Recent Cases on Patentable Subject Matter

1. Recent Cases on Patentable Subject Matter Mojdeh Bahar, J.D., M.A. Chief, Cancer Branch Office of Technology Transfer National Institutes of Health U.S. Department of Health & Human Services PLCW & NVPLC Meeting Oct. 2, 2008

2. Curse or Challenge? “May You Live in Interesting Times”

3. Disclaimer: All views or opinions presented herein are those of the presenter and do not reflect the policy or position of the United States Government, the Department of Health and Human Services, the National Institutes of Health, or the Office of Technology Transfer.

4. Origin of the Law • Article I section 8 of the Constitution “Congress shall have power... to promote the progress of science & the useful arts by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.

5. Patent Act of 1793 • Defined patentable subject matter as “any new and useful art, machine, manufacture, or composition of matter, or any new and useful improvement [thereof]” • This Definition remained unchanged until 1952.

6. Patent Act of 1952 • Replaced “art” with “process” • Defined patentable subject matter as “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement [thereof]”

7. 35 USC 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.

8. Case Law Cochrane v. Deener, 1877 • Defined a Process as “a mode of treatment of certain material to produce a given result. It is an act or a series of acts, performed upon the subject matter to be transformed and reduced to a different state or thing”. • Can be construed as the origin of the “transformation” test.

9. Some Basic Principles • “Everything under the sun made by man” is patentable. However the S. Ct. has made clear that this statement does not suggest that 101 embraces every discovery or that it has no limits. • Phenomena of nature • Mental processes • Abstract intellectual concepts are not patentable subject matter. This has been consistently reiterated by the Courts, see e.g., Diamond v. Chakrabarty 447 U.S. 303 (1980); Diamond v. Diehr 45 U.S. 175 (1981); In re Alappat 33 F. 3d 1526 (Fed. Cir. 1994); State Street Bank and Trust Co. v. Signature Trust Fin. Group 149 F. 3d 1368 (Fed. Cir. 1998); AT & T Corp. v. Excel Communications, Inc. 172 F. 3d 1352 (1999)

10. Business Method Patents • Cases claiming a method of doing business, E-Commerce • State Street Bankv. Signature Fin. Group, Inc. stands for the proposition that patentability does not turn on whether the claimed subject matter does “business” instead of something else (149 F. 3d 1368, Fed. Cir 1998) • Provided the “useful, concrete, and tangible” test. • Classification: 705; TC 3600

11. In re Stephen W. Comiskey • Applicant’s claims were rejected as obvious over the prior art. • Applicant appealed to the BPAI, and BPAI affirmed the Examiner’s rejection • Applicant appealed to Fed. Cir. • Federal Circuit held that the claims were not statutory subject matter and as such affirmed-in-part, vacated in part and remanded. (September 20, 2007)

12. In re Stephen W. Comiskey Claim 1 states in full: A method for mandatory arbitration resolution regarding one or more unilateral documents comprising the steps of: enrolling a person and one or more unilateral documents associated with the person in a mandatory arbitration system at a time prior to or as of the time of creation of or execution of the one or more unilateral documents; incorporating arbitration language, that is specific to the enrolled person, in the previously enrolled unilateral document wherein the arbitration language provides that any contested issue related to the unilateral document must be presented to the mandatory arbitration system, in which the person and the one or more unilateral documents are enrolled, for binding arbitration wherein the contested issue comprises one or more of a challenge to the documents, interpretation of the documents, interpretation or application of terms of the documents and execution of the documents or terms of the documents; requiring a complainant to submit a request for arbitration resolution to the mandatory arbitration system wherein the request is directed to the contested issue related to the unilateral document containing the arbitration language; conducting arbitration resolution for the contested issue related to the unilateral document in response to the request for arbitration resolution; providing support to the arbitration resolution; and determining an award or a decision for the contested issue related to the unilateral document in accordance with the incorporated arbitration language, wherein the award or the decision is final and binding with respect to the complainant

13. In re Stephen W. Comiskey • Claims drawn to a method of mandatory arbitration for unilateral and contractual documents • Fed. Cir. raised the 101 issue sua sponte • Fed. Cir. held that the claims are drawn to a mental process • Fed. Cir. held that the claims depend for their operation on human intelligence alone; in other words, the application of human intelligence to the solution of practical problems in not in and of itself patentable.

14. In re Bilski (Fed. Cir. 2008) • Claims were rejected under 35 USC 101 by the Examiner • BPAI affirmed the rejection, but questioned and analyzed the basis of the Examiner’s reasoning and use of case law • On Feb. 15, 2008 CAFC issued an order granting rehearing • 35 amicus briefs were submitted • Case was heard by the Fed. Cir on May 8, 2008 • The Opinion has not yet been rendered

15. In re Bilski…cont’d A method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price comprising the steps of: (a) initiating a series of transactions between said commodity provider and consumers of said commodity wherein said consumers purchase said commodity at a fixed rate based upon historical averages, said fixed rate corresponding to a risk position of said consumer; (b) identifying market participants for said commodity having a counter-risk position to said consumers; and (c) initiating a series of transactions between said commodity provider and said market participants at a second fixed rate such that said series of market participant transactions balances the risk position of said series of consumer transactions.

16. In re Bilski…cont’d • Claims drawn to a method of managing the risk of bad whether through commodities trading • In its analysis BPAI held that the recited steps do not transform any physical subject matter into a different state or thing, i.e., the claims fail the “transformation” test. • BPAI further stated that the claims are “abstract ideas”, and as such non-statutory subject matter. • BPAI further stated that the claims do not recite a “practical application” or a “concrete and tangible result” under State Street, and as such are non-statutory subject matter.

17. BPAI’s Decision • BPAI turned to USPTO’s Intrim Guidelines on 101 analysis, and yet again stated that the claims were non-statutory subject matter. • BPAI rejected all of the appellants’ argument regarding patentability. • BPAI emphasized that State Street and AT&T are not entirely applicable to the case at hand because unlike these cases, the instant case is based on “non-machine implemented” methods.

18. BPAI”s Recommendations • It would be more convenient if USPTO did not have to examine cases for 101 issues. • Claims reading on both statutory an non-statutory subject matters should be rejected under 101! • BPAI has asked CAFC for guidance on 101 issues (not limited to this case)

19. Questions