On October 30, 2008 the en banc Federal Circuit issued a decision in In re Bilski. The opinion addresses the eligibility of patent subject matter under 35 U.S.C. §101. Although the claims at issue in Bilski relate to business methods the court articulates a test for subject matter eligibility that may be applied to claims drawn to biotechnological and medical processes. Clients with inventions in these areas cannot afford to ignore Bilski’s potential effect, both on claim drafting and enforcement actions.
Most of the commentary about the Federal Circuit’s decision in In re Bilski has focused on its implications for business method and software patents. At its essense, however, Bilski more broadly addresses the eligibility of patent subject matter under 35 U.S.C. §101. The test that the court articulates in Bilski for subject matter eligibility in the business method context may be applied just as well to claims drawn to biotechnological and medical processes.
The “Machine or Transformation” Test
In its majority opinion, the Federal Circuit adopts the “machine or transformation” test for patent eligibility. A process will meet the requirements for patentability if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing. The court notes that a claim that recites a fundamental principle and pre-empts substantially all uses of that fundamental principle is not patentable. To impart patent-eligibility, “the use of a specific machine or transformation of an article must impose meaningful limits on the claim’s scope.” Unpatentable subject matter cannot be made patentable by insignificant post-solution or extra-solution activity. The transformation of an article “must be central to the purpose of the claimed process.” Further, in most cases, mere “gathering data would not constitute a transformation of any article.”
The claims at issue in Bilski relate to a method of hedging risk in the field of commodities trading. Claim 1 reads:
A method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price comprising the steps of:
- 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;
- identifying market participants for said commodity having a counter-risk position to said consumers; and
- 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.
The court characterized the claimed subject matter as a “non-transformative process that encompasses a purely mental process of performing requisite mathematical calculations without the aid of a computer or any other device.” The court also held that the claim would effectively pre-empt any application of the fundamental concept of hedging and mathematical calculations inherent in hedging: “while the claimed process contains physical steps (initiating, identifying), it does not involve transforming an article into a different state or thing.”
Implications for Biotechnological/ Medical Processes
The Federal Circuit acknowledged that the machine or transformation test (and/or its application) may need to be altered or even supplanted in certain instances by the Supreme Court, or even the CAFC itself. (“[F]uture developments in technology and the sciences may present difficult challenges to the machine-or transformation test…we recognize that the Supreme Court may ultimately decide to alter or perhaps set aside this test to accommodate emerging technologies. And we certainly do not rule out the possibility that this court may in the future refine or augment the test or how it is applied.”) Bilski at 14-15.
Although the opinion does not state explicitly that biotechnological processes will be assessed according to the machine or transformation test, the Federal Circuit does not distinguish such processes from the business methods at issue in Bilski.
The Federal Circuit’s footnote 26 suggests in a very clear yet indirect way that the patentability of certain medical diagnostic claims could be challenged under Bilski. The court there notes that “[o]f course, a claimed process wherein all of the process steps may be performed entirely in the human mind is obviously not tied to any machine and does not transform any article into a different state.” Justice Breyer made this very point in his dissent in Laboratory Corp. of America Holdings v. Metabolite Laboratories, Inc. 548 U.S. 124 (2006).
The claim at issue in Laboratory Corp. reads:
A method for detecting a deficiency of cobalamin or folate in warm-blooded animals comprising the steps of:
- assaying a body fluid for an elevated level of total homocysteine; and;
- correlating an elevated level of total homocysteine in said body fluid with a deficiency of cobalamin or folate.
Justice Breyer stated that “[a]t most, respondents have simply described the natural law at issue in the abstract patent language of a ‘process’. But they cannot avoid the fact that the process is no more than an instruction to read some numbers in light of medical knowledge. One might of course, reduce the ‘process’ to a series of steps, e.g. Step 1: gather data; Step 2: read a number; Step 3: compare the number with the norm; Step 4: act accordingly. But one can reduce any process to a series of steps. The question is what those steps embody. And here, aside from the unpatented test, they embody only the correlation between homocysteine and vitamin deficiency that the researchers uncovered. In my view, that correlation is an unpatentable natural phenomenon.” Lab Corp., Breyer dissent at 13-14.
While Bilski’s footnote 26 takes direct aim at the claim at issue in Laboratory Corp. (without ever mentioning the case), its ultimate effect on biotechnology and medical diagnostics may not become clearer until the Federal Circuit renders decisions in one or more pending cases, in particular: Classen Immunotherapies, Inc. v. Biogen IDEC, Fed. Cir. No. 2006-1634 (patent-eligibility of process claims related to risk-assessment of protocols for vaccination followed by immunization), Prometheus Laboratories, Inc. v. Mayo Collaborative Services, Fed. Cir. No. 2008-1403 (patentability of claims to measuring metabolite levels in patients after administration of a drug and adjusting the drug dosage based on the measured metabolite levels to avoid toxic side effects) and Ariad Pharmaceuticals, Inc. v. Eli Lilly & Company, Fed. Cir. No. 2009-1023 (patent eligibility of claims relating to methods of inhibiting expression of a gene whose transcription is regulated by NF-?B, comprising reducing NF-kB expression thereby inhibiting expression of the gene).
Dissenting Opinions Touch on Life Sciences Issues
While Bilski was heard en banc, it was not unanimous. Judges Newman, Mayer and Rader dissented adding insights relevant to the life sciences industry and color to the current debate. Both Judges Newman and Rader argued that innovation would be hampered by the machine or transformation test. Judge Newman appeared to be concerned with the uncertainties created by the decision, noting that “[u]ncertainty is the enemy of innovation. These new uncertainties not only diminish the incentives available to new enterprise, but disrupt the settled expectations of those who relied on the law as it existed.” Bilski, Newman dissent at 2.
Judge Rader specifically addressed the effect of the Bilski decision on medical science. “Denial of patent protection for this innovation--precisely because of its elegance and simplicity (the chief aims of good science)--would undermine and discourage future research for diagnostic tools. Put another way, does not Patent Law wish to encourage researchers to find simple blood tests or urine tests that predict and diagnose breast cancer or immunodeficiency disease? In that context, this court might profitably ask whether its decisions incentivize research for cures and other important technical advances. Without such attention, this court inadvertently advises investors that they should divert their unprotectable investments away from discovery of ‘scientific relationships’ with the body that diagnose breast cancer or Lou Gehrig’s disease or Parkinson’s or whatever.” Bilski, Rader dissent at 8.
Judge Mayer distinguished between business innovation and innovation in pharmaceuticals. “Although patents are not a prerequisite to business innovation, they are of undeniable importance in promoting technological advances. For example, the pharmaceutical industry relies on patent protection in order to recoup the large sums it invests to develop life-saving and life-enhancing drugs (referring to the cost of laboratory and clinical trials). Only patent protection can make the innovator’s substantial investment in development and clinical testing economically rational. Business method patents, unlike those granted for pharmaceuticals and other products, offer rewards that are grossly disproportionate to the costs of innovation. In contrast to technological endeavors, business innovations frequently involve little or no investment in research and development.” Bilski, Mayer dissent at 15-16.
The Future: Effect of Bilski on Biotechnology and Medical Diagnosis Claims
While the practical effects the Bilski decision may have on biotechnology and medical diagnosis claims is not yet clear, what is clear are the many unanswered questions that Bilski poses for such claims, which are easy to pose in the abstract, but promise to be challenging to resolve on a case-by-case basis. For example:
- When is a process tied to a particular machine or apparatus?
- What constitutes a transformation sufficient for a such a claim to qualify as patentable subject matter under 35 U.S.C. §101?
- At what point will a mere field-of use limitation that is otherwise insignificant render an ineligible process claim patent eligible under the new test?
- What constitutes insignificant post-solution activity?
- At what point does the use of a specific machine or transformation of an article impose meaningful limits on the claim’s scope so as to impart patent eligibility?
- What is a transformation that is central to the purpose of the claimed process?
- What sort of things constitute ‘articles’ such that their transformation is sufficient to impart patent-eligibility under §101? (Note that under I, in many cases, gathering data would not constitute a transformation of any article.)
As its nuances are enumerated further, the effects of the application of Bilski’s “machine and transformation” test on biotechnological and medical diagnosis process claims will become more apparent.
Clients should be aware that process claims may be prone to challenges on the basis of 35 U.S.C. §101, not only by examiners in the course of prosecution but also, for issued patents, by accused infringers or potential and existing licensees.
Going forward, a process or method patent application should include claims that either recite a nexus between the process and a machine or emphasize a transformation step. The application should also provide a clear link between the process or method and a useful, concrete, and tangible result. For example, diagnostic process claims could include a description of the end result of the process (e.g., diagnosis of a particular disease, recommendation of alternative courses of action based on the result, or determination of a particular treatment protocol). Pending applications should also be reviewed to determine whether a continuation filing could shore up claims that now may be potentially suspect in view of Bilski. Allowed applications and issued patents should be reviewed and, where found problematic in light of Bilski, consideration should be given to potential reissue and/or continuation filing strategies, particularly if such patents might be asserted in the near future.
While Bilski now provides an express articulation by the CAFC of the standards applicable in determining whether a claimed method meets the statutory requirements for patentable subject matter under 35 U.S.C. §101, Bilski’s precise impact on biotechnology and medical diagnostic claims remains to be further elucidated by the CAFC, and possibly the U.S. Supreme Court, in the coming months and years.