June 2010
Managing Intellectual Property, Chinese edition
Authored by Erika Harmon Arner and J. Michael Jakes
For the first time in nearly thirty years, the U.S. Supreme Court is considering the issue of what types of processes can be patented under 35 U.S.C. § 101, which authorizes patents for “any new and useful process, machine, manufacture, or composition of matter.” In Bilski v. Kappos, the Supreme Court is reviewing a decision by the U.S. Court of Appeals for the Federal Circuit that to be patentable a process must (1) be tied to a particular machine or apparatus; or (2) transform a particular article into a different state or thing. In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) (en banc). Applying this “machine-or-transformation” test, the Federal Circuit affirmed the USPTO’s rejection of Bilski’s patent application for a method of managing consumption risk costs of a commodity.
The Bilski court explained that under this “machine-or-transformation” test, a patent-eligible transformation must be central to the purpose of the invention and must transform “physical objects or substances.” According to the Federal Circuit, the transformation of legal obligations, organizational relationships, or business risks would not be patent-eligible under the machine-or-transformation test. The court did not expand upon the “machine” prong of the test because the Bilski applicants admitted that their claims did not recite a machine. This left open the question of whether and when reciting a computer sufficiently ties a process to a particular machine.
After the Supreme Court granted review of the Federal Circuit’s decision, sixty-seven amicus curiae briefs were filed by individuals, companies, associations, and academics. The oral arguments on November 9, 2009 drew record crowds to the steps of the Supreme Court. While patent owners and practitioners await the Court’s ruling, the courts and the USPTO struggle to determine the proper scope of patent-eligibility for a broad range of technologies, including computer software, signal processing, biotechnology, and business methods.
In addition to the Bilski case, several other certiorari petitions have been filed seeking the Supreme Court’s guidance on the scope of patent-eligible subject matter. These cases involve technologies ranging from a method for marketing products using a shared marketing force, to a method of testing an immunization schedule, to a method of optimizing the dosage level of a drug. When it issues its decision in Bilski, the Supreme Court may also announce its decision in one or more of these other cases, perhaps offering further insight into the Court’s view of the issue of patentable subject matter.
Meanwhile, the Federal Circuit’s docket includes several appeals from District Court decisions invalidating patent claims under the Bilski machine-or-transformation test. These decisions involve patents in many different technical areas, such as financial transaction systems, real estate investment methods, and 3-D computer graphics. These cases, many of which have been stayed pending the Supreme Court’s decision in Bilski, may provide future opportunities for the courts to refine the standards for patent eligibility.
The USPTO recently issued Interim Examination Instructions for Evaluating Subject Matter Eligibility Under 35 U.S.C. § 101. The Interim Instructions explain that to be directed to statutory subject matter, an invention must be (1) directed to a statutory category; and (2) not wholly directed to a judicially-recognized exception to patentable subject matter. The Interim Instructions contain several examples of subject matter that is not patentable according to the USPTO, including transitory signals, naturally occurring organisms, human beings, legal contractual agreements between two parties, games defined as a set of rules, a computer program per se, and a company. The Interim Instructions also include several examples of patent-eligible inventions, including a machine comprised of gears, pulleys, and belts that interact based on a mathematical relationship and a non-transitory, tangible computer readable storage medium with executable instructions or stored data.
The USPTO also provided guidance on the scope of patent-eligible subject matter in a precedential decision by the Board of Patent Appeals and Interferences. Ex Parte Gutta, No. 2008-4366, (B.P.A.I. Aug. 10, 2009) (precedential). In this decision, the Board set forth a two-part inquiry to determine the patent-eligibility of a machine or article of manufacture claim that involves a mathematical algorithm. For this type of claim, the inquiry involves two questions:
(1) Is the claim limited to a tangible practical application, in which the mathematical algorithm is applied, that results in a real-world use (e.g., “not a mere field-of-use label having no significance”)?
(2) Is the claim limited so as not to encompass substantially all practical applications of the mathematical algorithm either “in all fields” or even in “only one field?
A claim must satisfy both questions in order to be patent-eligible. Because it has been classified as “precedential”, the Gutta decision is binding on the USPTO.
The Director of the USPTO issued additional guidance in early 2010 on Subject Matter Eligibility of Computer Readable Media. The Director explained that ordinarily a claim to a computer-readable medium or machine-readable medium can be interpreted to cover both tangible media and non-tangible media such as transitory propagating signals. In such a situation, the claim must be rejected under § 101 as covering both statutory and non-statutory subject matter. To overcome this type of rejection, the Director suggests adding the term “non-transitory” to the claim. The USPTO will likely issue updated guidance, perhaps in the form of revisions to the Manual of Patent Examining Procedure or another precedential Board decision, once the Supreme Court issues its decision in the Bilski case, which is expected in May or June 2010.
While it is difficult to predict how the Supreme Court will rule in Bilski v. Kappos, Chinese companies may want to consider steps they can take now. For example, companies may wish to audit their U.S. patent portfolio to identify patents that could be at risk if the machine-or-transformation test is affirmed. When applying for and prosecuting patents in the U.S., companies may want to study the USPTO's guidance regarding statutory subject matter.
Copyright © Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm’s clients.
June 10-12, 2024
San Francisco
Lecture
Patent Protection for Software-Related Inventions in Europe and the USA Training Course
June 5, 2024
Hybrid
10th Annual Georgia Asian Pacific American Bar Association Gala
May 29, 2024
Atlanta
Due to international data regulations, we’ve updated our privacy policy. Click here to read our privacy policy in full.
We use cookies on this website to provide you with the best user experience. By accepting cookies, you agree to our use of cookies. Please note that if you opt not to accept or if you disable cookies, the “Your Finnegan” feature on this website will be disabled as well. For more information on how we use cookies, please see our Privacy Policy.
Finnegan is thrilled to announce the launch of our new blog, Ad Law Buzz, devoted solely to breaking news, developments, trends, and analysis in advertising law.