Fort Properties v. Master Lease (Central California SACV07-365 AG)

The ruling is all Bilski -

Courts have used varying standards in determining whether a claimed 'process' is patentable under Section 101. In Bilski, decided on October 30, 2008, the Federal Circuit clarified the appropriate standard to apply in determining whether a 'process' is patentable under Section 101. The court determined that "the proper inquiry under § 101 is . . . whether the claim meets the machine-or-transformation test." Bilski, 545 F.3d at 961. The court also reviewed and rejected other tests, such as the "useful, concrete and tangible result" test and the "technological arts" test, finding the tests "no longer valid" and holding that aspects of earlier decisions relying on those tests "should no longer be relied on." Id. at 960-61.

"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." Bilski, 545 F.3d at 961. The court explained that two considerations were important to analysis under the machine-or-transformation test. First, "the use of a specific machine or transformation of an article must impose meaningful limits on the claim's scope to impart patent-eligibility." Id. Second, "the involvement of the machine or transformation in the claimed process must not merely be insignificant extra-solution activity." Id. at 962.

The court noted that the patent application encountered 101 headwinds during prosecution, only allowed "in large part on the "useful, concrete, and tangible result" test rejected by Bilski."

The facts of Bilski are instructive. In that case, the Federal Circuit was confronted with a claim for a "method of hedging risk in the field of commodities trading." Bilski, 545 F.3d at 949. The court framed the question before it as whether "some so-called business methods, such as that claimed in the present case, [which] involve the manipulation of even more abstract constructs such as legal obligations, organizational relationships, and business risks" qualify as a "transformation or reduction of an article into a different state or thing constituting patent-eligible subject matter." Id. at 962. The court determined that those methods are not patentable, holding that "[p]urported transformations or manipulations simply of public or private legal obligations or relationships, business risks, or other such abstractions cannot meet the test because they are not physical objects or substances, and they are not representative of physical objects or substances." Id. at 963. Like the claims at issue in Bilski, the claims of the '788 Patent involve only the transformation or manipulation of legal obligations and relationships. Specifically, the claims of the '788 Patent only transform or manipulate legal ownership interests in real estate. Under Bilski, the Court cannot find that those claims transform an article or thing.

No machine/computer was involved in the claims.

Dead issue. Appeal would be a futile gesture.