PTO’s Handling of Patent Eligibility for Blockchain Applications

After reviewing the First District court case on 35 U.S.C. 101 for a blockchain patent, we wanted to check in and see how the U.S. Patent and Trademark Office (PTO) has been handling blockchain-related patent applications. In particular, over the past year, the Patent Trial and Appeal Board (PTAB) has issued several decisions on appeals of examiner rejections of blockchain patents under Section 101. Of these, the PTAB has not reversed any rejections made on Section 101 grounds: https://developer.uspto.gov/ptab-web/#/search/decisions (search “blockchain”). This, of course, does not mean that no blockchain patents are being issued; it only means that the decision to reject claims of particular patent applications is left in the examiners’ hands. However, this uniform affirmance of the rejections of blockchain applications is not unexpected given the updated PTO Section 101 guidance published in January of 2019 and the current inconsistent handling of Section 101 in the courts. See 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. 50 (Jan. 7, 2019). Given the present uncertainty in the law, the PTAB appears to be leaving the decision to the examiners, who are closest to the actual subject matter of the applications — and which may seem to be the safest course of action for the PTAB.

A recent decision that sheds some light on this consistent affirmance of 101 rejections for blockchain applications is Ex parte McCann, No. 2021-003397 (P.T.A.B. March 7, 2022). There, the PTAB reviewed claim 1 of the ’824 application and found it directed to the abstract idea of “certain methods of organizing human activity as exemplified by the commercial and legal interaction of managing commercial payment transactions by advising one to process payments with an available payment instrument and post the payment to a ledger, without significantly more.” Id. at 20. The PTAB explained why the claims were ineligible, even though the claims include a recital of a blockchain and cryptographic data:

As to the recital of a block chain [sic], a block chain per se is generic and conventional and is essentially an accounting ledger. The claims do not recite any technological implementation details. Instead the claims recite no more than the conceptual idea of using a block chain for storage. Appellant [sic] do not contend they invented block chain technology.

Similarly, the recital of cryptographic data is both generic and conventional. Such recital does no more than invoke the conceptual idea of cryptography without reciting any technological application or implementation details.

Id. at 14-15. The PTAB went on to find that the claims fail to provide an inventive concept because they do not provide significantly more than the recited abstract idea.  Id. at 17-19. The PTAB found that when the claims are analyzed individually and as an ordered combination, they are “purely conventional” and ordinary. Id. at 17-19.

This decision is informative for how to proceed before the PTO. In particular, one should be wary of invoking blockchain technology as a way of improving current business practices. In other words, claims that take an existing financial practice and “do it with a blockchain” are hard-pressed to pass Section 101 scrutiny. Instead, claims have a better chance if they highlight how their claims improve the operation of the underlying blockchain technology.