In rejecting a petition for an en banc review of the panel decision in In re Comiskey, the en banc U.S. Court of Appeals for the Federal Circuit vacated the original panel decision but authorized a new merits panel decision that maintained the position that the claimed method directed to a method of mandatory arbitration resolution is not patent eligible under § 101. In re Comiskey; Case No. 06-1286 (Fed. Cir., January 13, 2009) (Per curiam; concurring opinion by Dyk, J., in which Michel, J. and Prost, J., join; concurring opinion by Lourie, Jr.; dissenting opinion by Moore, J., in which Newman, J and Rader, J., join; dissenting opinion by Newman, J.).

This case was originally decided in September of 2007 by a three-judge panel made up of judges Dyk, Michel and Prost). (See IP Update Vol. 10, No. 10.) In response to Comiskey’s petition for rehearing en banc, the Court granted review for the limited purpose of authorizing the original merits panel to revise its opinion. The panel issued a new decision that accompanied the en banc order, in which it revised a controversial aspect of its earlier decision that linked patent eligible subject matter under § 101 with § 103 obviousness (suggesting that claim recitations directed to non-statutory subject matter would be considered de facto obvious) but maintained its original position (raised sua sponte by the Court) that the claimed subject matter was not patentable under § 101, notwithstanding that the appeal from the U.S. Patent and Trademark Office (USPTO) was based solely on an obviousness rejection.

During the appeal, after briefing and oral arguments on the USPTO’s obviousness rejection, the Court requested supplemental briefing to address issues relating to subject matter eligibility under § 101. The USPTO immediately urged the Court to resolve the case on the basis of § 101 to “give the Office needed guidance in this area.” When the original Comiskey opinion issued, only the §101 issue was addressed.

In its new panel decision the Court maintained the same ultimate position presented in the original panel decision vis a vis the method claims: 

It is thus clear that the present statute does 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. In other words, the patent statute does not allow patents on particular systems that depend for their operation on human intelligence alone, a field of endeavor that both the framers and Congress intended to be beyond the reach of patentable subject matter. Thus, it is established that the application of human intelligence to the solution of practical problems is not in and of itself patentable.

As it did in the earlier decision, the Court remanded system claims, which recited the use of the “modules,” to the USPTO to consider the patent eligibility issue in the first instance, reasoning that these claims, under the broadest reasonable interpretation, could require the use of a machine as part of the claimed arbitration system. 

As for the brouhaha raised by the dissent over the sua sponte application of § 101, the panel insisted that it was “entirely consistent with precedent” for an appellate tribunal “to affirm an agency on alternative legal grounds or to remand to the agency to consider an alternative ground” and that it is not necessary that the Court first decide that the original (i.e., USPTO) rejection was erroneous. 

Addressing Administrative Procedure Act (5 U.S.C.) compliance, the panel noted that under § 706 “the reviewing court need not decide the validity of every ground for affirming the agency decision.” 

Judge Lourie, concurring, thought the panel should have originally decided the appeal on the grounds appealed from the USPTO’s decision, but “having rendered the decision that [the panel] did, and which it now reaffirms as to the method claims, I do not believe we need to unwind the panel decision as to those claims in order to review the § 103 rejections. The panel was and is correct that the method claims do not pass muster under 35 U.S.C. § 101, and more uncertainty in the perceived state of the law that would be engendered by vacating that conclusion is not necessary or desirable.”

Judge Moore, joined by Judges Newman and Rader dissented, arguing that the sua sponte decision to decide the case based on a new ground of rejection was itself inappropriate, but to now remand to the USPTO to address “the uncontroversial determination that the machine claims are in fact direct to patentable subject matter” is inexplicable and wasteful, given that the USPTO has already rejected the system claims as obvious. As explained by Judge Moore:

The majority’s decisions to reject the process claims on a ground never raised by either party and not to resolve the rejection of the system claims (without finding any fault in the agency’s decision making) is not consistent with the need to respect and recognize agency expertise or the interests of agency or judicial economy.

Finally, Judge Newman weighted in with a dissent (or as she put it, a “protest”) from the denial of the petition for rehearing en banc, noting that the only change from the original panel decision is the deletion of analysis: “the revised opinion does not clarify, changes no result, adds no analysis, but simply deletes its reasoning, leaving silence rather than understanding.”

Perhaps with an eye arched in the direction of the Supreme Court, Judge Newman observed that the “§ 101 split between Comiskey’s method and system claims does not conform with any relevant statute or advance any known policy” and moreover places “thousands of issued patents and pending applications … under a cloud.”

Judge Newman notes that “the panel chose to delete its statement that the ‘routine additional of modern electronics’ to a patent-ineligible invention is prima facie obvious … and also deleted the citation to KSR … from which this statement came, confounding the difference between unpatentability under § 103 and ineligibility under § 101.” In Judge Newman’s view, “[i]nstead of the half-decision of the panel, the issue of § 101 should either be remanded as to all claims, or decided as to all claims.” 

Practice Note: At about the time the Federal Circuit issued its revised opinion in Comiskey, the BPAI (the USPTO’s Board of Patent Appeals and Interferences) issued a non-precedential decision in In re Cornea-Hasegan, an Intel-assigned application directed to a shortcut method of performing calculations and containing both method and apparatus claims. In affirming the examiner’s § 101 rejection against both types of claims, the BPAI concluded the § 101 analysis is the same for both “manufacture” and “process” claims, found no transformation of any article or tie to any particular machine and cited the 2007 Comiskey decision for the preposition that “the mere use of the machine to collect data necessary for application of the mental process may not make the claim patentable subject matter.” As detailed above, that statement was deleted in the newly minted Comiskey decision.