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October 30, 2008

Method Acting

Bernard Bilski and Rand Warsaw filed a patent application claiming managing commodities trading risk. The patent appeals board agreed with examiner rejection that the claimed process wasn't statutory under §101. In a sua sponte en banc hearing, the CAFC affirmed, albeit contentiously. In re Bilski sets the patentable-process test to whether a claimed method is: (1) "tied to a particular machine or apparatus," or (2) transforms the subject matter of the claim.

In re Bilski and Warsaw (CAFC 2007-1130)

9-3, majority opinion penned by Chief Judge Michel.

35 U.S.C. § 101 -

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.

From the CAFC ruling -

The statute thus recites four categories of patent-eligible subject matter: processes, machines, manufactures, and compositions of matter. Thus, the issue before us involves what the term "process" in § 101 means, and how to determine whether a given claim... is a "new and useful process.

While "process" is broad, the courts have constricted its meaning to exclude purely mental processes.

[T]he term "process" is ordinarily broad in meaning, at least in general lay usage. In 1952, at the time Congress amended § 101 to include "process," the ordinary meaning of the term was: "[a] procedure . . . [a] series of actions, motions, or operations definitely conducing to an end, whether voluntary or involuntary." WEBSTER'S NEW INTERNATIONAL DICTIONARY OF THE ENGLISH LANGUAGE 1972 (2d ed. 1952). There can be no dispute that Applicants' claim would meet this definition of "process." But the Supreme Court has held that the meaning of "process" as used in § 101 is narrower than its ordinary meaning. See Flook, 437 U.S. at 588-89 ("The holding [in Benson] forecloses a purely literal reading of § 101."). Specifically, the Court has held that a claim is not a patent-eligible "process" if it claims "laws of nature, natural phenomena, [or] abstract ideas." Diamond v. Diehr, 450 U.S. 175, 185 (1981) (citing Flook, 437 U.S. at 589, and Gottschalk v. Benson, 409 U.S. 63, 67 (1972)). Such fundamental principles are "part of the storehouse of knowledge of all men . . . free to all men and reserved exclusively to none." Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130 (1948); see also Le Roy v. Tatham, 55 U.S. (14 How.) 156, 175 (1852) ("A principle, in the abstract, is a fundamental truth; an original cause; a motive; these cannot be patented, as no one can claim in either of them an exclusive right."). "Phenomena of nature, though just discovered, mental processes, and abstract intellectual concepts are not patentable, as they are the basic tools of scientific and technological work." Benson, 409 U.S. at 67; see also Comiskey, 499 F.3d at 1378-79 (holding that "mental processes," "processes of human thinking," and "systems that depend for their operation on human intelligence alone" are not patent-eligible subject matter under Benson).

The true issue before us then is whether Applicants are seeking to claim a fundamental principle (such as an abstract idea) or a mental process. And the underlying legal question thus presented is what test or set of criteria governs the determination by the Patent and Trademark Office ("PTO") or courts as to whether a claim to a process is patentable under § 101 or, conversely, is drawn to unpatentable subject matter because it claims only a fundamental principle.

The Supreme Court Diehr precedent is that, while fundamental principles are not patentable, application of such principles "may well be deserving of patent protection."

The Supreme Court last addressed this issue in 1981 in Diehr, which concerned a patent application seeking to claim a process for producing cured synthetic rubber products. 450 U.S. at 177-79. The claimed process took temperature readings during cure and used a mathematical algorithm, the Arrhenius equation, to calculate the time when curing would be complete. Id. Noting that a mathematical algorithm alone is unpatentable because mathematical relationships are akin to a law of nature, the Court nevertheless held that the claimed process was patent-eligible subject matter... The Court declared that while a claim drawn to a fundamental principle is unpatentable, "an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection." Id. (emphasis in original); see also Mackay Radio & Tel. Co. v. Radio Corp. of Am., 306 U.S. 86, 94 (1939) ("While a scientific truth, or the mathematical expression of it, is not a patentable invention, a novel and useful structure created with the aid of knowledge of scientific truth may be.").

The patentable-process test is whether the method is (1) "tied to a particular machine or apparatus," or (2) transforms the subject matter of the claim.

The Supreme Court... has enunciated a definitive test to determine whether a process claim is tailored narrowly enough to encompass only a particular application of a fundamental principle rather than to pre-empt the principle itself. A claimed process is surely patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing. See Benson, 409 U.S. at 70 ("Transformation and reduction of an article 'to a different state or thing' is the clue to the patentability of a process claim that does not include particular machines."); Diehr, 450 U.S. at 192 (holding that use of mathematical formula in process "transforming or reducing an article to a different state or thing" constitutes patent-eligible subject matter); see also Flook, 437 U.S. at 589 n.9 ("An argument can be made [that the Supreme] Court has only recognized a process as within the statutory definition when it either was tied to a particular apparatus or operated to change materials to a 'different state or thing'"); Cochrane v. Deener, 94 U.S. 780, 788 (1876) ("A process is . . . an act, or a series of acts, performed upon the subject-matter to be transformed and reduced to a different state or thing."). A claimed process involving a fundamental principle that uses a particular machine or apparatus would not pre-empt uses of the principle that do not also use the specified machine or apparatus in the manner claimed. And a claimed process that transforms a particular article to a specified different state or thing by applying a fundamental principle would not pre-empt the use of the principle to transform any other article, to transform the same article but in a manner not covered by the claim, or to do anything other than transform the specified article.

The machine-or-transformation test is a two-branched inquiry; an applicant may show that a process claim satisfies § 101 either by showing that his claim is tied to a particular machine, or by showing that his claim transforms an article. See Benson, 409 U.S. at 70. Certain considerations are applicable to analysis under either branch. First, as illustrated by Benson and discussed below, the use of a specific machine or transformation of an article must impose meaningful limits on the claim's scope to impart patent-eligibility. See Benson, 409 U.S. at 71-72. Second, the involvement of the machine or transformation in the claimed process must not merely be insignificant extra-solution activity. See Flook, 437 U.S. at 590.

A claimed process is patent-eligible if it transforms an article into a different state or thing. This transformation must be central to the purpose of the claimed process.

For computer-implemented methods, transformation of data is patentable, but data gathering is not.

[T]he electronic transformation of the data itself into a visual depiction in Abele was sufficient; the claim was not required to involve any transformation of the underlying physical object that the data represented... So long as the claimed process is limited to a practical application of a fundamental principle to transform specific data, and the claim is limited to a visual depiction that represents specific physical objects or substances, there is no danger that the scope of the claim would wholly pre-empt all uses of the principle.

This court and our predecessor court have frequently stated that adding a data-gathering step to an algorithm is insufficient to convert that algorithm into a patent-eligible process. E.g., Grams, 888 F.2d at 840 (step of "deriv[ing] data for the algorithm will not render the claim statutory"); Meyer, 688 F.2d at 794 ("[data-gathering] step[s] cannot make an otherwise nonstatutory claim statutory")... We note that, at least in most cases, gathering data would not constitute a transformation of any article. A requirement simply that data inputs be gathered--without specifying how--is a meaningless limit on a claim to an algorithm because every algorithm inherently requires the gathering of data inputs. Grams, 888 F.2d at 839-40. Further, the inherent step of gathering data can also fairly be characterized as insignificant extra-solution activity. See Flook, 437 U.S. at 590.

Patentability of a claim must be considered holistically.

[T]he Court has made clear that it is inappropriate to determine the patent-eligibility of a claim as a whole based on whether selected limitations constitute patent-eligible subject matter. Flook, 437 U.S. at 594 ("Our approach to respondent's application is, however, not at all inconsistent with the view that a patent claim must be considered as a whole."); Diehr, 450 U.S. at 188 ("It is inappropriate to dissect the claims into old and new elements and then to ignore the presence of the old elements in the analysis."). After all, even though a fundamental principle itself is not patent-eligible, processes incorporating a fundamental principle may be patent-eligible. Thus, it is irrelevant that any individual step or limitation of such processes by itself would be unpatentable under § 101. See In re Alappat, 33 F.3d 1526, 1543-44 (Fed. Cir. 1994) (en banc) (citing Diehr, 450 U.S. at 187).

Novelty is orthogonal to patentability.

[T]he Court has held that whether a claimed process is novel or non-obvious is irrelevant to the § 101 analysis. Diehr, 450 U.S. at 188-91. Rather, such considerations are governed by 35 U.S.C. § 102 (novelty) and § 103 (non-obviousness). Diehr, 450 U.S. at 188-91. Although § 101 refers to "new and useful" processes, it is overall "a general statement of the type of subject matter that is eligible for patent protection 'subject to the conditions and requirements of this title.'" Diehr, 450 U.S. at 189 (quoting § 101).

A couple of corollaries apply to sewing a silk patent purse from an abstract sow's ear: 1) limiting an otherwise unpatentable process to a particular technical field doesn't make for patentability, and 2) the transformation must be integral to the process, not merely after-the-fact.

As a corollary, the Diehr Court also held that mere field-of-use limitations are generally insufficient to render an otherwise ineligible process claim patent-eligible. See 450 U.S. at 191-92 (noting that ineligibility under § 101 "cannot be circumvented by attempting to limit the use of the formula to a particular technological environment").

The Diehr Court also reaffirmed a second corollary to the machine-or-transformation test by stating that "insignificant postsolution activity will not transform an unpatentable principle into a patentable process." Id. at 191-92; see also Flook, 437 U.S. at 590 ("The notion that post-solution activity, no matter how conventional or obvious in itself, can transform an unpatentable principle into a patentable process exalts form over substance.").

The CAFC put aside old saws that have been considered to cut to patentability: the "useful, concrete and tangible result" inquiry; the "technological arts test;" "categorical exclusions," such as excluding business methods (citing State Street); and the Comiskey "mental process" bar. So, mind over matter is patentable.


Judges DYK and Linn concur by taking their time machine to 1793 to discover "that the only processes that were patentable were processes for using or creating manufactures, machines, and compositions of matter." Oh, and pooh to those who would consider anything 19th century or later. Let "the old ways are the best" be the motto for patenting.

This sets the stage for her majesty Judge Pauline Newman, who, in brilliant exposition, scours history and courses case law to put the majority, and Amish wanna-be's, to shame.

The court today acts en banc to impose a new and far-reaching restriction on the kinds of inventions that are eligible to participate in the patent system. The court achieves this result by redefining the word "process" in the patent statute, to exclude all processes that do not transform physical matter or that are not performed by machines. The court thus excludes many of the kinds of inventions that apply today's electronic and photonic technologies, as well as other processes that handle data and information in novel ways. Such processes have long been patent eligible, and contribute to the vigor and variety of today's Information Age. This exclusion of process inventions is contrary to statute, contrary to precedent, and a negation of the constitutional mandate. Its impact on the future, as well as on the thousands of patents already granted, is unknown.

Patents provide an incentive to invest in and work in new directions... It is antithetical to this incentive to restrict eligibility for patenting to what has been done in the past, and to foreclose what might be done in the future.

A curmudgeon coda from anti-patent Judge Mayer in dissent, who opines that "affording patent protection to business methods lacks constitutional and statutory support, serves to hinder rather than promote innovation and usurps that which rightfully belongs in the public domain."

The final word belonged to Judge "cut-to-the-quick" Rader:

This court labors for page after page, paragraph after paragraph, explanation after explanation to say what could have been said in a single sentence: "Because Bilski claims merely an abstract idea, this court affirms the Board's rejection." If the only problem of this vast judicial tome were its circuitous path, I would not dissent, but this venture also disrupts settled and wise principles of law.

Rader then proceeds to concur with Newman.

Because this court... links patent eligibility to the age of iron and steel at a time of subatomic particles and terabytes, I must respectfully dissent.

Innovation has moved beyond the brick and mortar world. Even this court's test, with its caveats and winding explanations seems to recognize this. Today's software transforms our lives without physical anchors. This court's test not only risks hobbling these advances, but precluding patent protection for tomorrow's technologies. "We still do not know one thousandth of one percent of what nature has revealed to us." Attributed to Albert Einstein. If this court has its way, the Patent Act may not incentivize, but complicate, our search for the vast secrets of nature. When all else fails, consult the statute.

Pray that the Supreme Court not lay its shaky hands on this, whereupon mucking up §101 further.

Posted by Patent Hawk at October 30, 2008 12:14 PM | § 101


No CAFC panel ever concurred in the PTO result before the en banc court decided this. The CAFC sua sponte called for an en banc hearing (not "rehearing") before a panel decision ever came down.

Posted by: TJ at October 30, 2008 1:20 PM

"Patents provide an incentive to invest in and work in new directions... It is antithetical to this incentive to restrict eligibility for patenting to what has been done in the past, and to foreclose what might be done in the future."

Whatever, Pauline. Patents don't "incentivize" junk business method or software innovations.

Profits do.

Posted by: Wake Up, It's Over at October 30, 2008 3:45 PM

Well,Pauline, I knew that the natural philosophers of the world (chemists and so on) were engaged in a search to discover all those "vast secrets of nature" you mention, but I hadn't realised till now that the financial engineers are also trying to find out the "vast secrets of nature". Is that what they think they're doing?

Posted by: MaxDrei at October 31, 2008 12:35 AM

I get nervous when I see judges talking about "fundamental[ist] principles". What is this, some sort of evangelical religious tribunal or a court of "law"? As you aptly underline in your opening discussion, the actual words of the statute say "any" followed by "new and useful" and then by the word "process" where the latter is defined broadly in 100(b)as being "art, method or process". The Bilski majority conveniently overlooks the law and jumps happily into irrationally exuberant discussions about "fundamental[ist] principles". Judge Giles Rich (author of the 1952 act) is probably doing cartwheels in his grave. He worked so hard to get a future minded and progressive patent statute passed only to see (from up there in in the patent hall of fame, not shame) all his efforts subverted by this fundamentalist majority.

Posted by: step back at October 31, 2008 4:01 AM

Hawkie (or anyone else), the opinion seem to be split out there.
(i) to get a patent you need to have the claim recite the machine [Peter Zura, Greg Aronian]. According to this opinion, Bilski is no big deal going forward (i.e. just need to include the 'magic words' in the claim), but may invalidate already-issued software patents which are missing the "magic words"; OR
(ii)this kills most patentability of software [Gene Quinn and others] GOING FORWARD - i.e. it is not sufficient to tie the claim to a laptop/PC.

The $64,000 question is: is a laptop or PC with a CPU and DRAM a "particular machine"???
I am NOT asking for people's political views (or for a scientific answer to my question about a particular machine) - I am asking what people thing is the case law NOW.

Posted by: anonymousAgent at October 31, 2008 6:09 AM


The Fed. Cir. explicitly stated they were not deciding whether a general purpose computer is a specific machine.

As far as the PTO goes, then, the current law is in Ex Parte Wasynczuk -- a general purpose processor is NOT a particular machine.

Two of them ("a first physical computing device" that "stimulates" a simulation on a "second physical computing device"), however is a particular machine.

See also Ex parte Langemyr (holding that a method claim reciting "a computer apparatus" is not tied to a particular machine and does not transform matter, therefore neither the method nor the computer program product claims recite patentable subject matter under 101).

I think Langemyr contradicts Beauregard, but the PTO rarely feels bound by the law.

Posted by: Anon E. Mouse at October 31, 2008 8:28 AM

Good job, Hawk. I haven't had time to finish the opinion yet, but you've sliced it, diced it, and served it up in as helpful an analysis as I've seen.

I have to be sympathetic to Newman's premise. So why, in the 21st century, ain't a novel process for processing data/information 101 patentable?

As far as Biliski's claims -- the whole case seems like an expensive, unpatentable process of converting a mole hill into a mountain. The CAFC has already blessed structure-based s/ware claims like:

"A computer readable storage medium having data stored therein representing software executable by a computer, the software including instructions to reduce use of the software by unauthorized users, the storage medium comprising:

instructions for requiring a password associated with the software; . . ."

See Z4 Technologies CAFC 2006-1638

This is a process claim in structural clothing. It's nothing more than Newman's premise in non-process terms. The novelty still resides in the instructions (i.e. s/ware). Why claim s/ware any other way? Especially now.

Posted by: Babel Boy at October 31, 2008 9:46 AM

"I think Langemyr contradicts Beauregard, but the PTO [rarely] NEVER feels bound by the law."

Typo corrected.

Posted by: JD at October 31, 2008 11:56 AM


I am re-posting Patent Agent's post from another thread as it seems germane here:

"Haven't courts already denied this line of logic from the PTO (general purpose computer vs. particular computer)? as cited in In re Lowry, In re Bernhart and Fetterer states:
There is one further rationale used by both the board and the examiner, namely, that the provision of new signals to be stored by the computer does not make it a new machine, i.e. it is structurally the same, no matter how new, useful and unobvious the result. . . . To this question we say that if a machine is programmed in a certain new and unobvious way, it is physically different from the machine without that program; its memory elements are differently arranged. The fact that these physical changes are invisible to the eye should not tempt us to conclude that the machine has not been changed. Bernhart, 417 F.2d at 1400."
Posted by: Patent Agent | Oct 30, 2008 at 12:45 PM


That I believe answers your question as to case law NOW.

Posted by: breadcrumbs at November 1, 2008 9:01 AM

"I think Langemyr contradicts Beauregard, but the PTO rarely feels bound by the law."

Have you actually read Beauregard? I'm doubting that you have. If you had, you'd know that there is nothing there to contradict. Beauregard is literally a paragraph or two stating that the PTO gave up its argument about printed subject matter in relation to computer storage mediums and thereby did not give the court a chance to rule on anything. More attorneys need to read the case. I should cite a link for you, but I'm too lazy atm.

Posted by: 6000 at November 2, 2008 9:55 AM