texts, statutes, and editorial content such as headnotes that summarize key aspects of cases. Westlaw also employs a proprietary classification system called the ‘Key Number System’ to organize legal materials.
Ross Intelligence, an AI-powered legal research platform, sought to develop a competing tool and initially attempted to license Westlaw’s data for training purposes. When Reuters declined, Ross turned to a third-party company, LegalEase, which compiled ‘Bulk Memos’—legal questions and answers based on Westlaw’s headnotes. Ross then used these memos to train its AI system.
Reuters filed a lawsuit in May 2020, alleging copyright infringement, arguing that Ross used proprietary Westlaw content without authorization to build its AI-driven research tool.
Court Ruling and Rejection of Fair Use
Judge Stephanos Bibas granted Reuters’ motion for partial summary judgment, rejecting Ross’s fair use defense. The court applied the four-factor test under U.S. copyright law:
- Purpose and Character of the Use: The court found Ross’s use to be commercial and non-transformative. Ross used Reuters’ copyrighted material to create a directly competing product, and the AI training process did not add a new or distinct purpose.
- Nature of the Copyrighted Work: This factor slightly favored Ross, as the Westlaw headnotes, while creative, contain factual elements.
- Amount and Substantiality of the Work Used: The court ruled in Ross’s favor on this factor since the headnotes were only used in training and not displayed to end-users.
- Market Effect: The ruling heavily favored Reuters, as Ross’s tool directly competed with Westlaw, threatening its market share. The court emphasized that Ross could have developed its AI training data independently or through licensed sources.
Given the emphasis on the fourth factor, the court ruled against Ross, stating that fair use does not protect the unauthorized use of copyrighted content for AI training.
Implications for AI and Copyright Law
This ruling is a major victory for copyright holders, affirming their rights over proprietary content and potentially opening new licensing revenue streams. On the flip side, AI developers now face stricter limitations on sourcing training data, emphasizing the need to either use non-copyrighted works or obtain proper licensing agreements.
However, this decision is not the final word on AI copyright disputes. Judge Bibas explicitly noted that Ross’s system was not a generative AI tool but rather a legal search engine. Future cases involving generative AI may see courts take a different stance, particularly on the transformative use factor.
As AI continues to evolve, the legal landscape will likely shift. This case sets a precedent but leaves open questions about how courts will treat AI-generated content moving forward. For now, AI companies should tread carefully, ensuring their training data complies with copyright laws to avoid similar litigation battles.
Federal Circuit Reverses ITC Decision, Strengthening Patent Eligibility for Composition Claims
The Federal Circuit has issued a significant ruling in US Synthetic Corp. v. Int’l Trade Comm’n, reversing the ITC’s controversial decision that had invalidated composition of matter claims as abstract ideas. This case provides an important clarification on patent eligibility under Section 101 and limits the expansive application of the abstract idea doctrine in composition claims.
The Case at a Glance
US Synthetic Corp. (USS) had patented polycrystalline diamond compacts (PDCs) used in drill bits, with claims defining the PDCs by their material properties, such as coercivity and thermal stability. The ITC had determined that these claims were abstract because they described the PDCs through their functional properties rather than specific manufacturing steps. This decision faced criticism from industry groups, including PhRMA, for expanding the abstract idea analysis into composition claims, a move that could have undermined long-standing patent protections.
The Federal Circuit’s Reversal
Writing for a unanimous panel, Judge Chen rejected the ITC’s reasoning, affirming that the claimed material properties were concrete and measurable rather than abstract. The court emphasized that these properties are inherently tied to the PDC’s physical structure, stating that they are “integrally and necessarily intertwined” with the composition itself. In contrast to the ITC’s position that these characteristics were mere “side effects” of manufacturing, the Federal Circuit ruled that they meaningfully define the PDC’s structure and composition.
A key takeaway from the decision is that defining a composition of matter by its properties is distinct from claiming an abstract idea. While functional limitations alone may be problematic in software patents, in the realm of chemistry and materials science, such properties often provide crucial insights into the nature of the invention.
Implications for Patent Law
This decision preserves decades of precedent allowing composition claims to be defined by their physical and material properties. The ruling clarifies that:
- Material properties can be valid claim limitations: When properties correlate with structure, they can serve as legitimate definitional elements rather than abstract concepts.
- A perfect correlation is not required: The court acknowledged that while no property is a perfect proxy for a composition’s structure, a reasonable correlation is sufficient to support eligibility.
- Patent validity includes eligibility: The court reaffirmed that issued patents are presumed valid, including under Section 101, and criticized the ITC for imposing an incorrect burden of proof on USS.
A Narrow but Important Ruling
While this ruling provides reassurance for those in chemical and material sciences, it does not offer much relief for software-related patent eligibility. The court explicitly distinguished this case from software claims, noting that software’s functional limitations are often untethered to physical structures.
Additionally, the decision leaves open the broader question of when, if ever, a composition of matter claim could be considered an abstract idea. The court provided guidance by example rather than establishing a strict test, maintaining flexibility in future cases.
Final Thoughts
The Federal Circuit’s reversal of the ITC decision is a win for those who rely on composition of matter patents, particularly in the pharmaceutical and material sciences industries. By reinforcing that material properties can define a composition’s structure, the ruling ensures that such patents remain valid and enforceable. For patent practitioners, this case highlights the importance of clearly explaining how claimed properties relate to structure within the patent specification—a practice that is now more crucial than ever.
Federal Preemption and Fast-Tracked Dismissals: Lessons from BearBox LLC v. Lancium LLC
When it comes to litigation, plaintiffs often prefer federal courts because cases tend to move faster than in state courts. But what happens when federal law works against them, forcing their case into a swift dismissal? That’s exactly what happened in BearBox LLC v. Lancium LLC, where the Federal Circuit not only shut down a state law conversion (theft) claim but also rejected an inventorship challenge—all thanks to the power of federal preemption and strict evidentiary standards.
The Case at a Glance
This dispute began with a chance meeting at a Bitcoin mining conference in 2019. After a brief conversation and a follow-up email, BearBox’s founder, Austin Storms, shared details about the company’s technology with Lancium’s co-founder. Five months later, Lancium filed a patent application, which ultimately became U.S. Patent No. 10,608,433.
BearBox sued, claiming:
- Correction of inventorship (arguing that Storms should be named as an inventor under federal patent law).
- Conversion under Louisiana state law (essentially arguing that Lancium “stole” BearBox’s technology).
The problem? Federal patent law preempted BearBox’s state law claim, and the inventorship argument collapsed under strict evidentiary rules.
Why Federal Preemption Matters
While state law conversion claims aren’t always preempted, the court found that BearBox’s claim too closely resembled a patent infringement case. The ruling emphasized a key legal principle:
State law cannot be used to give “patent-like” protection to ideas that are not patented or protected as trade secrets.
BearBox had shared its technology without restrictions—meaning it couldn’t later claim exclusive rights under state law. The Federal Circuit relied on Bonito Boats, Inc. v. Thunder Craft Boats, Inc., a Supreme Court case that reinforced the importance of free public access to unpatented ideas.
Why Federal Courts Move Faster—and Why That Worked Against BearBox
Plaintiffs often prefer federal courts because cases move more quickly than in state courts. However, this speed can also work against weaker claims, as shown in BearBox LLC v. Lancium LLC:
- Federal Preemption Eliminated the State Claim Early – BearBox’s attempt to bring a state law claim failed because the Federal Circuit ruled that patent law preempted it, cutting the case short.
- Strict Evidentiary Standards Doomed the Inventorship Claim – To prove inventorship, BearBox needed clear and convincing evidence, including independent corroboration. The court found its evidence—mainly a single email with attachments—insufficient.
- Summary Judgment Streamlined the Case – Rather than dragging on for years, the district court granted summary judgment, meaning BearBox’s claims never even made it to trial.
- Appellate Review Was Quick and Decisive – The Federal Circuit affirmed the ruling without remanding, reinforcing how federal courts efficiently dispose of meritless claims.
The Takeaway: Federal Court Speed Cuts Both Ways
Plaintiffs often seek out federal court for faster resolutions, but BearBox is a cautionary tale:
✅ If you have strong claims, federal court can move your case forward quickly.
❌ If your claims are weak, federal court will cut them down just as fast.
For those in intellectual property disputes, this case underscores the importance of securing patent protection or trade secret safeguards before sharing valuable technology. Otherwise, you might find yourself on the wrong end of federal preemption—watching your case disappear at lightning speed.
Updated IDS fees
The USPTO has changed how fees for Information Disclosure Statements (IDS) work, this change was implemented 2025-01-19.
A brief overview of the changes are as follows:
There are now fees for when the cumulative number of references that the applicant supplies exceed the following thresholds: 50, 100, 200. These fees are not insignificant and do not scale by entity size.
Between 51 and 100 references = $200
Between 101 and 200 references = $500
Over 200 references = $800
However, do note you reduce the larger fee by the smaller, so if you had cited over 50 citations and then cited over 100, but you already paid the $200 fee earlier, you would pay $300 for the second fee instead of $500. This applies to the over $200 fee as well.
These fees apply to applications filed before these changes.
These new fees do not replace the standard IDS filing fee, this is now called the “IDS timing fee” and these new fees are “IDS size fees”.
These numbers do not include references that were filed by the examiner or a “third party”.
Duplicate items are counted.
Divided Infringement
System claims describe the overall arrangement and interaction of different components within a system, protecting the “what” and “how they work together” of an invention.
Method claims focus on the specific steps to achieve a result, essentially protecting the “how” of an invention.
System claims define the components and their interactions within a system, while method claims detail the steps or actions taken to perform a function.
Using an example drawn from a simple google search and its generative AI, a method claim might be: “A method for cleaning a surface, comprising the steps of applying a cleaning solution, scrubbing with a brush, and rinsing with water.” A system claim might be: “A cleaning system including a spray nozzle, a brush attachment, and a water reservoir, wherein the nozzle is designed to deliver cleaning solution to the brush.”
Typically, method claims are considered easier to get, but more difficult to enforce, since all the steps of a method must be performed by a single entity in order to prove infringement, whereas system claims can be infringed by simply creating a system with the described components. But as usual, things are a bit trickier than that. Who is responsible for infringement when a system’s components are controlled by different agents?
The courts have decided that to “use” a system, a party had to “control the system as a whole and obtain benefit from it.” So in a case (Centillion Data Systems, LLC v. Qwest Communications International, Inc.) involving backend components operated by the service provider (Qwest), and front end components operated by customers, the courts decided it was the customers that used the system, therefore Qwest wasn’t liable for infringement.
A recent case, CloudofChange LLC v. NCR Corporation, involved a Point-of-Sale (PoS) system called NCR Silver. The claimed system in CloudofChange’s patents required both vendor-operated webservers and subscriber-operated PoS terminals. NCR operated the backend, while merchants controlled the frontend PoS terminals. NCR’s merchant users put the system into service because they initiate a demand for service at the POS terminal and benefit from the backend providing the service.
CloudofChange alleged direct infringement arguing NCR controlled and benefitted from each component of the claimed system, and the district court agreed with CloudofChange on the grounds that NCR’s merchant agreement required merchants to obtain and maintain internet access. This point, the court held, was fundamental in determining that NCR was directing its customers, and was therefore using the CloudofChange’s patented system. This differed from the previous Centillion case, where Qwest was determined to have in no way directed its customers to act as agents.
The Federal Circuit court, however, reversed that decision based on the same Centillion framework. The Circuit court noted that CloudofChange acknowledged NCR’s merchants used the system, not NCR, and simply requiring merchants get and keep internet access doesn’t rise to directing or controlling their use of the system as a whole. NCR doesn’t direct or control its merchants to subscribe to the NCR Silver system etc., the merchants take these actions of their own accord.
The Federal Circuit court said the District court had erred by focusing the liability analysis on control of a single element, internet access, rather than control over the use of the entire system. The court also distinguished between liability analysis for method claims versus system claims. For method claims, the defendant must control each step of the method. System claims describe a collection of components working together as a unified whole at a single point in time.
This fundamental difference between method and system claims directs how the Federal Circuit court thinks about liability. For a method claim, each step represents a distinct action performed by someone. If the steps are divided among multiple parties, it needs to be shown that one party is controlling or directing the performance of each step, otherwise no single party can be said to be ‘performing’ the complete method.
For system claims, the analysis focuses on control over the system as a whole, rather than individual components. The question there is does someone put the complete system into service and benefit from its collective operation. But in both cases, dividing the action among parties may result in no infringement.