Federal Circuit Upholds PTAB’s Section 101 Rejection of Information Exchange Patent Application: In re McFadden (2026)

On April 8, 2026, the U.S. Court of Appeals for the Federal Circuit affirmed a Patent Trial and Appeal Board (PTAB) decision finding Claim 14 of patent application No. 15/891,363 ineligible under 35 U.S.C. § 101 in In re Brian McFadden. The applicant, who represented himself pro se, filed the application in February 2018 under the title “System and Methods for Operating an Information Exchange.” The Federal Circuit’s decision reinforces the continued application of the Alice two-step framework to computer-implemented business method claims.

McFadden’s application was generally directed toward methods and systems designed to operate, regulate, and manage an information exchange. During examination, the USPTO’s Patent Trial and Appeal Board rejected Claim 14 as directed to an abstract idea — the concept of managing an information exchange — without an inventive concept sufficient to render it patent-eligible.

In affirming the PTAB’s rejection, the Federal Circuit addressed the applicant’s arguments on two grounds. First, the court found that McFadden’s step-two argument under the Alice/Mayo framework was “only raised on reply” and was therefore “not properly before this court.” Second, addressing the argument on its merits, the court concluded that McFadden’s broad and generic algorithms amounted to nothing more than an advance within ineligible subject matter, explaining that “computer-mediated implementation of routine or conventional activity is not enough to provide an inventive concept.”

The Federal Circuit stated plainly that “claim 14 does not contain an inventive concept sufficient to transform this abstract idea into a patent-eligible application.” This language tracks the court’s consistent approach: the mere recitation of a generic computer to implement an abstract idea does not convert the idea into a patent-eligible invention under § 101 doctrine as currently applied.

The procedural dimension of this case is instructive for practitioners. McFadden, appearing without counsel, failed to raise his step-two argument at the appropriate time in the proceeding. The Federal Circuit’s refusal to consider arguments first raised on reply underscores the importance of timely and properly structured § 101 arguments — not merely as a matter of substantive law, but as a matter of appellate procedure. Pro se litigants and inexperienced practitioners risk waiver by failing to develop their patent-eligibility arguments at the correct stage.

The broader § 101 landscape remains unsettled by legislation. The Patent Eligibility Restoration Act of 2025, reintroduced in the 119th Congress, aims to substantially overhaul § 101 by eliminating the judicially created exceptions and the Alice test. As of April 2026, the bill has not advanced to a floor vote in either chamber. Until legislation changes the landscape, decisions like In re McFadden confirm that the Federal Circuit will continue to apply the Alice framework strictly to computer-implemented claims that lack a demonstrable inventive concept beyond the abstract idea itself.

For patent applicants in the software, fintech, and business-method spaces, the case illustrates that generic computational implementations of information-handling concepts face significant § 101 headwinds. Building a robust patent-eligibility record early in prosecution — and preserving those arguments through each stage of review — remains critical to avoiding the fate of McFadden’s application.