Issuing two long-awaited decisions on the same day, the U. S. Court of Appeals for the Federal Circuit has clarified subject matter that falls outside the scope of patentable subject matter, intensifying a debate that has persisted in the wake of its nine-year-old State Street decision and finding that each of the applications failed to present patent subject matters under 35 U.S.C. § 101.
In one case, the Court held that claims directed to a method for mandatory arbitration resolution were unpatentable subject matter under § 101 because the claimed subject matter amounted to an unpatentable “mental process.” In re Comiskey, Case No. 06-1286 (Fed. Cir., Sep. 20, 2007) (Dyk, J.).
In a second case, the Court held that a signal (not embodied in a tangible media or memory) did not fall within any of the four statutory classes of patentable subject matter under § 101. In re Nuitjen, Case No. 06-1371 (Fed. Cir., Sep. 20, 2007) (Gajarsa, J.; Linn, J., dissenting).
Comiskey’s patent application was directed to a method and system for conducting mandatory arbitration involving legal documents, such as wills or contracts. Before the Federal Circuit, Comiskey argued that the claims were directed to patentable subject matter because they did not fall within an exception to patentability, such as an abstract idea, natural phenomena or law of nature. The U.S. Patent and Trademark Office (USPTO) argued the claims were directed to an abstract idea.
Citing State Street Bank & Trust Co., the Court concluded the claims were “barred at the threshold by § 101,” explaining “[i]t is well established that ‘[t]he first door which must be opened on the difficult path to patentability is § 101.’"
The Court characterized Comiskey’s claims as “business method” claims and cited its State Street decision for the proposition that business methods are “subject to the same legal requirements for patentability as applied to any other process or method.” The Court further explained that a claim involving a mental process or algorithm is directed to patentable subject matter only if it is tied to a machine or involves a transformation of an article. However, citing Gottschalk v. Benson, the Court held that mental processes—or processes of human thinking—are not patentable, even if they have practical application
The Court noted that while the range of patentable subject matter is extremely broad, the thread of Supreme Court and Federal Circuit cases on this issue have established that the application of human intelligence to the solution of practical problems is not in and of itself patentable. Thus, the Court held the patent statute did “not allow patents to be issued on particular business systems—such as a particular type of arbitration—that depend entirely on the use of mental processes.” As Comiskey’s independent claims 1 and 32 were directed to the mental process of resolving a legal dispute by the decision of a human arbitrator, the claims were found to be directed to unpatentable subject matter.
However the Court remanded independent claims 17 and 46 for further consideration by the USPTO. The Court noted these claims recited the use of “modules.” Therefore, even under the broadest reasonable interpretation, those claims could be limited to a system requiring use of a computer. The Court explained that as recognized by the Supreme Court in Diamond v. Diehr and the Federal Circuit in State Street Bank, combining an unpatentable mental process with a machine may produce patentable subject matter. The Court went on to caution that claims that satisfy the threshold of § 101 must still satisfy the other requirements for patentability, noting “[t]he routine addition of modern electronics to an otherwise unpatentable invention typically creates a prima facie case of obviousness,” citing Leapfrog Enterprises v. Fisher-Price,(See IP Update, Vol. 10, No. 5). The Court then went further, linking § 101 and § 103 in a manner that pre-empts reliance on secondary considerations for non-patentable (under § 101) subject matter, stating that “there is no pertinent evidence of secondary considerations because the only evidence offered is of long felt need for the unpatentable mental process itself, not long felt need for the combination of the mental process and a modern communication device or computer.” The Court then observed that claims 17 and 46 merely appear to add a modern general purpose computer to an otherwise unpatentable mental process.
Nuijten sought to patent a signal with embedded supplemental data, also known as a watermark. Nuijten obtained allowance of claims directed to a process of adding a watermark to a signal, an arrangement for embedding supplemental data in a signal and a storage medium having the signal stored thereon. However, those application claims directed to a signal with embedded supplemental data were rejected under § 101 as being directed to non-statutory subject matter. The Board of Patent Appeals and Interferences of the USPTO noted that “[t]he signal … has no physical attributes … thus, it is considered an ‘abstract idea,’” and found that the signal claims did not fit into any of the four statutory categories of patentable subject matter defined in § 101. Nuijten appealed.
The Federal Circuit noted that while a carrier (such as electromagnetic radiation or light pulses) upon which the information is embedded is required, the claims were not limited by any specified physical medium. The Court explained that while in its State Street decision, it held “[t]he question of whether a claim encompasses statutory subject matter should not focus on which of the four categories of subject matter a claim is directed,” the claimed subject matter “must [still] fall into at least one category of statutory subject matter. … If a claim covers material not found in any of four statutory categories, that claim falls outside the plainly expressed scope of § 101, even if the subject matter is otherwise new and useful.” Thus, the issue presented here is whether a transitory signal per se fits any of the statutory categories: process, machine, manufacture or composition of matter.
Process, Machine, Composition of Matter
The Court readily found that the signal claims were not directed to a process, a machine or a composition of matter. As for process, the Court found no active steps and hence no process. Finding no “concrete thing,” the Court found the signal is not a “machine.” After defining composition of matter as a chemical union, gas, liquid or solid, the Court found the signal did not find a home there either.
Turing to the category of manufacture, the Court cited Supreme Court’s definition of “manufacture” (in its verb form) from Diamond v. Chakrabarty as “the production of articles for use from raw or prepared materials by giving to these materials new forms, qualities, properties, or combinations,” and explained that the same dictionary the Supreme Court used to define “manufacture” in its verb form, defined “manufacture” in its noun form as “a particular substance or commodity: as an article of merchandise, an article of clothing.” Noting that when a signal is encoded on an electromagnetic carrier it can be transmitted through a vacuum, a medium that by definition is devoid of matter. Thus, the Federal Circuit determined that the claimed signal is not a manufacture.
Judge Linn, dissenting-in-part, argued the claimed signal was a manufacture. Citing the majority opinion for the proposition that the signal claim contemplates “some physical carrier of information,” Linn reasoned the claimed signal required some material to which the signal was input, whether a pulse of energy or a stone tablet, be given a new form, quality or property by direct human action or by a machine, and thus was a new and useful manufacture in the expansive sense of 35 U.S. § 101.” Judge Linn also pointed out that “manufacture” had a second definition as “anything made for use from raw or prepared materials.” Asserting this definition did not require the manufacture be an “article” or a transformed “raw material,” only that it be “something—‘anything’—made from them,” he argued that the claimed signal is an information carrier and that the claim is not an attempt to claim the information itself.
Practice Note: Several cases, including In re Belski (argued on October 1, 2007), on the Federal Circuit dock are likely to further clarify the extent to which the Federal Circuit can be expected to heed the rumblings of the Supreme Court and pre-emptively narrow State Street. The Comiskey opinion already appears to require a claim to recite a “technological art,” a requirement recently eliminated by the Board in its In re Lundgren decision. (See IP Update, Vol. 8, No. 11.)