Federal Circuit Affirms PTAB Decisions Holding Computer-Based Diagnostic Method Claims Ineligible

On March 25, 2021, the Federal Circuit affirmed a Patent Trial and Appeal Board (PTAB) decision that maintained the rejection of diagnostic method claims in a patent application owned by The Board of Trustees of Leland Stanford University (Stanford), providing further guidance regarding the subject matter eligibility of computer-based diagnostic methods.[1] In this case, the Court found that the claims were ineligible under 35 U.S.C. § 101 for being “drawn to abstract mathematical calculations and statistical modeling, and similar subject matter.”[2] This decision follows a recent decision issued by the Court last month regarding a related Stanford patent application directed to similar subject matter.[3] Together, these decisions illustrate the pitfalls that are currently being encountered by applicants seeking to obtain patent protection for computer-based diagnostic methods and systems. More importantly, they provide guidance regarding issues that applicants should consider when drafting applications and claiming subject matter in this area.

Stanford filed US Patent Application No. 13/486,982 (the “‘982 Application”) in June 2012. The disclosure of the ‘982 Application is generally “directed to computerized statistical methods for determining haplotype phase.” [4] Haplotype phasing is a process for determining the parent from whom alleles — i.e., versions of a gene — are inherited. The ‘982 Application discloses computer-based methods for inferring haplotype phase for an individual, without requiring sequencing data from relatives, using a statistical model referred to as “PHASE-EM.” Claim 1 in the ‘982 Application, as presented on appeal, is directed to a computer-implemented diagnostic method that applies the PHASE-EM statistical model to infer the haplotype phase of an individual:

Claim 1. A computerized method for inferring haplotype phase in a collection of unrelated individuals, comprising:
receiving genotype data describing human genotypes for a plurality of individuals and storing the genotype data on a memory of a computer system;
imputing an initial haplotype phase for each individual in the plurality of individuals based on a statistical model and storing the initial haplotype phase for each individual in the plurality of individuals on a computer system comprising a processor a memory [sic];
building a data structure describing a Hidden Markov Model, where the data structure contains:
a set of imputed haplotype phases comprising the imputed initial haplotype phases for each individual in the plurality of individuals;
a set of parameters comprising local recombination rates and mutation rates;
wherein any change to the set of imputed haplotype phases contained within the data structure automatically results in re-computation of the set of parameters comprising local recombination rates and mutation rates contained within the data structure;
repeatedly randomly modifying at least one of the imputed initial haplotype phases in the set of imputed haplotype phases to automatically re-compute a new set of parameters comprising local recombination rates and mutation rates that are stored within the data structure;
automatically replacing an imputed haplotype phase for an individual with a randomly modified haplotype phase within the data structure, when the new set of parameters indicate that the randomly modified haplotype phase is more likely than an existing imputed haplotype phase;
extracting at least one final predicted haplotype phase from the data structure as a phased haplotype for an individual; and
storing the at least one final predicted haplotype phase for the individual on a memory of a computer system.

During prosecution, the examiner rejected the claims of the ‘982 Application “on grounds that the claims cover patent-ineligible abstract mathematical algorithms and mental processes,” and the PTAB affirmed the rejection.[5] On appeal, the PTAB applied the two-step Alice framework established by the Supreme Court for determining patent eligibility.[6] Under step one of the Alice inquiry, the PTAB held that claim 1 is directed to patent-ineligible abstract ideas in the form of mathematical concepts.[7] As explained by the PTAB, “claim 1 recites an initial step of receiving genotype data, followed by the mathematical operations of building a data structure describing an HMM and randomly modifying at least one imputed haplotype to automatically recompute the HMM’s parameters.”[8]

In view of these findings, the PTAB “determined that claim 1 recites two abstract mental processes:” namely, “the step of ‘imputing an initial haplotype phase for each individual in the plurality of individuals based on a statistical model;’” and “the step of automatically replacing an imputed haplotype phase with a randomly modified haplotype phase when the latter is more likely correct than the former.”[9] The PTAB further considered the additional elements recited by claim 1 but found that such elements merely “recited generic steps of receiving and storing genotype data in a computer memory, extracting the predicted haplotype phase from the data structure, and storing it in a computer memory.”[10] Stanford had argued that claim 1’s steps result in improved computer functionality, which has been considered patentable technological improvements under prior Federal Circuit decisions.[11] However, the PTAB rejected this argument. In addition, the PTAB rejected Stanford’s argument that the claims represent a practical application that integrated the alleged judicial exceptions under step two of the Alice framework, finding claim 1 devoid of any specific step that applies the information in a useful way, such that the claimed calculations are “integrated” into a practical application.[12]

The Federal Circuit affirmed this decision, finding no error in the PTAB’s conclusion that the claims on appeal were directed to ineligible subject matter. As noted by the Court, “[t]he different use of a mathematical calculation, even one that yields different or better results, does not render patent-eligible subject matter” under step one of the Alice framework.[13] Turning to step two of the analysis, the Court recognized that “claim 1 is not saved” because there is “no inventive concept that would warrant treating the use of the claimed algorithms and mathematical calculations as patent-eligible subject matter.”[14] In short, as stated by the Court, “claim 1 simply appends the abstract calculations to the well-understood, routine, and conventional steps of receiving and storing data in a computer memory and extracting a predicted haplotype,” and the “application of those elements results in the mathematical analysis itself.”[15]

Takeaways

This decision, as well as the Court’s decision last month in the related Stanford appeal, noted above, highlights the need for applicants to focus on additional improvements to technology – beyond increased accuracy – when drafting and prosecuting applications directed to computer-implemented diagnostics methods. In this case, Stanford’s claimed methods implemented a specific HMM-based algorithm that provides superior results when used to analyze large sets of genotype data, as compared to prior art methods. Yet, the Court failed to recognize this as an improvement to technology, and instead characterized it as “merely an enhancement to the abstract mathematical calculation of haplotype phase itself.”[16]

At this time, applicants should take care to avoid drafting applications in a way that suggests that any disclosed diagnostic method (or system) provides increased accuracy solely due to improvements to the algorithmic component(s) of a claim. Instead, disclosures should highlight other practical benefits provided by such invention, to the extent possible, and include non-routine or unconventional processing steps.

For example, a diagnostic method that requires both computer-implemented data processing, plus physical sample preparation steps (e.g., enrichment of a sample comprising specific biomarkers of interest) may be found to qualify as a patent-eligible practical application of any alleged judicial exception. Such claims are non-ideal due to concerns about divided infringement. However, applicants in this industry may wish to hedge their bets in the short-term by taking a more cautious approach to claim drafting while we wait for further guidance from Congress or the Supreme Court regarding the scope of § 101 patent eligibility.

[1] In re Bd. of Trs. of the Leland Stanford Junior Univ., No. 2020-1288, 2021 WL 1133865 (Fed. Cir. Mar. 25, 2021).

[2] Id. at *1.

[3] In re Bd. of Trs. of the Leland Stanford Junior Univ., 989 F.3d 1367 (Fed. Cir. 2021).

[4] Stanford, 2021 WL 1133865 at *1.

[5] Id. at *2.

[6] Id.

[7] Id.

[8] Id.

[9] Id. at *3.

[10] Id.

[11] Id. (citing Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016) and McRO, Inc. v. Bandai Namco Games America Inc., 837 F.3d 1299 (Fed. Cir. 2016)).

[12] Id.

[13] Id. at *5.

[14] Id.

[15] Id. at *6.

[16] Id. at *5.