SUPREME COURT DECISIONS ON PATENTABILE SUBJECT MATTER
©2009 Robert J. Yarbrough
I.
INTRODUCTION
On Otober 30, 2008, the Federal Circuit decided In re Bilski, 545 F.3d 943(Fed.
Cir. 2008). The court considered the patentability of claims directed to a system of
hedging price risk for commodities. The claimed method could be implemented
independent of any apparatus. The court concluded that the claimed method was
unpatentable subject matter because it was neither (1) tied to a specific machine or
apparatus, nor (2) transformed an article into another state or thing.1
In June, 2009, the U.S. Supreme Court accepted certiorari of Bilski. The
decisions discussed below are a survey of Supreme Court jurisprudence on the subject
of patentabile subject matter and provide a background to the Court’s review of the
Bilski decision.
II.
DEFINITIONS FROM THE STATUTE
What can be patented is defined by statute at 35 U.S.C. §101 (1952):
Whoever invents or discovers any new and useful process, machine,
manufacture, or composition of matter, or any new and useful improvement
thereof, may obtain a patent therefor, subject to the conditions and
requirements of this title.
The term “process” is defined by 35 U.S.C. §100(b) as follows:
The term ‘process’ means process, art or method, and includes a new use of a
known process, machine, manufacture, composition of matter, or material.
III.
THE CASES
1
The Federal Circuit has issued one precedential decision applying Bilski, Prometheus Laboratories, Inc. v. Mayo
Collaborative Services, Fed. Cir., No. 2008-1403, 9/16/09). In Prometheus, the court considered a method drawn
to the administration of a drug. The court concluded that administration of the drug satisfied the transformation
requirement under Bilski by transforming the human body and hence was patentable subject matter.
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A.
Neilson v Harford, 151 Eng. Rep. 1266, 8 M&W 806, Web. Pat. Cas.
273 (1844)
This English case was cited by O’Reilly v Morse, infra, and
Parker v Flook, infra. Nielsen, whose picture appears at the right,
discovered that a blast furnace worked much better if the air blown
through the molten iron was preheated. He developed a furnace
with a preheating chamber through which the air passed.
The court concluded that the principle of preheating air
could not be patented; however, a furnace implementing the
principle by including a preheating chamber was a proper subject for a patent. The
court made the following statement:
The case must be considered as if, the principle being well known, the
plaintiff had first invented a mode of applying it by a mechanical
apparatus.
As applied in subsequent cases, the statement means that the natural
phenomenon that has been discovered must be considered as prior art and the
question of patentability turns on whether the implementation of the natural
phenomenon is novel. If the implementation is conventional (as in Flook) or is trivial
(as in Funk Brothers Seed Co. v Kalo Inoculant Co., infra.) then the subject matter
cannot be patented.
B.
O’Reilly v Morse, 56 U.S. (15 How.) 62 (1853)
O’Reilly v Morse is the telegraph case and was an infringement action by Morse.
The specific invention in question was the use of repeaters to allow a telegraph signal
to be transmitted over
long distances. The
telegraph key closed the
circuit of an
electromagnet at a
remote location. The
electromagnet acted as a second key and closed a second circuit to an even more
remote location.
Claim 8 of the Morse patent reads as follows:
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Eighth. I do not propose to limit myself to the specific machinery or
parts of machinery described in the foregoing specification and claims;
the essence of my invention being the use of the motive power of the
electric or galvanic current, which I call electro-magnetism, however
developed for marking or printing intelligible characters, signs, or
letters, at any distances, being a new application of that power of which
I claim to be the first inventor or discoverer.
The Supreme Court noted that Morse had not provided enablement for the
breadth of the claim and taught only electromagnetic repeaters. The Court also
adopted the reasoning of the Neilson case to conclude that claim 8 addresses all
possible applications of a physical principle, not a specific implementation of the
principle. Claim 8 therefore was not patentable.
C.
Cochrane v Deener, 94 U.S. 780 (1876)
Cochrane was an infringement case. The invention
was a process for milling flour using air to carry off fine
impurities from the ‘middlings.’ The ‘middlings’ were
then ground and added back to the superfine flour. Use of
air in milling was old, but not for this purpose. Cochrane
taught the use of a perforated inclined sheet through
which air passed, carrying off the impurities from the
middlings.
The Court concluded that the process claimed
reducing the flour to a powder and that it was
unimportant to the invention or to the claim how that reduction is accomplished. The
process is not limited to the specific machine described in the specification.
The Court took as a given that processes are patentable. The Court concluded
that a patent to a process is to the process as a whole and defined ‘process’ as
follows:
A process is a mode of treatment of certain materials to produce a given
result. It is an act, or a series of acts, performed upon the subject
matter to be transformed and reduced to a different state or thing.
The definition of ‘process’ provided by Cochrane v Deener worked very well in
the mechanical age.
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D.
Tilghman v Proctor, 102 U.S. 707 (1880)
Tilghman was an infringement case. The patent claimed a process for
manufacturing fatty acids and glycerin using water at high temperature and pressure.
The Court considered whether O’Reilly v Morse
held that processes are not patentable. The Court
clarified that a patent for a process is different from a
patent for a scientific principle. Morse claim 8 failed
because it was not a claim to a particular machine, or a
claim to a process for utilizing a principle. Instead it
was a claim to the principle itself, which was not
patentable.
E.
Mackay Co v RCA., 306 U.S. 86 (1939)
Mackay was an infringement action relating to radio antenna design. The
patent used a previously known mathematical expression to derive the proper angle
of a radio antenna when the wire
making up the antenna was a
multiple of half-wavelengths.
The invention was to combine
two wires separated by an angle
double that calculated by the
formula. To avoid prior art, the application was limited to antenna configurations
calculated using the formula.
The Court accepted as established law that purely mathematical expressions
are not patentable but “a novel and useful structure created with the aid of
knowledge of scientific truth may be.” Mackay appears to be a situation where the
principle in question really was part of the prior art.
The Court concluded that the accused devices did not infringe because they
were not designed in accordance with the mathematical formula relied upon by the
applicant.
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F.
Funk Bros. Seed v Kalo Inoculant, 333 U.S. 127 (1948)
Funk Bros. was an infringement case. Legumes require
bacteria to fix nitrogen, with different species of bacteria used
for different plants. Farmers could not mix the different
species of bacteria, because they had mutually inhibitory
effects. The inventor discovered that certain strains of the
different species of bacteria did not have these inhibitory
effects and could be mixed. A farmer could use a single mixed
product to inoculate all of his or her crops.
The claim in question was the following:
An inoculant for leguminous plants comprising a plurality of selected
mutually non-inhibitive strains of different species of bacteria of the
genus Rhizobium, said strains being unaffected by each other in respect
to their ability to fix nitrogen in the leguminous plant for which they are
specific.
The Supreme Court concluded that this claim did not address patentable
subject matter. The inventor did not create the strains of bacteria and the strains
therefore were ‘phenomena of nature’ and unpatentable. While the aggregation of
different strains into one product was an application of the natural phenomena, the
invention amounted to no more than an alternate way to package the product.
Because the packaging improvement over the unpatentable prior art was trivial, the
invention was not patentable subject matter.
The Court in Funk Bros. appears to introduce obviousness into the question of
what is patentable subject matter. The Court appeared to confound what can be
patented with what should be patented.
G.
Gottshalk v Benson, 409 U.S. 63 (1972)
Gottshalk was an appeal from a denial of a patent by the PTO.
The process at issue was a method for converting ‘binary coded decimal’
numerals to pure binary numerals on a general purpose computer. The Court noted
that the claimed process could occur on any computer or entirely in a person’s head.
The patent claims would prohibit use of the algorithm by any person for any use on
any machine and in any field. The Court found that the claim was directed to the
algorithm and the algorithm was unpatentable.
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Of interest, the PTO in its brief argued that no process should be patented
unless it transformed substances or was implemented with a new machine. The Court
reviewed its prior decisions relating to process patents and noted that all either
transformed an article or utilized a particular machine. The Court noted with
approval that the process inventions in the prior cases transformed a raw material,
which provided definite bounds for the scope of the claims. Discussing Cochrane v
Deener and Tilghman v Proctor, the Court said:
Transformation and reduction of an article “to a different state or thing”
is the clue to the patentability of a process claim that does not include
particular machines.
…
It is argued that a process patent must either be tied to a particular
machine or apparatus or must operate to change articles or materials to
a "different state or thing." We do not hold that no process patent could
ever qualify if it did not meet the requirements of our prior precedents.
It is said that the decision precludes a patent for any program servicing a
computer. We do not so hold…
(Emphasis supplied).
From the foregoing, the Court was not willing to prohibit all software patents
and was not willing to require that all patents for processes either ‘transform’ an
object or be tied to a particular machine.
We can infer that the Court found that transformation and tying a process to a
particular machine are factors in determining whether the process is patentable, but
that other factors may exist that were not before the Court. The Court did not need
to reach those other factors because the claims in question were to a general
principle, like Morse; namely, a mathematical algorithm.
The Federal Circuit in Bilski and the PTO in its Bilski appeals brief take a
different read. The highlighted “the clue” phrase above is the basis of the Federal
Circuit’s Bilski decision and the heart of the PTO’s argument to the Supreme Court to
affirm Bilski. The argument goes that since the Supreme Court said ‘the’ clue rather
than ‘a’ clue, then the Supreme Court intended the ‘machine or transformation’ test
to be exclusive.
H.
Parker v Flook, 437 U.S. 584 (1978)
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Parker v Flook was an appeal from a denial of a patent by the patent examiner.
The claims at issue in Parker v. Flook were directed to a method for monitoring
the operation of a catalytic converter for hydrocarbon production by collecting data
and applying an algorithm to the data to update an alarm value. The alarm value was
a number, indicating whether the catalytic conversion process was within operational
limits. The method was old, other than application of the algorithm. Parker v Flook
is one step past Gottshalk v Benson. In Gottshalk, there were no limits on the
algorithm at all. In Parker v Flook, the algorithm was limited to one field of activity.
Parker v Flook is a six to three decision. The majority concluded that the
algorithm coupled with insignificant ‘post solution activity’ was not patentable
subject matter.
The Court adopted the reasoning of the O’Reilly v Morse and Neilson v Harford
cases, assuming that the physical principle was part of the prior art and looking for
patentability separate and apart from the physical principle.
This approach has been compared to the ‘analytic dissection’ approach to
computer program copyright infringement analysis. In this approach, two computer
programs are compared to determine whether the works are ‘substantially similar’ for
copyright infringement purposes. The first step is to remove all unprotectable
elements from the copyrighted work, such as information in the public domain,
unprotectable ideas, conventional elements, and functional aspects. What remains is
compared to the accused infringing work.
Although not mentioned by the Court, the ‘transformation’ involved in Flook
was of one number into another number. Query whether the invention would have
been patentable if the draftsman had attached specific consequences to those
numbers; for example, if the draftsman had included the step of adjusting the flow of
feedstock into a reactor vessel when an adjusted alarm limit was exceeded. Here the
transformation would have been from one hydrocarbon into another hydrocarbon.
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I.
Diamond v Chakrabarty, 447 U.S. 303 (1980)
Chakrabarty developed a bacterium that ate
crude oil. His patent application for the organism
itself was denied by the PTO based on the argument
that living organisms are not patentable. The
examiner allowed claims directed to a method for
producing the genetically-engineered bacterium and
to a combination of the bacterium and other
materials, such as straw, that could inoculate
spilled oil with the bacterium.
In a five to four decision, the Supreme Court
concluded that the bacterium was a ‘manufacture’ or ‘composition of matter’ under
35 U.S.C. §101 and hence patentable. Diamond v Chakrabarty, quoting the
committee reports for the 1952 patent act, is the source of the quote that §101 is
intended to “include anything under the sun that is made by man.” Since
Chakrabarty’s bacterium was made by man, it was patentable.
The Court distinguished the mixture of naturally-occurring bacteria that was
held unpatentable in Funk Bros. to the engineered bacterium of Chakabarty:
His claim is… to a nonnaturally occurring manufacture or composition of
matter – a product of human ingenuity.”
The dissent argues legislative intent – the legislature did not intend for §101 to
cover plants due to subsequent enactments that specifically addressed plant patents.
J.
Diamond v Diehr, 450 U.S. 175 (1981)
Diamond v Diehr is an appeal from a patent claim rejection.
The invention in question related
to a process for making products from
cured rubber. The curing time depends
on a variety of parameters, including
temperature. Prior to the invention, the
only way to determine that temperature
was to open the mold. The invention
included thermocouples installed in the
mold to measure the temperature without opening the mold. The invention also
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included a computer-implemented system to monitor the necessary parameters and
perform the calculations to determine when the mold should be opened.
The examiner rejected the claims because once the unpatentable algorithm
was removed the claims (as in Parker v Flook), the remaining steps were old.
In a five to four decision, the Court concluded that while an algorithm alone is
not patentable, if it is incorporated into a machine that “transforms an article to a
different state or thing” then it is patentable subject matter.
The Court rejected the analysis used by the examiner and argued by the PTO
that Flook required an unpatentable algorithm in the claims to be ignored and
patentability determined based on the remainder of the claim:
…To accept the analysis proffered by the petitioner would, if carried to
its extreme, make all inventions unpatentable, because all inventions
can be reduced to underlying principles of nature which, once known,
make their implementation obvious.
The Court did not overrule Flook; however, the Court stated that the invention
must be considered “as a whole,” which contradicts the approach that Flook
borrowed from Nielsen v Harford of treating physical principles or algorithms as part
of the prior art and not to be considered when determining patentability.
K.
J.E.M. AG Supply v Pioneer, 534 U.S. 124 (2001)
The issue was whether §101 addressed plants or whether protection of plants
was limited by the Plant Patent Act and the Plant Variety Protection Act. The Court
concluded that plants are a proper subject of utility patent protection.
L.
Laboratory Corp. of America v Metabolite Laboratories, 126 S.Ct.
1921 (2006)
Lower courts found a patented process valid and infringed. The Supreme Court
granted certiorari and subsequently revoked certiorari as improvidently granted
because the appellant had not presented the §101 issues to the Federal Circuit.
Justices Breyer, Stevens and Souter issued a dissent from the revocation of certiorari.
The invention was that homocysteine, an amino acid, in the body correlated to
a deficiency of the vitamins folate (folic acid) and coalamin (B12). The claimed
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process involved measuring homocysteine by any means and if the level of was
elevated, concluding that a vitamin deficiency was likely.
The issue on appeal, and the issue addressed by the dissent, was whether the
claimed process addressed an unpatentable scientific principle.
The dissent pointed out that the inventors admitted that the correlation step
occurred in the mind of the physician reviewing test results. Since the physician
could not be divorced from his or her training, the claim would be infringed every
time a physician reviewed homocysteine test results, whether or not the test was
conducted for the purposes of determining a vitamin deficiency. (Homocysteine
testing had been identified as a possible predictor of heart disease).
The dissent criticizes State Street Bank:
That case does say that a process is patentable if it produces a ‘useful,
concrete, and tangible result.’ 149 F. 3d, at 1373. But this Court has
never made such a statement and, if taken literally, the statement
would cover instances where this Court has held the contrary. The
Court, for example, has invalidated a claim to the use of
electromagnetic current for transmitting messages over long distances
even though it produces a result that seems ‘useful, concrete, and
tangible.’ Morse, supra, at 16. Similarly the Court has invalidated a
patent setting forth a system for triggering alarm limits in connection
with catalytic conversion despite a similar utility, concreteness, and
tangibility. Flook, supra. And the Court has invalidated a patent setting
forth a process that transforms, for computer-programming purposes,
decimal figures into binary figures, even though the result would seem
useful, concrete, and at least arguably (within the computer’s wiring
system) tangible. Gottschalk, supra.
Justice Souter has since retired, but Justices Breyer and Stevens still are
on the Court.
M.
eBay v MercExchange, 547 US 388 (2006)
Although not a patentability case, the underlying patent in the eBay case was
characterized by the majority opinion as “a business method patent.” The patent
addresses the ‘buy it now’ function implemented by eBay.
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The patent was determined to be valid and infringed by the District Court and
the validity of the patent was not at issue
before the Supreme Court. The issue
before the Court was whether injunctions
should issue as a matter of course in the
case of patent infringement. The
unanimous Court determined that an
injunction will not issue unless the
successful patent plaintiff meets the four
factors for injunctive relieve, just like
every other litigant. The four factors are
irreparable injury, no adequate remedy at law, balance of hardships favors plaintiff,
and the public interest favors an injunction.
Of most interest to the present inquiry is the concurring opinion by Justices
Kennedy, Breyer, Souter and Stevens. The concurring opinion discussed the longestablished practice of awarding injunctive relief in patent matters and distinguished
the patent climate of earlier times to the present.
An industry has developed in which firms use patents not as a basis for
producing and selling goods but, instead, primarily for obtaining
licensing fees. …For these firms, an injunction, and the potentially
serious sanctions arising from its violation, can be employed as a
bargaining tool to charge exorbitant fees to companies that seek to buy
licenses to practice the patent. … When the patented invention is but a
small component of the product the companies seek to produce and the
threat of an injunction is employed simply for undue leverage in
negotiations, legal damages may well be sufficient to compensate for
the infringement and an injunction may not serve the public interest. In
addition injunctive relief may have different consequences for the
burgeoning number of patents over business methods, which were not of
much economic and legal significance in earlier times. The potential
vagueness and suspect validity of some of these patents may affect the
calculus under the four-factor test.
From this dissent, at least three sitting justices are hostile to the direction that
the patent field has taken and are eager to limit the scope of patent protection and
of patents.
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