The Patent Eligibility Requirement of 35 U.S.C. Section 101: A Series (Fourth Post)

Written by Ben Esplin

The Deepening Divide

This series continues to rely on two fundamental premises: first, that the Alice/Mayo test for subject matter eligibility under Section 101 is administered using separate and logically discrete frameworks by the USPTO in examining patents and the Federal Courts during patent enforcement; and second, that this "dual approach" to the Alice/Mayo test has been an almost unmitigated disaster[1][2][3]. The first three posts in this series have demonstrated how this dual approach has degraded examination quality at the USPTO, undermined the presumption of validity under 35 U.S.C. § 282, and disrupted the traditional patent law ecosystem that has historically made legal tests predictable and administrable.

Recent developments have not only failed to address these systemic problems but have actually exacerbated them. The Federal Circuit's decision in Rideshare Displays, Inc. v. Lyft, Inc. represents a watershed moment—the court explicitly acknowledged the existence of the USPTO's divergent framework while simultaneously rejecting it, thereby institutionalizing the very divide this series has identified as fundamentally destructive to the patent system[1]. More troubling still, the appointment of John Squires as the new Director of the USPTO appears to signal an intention to deepen this divide rather than resolve it.

Rideshare: Acknowledgment Without Resolution

The Federal Circuit's decision in Rideshare Displays is remarkable not for its holding on patent eligibility—which follows established precedent—but for what it reveals about the court's awareness of, and apparent indifference to, the systemic problems created by the dual approach to the Alice/Mayo test.

Judge Hughes, writing for the panel, explicitly noted that the court would not "adopt the USPTO's 2019 Revised Patent Subject Matter Eligibility Guidance," stating that such guidance "is not binding on this Court". This rejection was not merely procedural; it was a direct rebuke of the USPTO's attempt to create a more patent-friendly framework for eligibility analysis. The court instead chose to "evaluat[e] the Board's decision under our precedent," effectively drawing a bright line between the judicial approach and the administrative approach to Section 101.

What makes this particularly significant is that the PTAB had initially allowed Rideshare's substitute claims under the USPTO's framework, finding them to provide "a technological solution to a technological problem in computer and network technologies". The Federal Circuit reversed this determination, finding that "improving a user's experience while using a computer application is not, without more, sufficient to render the claims directed to an improvement in computer functionality". This reversal demonstrates the practical impossibility of meaningful deference to USPTO eligibility determinations when the two institutions are operating under fundamentally incompatible analytical frameworks.

The court's decision to explicitly acknowledge the USPTO's framework only to reject it represents a missed opportunity to address the systemic problems this series has identified. Rather than working toward harmonization or expressing concern about the lack of consistency between the two approaches, the Federal Circuit has essentially institutionalized the divide by formally recognizing—and rejecting—the administrative framework.

Director Squires: Signaling Further Divergence

The appointment of John Squires as USPTO Director has brought with it clear signals that the USPTO intends to move even further away from the Federal Circuit's approach to patent eligibility. His early actions suggest not merely a continuation of the dual approach, but an acceleration of it.

Director Squires' first ceremonial patent signings on September 23, 2025, were deliberately chosen to send a message. He selected patents covering diagnostic methods using discovered antibodies and blockchain-based resource allocation software—technologies that "sit squarely within the domains that the Supreme Court and Federal Circuit have restricted most heavily over the past decade via the expanded patent eligibility doctrine of Alice and Mayo"[1]. In his remarks, Squires emphasized that "the U.S. Patent Office is open for business, especially for the technologies of tomorrow".

More substantively, Director Squires' decision in Ex parte Desjardins represents a direct challenge to Federal Circuit precedent. In that case, Squires vacated a PTAB decision that had entered a Section 101 rejection against DeepMind's machine learning patent application. His opinion contained remarkably direct criticism of the original panel's reasoning, stating that "the panel essentially equated any machine learning with an unpatentable 'algorithm' and the remaining additional elements as 'generic computer components,' without adequate explanation".

Most tellingly, Director Squires concluded his Desjardins opinion with what can only be interpreted as a directive to USPTO personnel to reduce reliance on Section 101 rejections: "This case demonstrates that §§ 102, 103 and 112 are the traditional and appropriate tools to limit patent protection to its proper scope. These statutory provisions should be the focus of examination".

The Institutional Consequences

These recent developments have transformed what was already a problematic dual approach into something approaching open institutional warfare. The Federal Circuit's explicit rejection of USPTO guidance in *Rideshare* and Director Squires' equally explicit criticism of Federal Circuit reasoning in *Desjardins* represent a fundamental breakdown in the cooperative relationship that has traditionally characterized the patent system.

The USPTO's lack of interpretive authority over substantive patent law provisions, as the Federal Circuit noted in *Rideshare*, means that the agency's "internal guidance documents directing how patent examiners and even PTAB judges must apply these provisions receive no deference from reviewing courts"[1]. Yet Director Squires appears determined to push the USPTO's framework even further from judicial precedent, creating an increasingly untenable situation.

This institutional conflict has practical consequences for patent applicants and patent holders. Patents examined under the USPTO's more permissive framework face an elevated risk of invalidity in litigation, while the uncertainty created by the divergent approaches makes strategic decision-making nearly impossible. The presumption of validity under 35 U.S.C. § 282 becomes meaningless when the court reviewing a patent's validity is operating under a completely different analytical framework than the agency that granted the patent.

The Path Forward

The events of recent months have made clear that the dual approach to the Alice/Mayo test is not a temporary aberration that will resolve itself through the normal operation of appellate review. Instead, it has become an entrenched feature of the patent system, with both institutions now explicitly acknowledging—and defending—their divergent approaches.

The Federal Circuit's decision in Rideshare to formalize its rejection of USPTO guidance, combined with Director Squires' apparent determination to push the USPTO framework even further from judicial precedent, suggests that this divide will only deepen in the coming months and years. The traditional mechanisms for ensuring consistency between administrative and judicial interpretation of patent law have clearly failed in the context of Section 101.

Without intervention from Congress and/or the Supreme Court to either eliminate the judicial exceptions to patentability or provide clear statutory guidance for their application, the patent system will continue to operate under this fundamentally dysfunctional dual approach. The recent developments discussed in this post suggest that the problems identified in the first three installments of this series are not merely persistent—they are accelerating.

Conclusion

The Alice/Mayo test has proven to be more than just a poorly conceived legal standard; it has become a catalyst for institutional conflict within the patent system itself. The explicit acknowledgment of this conflict in Rideshare Displays and the apparent embrace of it by Director Squires represents a new phase in the deterioration of Section 101 jurisprudence.

For patent prosecutors, this reality requires strategies that account for the likelihood of continued—and deepening—divergence between USPTO and Federal Circuit approaches to patent eligibility. At Esplin & Associates, we have developed prosecution techniques that preserve arguments viable under both frameworks while avoiding the pitfalls created by their inconsistencies. The alternative—hoping for institutional reconciliation that recent events suggest is increasingly unlikely—represents an unacceptable risk to our clients' intellectual property rights.

If you would like to discuss how these developments might impact your company's patent portfolio strategy, please do not hesitate to reach out for a consultation.