In the November 2008 issue of this Newsletter, we reported the highly anticipated en banc Federal Circuit decision in In re Bilski. There, the Federal Circuit addressed the meaning of the term “process” in 35 U.S.C. § 101 and set forth the sole and exclusive test for determining whether a claim to a process contains patent-eligible subject matter. Recognizing that laws of nature, scientific truths, natural phenomena, mathematical algorithms, abstract ideas, and mental processes (collectively, “fundamental principles”) “are part of the storehouse of knowledge of all men, free to all men and reserved exclusively to none,” the Federal Circuit held that, while one cannot patent and thus preempt all use of fundamental principles, one may patent an application of such a fundamental principle if it meets the “machine-ortransformation test.” Under the machine-ortransformation test, a claimed process constitutes patent-eligible subject matter only if (i) it is tied to a particular machine or apparatus or (ii) it transforms an article into a different state or thing.

Eight months after the Federal Circuit’s decision in Bilski, the Board of Patent Appeals of Interferences (the “BPAI” or “Board”) has issued at least forty-eight opinions, the federal district courts have issued at least nine opinions and the Federal Circuit has issued at least two published opinions touching on the patent eligibility of process claims under the Bilski standard. Notwithstanding these judicial developments, the patent applicant in Bilski filed a writ of certiorari asking the U.S. Supreme Court to review the Federal Circuit’s decision. On June 1, 2009, the Supreme Court granted Bilski’s request. While we anxiously await the Supreme Court’s opinion, this article seeks to (i) delineate observed trends in 35 U.S.C. § 101 jurisprudence before the lower courts, with respect to the machine prong of the machine-or-transformation test, based on a sampling of twenty-five opinions and (ii) answer some of the questions we asked in our last Newsletter.

Background on the Federal Circuit Opinion

In Bilski, the claim at issue was directed to a method of hedging risk in the field of commodities trading. Specifically, the claim encompassed the exchange of legal rights to purchase some commodity at a given price during a given time period. As to the machine prong of the machine-or-transformation test, the patent applicants admitted that the claim was not limited to any specific machine or apparatus. Having not satisfied the machine prong, the court turned to the transformation prong and ruled that the claim failed to transform an article into a different state or thing. Accordingly, the court affirmed the Patent Office’s decision to reject the claim under 35 U.S.C. § 101.

Clarification of the Machine Prong

In Bilski, the Federal Circuit gave little guidance with respect to the precise contours of the machine prong of the machine-or-transformation test, or answers to particular questions, such as whether or when recitation of a computer suffices to tie a process claim to a particular machine. Indeed, in our prior Newsletter, we identified at least three questions left unanswered by the Federal Circuit: (i) whether or when recitation of a computer or general purpose processor suffices to tie a process claim to a particular machine; (ii) what kind of ties between the claimed processes and the recited machine and/or their degree of connection are required to satisfy the machine prong; and (iii) whether use of abstract categories of machines (e.g., “diagnostic imaging devices” instead of “X-ray machines”) will satisfy the machine prong or expose applicants to impermissible field-of-use limitations? Based on a sampling of twenty-five opinions applying Bilski, a few observations can be made.

Of the twenty-five opinions sampled, only three (or twelve percent) found claims drawn to patent-eligible subject matter. Certain trends have emerged. Generally, method claims were found to have violated 35 U.S.C. § 101 if the method: (i) did not recite something concrete; (ii) merely recited a near-machine abstraction; or (iii) was limited to a general purpose device. At the same time, methods were generally found to constitute patent-eligible subject matter if (iv) the claim recited a machine or physical object that appeared to be specific with respect to a specified function or application, i.e., the claim was directed to a specific purpose computer.

I. Machine Prong: Method Claims Must Recite Something Concrete

First, it is clear that process claims that do not recite, require or even suggest any connection to a concrete machine do not satisfy the machine prong. One such claim was addressed by the Federal Circuit in In re Ferguson. There, the court addressed the following claim:

A method of marketing a product, comprising: developing a shared marketing force . . . ;

using said shared marketing force to market a plurality of different products . . . ;

obtaining a share of total profits . . . ; and

obtaining an exclusive right to market each of said plurality of products . . . .

(Emphasis added.)

Although applicants argued that the method claim was tied to the use of a shared marketing force and thus satisfied Section 101, the court refused to accept that a “marketing force” was a machine or apparatus. Citing In re Nuijten, the court defined a “machine” as “a concrete thing, consisting of parts or of certain devices and combination of devices. This includes every mechanical device or combination of mechanical powers and devices to perform some function and produce a certain effect or result.” Because a marketing force is not a concrete part, device or combination of devices, the claim was not directed to patent-eligible subject matter.

II. Machine Prong: Claims Must Not Merely Be Directed to Near-Machine Abstractions

Second, claims that are directed to steps that merely require the use of “near-machine abstractions” will not generally carry the day. Although no opinion uses the term “near-machine abstraction,” it is clear that courts reject method claims that incorporate a fundamental principle but throw in a limitation that merely appears, for all intents-and-purposes, like a machine. These “near-machine abstractions” are generally not sufficient under the Bilski machine prong because they are abstract constructs capable of being implemented in one’s head.

The Northern District of California addressed this very issue in Cybersource Corp. v. Retail Decisions, Inc. There, the court addressed a claim directed to a “method for verifying the validity of a credit card transaction over the Internet” where no structure was recited in the body of the claim. Plaintiff argued that the claims required implementation in myriad general and special purpose computers, routers, hubs, switches and other specialized hardware comprising the “Internet.” The court, however, disagreed, finding that the Internet is not a particular machine but rather an abstraction. According to the court, “[i]f every computer user in the world unplugged from the [I]nternet, the [I]nternet would cease to exist, although every molecule of every machine remained in place. One can touch a computer or a network cable, but one cannot touch ‘the [I]nternet.’” The court buttressed its holding by finding that even if the Internet was a machine, it failed the machine prong because the limitation (i) was nothing more than “insignificant extra-solution activity” that failed to make patentable an otherwise unpatentable mental process; and (ii) did not impose meaningful limits on the scope of the claims because it would preempt the use of a fundamental mental process across an extraordinarily large and important segment of the commercial system. “A limitation to ‘only’ the vast area of online credit card transactions is not meaningful.”  

Similarly, multiple BPAI decisions have found claims (i) reciting abstract software components such as a “program”; and (ii) finding abstract objects such as “databases” and “interfaces” unpatentable. In Ex parte Snyder, the Board addressed the following claim:

A process for converting text to XML, comprising the steps of:

(a) defining a transformer program having a plurality of compound statements . . . ;

(b) receiving a text stream; [and]

(c) executing the transformer program . . . .

(Emphasis added.)

The Board in Snyder held that the method could “reasonably be interpreted to encompass a human being performing these steps.” “In this case, we do not even find a nominal recitation of structure.” Because a computer program is not a physical machine, the claim failed the machine-or-transformation test.

Non-software abstractions have also been found to be insufficient to satisfy the Bilski machine prong. In Ex parte Shahabi, the Board addressed the following claim:

A method, comprising:

processing at least one query . . . to produce a transformed query; and

performing a range-sum query on a database using the transformed query to produce a result.

(Emphasis added.)

Similarly, in Ex parte Schultz, the Board addressed the following claim.

A method for interfacing with a human user, comprising:

assigning a tonality to respective ones of groups of information . . . ;

generating a voice transmission based on one of the groups . . . ; and

sending to the human user, via an interface, the voice transmission for aural perception by the human user.

(Emphasis added.)

In each instance, the Board found that the claims could be performed as mental steps or via human activity and need not involve a machine at all. In Shahabi, the Board construed the term “database” not as a specific machine, but as any collection of data elements in the abstract. In Schultz, the Board construed the term “interface” as any type of interface including, for example, “an acoustic interface,” notwithstanding the fact that the specification’s preferred embodiment of the invention included audible, interactive user interfaces for navigating a voice user interface system or an interactive voice response system. Because abstract collections of data elements and acoustic interfaces are not machines, the Board held that each claim was not directed to patent-eligible subject matter.

III. Machine Prong: Claims Must Not Be Limited Merely to General Purpose Devices

Several Board decisions make one point clear: a general purpose machine, processor or device will not render an otherwise-ineligible process claim patent eligible under 35 U.S.C. § 101. The Board decisions ostensibly appear to follow the guidelines set by the U.S. Supreme Court in Gottschalk v. Benson. In Benson, the court addressed claims directed to a process of converting data in binary-coded decimal format to pure binary format, using an algorithm programmed onto a digital computer. The Supreme Court stated that “[t]he mathematical formula involved here has no substantial practical application except in connection with a digital computer, which means that . . . the patent would wholly preempt the mathematical formula and in practical effect would be a patent on the algorithm itself.”

In Ex parte Daughtrey, the Board considered a claim directed to a “method for producing a concise summary of fare rules and restrictions that the fare rules place on fares” where the only concrete “thing” recited or suggested in the claim was a “user output device” for displaying the summary of the method results. In the same appeal, the Board considered a method claim that “recite[s] a single process step of rendering data on a monitor for providing a fare rule summary tool as a user interface for display on a monitor.” Similarly, in Ex parte Halligan, the Board considered a claim that recites “a programmed computer method” in which each of the process steps for providing documentation, analysis, auditing, accounting, protection, and other management relating to an existence, ownership, access and employee notice of trade secrets of an organization is performed by the programmed computer. Finally, in Ex parte Enenkel, the Board considered a “machine-processing method for computing a property of a mathematically modeled physical system” where each of the steps is performed “via a machine processing unit.”

In each of these cases, the BPAI rejected the claims as drawn to non-statutory subject matter. In Daughtrey, the Board held that the claimed “user output device” and “monitor” amounted to insignificant extra-solution activity and lacked meaningful limits. In Halligan, the Board found that, were the use of “the programmed computer” to satisfy the Bilski machine prong, it “would exalt form over substance and would allow pre-emption of the fundamental principle present in the non-machine implemented method by the addition of the mere recitation of a programmed computer.” This field-of-use limitation was insufficient to render the claim eligible for patent protection. Lastly, in Enenkel, the Board cited the language of Benson and held that the claim could not issue for it would wholly preempt the mathematical formula and in practical effect would be a patent on the algorithm itself.

IV. Machine Prong: Claims Must Recite a Machine or Physical Object and Must Specify or Suggest a Specific Function or Application Associated with the Machine or Physical Object

Each of the three opinions that found claims directed to patent-eligible subject matter were issued by the BPAI. The first such case is Ex parte Borenstein, where the Board considered the following claim:

A method for providing catalog information for presentation to a user of a store in an electronic commerce system, comprising the steps of:

storing a first portion and at least a second portion of said catalog information in said store and in at least one profile store, respectively, to share said at least one second portion of said catalog information between said store and at least one second store; and

storing path information defining a sequential relationship between said store and said at least one profile store for retrieving said catalog information for said store.

(Emphasis added.)

In two short sentences the Board held the method

drawn to patent-eligible subject matter because “while the storage of information . . . could arguably be done as a mental process, the recitation of a structured relationship between multiple stores that requires ‘path information’ inherently implies that this information must be stored on a computer or database. This ‘particular’ computer or database is sufficient structure to meet the machine prong of the machine-or-transformation test of In re Bilski.” For this reason alone the Board reversed the examiner’s final rejection of the method claim.

In view of the overwhelming, consistent body of 35 U.S.C. § 101 jurisprudence noted above, the Board’s terse opinion appears, at first glance, to be an outlier with respect to the tenet that a claim must not merely be limited to a general purpose device such as a computer or database. The author of this article posits that the decision, however, may not in fact be an outlier. The claim requires the method to be tied to “an electronic commerce system,” where the electronic commerce system includes the “electronic” stores recited in the body of claim. The claimed stores are in fact machines, i.e., computers and/or databases, specific to the function of an electronic store. In other words, the claim does not require a general purpose processor or database, but rather requires special purpose machines tailored to a specific function, i.e., stores in an electronic commerce system.

Two other opinions finding claims drawn to patenteligible subject matter are not as controversial and illustrate examples of claim language that has satisfied the machine prong of the machine-or-transformation test. For example, in Ex parte Myka, the BPAI considered the following claim:

A method for wireless bonding of devices and communicating media file transfer parameters, the method comprising:

monitoring, at a master device, an area of interest for the presence of potential bondable devices;

receiving, at the master device, a presence signal from a potential bondable device;

determining bond capability of the potential bondable device;

approving the potential bondable device as a bonded device; and

communicating, from the master device to the bonded device, media file transfer parameters . . . .

(Emphasis added.)

In Ex parte Le Buhan, the Board considered the following claim:

A method for storing content encrypted by control words in a receiver/decoder unit having a local storage unit and being connected to a security unit . . . , the method comprising[:]

storing the encrypted content . . . in the storage unit; and

storing in the storage unit the system keys . . . , the system keys being encrypted by a predefined local key contained in the security unit.

(Emphasis added.)

In Myka, the Board found that the claims were performed by a specific machine, namely, the master device or a bondable/bonded slave device. The Board observed that the claims required the communication of information between the master device and the bonded device, and therefore were tied to a particular machine or device. Presumably, the Board gave weight to the fact that the term “slave device” was characterized in the specification as a media capture device. Accordingly, at least the claimed slave device was not merely a general computer. Rather, it was configured as a media capture device and was capable of assisting in the communication of media files between itself and a master device.

Similarly, in Le Buhan, the Board found that the receiver/decoder unit having a logical storage unit (e.g., a magnetic hard disk) and being connected to a security unit (e.g., a smart card) was “sufficient for satisfying the ‘particular machine’ prong of the Bilski machine-or-transformation test.” Like the Myka panel, the Le Buhan panel presumably gave weight to the fact that neither the receiver/decoder unit nor its connected security unit were merely general purpose computers. Rather, they were configured to have a specific function or application, i.e., storing content and system keys.

Conclusions Reached

To date, the BPAI, the federal district courts and the Federal Circuit have taken the approach that claims that (i) do not recite anything concrete; (ii) merely recite a near-machine abstraction such as software and constructs capable of being implemented in one’s head and via a machine (e.g., a database); or (iii) merely act as a general purpose machine will fail the machine prong of the machine-or-transformation test. While the author of this article believes that the former two approaches are defendable and sound, this author believes that the latter approach should be reconsidered. Specifically, it is the author’s opinion that (i) claims using general purpose machines solely for insignificant post-solution activity (e.g., display of a result on a monitor); and (ii) claims that preempt all substantial practical application of the method should be impermissible under 35 U.S.C. § 101. However, it is this author’s further opinion that courts should strictly follow the holding in Gottschalk v. Benson and not blindly reject claims merely because they call for a general purpose machine or processor.

In other words, claims reciting an algorithm implemented on a general purpose machine or processor should be permissible under 35 U.S.C. § 101 if the underlying algorithm itself is capable of being performed in a variety of contexts (e.g., in one’s head, using ‘pen and paper,’ using application-specific circuits, or using a processor executing program instructions). To rule otherwise ignores the Supreme Court’s Benson holding and exalts form over substance, where apparatus claims drawn to circuit components configured to perform the same “function” are generally patent-eligible.

Obviously, there is no guarantee that the Supreme Court’s decision in Bilski will have any effect on the trends concerning interpretation of the machine prong of the Federal Circuit’s test. Indeed, unless the Supreme Court overturns the machine-ortransformation test, it is possible that the Supreme Court could affirm the machine-or-transformation test and rule only on the interpretation of the transformation prong discussed in Bilski.