In view of the Supreme Court’s decision in Bilski v. Kappos, the USPTO on July 27, 2010 released Interim Bilski Guidelines to its Examining Corp. for determining subject matter eligibility ( “Interim Guidance for Determining Subject Matter Eligibility for Process Claims in View of Bilski v. Kappos”).

Machine-or-Transformation Test | Factor-Based Inquiry

Overall, the guidelines rely primarily upon the Machine-or-Transformation test.  Although the guidelines state that the Supreme Court indicated in Bilski v. Kappos that the machine-or-transformation test is not the sole test for determining patent subject matter eligibility and that “Bilski held open the possibility that some claims that do not meet the machine-or-transformation test might nevertheless be patent-eligible,” the guidelines also state: “to date, no court presented with a subject matter eligibility issue, has ever ruled that a method claim that lacked a machine or a transformation was patent-eligible.” (43924)  The present guidelines also indicate that “this additional guidance, which builds upon the 2009 Interim Instructions, is a factor-based inquiry.”

Prior USPTO Guidance

The Federal Register notice indicates that the present patent subject matter eligibility guidelines are effective July 27, 2010 and supplement the prior patent subject matter eligibility guidelines that were released on August 24, 2009 (“Interim Examination Instructions for Evaluating Subject Matter Eligibility Under 35 U.S.C. 101”).  However, the Federal Register notice also indicates that the present guidelines “supersede previous guidance on subject matter eligibility that conflicts with the Interim Bilski Guidance.”  It should be noted that this blog examined at length the previously released subject matter eligibility guidelines (“35 USC 101 | Patent Prosecution after Bilski v. Kappos“) and the Supreme Court’s Bilski v. Kappos decision (“Bilski v. Kappos | Supreme Court | 35 USC 101 | Business Methods.)”

Present USPTO Guidance | Highlights

• “Under the principles of compact prosecution, each claim should be reviewed for compliance with every statutory requirement for patentability in the initial review of the application, even if one or more claims are found to be deficient with respect to the patent-eligibility requirement of 35 U.S.C. 101.  Thus, Office Personnel should state all non-cumulative reasons and bases for rejecting claims in the first Office Action.” (43923)
• “The Bilski Court underscored that the text of §101 is expansive … (‘In choosing such expansive terms … modified by the comprehensive ‘any’, Congress plainly contemplated that the patent laws would be given wide scope.’)(quoting Diamond v. Chakrabarty, 447 U.S. 303, 308 (1980))” (43923)
• “The Court also made clear that business methods are not ‘categorically outside of §101′s scope..” (43923)
• “Examiner’s are reminded that §101 is not the sole test for determining patentability” (43923)
• “The §101 patent-eligibility inquiry is only a threshold test.   Even if an invention qualifies … the claimed invention must also satisfy ‘the conditions and requirements of this title.’ §101 Those requirements include that the invention be novel, see §102, nonobviousness, see §103, and fully and particularly described. see §112 … therefore, Examiners should avoid focusing on issues of patent-eligibility under §101 to the detriment of considering an application for compliance with the requirements of §102, §103, and §112, and should avoid treating an application solely on the basis of patent-eligibility under §101 except in the most extreme cases. ” (43923-43924)
• “The recitation of some structure, such as a machine, or the recitation of some transformative component will in most cases limit the claim to such an application.   However, not all such recitations necessarily save the claim” (see Flook) (43924)
• “The fact that the steps of a claim might occur in the ‘real world‘ does not necessarily save it form a section §101 rejection.  Thus, the Bilski claims were said to be drawn to an “abstract idea” despite the fact that they included steps drawn to initiating transactions.” (43924)
• “Bilski also held that the additional, narrowing, limitations in the dependent claims were mere field of use limitations or insignificant postolution components, and that adding these limitations did not make the claims patent-eligible.” (43924)
• “Prior to the adoption of the machine-or-transformation test, the Office had used the ‘abstract idea’ exception in cases where a claimed ‘method’ did not sufficiently recite a physical instantiation.   See, e.g., Ex parte Bilski, No. 2002-2257, slip op. at 46-49 (B.P.A.I. Sept. 26, 2006)(informative), http://www.uspto.gov/ip/boards/bpai/decisions/inform/fd022257.pdf. Following Bilski, such an approach remains proper.” (43924)
• “Each of the factors relevant to the particular patent application should be weighed to determine whether the method is claiming an abstract idea by covering a general concept, or combination of concepts, or whether the method is limited to a particular practical application of the concept.” (43926)
• “Sections 102, 103, and 112 are typically the primary tools for evaluating patentability unless the claim is truly abstract.”  (43926)
• “If the factors indicate that the method claim is attempting to cover an abstract idea, the examiner will reject the claim under §101, providing clear rationale supporting the determination that an abstract idea has been claimed, such that the examiner establishes a prima facie case of patent-ineligibility.   The conclusion made by the examiner must be based on the evidence as a whole.”  (43926)

Evaluating Method Claims for Subject Matter Eligibility | Factors to be Considered

The following document (“101 Method Eligibility Quick Reference Sheet“) which was generated by the USPTO summarizes the primary factors that should be considered in furthering a subject matter eligibility inquiry.  More specifically, this document includes: factors weighing toward eligibility, factors weighing against eligibility, examples of general concepts, and indicates that the prior USPTO subject matter eligibility guidance should be reviewed for a “detailed explanation of the terms machine, transformation, article, particular, extrasolution activity, and field-of-use.”  Additionally, please note that this “Quick Reference Sheet” is a summation of the items that are included in the Federal Register notice at 43925 and 43926.

Public Comments | Deadline

The Federal Register notice indicates that any member of the public may submit written comments regarding these guidelines; however, said comments must be received on or before September 27, 2010 and no public hearing will be held.   Additionally, the Notice states “the office is especially interested in receiving comments regarding the scope and extent of the holding in bilski” and includes a number of specific questions for public comment:

“1.  What are examples of claims that do not meet the machine-or-transformation test but nevertheless remain patent-eligible because they do not recite an abstract idea?

2.  What are examples of claims that meet the machine-or-transformation test but nevertheless are not patent-eligible because they recite an abstract idea?

3.  The decision in Bilski suggested that it might be possible to ‘defin[e] a narrower category or class of patent applications that claim to instruct how business should be conducted,’ such that the category itself would be unpatentable as ‘an attempt to patent abstract ideas’  Bilski slip op. at 12.  Do any such ‘categories’ exist?  If so, how does the category itself represent an ‘attempt to patent abstract ideas?’”

Comments should be sent by email/facsimile (bilski_guidance@uspto.gov | 571.273.0125) or by mail (Mail Stop Comments-Patents, Commissioner for Patents, P.O. Box 1450, Alexandria, VA 22313-1450), with email being the preferred delivery means.

USPTO Documents

Memo from Robert W. Bahr, Acting Associate Commissioner for Patent Examination Policy (this document includes the below listed documents): http://www.uspto.gov/patents/law/exam/bilski_guidance_27jul2010.pdf

101 Method Eligibility Quick Reference Sheet:  http://www.uspto.gov/patents/announce/bilski_qrs.pdf

Federal Register Notice:   http://edocket.access.gpo.gov/2010/pdf/2010-18424.pdf

Interim Examination Instructions for Evaluating Subject Matter Eligibility Under 35 U.S.C. 101 (released August 24, 2009): http://www.uspto.gov/web/offices/pac/dapp/opla/2009-08-25_interim_101_instructions.pdf

Until further guidance is provided by the Federal Circuit (or Congress), it is not clear what is required for a claim to pass the threshold patent eligibility inquiry of 35 USC 101 (and not be construed as an “abstract idea”) outside of satisfying the “Machine-or-Transformation” test and the Supreme Court’s Trilogy of cases (Benson, Flook, and Diehr) related to patent subject matter eligibility.  However, even with such uncertainty, there are a number of items that remain unchanged even after the Supreme Court’s decision in Bilski v. Kappos from a patent prosecution perspective.

Patent Prosecution | USPTO has Initial Burden in furthering a Prima Facie Case of Unpatentability

One of the initial items that should be considered when analyzing the propriety of a rejection(s) included in an Office Action (irrelevant of whether its a 35 USC 101/35 USC 102/35 USC 103/35 USC 112 rejection) should be: Has the Examiner Satisfied their Initial Burden?.

The Examiner bears the initial burden in providing factual support for a rejection included within the Office Action.  For example, regarding Obviousness rejections (35 USC 103), MPEP 2142 – Legal Concept of Prima Facie Obviousness states: “The examiner bears the initial burden of factually supporting any prima facie conclusion of obviousness. If the examiner does not produce a prima facie case, the applicant is under no obligation to submit evidence of nonobviousness.”

For subject matter rejections under 35 USC 101, MPEP 2106 indicates that it is the Examiner who bears the initial burden in furthering a prima facie showing under 35 USC 101 (see MPEP 2106 – Patent Subject Matter Eligibility).  Accordingly, if a practitioner receives a 35 USC 101 rejection which only states that the claim is not patent eligible because it does not satisfy the “machine-or-transformation” test without anything further, such a rejection would not appear to satisfy the requirements included in MPEP 2106.

MPEP 2106:

“D.  Establish on the Record a Prima Facie Case

USPTO personnel should review the totality of the evidence (e.g., the specification, claims, relevant prior art) before reaching a conclusion with regard to whether the claimed invention sets forth patent eligible subject matter. USPTO personnel must weigh the determinations made above to reach a conclusion as to whether it is more likely than not that the claimed invention as a whole either falls outside of one of the enumerated statutory classes or within one of the exceptions to statutory subject matter. ‘The examiner bears the initial burden of presenting a prima facie case of unpatentability.’ In re Oetiker, 977 F.2d 1443, 1445, 24 USPQ2d 1443, 1444 (Fed. Cir. 1992). If the record as a whole suggests that it is more likely than not that the claimed invention would be considered a practical application of an abstract idea, natural phenomenon, or law of nature, then USPTO personnel should not reject the claim.

After USPTO personnel identify and explain in the record the reasons why a claim is for an abstract idea with no practical application, then the burden shifts to the applicant to either amend the claim or make a showing of why the claim is eligible for patent protection. See, e.g., In re Brana, 51 F.3d 1560, 1566, 34 USPQ2d 1436, 1441 (Fed. Cir. 1995); see generally MPEP § 2107 (Utility Guidelines).”

Patent Subject Matter Eligibility Guidelines | USPTO

Although the Supreme Court held in Bilski v. Kappos that the “Machine-or-Transformation” (M-or-T) test is not the sole test for determining patent subject matter eligibility, it still spoke positively of the test (e.g., “the test may be a useful and important clue or investigative tool” – my prior post which reviews Bilski v. Kappos is available: here.)

It should be stressed that a claim may be patent-eligible (as long as its not an “abstract idea”) even if it does not satisfy the M-or-T test as the Supreme Court held that: “the Federal Circuit incorrectly concluded that this Court has endorsed the machine-or-transformation test as the exclusive test.”  Until additional guidance is developed (CAFC/USPTO/Congress) and in the interest of time/cost, a patent practitioner may consider continuing to implement the existing guidance that has been provided by the USPTO regarding patent subject matter eligibility.

To help accomplish the foregoing task, the practitioner may want to revisit the interim instructions that were released last summer (August 2009) by the USPTO: “Interim Patent Subject Matter Eligibility Examination Instructions” which provide guidance for evaluating subject matter eligibility under 35 USC 101.

The following USPTO document includes: 1) the aforementioned instructions; 2) multiple subject matter eligibility test flowcharts for evaluating product and process claims; and 3) a USPTO training presentation entitled “Interim Examination Instructions for Evaluating Subject Matter Eligibility Under 35 USC 101″ which includes a detailed analysis of a number of exemplary product and process claims.   The following discussion reviews key items from the aforementioned USPTO document.

Machine, Manufacture, and Composition of Matter (Product) Claims | Patent Subject Matter Eligibility Guidelines | USPTO

If a claim is directed to one of the three product categories, it is patent eligible.  However, if a judicial exception is recited in the claim, it must be determined if the “judicially excepted subject matter has been practically applied in the product.”

Product Claim | Primary Inquiries:

#1)  Is the claim directed to a product (machine, manufacture (computer-readable medium or “beauregard” claim), or composition of matter)?
#2)  Is a judicial exception recited in the claim? (e.g., mathematical algorithm)  (if answer is “NO” than claim is patent eligible under 35 USC 101, else must additionally satisfy inquiries #3 and #4 for claim to be patent eligible).
#3)  Is the claim as a whole directed to a practical application of the judicially excepted material?

This prong is satisfied when: “a claim that includes judicially excepted subject matter and whose broadest reasonable interpretation is directed to a man-made tangible embodiment (i.e., structure) with a real world use is limited to a practical application (the subject matter has been practically applied….” (page 4)   Additionally, a practical application: “relates to how a judicially recognized exception is applied in a real world product or a process, and not merely the result achieved by the invention”; and “is often self-evident based on the claim limitations that define the tangible embodiment.” (page 4)

The aforementioned requirements are satisfied in one of exemplary product claim examples: (“a machine for evaluating search results, comprising: a microprocessor coupled to a memory, wherein the microprocessor is programmed to evaluate search results by: sorting the results … ranking the results … comparing the ranked results…”) as the claim recites: 1) a tangible embodiment (microprocessor); and a real-world use (microprocessor evaluates search results).  (page 20)

In another one of the exemplary product claim examples, a Beauregard claim (or computer-readable medium claim) additionally satisfies this inquiry due to its recitation of a computer-readable medium (tangible embodiment) and real-world use (sorting search results): “a non-transitory computer-readable storage medium with an executable program stored thereon, wherein the program instructs a microprocessor to perform the following steps…”) (page 21)  Additionally, it should be noted that the reasoning for the aforementioned “non-transitory” language is provided below in the section entitled “Subject Matter Eligibility of Computer Readable Media.”

#4)  Is the claim directed to substantially all practical applications of the exception?

If an algorithm can be used with “different programming steps”, (page 20) than the claim is likely not directed to substantially all practical applications of the exception.   Conversely, the claim is likely directed to substantially all practical applications of the exception if use of the mathematical subject matter is foreclosed beyond the claim (preemption).

In addition to the above items, the following flowchart is included in the USPTO document.

Product Claim | Patent Eligible Subject Matter

Process Claims | Patent Subject Matter Eligibility Guidelines | USPTO

Process Claim | Primary Inquiries:

#1)  Is the “Machine-or-Transformation” (M-or-T) test satisfied (“tied to a particular machine or apparatus (machine-implemented)” or “particularly transform a particular article to a different state or thing.” (page 6)  An”article” is defined as “a physical object or substance” or “electronic data that represents a physical object or substance … data should be more than an abstract value….” (page 6) Further, for computer-implemented processes, the “machine” is usually a general purpose computer.   However, once this general purpose computer is programmed to perform process steps, it in effect may become a “special purpose computer” (or “particular”). (page 7)
#2)   If a “particular machine” is present, does use of it impose a meaningful limit on the claim (more than field of use) OR if a “transformation” is present, does the transformation impose a meaningful limit on the claim?
#3)   If a “particular machine” is present, does use of it involve more than insignificant “extra-solution” activity OR if a “transformation” is present, does the transformation involve more than insignificant “extra-solution” activity?

#4)   Confirm: a) “real world application” is present; and b)”substantially all practical uses of a judicial exception” are not pre-empted.

In addition to the above inquiries which are described in the guidelines, two different exemplary process claims are included which are examined below.

Process Claim | Tied to a Particular Machine

It should be noted that the first exemplary process claim (“Claim Tied to a Particular Machine” – page 26) included in the USPTO document does not recite within the preamble a “machine;” however, one of the steps includes a machine: “comparing, using a microprocessor, the ranked results to….”  This claim is patent eligible as said step is considered “central to the method invented by the applicant”(imposes a meaningful limit) and not “a mere field-of-use or insignificant extra-solution activity” (satisfying inquiries #2 & #3 noted above).

Process Claim | Extra-Solution Activity

Contrastingly, in the second exemplary process claim (“Extra-Solution Activity” – page 27), even though the claim inherently recites a “particular machine” (e.g., “the step of obtaining the search results inherently requires a programmed microprocessor to download data from a database…”), the claim is not patent eligible as the aforementioned step is “not central to the purpose of the method … and is insignificant extra-solution activity.”).

In addition to the above items, the following flowchart is included in the USPTO document.

Process Claims | Patent Eligible Subject Matter

“Transformation” Prong of M-or-T Test | Patent Subject Matter Eligibility Guidelines | USPTO

On pages 5 and 6 of the guidelines, “transformation” is defined as an article that has “changed to a different state or thing” (please note that an”article” is defined as “a physical object or substance” or “electronic data that represents a physical object or substance … data should be more than an abstract value….” (page 6)).  A change of location, purely mental processes such as thoughts or human based actions, and mathematical manipulations of data do not constitute a transformation.

Contrastingly, the transformation prong of the M-or-T test is satisfied with regard to electronic data when “the nature of the data has been changed such that it has a different function or is suitable for a different use.” (page 6)

Subject Matter Eligibility of Computer Readable Media | USPTO

Earlier this year, the USPTO released a document entitled “Subject Matter Eligibility of Computer Readable Media” (signed January, 2010 by Director Kappos) in which guidance is provided regarding “computer readable medium” / “machine readable medium” claims (or Beauregard claims).

The document states, “the broadest reasonable interpretation of a claim drawn to a computer readable medium … typically covers forms of non-transitory tangible media and transitory propagating signals per se in view of the ordinary and customary meaning of a computer readable media, particularly when the specification is silent. See MPEP 2111.01.”  The document further states that if a claim is drawn to a computer readable medium which covers both transitory and non-transitory embodiments, the claim may be amended (to cover only statutory embodiments) with the recitation “non-transitory.”  Further, the document states that such an amendment will normally not trigger a new matter issue even if the specification is silent unless the specification “does not support a non-transitory embodiment because a signal per se is the only viable embodiment….”

Concluding Thoughts | USPTO Practice

The following “thoughts” are a final recap/derived from the USPTO resources described above:

• Initial Burden: The Examiner bears the initial burden in furthering a prima facie showing under 35 USC 101 prior to the burden shifting to the Applicant. This prima facie showing requires the Examiner to “identify and explain in the record the reasons why a claim is for an abstract idea.”
• Product Claims: Simply reciting a “machine” or other product in the preamble without further inclusion of a tangible recitation (e.g., a “microprocessor”) in the main body of the claim will likely not satisfy the aforementioned USPTO guidelines (see exemplary method claim on page 20 of the Patent Subject Matter Guidelines document).  Further, it should be noted that a “machine” is described in said document as “a concrete thing, consisting of parts.” Simply stated: an apparatus claim recites structural components (physical), while a method claim recites a series of steps or acts.  Additionally, inquiries #3 and #4 (particular practical application/no preemption) described above for “Product” claims must additionally be satisfied for the claim to be patent eligible under 35 USC 101.
• Beauregard Claims: Ensure that a “computer readable medium” (or Beauregard) claim recites the verbiage “non-transitory” (e.g. “a non-transitory computer-readable storage medium….”) to avoid having the claim construed in “the broadest reasonable interpretation” as a transitory embodiment (signal) which is non-statutory.  Further, ensure that the Specification does not indicate that the storage medium or other “tangible” product (machine) may be software-based, etc. as such a description may result in the claim being construed as directed to a non-statutory category.  Page 3 of said document includes a listing of “non-limiting examples of claims that are not directed to one of the statutory categories: “1) transitory forms of signal transmission (for example, a propagating electrical or electromagnetic signal per se); 2) a naturally occurring organism; 3) a human per se; 4) a legal contractual agreement between two parties; 5) a game defined as a set of rules; 6) a computer program per se; 7) a company.”
• Process Claims: Even though a “particular machine” is recited within a process claim, unless the machine imposes a meaningful limit (and is central to the purpose of the process claim), the involvement of the particular machine may be considered extra-solution activity.  Additionally, inquiry #4 (real-world application/no preemption) described above for “Process” claims must additionally be satisfied for the claim to be patent eligible under 35 USC 101.

[Please disregard the following: Technorati Verification EVGE9CTK3G5Z]

On June 28, 2010, the Supreme Court rendered what was arguably one of the most anticipated patent law cases: Bilski v. Kappos. Although the Court held that Bilski’s claims did not satisfy the 35 USC 101 patent-eligibility inquiry, the Court did explicitly recognize that patent protection is available for “at least some methods of doing business.”

Holding

The Supreme Court held: 1) Bilski’s patent claims were “an unpatentable abstract idea, just like the algorithms at issue in Benson and Flook“; 2) the Federal Circuit’s “machine-or-transformation test” is NOT the sole test for determining patentability under 35 USC 101; 3) Section 101 “precludes a reading of the term ‘process’ that would categorically exclude business methods”; and 4) the “useful, concrete, tangible result” test of State Street is likely no longer applicable.

Background

The claimed subject matter in the Bilski patent application related to a method of hedging against risk created by price changes in the field of commodities trading.  The United States Patent and Trademark Office (USPTO) Board of Patent Appeals and Interferences(BPAI) affirmed the Patent Examiners rejection of the claims under 35 USC 101 concluding that:

“Applicants’ claims do not involve any patent-eligible transformation, holding that transformation of “non-physical financial risks and legal liabilities of the commodity provider, the consumer, and the market participants” is not patent-eligible subject matter. Id. at 43. The Board also held that Applicants’ claims “preempt[] any and every possible way of performing the steps of the [claimed process], by human or by any kind of machine or by any combination thereof,” and thus concluded that they only claim an abstract idea ineligible for patent protection. Id. at 46-47. Finally, the Board held that Applicants’ process as claimed did not produce a “useful, concrete and tangible result,” and for this reason as well was not drawn to patent-eligible subject matter. Id. at 49-50.”

Similarly, the Court of Appeals for the Federal Circuit (CAFC), sitting en banc, also held that Bilksi’s claims were not patentable.  To determine whether a claimed process met the initial patentability requirement of 35 USC 101, the CAFC in essence rejected its prior “State Street” patentability test (claimed process is patentable under 35 USC 101 if it produces a “useful, concrete, and tangible result”) and introduced a new (and arguably more restrictive) “machine-or-transformation” test (claimed process is patentable under 35 USC 101 if: “1) it is tied to a particular machine or apparatus; or 2) it transforms an article into a different state or thing.”)

Guidance for Determining Patent Eligible Subject Matter

Although the Court did not annunciate an explicit test for determining when a process claim may satisfy 35 USC 101, the following items highlight the opinion:

• Congressional Intent | “Wide Scope” for Patent Laws | Three Exceptions to 35 USC 101

The Court states that Congress intended for the patent laws to have a “wide scope” with the exception of three specific items:

“Section 101 thus specifies four independent categories of inventions or discoveries that are eligible for protection: processes, machines, manufactures, and compositions of matter. ‘In choosing such expansive terms . . . modified by the comprehensive ‘any,’ Congress plainly contemplated that the patent laws would be given wide scope.’ Diamond v. Chakrabarty, 447 U. S. 303, 308 (1980). Congress took this permissive approach to patent eligibility to ensure that “‘ingenuity should receive a liberal encouragement.’” Id., at 308–309 (quoting 5 Writings of Thomas Jefferson 75–76 (H. Washington ed. 1871)).  The Court’s precedents provide three specific exceptions to §101’s broad patent-eligibility principles: ‘laws of nature, physical phenomena, and abstract ideas.’ Chakrabarty, supra, at 309.”

• 35 USC 101 | “Threshold Test”

The Court confirmed that 35 USC 101 is only a threshold test in determining patent-eligible subject matter.   Overcoming this initial patentability hurdle does not automatically result in a patent grant as an Applicant must still overcome the additional patentability requirements of 35 USC 102 and 35 USC 103 (anticipation and obviousness, respectively) in addition to 35 USC 112 (invention which is fully & particularly described).   The Court stated:

“The §101 patent-eligibility inquiry is only a threshold test. Even if an invention qualifies as a process, machine,manufacture, or composition of matter, in order to receive the Patent Act’s protection the claimed invention must also satisfy ‘the conditions and requirements of this title.’ §101. Those requirements include that the invention be novel, see §102, nonobvious, see §103, and fully and particularly described, see §112.”

• Machine-or-Transformation Test | “Not the Sole Test” | Useful & Important Clue or Investigative Tool | Industrial Age vs. Information Age (non-precedential)

The Supreme Court stated that “the Federal Circuit incorrectly concluded that this Court has endorsed the machine-or-transformation test as the exclusive test.”   Instead, “the court’s precedents establish that although that test may be a useful and important clue or investigative tool, it is not the sole test for deciding whether an invention is a patent-eligible “process” under 101.”

Although Parts II-B-2 and II-C-2 are non-precedential (Justice Scalia did not join these parts), the court therein cites the uncertainty that would be created with a sole machine-or-transformation test with regard to Information Age products such as “software, advanced diagnostic medicine techniques, and inventions based on linear programming, data compression, and the manipulation of digital signals.”  Accordingly, a disconnect between a test rooted in the Industrial Age vs. our current Information Age Economy is realized herein: “the machine-or-transformation test may well provide a sufficient basis for evaluating processes similar to those in the Industrial Age-for example, inventions grounded in a physical or other tangible form … there are reasons to doubt whether the test should be the sole criterion for determining the patentability of inventions in the Information Age.”  However, the Court is careful in stating that they are not opining on whether the aforementioned list of technologies should or should not receive patent protection. Additionally, it is stated here that “section 101′s terms suggest that new technologies may call for new inquiries.”

• Patentable “Business Method” Process |  1) Definition of “Process” found in 35 USC 100(b); and 2) Guideposts in Benson, Flook, and Diehr

The Court held that because the Bilski patent application can be rejected as an abstract idea, it “need not define further what constitutes a patent ‘process,’ beyond pointing to the statutory definition of that term in 100(b) and looking to the guideposts in Benson, Flook, and Diehr.”

1.  Statutory Definition: the Court states that at least some methods of doing business are likely covered by 35 USC 100(b) purely from a textual perspective as the term ”method” is within 35 USC 100(b)’s definition of “process.”  Accordingly, the Court requires that the “ordinary, contemporary, common meaning” of 35 USC 100(b) be utilized in determining whether a process satisfies the threshold test of 35 USC 101.   The Court rejects a judicially created definition by asserting that:

“this court has ‘more than once cautioned that court’s should not read into the patent laws limitations and conditions which the legislature has not expressed.’ Diamond v. Diehr, 450 U.S. 175, 182 (1981) … in patent law, as in all statutory construction, ‘[u]nless otherwise defined, words will be interpreted as taking their ordinary, contemporary, common meaning.’ Diehr, supra at 182.”

However, the Court states that “nor is it clear how far a prohibition on business method patents would reach, and whether it would exclude technologies for conducting a business more efficiently.”

To provide support for the assertion that business methods are not categorically excluded from 35 USC 101, the Court points to Federal Law (35 USC 273) :

“For purposes of this defense alone, ‘method’ is defined as ‘a method of doing or conducting business.’ 273(a)(3) … by allowing this defense the statute itself acknowledges that there may be business method patents ... while 273 appears to leave open the possibility of some business method patents, it does not suggest broad patentability of such claimed inventions.”

2.  Trilogy of Prior Supreme Court Cases:  The Court states that in addition to reviewing the text of 35 USC 100(b), the trilogy of Supreme Court cases (Benson, Flook, and Diehr) provide a “guidepost” (or guidance) in determining whether a process satisfies the initial threshold of 35 USC 101.    Part III of the opinion details each of these cases briefly.

• “Useful, Concrete, and Tangible Result” Test | Other Federal Circuit “Limiting Critera” Possible

It is likely that the “useful, concrete, and tangible result” test of State Street is game over as the Court states that “nothing in today’s opinion should be read as endorsing interpretations of 101 that the Court of Appeals for the Federal Circuit has used in the past.  See e.g., State Street, 149 F. 3d at 1373; AT&T Corp., 172 F.3d. at 1357.” Additionally, the aforementioned assertion is furthered by item #4 listed below.

However, the Court does indicate to the Federal Circuit that “we by no means foreclose the Federal Circuit’s development of other limiting criteria that further the purposes of the Patent Act and are not inconsistent with the text.”

• Four Points of “Substantial Agreeement”

Justice Breyer’s concurring opinion with whom Justice Scalia joins provides four items which “highlight the substantial agreement among many Members of the Court on many of the fundamental issues of patent law raised by this case.”   The four items are as follows:

1.  ”Although the text of 35 USC 101 is broad, it is not without limit.”

2.  ”In a series of cases that extend back over a century, the Court has stated that ‘[t]ransformation and reduction of an article to a different state or thing is the clue to to the patentability of a process claim that does not include particular machines.”

3.   “While the machine-or-transformation test has always been a ‘useful and important clue,’ it has never been the ‘sole test for determining patentability.’”

4.  ”Although the machine-or-transformation test is not the only test for patentability, this by no means indicates that anything which produces a ‘useful, concrete, and tangible result’ … is patentable.”

Conclusion

A possible “take away” from this decision is that a more centrist position for 35 USC 101 is to be developed in line with the statutory definition of “process” and the Supreme Court Trilogy (Benson, Flook, and Diehr).  This “centrist position” would fall somewhere in between the two ends of the spectrum, namely the broad “useful, concrete, and tangible result” test of State Street on one end and the more restrictive sole “machine-or-transformation” test on the other end.

Another possible “take away” from the case is that by keeping the door open for “at least some methods of doing business,” some may assert that the Court recognized that the tools and products of our knowledge economy will not always conform to rigid constructs (e.g., sole “machine-or-transformation” test).  Such a belief is not surprising as the Supreme Court in J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred Int’l. stated that that 35 USC 101 is a “dynamic provision designed to encompass new and unforeseen inventions,” while in Chakrabarty it stated that “Congress employed broad general language in drafting 101 precisely because [new types of] inventions are often unforseeable.”   Such an assertion may be compatible with the aforementioned “centrist position” as 35 USC 101 (a “threshold test”) could be tempered by 35 USC 102/103/112.

In conclusion, business method patents have not been wiped off the map, and the Federal Circuit (or Congress) is now tasked with providing further guidance regarding 35 USC 101.

Text of Bilski v. Kappos is available here.