35 U.S.C. 101 Inventions patentable.
Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

Exemplary of Congressional laxity in drafting the patent laws, three words as to the utility of §101: not enough guidance. As the patent appeals board (PBAI) construed in its 71-page Bilski ruling:

A "process" is the most difficult category of §101 to define. Not every process in the dictionary sense constitutes a "process" under §101. When Congress approved changing "art" to "process" in the 1952 Patent Act, it incorporated the definition of "process" that had evolved in the courts. The Supreme Court has arguably defined a "process" as "an act, or series of acts, performed on the subject matter to be transformed and reduced to a different state or thing." See Lundgren 76 USPQ2d at 1398. The subject matter transformed may be tangible (matter) or intangible (some form of energy, such as the conversion of electrical signals or the conversion of heat into other forms of energy (thermodynamics)), but it must be physical.

Alappat, Arrhythmia Research Technology Inc. v. Corazonix Corp..., State Street, and AT&T all involved transformation of data by a machine. The court specifically held that transformation of data representing some real world quantity... by a machine was a practical application of a mathematical algorithm, formula, or calculation that produced "a useful, concrete and tangible result."... The holding of State Street is limited to transformation of data by a machine... The "useful, concrete and tangible result" test of State Street and AT&T is presently limited to machine claims and machine-implemented process claims... The terms "useful, concrete and tangible" have not yet been defined.

During prosecution, claims that read on statutory and nonstatutory subject matter should be held to be unpatentable.

Administrative Patent Judge McQuade opined in his concurrance:

The quest for a bright line test for determining whether a claimed invention embodies statutory subject matter under 35 U.S.C. §101 is an exercise in futility... Hence, any assessment to determine whether a claim recites statutory subject matter should be fact-specific and conducted on a case-by-case basis. This approach, of course, does not easily lend itself to a test.

The Bilski decision puts the examining crew, and prosecutors, on notice to expect the 101 rejections to keep flying in thick for method claims, even those that transform data using a computer.

The PBAI wrote the decision as a plea for appeal to the CAFC, and Bilski has granted their wish.  But Bilski falls in line behind Nuijten. Still, Bilski embodies the agency's current musings regarding §101, so at least provides talking points among the patent chattering class; to that extent, Bilski is having its impact.

Here's Hal Wegner on the intricacies of the case:

In re Bilski, Fed. Cir. 2007-1130, may well only reach the merits of business method patent-eligibility under 35 USC § 101. Yet, there are procedural subplots within the case that are, at best, bizarre. Indeed, Bilski may represents perhaps the procedurally most bizarre procedural intervention in an ex parte appeal to the Board in the fifteen years since the notorious Ex Parte Alappat, 23 USPQ2d 1340 (PTO Bd. Pat. App. & Int. 1992), subsequent proceedings sub nom In re Alappat, 33 F.3d 1526 (Fed. Cir. 1994)(en banc)...

Bilski claims an effective filing date two years before the State Street Bank decision of the Federal Circuit. The appeal was filed five (5) years ago, antedating decision in Lundgren by two (2) years. Ex parte Lundgren, 2004 Westlaw 2004 WL 4979160 (PTO Bd. App. 2004)(per curiam)(Fleming, Chief APJ, Harkom, Vice-Chief-APJ, Hairston, APJ, Smith, APJ, Barrett, APJ))(Barrett, APJ, dissenting with opinion). The original panel in Bilski, like Lundgren, included both current Chief Judge Fleming and Judge Barrett (and a third member, the heretofore unknown Judge Nagumo).

Because Lundgren was a five member precedential panel opinion that included both the Chair and Vice-Chair of the Board it would be expected that Bilski would therefore be reversed, following the precedential ruling in Lundgren.

Yet, for reasons the PTO has yet to explain, the Bilski case was reargued before a panel that this time was chaired by Judge Barrett, with the Chief Judge of the Board inexplicably removed from the panel but retaining the heretofore unknown Judge Nagumo, but with the addition of APJ's Frankfort, McQuade and Bahr. The reargument took place only on March 8, 2006.

It is very difficult to make complete sense of the majority opinion in Bilski that has a detailed section captioned "Ex parte Lundgren" (pp. 11-34), that states that "[t]o avoid repetition, this opinion expressly incorporates by reference the legal analysis of statutory subject matter in the concurring-in-part/dissenting-in-part opinion of Administrative Judge Barrett in Ex parte Lundgren, 76 USPQ2d 1385, 1393-1429 (Bd. Pat. App. & Int. 2005)(precedential)." (p. 11). Another section ploughs through the "Interim Guidelines" (pp. 34-41), which is then, finally, followed by the case itself in a section styled as "Analysis" (pp. 41).

Particularly in the absence of any intervening judicial precedential to the contrary, on what basis can a new panel simply abrogate the "precedential" Lundgren opinion?

Possibly the most cogent analysis of the majority opinion that is found in a concurring opinion, McQuade, APJ, that summarizes the situation: "[A]ny assessment to determine whether a claim recites subject matter should be fact-specific and conducted on a case-by-case basis. This approach, of course, does not easily lend itself to a[n] [outcome predictable] test." Bilski, p. 67 at p. 68 (McQuade, APJ, concurring).

Because of its massive backlog of business method patents, the PTO's real concern is not over patent-eligibility of a claim to a signal, per se (the question raised in Nuijten), but, rather, over State Street Bank patent-eligibility of "business methods". Yet, the PTO has its own "business method" test case that has only recently reached the Federal Circuit, In re Bilski, Fed. Cir. 2007-1130. Unless there is an inordinately slow decision in Nuijten (which is not expected, given the Nuijten panel of Gajarsa, Linn, Moore, JJ.), the Nuijten case will be well on its way to the Supreme Court before there is an argument in Bilski. The PTO thus will have to put all its Bilski eggs in a Nuijten basket at the Supreme Court.

Blogs on Bilski: Patently-O, 271, patently-unobvious.