It may seem odd that more than 220 years after the first U.S. patent statute was enacted, the question, “What can be patented?” remains unsettled. Nonetheless, the question has persisted, especially for computer-implemented methods and “methods of doing business.”
In a pair of decisions issued in July, the U.S. Court of Appeals for the Federal Circuit summarized more than 40 years of precedent from the U.S. Supreme Court and the Federal Circuit (and its predecessor). See CLS Bank Int’l. v. Alice Corp. Pty. Ltd., 103 U.S.P.Q.2d 1297 (Fed. Cir. 2012); Bancorp Services v. Sun Life Assurance Co. of Canada (U.S.), 103 U.S.P.Q.2d 1425 (Fed. Cir 2012). Based on those summaries, the court synthesized new guidelines that may offer practical guidance about the boundaries between subject matter that is and is not eligible for patenting in the fields of computer software and business methods.
With this information in hand, attorneys should be able to better advise their clients regarding the likelihood that a patent directed to these methods can be obtained from the U.S. Patent Office and the likelihood that the validity of such a patent will be upheld by a court.
The 1998 Federal Circuit decision in State Street Bank & Trust v. Signature Financial Group, 47 U.S.P.Q.2d 1596 (Fed. Cir. 1998), held that no statutory basis exists for broadly denying patent eligibility for “methods of doing business.” A sharp surge in applications to patent software, businesses methods and other sometimes intangible processes followed that decision. As a result, courts deciding patent matters have repeatedly had to determine the limits of patent-eligible subject matter.
In 2008, the Federal Circuit, sitting en banc, announced an exclusive, definitive test — the so-called “machine-or-transformation test” — by which the patent eligibility of processes was to be assessed. According to the test, a claimed process is patent-eligible if it either is tied to a particular machine or transforms a tangible object or composition into a different state or thing. See In re Bilski, 545 F.3d 943, 965 (Fed. Cir. 2008 (en banc), rev’d, Bilski v. Kappos, 130 S. Ct. 3218 (2010). The U.S. Supreme Court, however, nullified the “exclusive” nature of the test, holding that it “is a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under §101 … [but] not the sole test for deciding whether an invention is a patent-eligible ‘process.’”
The Supreme Court recognized that the Bilski machine-or-transformation test is a way of assessing whether a claimed process is a non-patent-eligible mental process or abstract idea. However, in rejecting sole reliance upon that test, the court emphasized that subject matter eligibility of business method-type patent claims must be analyzed by assessing whether a claimed process (1) falls within a statutorily authorized class of patent-eligible subject matter and (2) is subject to any judicially recognized exception from patent eligibility. The CLS Bank and Bancorp decisions, together with other precedent, further explicate this analysis.
PATENT ELIGIBILITY AND ITS EXCEPTIONS
An invention may not be patented unless it falls within one of the categories of subject matter set forth in 35 U.S.C. §101, namely processes, machines, manufactures and compositions of matter. However, not all subject matter within these categories is eligible for patenting. At least two types of subject matter are excepted from patent eligibility, namely mental processes and abstract intellectual concepts or ideas. See In re Bilski and Gottschalk v. Benson, 409 U.S. 63, 67 (1972).
Assessing whether an invention is appropriately classified as a “mental process” or an “abstract idea” is not straightforward. Judicial decisions preceding CLS Bank and Bancorp have resolved individual disputes regarding abstractness and mental processes of business-method patent claims, but did not lead to adoption of a rule of general applicability.
The exceptions from patent eligibility apply regardless of the statutory category that is recited in a patent claim. Process-centered inventions do not escape the “mental process” or “abstract idea” exception merely because they are claimed in a form intended to invoke a different statutory category, such as a program, a programmed computer or a system. See CyberSource v. Retail Decisions, 99 U.S.P.Q.2d 1690, 1698 (Fed. Cir. 2011) (“The basic character of a process claim … is not changed by claiming only its performance by computers, or by claiming the process embodied in program instructions on a computer readable medium”).
A process-centered invention must be considered in its entirety to assess whether it encompasses patent-eligible subject matter, because otherwise patent-eligible claims are not disqualified from patentability merely by inclusion of mental steps and/or abstract ideas. Each step recited in a claimed process must be assessed individually to ascertain whether the individual step is a mental process or an abstract idea, so that an understanding of the nature of the claim as a whole can be obtained. See Application of Prater, 415 F.2d 1393, 1402 n.22 (C.C.P.A. 1969)
If a claimed process, considered as a whole, can be performed entirely in the mind of a human being, then the process is directed to a mental process and is not patent eligible. Per Bilski, a process that is tied to a particular machine can be patent eligible. However, mere generic recitation of computer implementation in a claim otherwise directed to a process does not tie the process claim to a machine sufficiently to remove the process from the “mental processes” exception to patent eligibility. See Dealertrack v. Huber, 674 F.3d 1315, 1333 (Fed. Cir. 2012).
CLS Bank and Bancorp identified two ways in which recitation of a computer or other machine can render an otherwise patent-ineligible process eligible for patenting.
First, recitation in a patent claim of a machine (e.g., a computer) can confer patent eligibility to a process-centered claim when the invention practically requires use of the machine to perform the claimed process. See Bancorp (“To salvage an otherwise patent-ineligible process, a computer must facilitate the process in a way that a person making calculations or computations could not”). Similarly, the computerized methods in CLS Bank were held patent-eligible because the claimed computerized steps were “integral to the method, as playing a significant part in permitting the method to be performed, and as not being token post-solution activity.” By contrast, when a recited computer is used in a process only for conventional functions, such as performing repetitive calculations, such recitations do not lend patent eligibility to the underlying process.
Second, recitation in a patent claim of a machine (e.g., a computer) can confer patent eligibility to a process-centered claim when the claimed process relates to improvements in machine technologies (e.g., computer components or connections) that are recited in a claim. See Bancorp (“the claimed processes [held patent eligible in another case] plainly represented improvements to computer technologies in the marketplace. … No such technological advance is evident in the present invention”).
Patent eligibility of a claimed process can be enhanced by reciting steps that are performed using a machine and that could not practically be performed without it. Put another way, mere conventional use of computer technology for computing processes will not confer patent eligibility. Patent eligibility of a claimed process can also be enhanced by reciting machine components or connections that represent an advance over conventional components or connections.
If a claimed process, considered as a whole, encompasses all practical applications of an abstract concept, then the process is directed to an abstract idea and is not patent eligible.
Patent ineligibility of a claimed process that includes performance of an abstract idea cannot be avoided merely by reciting in the claim either (1) a limitation on the use of the idea to within a particular technological environment or (2) insignificant activity beyond performance of the idea. Similarly, an abstract idea cannot be transformed into patentable subject matter merely by reciting in a claim connections to the physical world through legal instruments such as contracts or deeds to real property. See Fort Properties, v. American Master Lease, 671 F.3d 1317, 1322-1323 (Fed. Cir. 2012).
The CLS Bank decision highlights that potential foreclosure of future innovation in similar computer-implemented processes must be considered when assessing the “abstractness” of computer-implemented processes. See CLS Bank (“the essential concern is … foreclosure of innovation. Claims that are directed to no more than a fundamental truth and foreclose, rather than foster, future innovation are not directed to patent-eligible subject matter”). Put another way, “a claim that is drawn to a specific way of doing something with a computer is likely to be patent eligible whereas a claim to nothing more than the idea of doing that thing on a computer may not.” By way of example, generic methods of administering of life insurance policies using a computer (Bancorp) were held not patent eligible, while claims reciting practical methods of applying a business concept in a highly specific way that practically required computer-implementation (CLS Bank) were held patent eligible.
The CLS Bank decision also suggests that a claimed process should not be held patent ineligible unless the abstractness of the process “manifestly overrides the broad legislative intent to permit patentability of new and useful processes,” such as a claim directed to an abstract idea that is pre-emptive of a fundamental concept or idea that would foreclose innovation in the relevant area. This language suggests that “close calls” on patent subject matter eligibility ought to be made in favor of eligibility.
Patent eligibility of a machine-implemented process can be enhanced by tailoring process claims in a manner that does not encompass alternative methods of achieving the same result in alternative ways than those actually disclosed in the patent.
From the CLS Bank and Bancorp decisions, a few generalizations may be made:
• Patentability of process claims will be enhanced by reciting use of a machine as an integral part of the process.
• Patentability of process claims will not be enhanced by reciting use of a machine for a conventional purpose.
• Patentability of process claims will be enhanced by reciting improvements in a machine or its operability in the process.
• Process claims that encompass many variations beyond those taught in the patent specification are more likely to be considered abstract and, thus, more likely patent ineligible than more narrowly drawn claims. •
Gary D. Colby is a patent attorney with Dilworth Paxson in Philadelphia, where he has practiced since 1997. He has technical expertise in biotechnology, pharmaceuticals, chemistry and automation technologies. He is experienced in patent prosecution, client counseling regarding patent rights and negotiating technology-related agreements. He is also an experienced patent litigation team member.