In re Bilski : Patentable Subject Matter : Federal Circuit Overturns Pure Business Method Patents : Requires Machine Process / Physical Transformation

A LANDMARK DECISION IN US PATENT LAW : IN RE BILSKI (2008 WL 4757110 (Fed. Cir. Oct. 30, 2008) (en banc)). As written by Lewis R. Clayton of Paul | Weiss in his article ‘Bilski’: Obtaining Business Method Patents Gets Harder in the New York Law Journal:

By a 9-3 vote, the en banc court affirmed the rejection of a business method patent application by the Board of Patent Appeals and Interferences. Its opinion shifts the balance in this debate, making it significantly more difficult to obtain and defend business method patents.

LawPundit has been ranting and raving about pure business method patents for years and anonymous posters commenting at other blawgs have levelled names at us for our views – but, judging by this case – we were right along.

With the October 31, 2008 Federal Circuit Court landmark patent decision in In re Bilski (.pdf) (we posted about that case previously here and here), it is now quite safe to say that pure business method “patentphilia” (a word we herewith coin today – Google search gave no results) is a thing of yesteryear.

The Federal Circuit, in an opinion written by Chief Judge Michel, in In re Bilski, 2008 WL 4757110 (Fed. Cir. Oct. 30, 2008) (en banc) concluded:

that Applicants’ claims are not directed to patent-eligible subject matter, and in doing so, clarif[ied] the standards applicable in determining whether a claimed method constitutes a statutory “process” under [35 U.S.C.] § 101.

The court wrote:

In essence, the claim is for a method of hedging risk in the field of commodities trading.

The examiner ultimately rejected claims 1-11 under 35 U.S.C. § 101, stating: “[r]egarding . . . claims 1-11, the invention is not implemented on a specific apparatus and merely manipulates [an] abstract idea and solves a purely mathematical problem without any limitation to a practical application, therefore, the invention is not directed to the technological arts.”

Whether a claim is drawn to patent-eligible subject matter under § 101 is a threshold inquiry, and any claim of an application failing the requirements of § 101 must be rejected even if it meets all of the other legal requirements of patentability. In re Comiskey, 499 F.3d 1365, 1371 (Fed. Cir. 2007) [Footnote 1] (quoting Parker v. Flook, 437 U.S. 584, 593 (1978)); In re Bergy, 596 F.2d 952, 960 (CCPA 1979), vacated as moot sub nom. Diamond v. Chakrabarty, 444 U.S. 1028 (1980). Whether a claim is drawn to patent-eligible subject matter under § 101 is an issue of law that we review de novo. Comiskey, 499 F.3d at 1373; AT&T Corp. v. Excel Commc’ns, Inc., 172 F.3d 1352, 1355 (Fed. Cir. 1998). Although claim construction, which we also review de novo, is an important first step in a § 101 analysis, see State St. Bank & Trust Co. v. Signature Fin. Group, 149 F.3d 1368, 1370 (Fed. Cir. 1998) (noting that whether a claim is invalid under § 101 “is a matter of both claim construction and statutory construction”), there is no claim construction dispute in this appeal. We review issues of statutory interpretation such as this one de novo as well. Id.

Footnote 1 reads: “Although our decision in Comiskey may be misread by some as requiring in every case that the examiner conduct a § 101 analysis before assessing any other issue of patentability, we did not so hold. As with any other patentability requirement, an examiner may reject a claim solely on the basis of § 101. Or, if the examiner deems it appropriate, she may reject the claim on any other ground(s) without addressing § 101. But given that § 101 is a threshold requirement, claims that are clearly drawn to unpatentable subject matter should be identified and rejected on that basis. Thus, an examiner should generally first satisfy herself that the application’s claims are drawn to patent-eligible subject matter.”

Ken Adamo, John V. Biernacki and Douglas H. Pearson of Jones Day analyze the case In re Bilski in a 19 November 2008 article, which has many useful insights, among which is the following text and graphic (linked from

Consideration of a spectrum (as shown in the figure below) informs where an innovation may reside with respect to its subject matter. At one end of the spectrum (Category 1) are the traditional technology-laden innovations. Examples in this category would be new automotive engine designs or a new chemical-manufacturing process. The middle of the spectrum contains the hybrid patent category, the exemplar being e-commerce-type patents. At the other end of the spectrum (Category 3) are “pure” business method innovations, which is where the business method of Bilski (for managing consumption risk of a commodity sold by a commodity provider) would reside.

John Palfrey cites to the .html of this case at (last viewed 13:38 November 21, 2008, CET), but that html rendition of the case is flawed because it copies the original .pdf court opinion to .html without editing the text so copied. As a result, the second part of a run-on footnote like footnote number 1, originally at the bottom of pages 1 and 2 of the original .pdf opinion, now appears in the flawed .html in the middle of the text opinion without it being apparent for the text that it is the continuation of footnote number one. We do not want to throw stones, since text conversions are problematical (we ourselves hate Adobe and .pdf) and no one is without flaw in this regard if he works without editors, as many websites and blogs do, but we do want to alert website authors, blog writers and online legal readers to this problem. Established legal publishers like WestLaw do not earn their money for nothing. They have the resources and the editors one needs to get things into print accurately.

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