The patent community is eagerly awaiting the Supreme Court decision in In re Bilski, hoping for clear guidance on what constitutes patentable subject matter under 35 U.S.C. § 101. The claims at issue in Bilski are directed to a “method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price.” More generally, one can categorize the claimed invention as a non-machine-implemented business method. The PTO rejected the claims as unpatentable, and the Court of Appeals for the Federal Circuit affirmed the rejection in an en banc decision, holding that a process is patentable only if (i) it is tied to a particular machine or apparatus, or (ii) it transforms a particular article into a different state or thing. This test has subsequently been referred to as the “machine-or-transformation test” or “M-or-T test.” The Supreme Court granted a Petition for a Writ of Certiorari on June 1, 2009 and heard oral arguments on November 9, 2009.

Meanwhile, on August 24, 2009 the PTO issued “Interim Examination Instructions For Evaluating Subject Matter Eligibility Under 35 U.S.C. § 101.” The interim instructions identify two criteria that must be satisfied for subject matter eligibility and provide guidance to patent examiners for evaluating those criteria. The two criteria are: (1) the claimed invention must be directed to one of the four statutory categories of patent-eligible subject matter (process, machine, article of manufacture, and composition of matter) and (2) the claimed invention must not be wholly directed to subject matter encompassing a judicially recognized exception (e.g., abstract ideas, mental processes, or substantially all practical uses of a natural phenomenon or a law of nature, including mathematical algorithms and formulas).

Regarding the first point, the interim instructions provide definitions for the four statutory categories and a list of non-limiting examples that are not directed to one of the statutory categories (e.g., transitory signals, a naturally-occurring organism, a computer program per se). According to the PTO, if a claim covers both statutory and non-statutory embodiments (under the broadest reasonable interpretation in light of the specification), it fails the first criteria. For example, a claim to a computer-readable medium that can encompass a compact disc as well as a carrier wave should be rejected as embracing nonstatutory subject matter, because a carrier wave is a patent-ineligible transitory signal. Regarding the second point, the interim instructions provide different guidance depending on whether the claim is directed to a “product” (i.e., a machine, manufacture, or composition of matter) or a process. If the claim is directed to a product, the examiner must first determine whether the claim recites a judicially recognized exception such as an abstract idea, law of nature, or natural phenomenon (e.g., a mathematical formula). If so, the examiner must determine whether the claim as a whole is directed to a practical application of the abstract idea, law of nature, or natural phenomenon. According to the PTO, a man-made tangible embodiment is evidence of a practical application. If the claim is directed to a practical application, the examiner must then determine whether the claim covers substantially all practical applications. If it is directed to a particular practical application and does not effectively preempt all practical applications, then it is eligible subject matter.

If the claim is directed to a process, then it must pass the M-or-T test to ensure that it is limited to a particular practical application. The examiner must determine whether the claim is tied to a particular machine or involves the transformation of a particular article to a different state or thing. The “article” can be electronic data that represents a physical object or substance. If the claim meets either prong of the M-or-T test, the examiner must consider two corollaries: (i) the use of the particular machine or the transformation of the particular article must impose a meaningful limit on the claim’s scope (e.g., the machine cannot merely appear in a field-of-use limitation) and (ii) the use of the particular machine or the transformation of the particular article must involve more than insignificant “extra-solution” activity, i.e., an activity that is not central to the purpose of the claimed method.

Unless and until the Supreme Court reverses the Federal Circuit decision in Bilski, applicants should take the interim instructions into account when drafting and prosecuting patent applications. For example, a process claim should pass muster under the interim instructions if it recites that non-trivial steps are performed by a computer or microprocessor, or if it specifically identifies electronic data by indicating what the data represents, the particular type or nature of the data, and/or how or from where the data is obtained and recites a change in the nature of the data such that it has a different function or is suitable for a different use. In addition, applicants may wish to include the term “non-transitory” in claims directed to a computer-readable medium, to avoid a possible rejection under Section 101.