Over the past few years, there has been considerable discussion about whether patents should be allowed for inventions in emerging technology areas, such as artificial intelligence (AI), cryptocurrency, blockchains, and medical diagnostics.  The argument for allowing patents in these areas is that they encourage investment in developing new technologies and bring new products and services to the market.  For instance, entrepreneurs and investors are more likely to invest in new products and services if they know that a patent protects their idea, as it grants them the exclusive right to make, use, and sell the technology over the lifetime of the patent.  On the contrary, the argument against allowing patents in these areas is that granting exclusive rights to ideas may increase the costs of products and services or stifle competition. 

The second Trump administration has signaled that it will be more pro-patent and allow patents in emerging fields.  President Trump has appointed Howard Lutnick as the United States Secretary of Commerce, overseeing the United States Patent and Trademark Office (USPTO), and has appointed John Squires as the Director of the USPTO.  Both Secretary Lutnick and Director Squires have impressive backgrounds in supporting patents and new inventions.  Secretary Lutnick is one of the most prolific inventors holding a U.S. government position in history.  He is a named inventor on over 400 U.S. patents.  Many of these patents have been in emerging technological areas such as finance, trading, exchange technology, and e-markets.  Director Squires, earlier in his career, served as the Chief Intellectual Property Counsel for Goldman Sachs and was most recently a Partner and Chief of the IP and Emerging Companies practice at the law firm of Dilworth Paxson LLP.  Director Squires was sworn into office on September 22, 2025.  On September 23, 2025, the following day, Director Squires signed and issued his first two patents as the Director of the USPTO.  The first patent was U.S. Patent 12,419,201 for an invention in medical diagnostics, and the second was U.S. Patent 12,419,202 for an invention in distributed ledger/crypto technologies.  Director Squires said, “I say to inventors and entrepreneurs everywhere: the U.S. Patent Office is your partner,” and “[w]e are here to secure your rights, unleash your potential, and ensure that innovation continues to power America’s future.”  In light of the recent appointments of Secretary Lutnick and Director Squires, the USPTO’s procedures for handling inventions related to AI and other emerging technologies are likely to continue evolving.   

The latest official guidance from the USPTO on AI-related inventions was a memorandum issued on August 4, 2025, and titled “Reminders on Evaluating Subject Matter Eligibility of Claims under 35 U.S.C. 101” (hereinafter “2025 AI Memo”).  The 2025 AI Memo clarifies that existing U.S. patent law should be used to examine patent applications for AI-related inventions and provides a “reminder” for when subject matter eligibility rejections should be made.    

Each patent application filed with the USPTO undergoes a rigorous examination.  A patent examiner first reviews a patent application and performs a prior art search.  The patent examiner compares the invention described in the patent application with the prior art and determines whether the invention is novel.  An invention is novel if it is not the same as previous inventions.  Then, the patent examiner determines whether the invention is obvious.  To determine whether an invention is obvious, the patent examiner identifies the differences between the invention and the prior art, and then performs an analysis of whether the differences would have been obvious to a person of ordinary skill in the art at the time of the invention.

In addition to the standard novelty and obviousness tests, each invention is also examined to ensure that it qualifies as patent-eligible subject matter.  Patent eligible subject matter includes processes, machines, articles of manufacture, and compositions of matter.  AI-related inventions commonly fall within the categories of processes and machines.  However, patent eligible subject matter excludes laws of nature, natural phenomena, and abstract ideas.  U.S. courts have held that abstract ideas can encompass inventions directed to mathematical formulas and methods of organizing human behavior.  This has led to some AI-related inventions being rejected by the USPTO, as the USPTO has viewed them as mathematical formulas or methods of organizing human behavior.   

The 2025 AI Memo reiterates that the U.S. Supreme Court’s current test for determining patent-eligible subject matter, referred to as the two-step “Alice/Mayo Test,” also applies to AI-related inventions.  The first step of the Alice/Mayo Test is to determine whether an invention is directed to a patent-ineligible concept such as an abstract idea, a law of nature, or a natural phenomenon.  If the patent is not directed to a patent-ineligible concept (i.e., the patent is directed to a patent-eligible concept such as a process, machine, article of manufacture, or composition of matter), the invention qualifies as patent-eligible subject matter, and a patent may be issued for the invention.  If the invention is directed to a patent-ineligible concept, the patent examiner proceeds to the second step.   

The second step of the Alice/Mayo test is to determine if the invention includes an “inventive concept” that adds an element or combination of elements that transforms the invention into significantly more than an abstract idea or law of nature itself.  If the patent examiner determines that the invention does not have an “inventive concept,’ the patent application is rejected for the invention not being directed to statutory subject matter.  If the patent examiner determines that the invention does have an “inventive concept,” the invention qualifies as patent-eligible subject matter, and a patent may be issued for the invention. 

From my perspective and from what I have heard from my colleagues, patent examiners have been inconsistently applying the Alice/Mayo test to AI-related inventions.  I think this primarily stems from the fact that the underlying cases the U.S. Supreme Court was deciding when developing the Alice/Mayo test were medical diagnostic cases, rather than AI cases.  In an effort to help resolve this issue, the 2025 AI Memo provides several helpful “reminders” that I think will help improve consistency among patent examiners when dealing with AI-related inventions. 

The 2025 AI Memo clarifies when AI-related inventions should be rejected for being directed to methods of organizing human behavior.  Patent examiners have sometimes rejected AI-related inventions because they include steps or functions that a human could perform.  For example, an AI-related invention may involve steps such as collecting data, analyzing the data, and making a decision based on the analysis.  A patent examiner could argue that the AI-related invention is directed to a method of organizing human behavior, because a human could similarly perform steps of collecting data, analyzing data, and making a decision based on the data.  However, the 2025 AI Memo states that AI-related inventions that encompass AI in a way that cannot be practically performed in the human mind should not be rejected as being directed to methods of organizing human behavior.  Many AI-related inventions involve collecting and analyzing large amounts of data and updating large mathematical models that cannot be practically performed in the human mind.  Therefore, I think this clarification or “reminder” will help advance patents for AI-related inventions.  Additionally, the 2025 AI Memo reminded patent examiners that inventions directed to improvements in computer-related technologies and inventions directed to technological solutions to technological problems are patent-eligible subject matter.   

In light of the above, the USPTO’s handling of examining patent applications for AI-related inventions is continuing to evolve as more advances are made in this field and larger volumes of patent applications are filed for AI-related inventions.  The USPTO is adapting how it applies laws originally developed to handle other technological fields, such as medical diagnostics, to AI-related inventions.  The current administration has signaled its intention to move the USPTO towards a more patent-friendly approach, issuing more patents for AI-related inventions to encourage technological development and stimulate businesses to bring new products and services to market.