2024 forecast: AI, patent eligibility and Fintiv

A few key items related to patents in the US are at the forefront of shaping our patent laws in 2024.

Below, we discuss notable takeaways when it comes to trends in obtaining patents, as well the review of issued patents through post-grant proceedings.

Artificial intelligence

First, 2023 became the year when artificial intelligence (AI) became a household term. A great deal of new software technologies implement some form of AI, such as machine learning. According to recent statistics from the US Patent and Trademark Office (USPTO), the rise in AI innovations has led to a boom in patent application filings related to AI technology.

These AI-assisted type inventions are raising two important questions. One being whether AI can be an inventor and the second being whether AI-assisted inventions meet the current eligibility requirements to obtain patent protection.

For many AI technologies, the novelty lies in the algorithms and such algorithms are merely abstract ideas that would not be subject matter eligible for patent protection. There is also concern as to whether AI-assisted technology would be rendered obvious to someone with ordinary skill in the field that they would be utilised.

Both of these questions have made their way to the White House. On October 30, President Joe Biden issued an executive order (EO) on the safe, secure, and trustworthy development and use of AI. Pursuant to the EO, the USPTO director will be required to publish guidance for patent examiners and applicants regarding inventorship in the early part of 2024.

The guidance will likely provide examples of AI’s different roles in the inventorship process and how inventorship issues should be evaluated. This should provide clarity on how inventorship will be determined when AI contributes to an idea versus the development.

It should also clarify whether AI could eventually be listed as a co-inventor with a human, and if so, how ownership will be attributed. Additionally, the director will be required to provide guidance on AI in the context of patentable subject matter.

Of particular importance will be whether examination of certain types of AI-related patent applications could be treated differently than examination of other types of patent applications. The guidance will also likely identify whether any additional criteria need to be met for AI related inventions to be patent eligible.

Patent eligibility

2023 was also the year to see potential changes to our patent system with the Patent Eligibility Restoration Act of 2023 (PERA). In particular, PERA is being sought after to address the judicially created exceptions to patent eligibility.

Many believe that patent eligibility requires substantial clarification and the judicial exceptions have been confusing and inconsistent. Of importance is language in PERA that recites: “All judicial exceptions to patent eligibility are eliminated.”

Such language may pose questions that may be before the US Supreme Court in 2024. For example, such language may pose the question as to whether the Supreme Court’s judicial exceptions to patent eligibility are required to comply with the US Constitution, or whether the various judicial exceptions to patent eligibility are unconstitutional activism by the Supreme Court.

For example, if Congress eliminates the judicial exceptions to patent eligibility, then would the Supreme Court deem that such an act violates the Constitution? These issues will likely be hot topics in 2024.

Changes at the PTAB

Meanwhile, as to reviewing issued patents, the Patent Trial and Appeal Board (PTAB), had an active year under the guidance of USPTO director Kathi Vidal, who introduced several new contours to the PTAB landscape.

One change at the Patent Office that may garner more attention in 2024 relates to how PTAB decisions are reviewed by the USPTO director. In July, the Patent Office issued a revised decision review (DR) process, evidencing Director Vidal’s efforts to formalise the process and procedures for conducting DRs after the Supreme Court’s decision in Arthrex, in which the Supreme Court established a requirement that decisions made by administrative patent judges (APJs) must be subject to review by the director.

The updates to the interim DR process include expanding the process to allow parties to request DR of institution decisions. This change allows the director to administer additional DRs directed specifically to the institution stage of the proceeding (before this, the director was only using DRs to review final written decisions).

The updates also include the creation of two new panels for bifurcating the types of DR that can be administered under the new rules (which effectively replace the now-retired Precedential Opinion Panel (POP)). The new DR processes and procedures set out by the revised DR process further enhance what is becoming an oft-used tool for the director to provide guidance to the PTAB and the public.

This is evidenced by data from the USPTO indicating that there were only five decisions designated as precedential in 2023, yet there were at least triple that number in director review decisions, and more than half of those director review decisions related to the Board’s institution decisions. This further underscores that the director review process is now a common avenue for guidance to get to the public and the PTAB.

Fintiv’s downward trend

One trend continued from 2022—a steep decline in discretionary denials based on the Fintiv doctrine during director Vidal’s tenure. The Fintiv doctrine is a set of factors for whether institution of a post-grant proceeding should be denied based on a parallel proceeding, such as a district court litigation. And the decrease in discretionary denials at the PTAB has contributed to a rise in institution rates.

While there was brief confusion around whether a showing of compelling merits could be used to defeat a discretionary denial based on Fintiv, in February, Director Vidal clarified, through a sua sponte director review of a recent institution in CommScope Techs v Dali Wireless, that the full Fintiv analysis must be undertaken, even where compelling evidence of invalidity is presented by in a petition.

Given the recent swings in Fintiv’s application, it will be interesting to see if that trend continues in 2024, or if the pendulum swings back in the other direction should parties become more cautious about whether to file stipulations that can be used to moot Fintiv issues.

Another notable development was a large package of rule proposals released in April 2023 as an Advanced Notice of Proposed Rulemaking (ANPRM). Those rule proposals were varied and extensive—ranging from issues such as categorical institution denials under certain circumstances, a PTAB standing requirement, as well as a proposal to allow for a higher word count limit for petitions if an additional fee is paid, among many other proposals.

What comes next?

The ANPRM drew much attention and, in 2024, we should expect to see which proposals the office will attempt to promulgate as formal rules and how the many public comments are addressed.

In conclusion, 2023 saw interesting changes to the US patent landscape and it will be interesting to see what is in store for 2024. The rise of AI presents unique challenges and opportunities. Legislative efforts such as PERA will be interesting to follow as stakeholders demand clarity on issues such as patent eligibility for computer technology. And the PTAB landscape should continue to evolve under Director Vidal’s active leadership, including the rule changes and proposals brought forth this year.

A version of this article originally appeared on  WIPR.

Manita Rawat is a partner at Morgan Lewis. She can be contacted at: manita.rawat@morganlewis.com

Alexander Stein is a partner at Morgan Lewis. He can be contacted at: alexander.stein@morganlewis.com